Sitting of 15 May 1990

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

    PENZANCE SOUTH PIER EXTENSION BILL
    Queen's consent, on behalf of the Crown, signified.
    Read the Third time, and passed.

    BRITISH RAILWAYS (No. 2) BILL
    Order for consideration read.
    To he considered on Thursday 17 May.

Oral Answers to Questions
  DEFENCE

    Low Flying
    Mrs. Margaret Ewing: To ask the Secretary of State for Defence what steps he is taking to reduce the incidence of low-flying military aircraft over populated areas.
    Mr. Maclennan: To ask the Secretary of State for Defence what proposals he has to review the flying of aircraft below 250 ft in the Scottish tactical training area.
    The Parliamentary Under-Secretary of State for Defence Procurement (Mr. Michael Neubert): The operation of the United Kingdom military low-flying system is kept under continuous review as efforts are made to minimise the impact of low-flying training on those on the ground. This monitoring applies equally to the operation of the tactical training areas which provide essential work-up training for exercises in North America.
    Mrs. Ewing: Given the broad welcome yesterday for the report by the Select Committee on Defence and especially for the proposal that flights under 250 ft should be phased out over two years, will the Minister tell us when the Government will give a measured response to the recommendations in that report and when they will ensure that hon. Members of all parties who are interested in the subject are given a full opportunity to debate the issues?
    Mr. Neubert: We also welcome the fact that the Select Committee has concluded its comprehensive study of this important subject. The report deserves careful and considerable study, which it will receive. In accordance with parliamentary convention, we shall present our formal response in due course. Until then, I cannot respond to any particular recommendation in the report.
    Mr. Maclennan: In considering the Select Committee's report, will the Minister pay particular attention to the evidence given by his own officials that it was possible to
    724
    bring down flight training from 250 ft to 100 ft within two weeks? If the international climate persists, two weeks seems sufficient time in which to make the adjustment. Will the hon. Gentleman also pay particular attention to the fact that this country is paying a far smaller amount for research into simulators, especially on Tornado-type aeroplanes, than the Federal Republic of Germany? It would be appropriate to build up such research while phasing out very low flying.
    Mr. Neubert: It is important to remember that very low flying, which occurs in the three tactical training areas, accounts for only 1 per cent. of low-flying training as a whole in the United Kingdom. It would also be as well not to underrate the need for that low-flying training because training in this country is carried out at far greater heights and slower speeds than would be necessary in conditions of war, when aircraft would need to fly lower and faster. I take into account all that the hon. Gentleman has said, but, as I mentioned earlier in response to the hon. Member for Moray (Mrs. Ewing), we shall first have to prepare a formal response to the Select Committee.
    Mr. Hague: Will my hon. Friend take particular note of some of the useful and practical recommendations in the Select Committee report, such as better records of low flying in each area and the publicising of a telephone number and address to which members of the public could complain, as well as the other recommendations?
    Mr. Neubert: Yes, my hon. Friend is right to recognise the constructive nature of the report and the fact that almost every aspect of low-flying training is covered in it. We shall certainly take account of what is suggested and we shall endeavour to be as positive as possible in reply.
    Mr. Quentin Davies: Lincolnshire has the highest concentration of RAF stations in the country and, I believe, one of the highest concentrations of low-flying planes come over my house all the time. Lincolnshire also has a long tradition of great pride in the valour and skill of the RAF. Lincolnshire is totally committed to maintaining the RAF's tactical viability through proper low-flying.training—
    Mr. Speaker: Order. The hon. Member should ask a question, please.
    Mr. Davies: If the young men in the RAF are prepared to risk their lives in our common defence, the least that we can do is to put up with a little noise occasionally. While naturally investigating any abuses, will my hon. Friend the Minister give very short shrift to the whingers?
    Mr. Neubert: Lincolnshire has many claims to fame, as I am sure that my right hon. Friend the Prime Minister would be the first to acknowledge, and I am glad to hear that it is such a strong source of support for the Royal Air Force and the need to carry out necessary training. As the Select Committee acknowledged, low flying needs intensive training and regular practice. That is the sole purpose of low-flying training in this country.
    Mr. Win Griffiths: Does the Minister accept that other countries seem to manage without the amount of low-flying training that we carry out here? Would not it be a sign of the Minister's good faith about the need for change, which my constituents in Porthcawl would welcome, that should there be a reduction not only in low

    725
    flying by military aircraft but in the number of training aircraft taking off from RAF St. Athan in the Vale of Glamorgan? Will the Minister make that commitment now?
    Mr. Neubert: There are no commitments to be made this afternoon, as I made clear earlier. We are members of NATO and we make a major contribution to the defence of this country and that of western Europe. The hon. Gentleman would do well not to belittle the efforts of our highly professional pilots in that defensive system.
    Mr. Bill Walker: Does my hon. Friend agree that Opposition Members who call for the abandonment of any stand-off capability for our low-flying aircraft expect RAF pilots to deliver old iron bombs with none of the security which comes from flying below radar? That is a recipe for disaster.
    Mr. Neubert: My hon. Friend, with his long experience of the Royal Air Force and of defence matters generally, exposes the poverty of the Labour party's defence stance, which will no doubt bring dividends when it is put to the test at another general election in which the issue of defence will be foremost in people's minds when they make their decisions.
    Mr. Rogers: Will the Minister inform his hon. Friend the Member for Stamford and Spalding (Mr. Davies) that Lincolnshire is not a designated low-flying area and that if any low flying is taking place in his constituency, the pilots are breaking the regulations? The Opposition welcome the Select Committee's recommendations, especially those that we have been urging on the Government for some time, but will the Minister assure the House that he will look urgently at the recommendations relating to ultra-low flying, especially that which affects the three areas in the United Kingdom subjected to flights at 100 ft?
    Mr. Neubert: I fear that the Opposition spokesman shares the confusion demonstrated by half the nation's sub-editors in this morning's papers. We must be careful to distinguish between the three tactical training areas where low flying is allowed as low as 100 ft and general low-flying training, which accounts for 99 per cent. of low flying. The latter is spread fairly over the whole country and counties including Lincolnshire will see their share of low flying. The only quibble that I have with my hon. Friend the Member for Stamford and Spalding (Mr. Davies) is that he need not necessarily believe that he is getting an unfair share of that low flying.

    Chieftain Tanks
    Mr. Batiste: To ask the Secretary of State for Defence when he expects to make a decision concerning a replacement for the order of Chieftain tanks.
    The Minister of State for Defence Procurement (Mr. Alan Clark): It remains our intention to reach a decision by the end of this year.
    Mr. Batiste: My hon. Friend will be aware from his recent visit to Leeds of the skills, commitment and investment by Vickers and its work force in its objective to produce the best tank in the world for the British Army. Can my hon. Friend the Minister confirm that he has had
    726
    an opportunity to examine the report on the second milestone and that that excellent company has passed that important test?
    Mr. Clark: Yes. I am pleased to announce that Vickers Defence Systems has successfully passed the second milestone report. I am confident that if that progress is maintained, it will pass the third at the end of September. That process should allow completely fair competition, from which we shall select the tank best suited to the Army's requirements.
    Mr. Menzies Campbell: In selecting the tank best suited to meet the Army's requirements, does the Minister accept that it is necessary to take account of the threat and the need to meet that threat? Does he agree that it is necessary to resist any attempt to exact a crude percentage decrease in the defence budget and that we should ensure that the defence budget is adequate to meet the United Kingdom's continuing requirements?
    Mr. Clark: I very much welcome what the hon. and learned Gentleman has said. That thinking is in the forefront of my right hon. Friend's mind when examining the various options for change in our defence procurement and spending.
    Mr. Wilkinson: In the future battlefield of central Europe—[Interruption.]—force levels may be less. Therefore, when reviewing what tank to select to replace the Chieftain, will my hon. Friend examine with the closest care the possibility of ordering dedicated anti-tank helicopters at an early date?
    Mr. Clark: I do not go along with my hon. Friend's view that the next battlefield will necessarily be found in central Europe. However, Her Majesty's forces must be prepared to counter Her Majesty's enemies in any theatre. To give them the efficiency and capability that they need, it is necessary to address the correct mix between helicopters and armour.
    Mr. Battle: What is the Government's present defence procurement policy? Does the Minister accept that the jobs of those who work in the defence industries, such as those at Barnbow, are proving to be the most precarious in the present climate of disarmament? If that company were not to get the contract, what practical alternatives would the Government suggest to ensure that there is job security for those people in Leeds?
    Mr. Clark: To my knowledge, there have been no redundancies so far in either establishment. However, the issue of redundancies and work allocation is entirely a matter for the commercial judgment of the companies concerned.
    Mr. Kirkhope: I congratulate my hon. Friend on what he has said about the stage that the replacement tank has reached at Barnbow. Does he agree that we are now in a state of such uncertainty in Europe that we must carefully consider replacing our weapons with the most modern systems that we can find to deal with any eventuality? Does he further agree that the comments of some Labour Members about the future of the Leeds tank factory—that it might be turned over to making dishwashers and washing machines in the future—is typical of the defence policies pursued by the Labour party?
    Mr. Clark: Yes. None the less, the Labour party's concept of an arms conversion agency with a central corporate directive ideology remains an interesting concept echoed only in the Soviet Union, which is hardly an example of high economic efficiency.

    Rosyth
    Mr. Douglas: To ask the Secretary of State for Defence if he will make a statement on the nature and purpose of the recent visit of the Parliamentary Under-Secretary of State for Defence Procurement to Rosyth dockyard and naval base.
    Mr. Neubert: I paid a routine briefing visit to Rosyth royal dockyard on 25 April as the Minister responsible for the dockyards.
    Mr. Douglas: Will the Minister enlighten us about what reassurances he gave to the workers in the dockyard and with Babcock Thorn Ltd. with specific regard to radiation exposure? Will he assure the House that the levels of radiation exposure to which those workers have been subjected in the past will be reduced and that more stringent measures will be adopted in the industry—at Rosyth, Devonport and elsewhere—to ensure that such exposure is reduced and that the workers' health is safeguarded in future?
    Mr. Neubert: We naturally take our workers' health and safety extremely seriously. That applies also to the work force in the royal dockyards who are the initial responsibility of the dockyards' contractors. Ministry of Defence policy is that exposure of our employees to radiation should occur only where it is justified, that it should come within the statutory limit of 50 mSv per year and our own much lower self-imposed limit of 30 mSv per year, and that the level should be as low as is reasonably practicable. As a result, the trend for exposure levels has been downwards. If it is any reassurance, 98 per cent. of all dockyard workers have an average exposure of less than 15 mSv and, on average, for all dockyard workers, the exposure is only 2 mSv.

    NATO Nuclear Planning Group
    Mr. Flannery: To ask the Secretary of State for Defence what decisions were made at the recent NATO nuclear planning group meeting in Alberta, Canada.
    The Minister of State for the Armed Forces (Mr. Archie Hamilton): The meeting discussed a wide range of nuclear issues. In particular, nuclear planning group Ministers were able formally to welcome President Bush's recently announced decisions to terminate the follow-on to Lance development and nuclear artillery shell modernisation programmes. A copy of the final communiqués from the NPG has been placed in the Library.
    Mr. Flannery: Is not it a fact that tension throughout the world has eased a great deal and at the highest level of the super-powers there is new thinking about nuclear armaments? Will the Minister assure us that we are not the odd man—perhaps I should say the odd woman—out in recognising that fact, but are ready to meet all the other nations who are ready to bring down their nuclear
    728
    armaments, or are we going to stand out as though the Russians are expected to attack next Thursday afternoon at 3 o'clock?
    Mr. Hamilton: Of course, things have changed in the past 12 months. It is a recognition of the fact that the Warsaw pact's capability is much reduced, and the threat from the east European countries is probably no longer there, that it does not seem to be as necessary now as it was to make sure that short-range nuclear systems are modernised. However, I believe that the North Atlantic Treaty Organisation will continue to recognise the need for a flexible nuclear response and to accept the fact that the Soviet Union is still a military super-power with a large nuclear capability and is likely to remain so for the foreseeable future.
    Mr. Brazier: I congratulate my hon. Friend on his answer. Does he agree that the Soviet Union not only has more nuclear weapons than the whole of NATO put together but, more importantly, that nuclear weapons are spreading to an increasing number of Third world countries? Does he agree that it is inconceivable that western Europe should shed the only nuclear defences which currently belong in European hands by Britain and France relinquishing their small strategic nuclear deterrents?
    Mr. Hamilton: That is quite right. As my hon. Friend has said, our deterrent is a minimum deterrent, so it is not a matter of embarking on a massive arms race. We have the minimum deterrent necessary to give us a nuclear capability. It is a tragedy that the nuclear non-prolification treaty has not been so successful as it might have been and there are other countries developing nuclear capability in addition to the original five powers, including China, which have nuclear weapons.
    Mr. O'Neill: In relation to President Bush's welcome statement, will the Minister state whether his right hon. Friend the Secretary of State or the Prime Minister was consulted, or merely informed, before the statement was made?
    Mr. Hamilton: Yes, there was consultation, and we were kept in touch about the intentions of the United States before the announcement was made.
    Mr. David Evans: Does the Minister agree that although there is a lessening of aggression and tension coming from eastern countries, including the Soviet Union, there seems to be an increase in aggression and tension coming from the middle east, particularly Iraq and Libya? Will he therefore assure me and the people of this country that we shall keep up our vigilance and continue to develop our conventional forces and modernise our nuclear deterrent—unlike the Labour party which, at the last Labour party conference, agreed to a reduction in defence spending of £5 billion or, to put it another way, the complete removal of the Royal Air Force? May I ask the Labour party whether £5 billion is the price of protecting our loved ones?
    Mr. Hamilton: My hon. Friend is absolutely right. It is essential that we keep a defence capability, because we live in an extremely uncertain world. Many of the recent developments that have led to the easing of tension

    729
    actually create new dangers, so it is important that we should have a nuclear capability as part of our defence capability, and it is essential to keep it up to date.

    Ministry Stores (Security)
    Mr. John Evans: To ask the Secretary of State for Defence if he has any plans to increase security at Ministry of Defence stores in the United Kingdom.
    Mr. Archie Hamilton: Security at all defence establishments is kept under regular review. We look carefully at any general lessons which can be drawn from incidents such as yesterday's at Eltham.
    Mr. Evans: Will the Minister confirm that £3·5 billion worth of military equipment is still stored in depots which do not meet Ministry of Defence fire regulations? Given the previous fires at Donnington which destroyed hundreds of millions of pounds worth of equipment, is not that criminal complacency?
    Mr. Hamilton: We have a continuing programme to improve the ability of our stores to withstand fires. It costs considerable sums and cannot be done overnight.
    Mr. David Martin: Although I appreciate that the IRA will always use its cowardly methods regardless of the amount of security that we maintain at our bases, and that it will just aim for ever softer targets, will my hon. Friend assure me that as far as possible we shall draw service personnel and activities within secure premises and that when we come to think of selling off MOD establishments which are surplus to requirements we shall bear in mind above all the requirements of security?
    Mr. Hamilton: Yes, we always bear the need for security in mind when we relocate military establishments. If we ended up with a number of enormous military bases incorporating all our different military establishments, the IRA could claim a victory.
    Mr. Molyneaux: Does the Minister agree that there is little point in strengthening the outer defences if potential terrorists can gain access to the very heart of defence installations? Is there not an overwhelming case for a truly effective method of screening all who have access to those establishments?
    Mr. Hamilton: I must point out to the right hon. Gentleman that there are about 2,000 military establishments in the United Kingdom, and it is extremely difficult to provide a high degree of security at all of them. He would not expect me to go into details of the security measures that we have taken, but it is significant that lives were saved and injuries avoided at Eltham by the precautions that had been taken. The laminated windows that had been put in stopped glass splintering across the room.
    Sir Michael McNair-Wilson: Has my hon. Friend any plans to replace with something rather more effective the current wire mesh fencing that is so commonly used around military establishments and which is so obviously not intruder-proof?
    Mr. Hamilton: When my hon. Friend asks for something more effective he is talking about an incredible increase in expenditure on security fencing, if we are to use all the different available sensors and so on that are needed
    730
    to make them effective. It worries me that people think that security can be enhanced merely by installing perimeter fences, which may create the illusion of security even though it is easy for people to break through them.

    Arms Reduction
    Ms. Primarolo: To ask the Secretary of State for Defence what United Kingdom forces have been offered for inclusion in the proposed START agreement; and if he will make a statement on the defence implications.
    Mr. Archie Hamilton: The START negotiations are bilateral between the United States and the Soviet Union—British nuclear forces would therefore not be included in any agreement.
    Ms. Primarolo: Why have none of Britain's nuclear forces been included in the START agreement? Is it because the Government are made up of closet warmongers who do not believe in the principle or practice of arms control? Do the Government remember their commitment to the nuclear non-proliferation treaty and to negotiate away our nuclear weapons in good faith? Why, when the time is right, are the Government not prepared to make any reductions?
    Mr. Hamilton: The hon. Lady is a bit wrong about this. The START treaty was between the United States and the Soviet Union. We were never part of it and it was not intended that we should be. I remind the hon. Lady that the Government's policy is to have the minimum independent nuclear deterrent that we need. We differ from the Opposition, who would like that deterrent negotiated away as soon as possible. I am sure that the hon. Lady supports that stance. There is a major difference in our attitudes. We want Britain to have a minimum nuclear deterrent and I hope that that will remain the position for a long time.
    Mr. Mans: Does my hon. Friend agree that it would be foolish to include any British nuclear weapons in the START treaty until the Soviet Union's nuclear arsenal is reduced to the extent that it no longer poses a threat to this country?
    Mr. Hamilton: I totally accept what my hon. Friend says. It is difficult to envisage a time when the Soviet nuclear capability would be reduced to that degree. That certainly has to be one criterion. We must also remember earlier contributions to the effect that the non-proliferation treaty has not worked as well as it might and that other countries are now achieving a nuclear capability. We should not be concerned solely about the nuclear capability of the Soviet Union.
    Mr. Cohen: Why cannot Trident be included in the START agreement? Is not Trident an eight times increase in capability over Polaris at a time when world tension is reducing? Would not cancellation of the fourth Trident save Britain about £1 billion per annum? Why will not the Government cancel that?
    Mr. Hamilton: As I have already explained, Trident is merely an uprating of our nuclear capability, and that is the minimum deterrent that we think we need. It is important for us to maintain Trident because if we did not we would cease to be a nuclear-capable nation. It is not the intention of the Government that we should be in that

    731
    position, although I know that, in the unlikely event of a Labour Government, the Opposition would negotiate away as early as possible our independent nuclear deterrent.
    Mr. Ian Bruce: Following the START treaty, may we look forward to a reduction in nuclear weapons throughout the world? Do the principles of those reductions—that they should be balanced, mutual and verifiable—hold good today and will the Government have nothing to do with the unilateralism about which we still hear from the Opposition?
    Mr. Hamilton: Yes, indeed, and the basic preliminary agreements of the START treaty are ceilings of 6,000 warheads on 1,600 strategic offensive delivery systems. That would certainly lead to significant reductions. My hon. Friend talks about a reduction in nuclear weapons throughout the world. But other nations are trying to develop nuclear capability and there is a difficulty about making the non-proliferation treaty stronger and have verification in such countries.

    Defence Companies
    Mr. Nigel Griffiths: To ask the Secretary of State for Defence if he will list the five largest British defence companies providing defence equipment to the United Kingdom armed forces.
    Mr. Alan Clark: The Ministry of Defence does not maintain separate information on the size of companies, but the five largest British companies by turnover and providing equipment to the United Kingdom armed forces in 1989–90 were BP, Shell, ICI, BAT Industries and British Telecom.
    Mr. Griffiths: The Minister told the House on 9 January that issues of defence diversity were purely matters for the commercial judgment of the companies concerned. Does not he realise that the Government, private firms and public enterprise must all play a part in the profound changes that are affecting our defence industries? The Government cannot wash their hands and leave the matter purely to commercial considerations.
    Mr. Clark: The hon. Gentleman distinguished himself as being the only hon. Member who tried to get a whinge-up going on the occasion of the European fighter aircraft statement by my right hon. Friend last week. Therefore, I do not feel particularly disposed to join him in a philosophical discourse.
    Sir Jim Spicer: Does my hon. Friend agree that the question just put to him was absolute nonsense? Would not it be much better to talk about which companies are most important to our defence capability and, in that context, would he include Westland?
    Mr. Clark: Plainly, as our principal helicopter manufacturer, Westland will have an important role in the provison of helicopters for the armed forces in the next decade.
    Mr. Campbell-Savours: Will the Minister advise the five companies to which he referred to avoid getting into bed with SGL Defence Ltd., whose paid hack in the House of Commons is the Chairman of the Select Committee on Defence?
    Mr. Speaker: Order. The hon. Gentleman knows that he cannot say that. We dealt with the matter yesterday. The hon. Gentleman must not cast aspersions of that kind across the Chamber. Will he please withdraw that charge?
    Mr. Campbell-Savours: I am not aware of what I can withdraw. The Register of Members' Interests shows that the hon. Gentleman is a paid hack of SGL Defence Ltd.
    Mr. Speaker: Order. The phrase to which I object is "paid hack". That is not a parliamentary expression. [Interruption.] Order. This takes up a lot of time. Will the hon. Gentleman please withdraw the phrase "paid hack"? It is unparliamentary.
    Mr. Campbell-Savours: Would paid servant be in order, Mr. Speaker?
    Mr. Speaker: Order. The hon. Gentleman knows that he must not bandy words of that kind. I want him to withdraw that charge. If it was levelled against an Opposition Member, he would feel strongly about it. Withdraw it, please.
    Mr. Allen: On a point of order, Mr. Speaker.
    Mr. Speaker: Order. I am dealing with the hon. Member for Workington (Mr. Campbell-Savours).
    Mr. Allen: On a point of order, Mr. Speaker.
    Mr. Speaker: I am not dealing with another point while I am on my feet. I am asking the hon. Member for Workington to withdraw that phrase.
    Mr. Campbell-Savours: I am a little concerned that my credibility among my hon. Friends might drop if I withdraw it.
    Mr. Speaker: The hon. Gentleman should be far more concerned that his credibility in this place may be compromised. Withdraw the charge, please.
    Mr. Campbell-Savours rose—
    Mr. Speaker: Order. The hon. Gentleman does not need to consult his hon. Friends.
    Mr. Campbell-Savours: I withdraw it.
    Mr. Clark: One thing that I have never done is to tell anyone whom he should go to bed with.

    Infantry
    Mr. Speller: To ask the Secretary of State for Defence how many infantry battalions, both Regular and Territorial Army, are in existence at present; and if he will estimate the number of infantry battalions in 1995.
    Mr. Archie Hamilton: At present, there are 55 Regular and 41 Territorial Army infantry battalions in the British Army. The total number of battalions in 1995 will depend on the circumstances at the time. However, we recognise that the changing circumstances in Europe will have implications for the deployment and structure of our forces and we are therefore examining options for change.
    Mr. Speller: Does my hon. Friend agree that, as the next five years will show, the defence of the realm in the near future is more likely to depend on soldiers on the ground than on the intercontinental ballistic missile? Will he undertake to preserve the county infantry regiment with

    733
    its territorial battalion as the logical military bobby on the beat which we are likely to need in the face of increased urban terrorism?
    Mr. Hamilton: I accept my hon. Friend's view that we shall continue to need the capability to meet the terrorist threat in Northern Ireland, and that that capability will continue. However, we are now moving into a period when arms control agreements are likely to be signed and I cannot anticipate what the effects of those will be on the size and shape of the British Army.
    Mr. Dalyell: If a major in an infantry battalion were to get into any kind of dismissal or resignation difficulty, would his case be confined, like paragraph 19A of the report on Colin Wallace's case in relation to his statement, to a very few senior officials? Would that be the position?
    Mr. Hamilton: I cannot comment on what parallels can be drawn between the question and Colin Wallace.
    Mr. Patrick Thompson: When my hon. Friend is considering the future and number of infantry battalions, will he consider all the ways in which he can enhance the strength and quality of the volunteer reserves and Territorial Army? Will he continue to emphasise the importance of links between infantry battalions and their local area, county, and so on?
    Mr. Hamilton: I am grateful to my hon. Friend. We are well aware of the importance of links between infantry battalions and various parts of the country. If there are changes, there is no doubt in my mind that the role of the Territorial Army and the volunteer reserves will become more important—in terms of reinforcement plans in Germany, for example.

    Lance Missile
    Mr. Patchett: To ask the Secretary of State for Defence whether Her Majesty's Government will abandon their support for a replacement to the Lance short-range nuclear missile.
    Mr. Archie Hamilton: The Government were consulted on the decision not to proceed with the development of a follow-on to Lance, and we fully support it.
    Mr. Patchett: How do the Government justify their isolation in that respect? Will they stop blocking proposed cuts in short-range nuclear weapons at the next meeting of NATO?
    Mr. Hamilton: We are not blocking any SNF negotiations, because the alliance's position on that has not yet been agreed. But there is no question of our blocking it. As to going along with the decision not to have a follow-on to Lance, we must accept that over the past year the position in eastern Europe has radically changed and that the need for short-range nuclear systems is not what it was.
    Mr. Wilkinson: In these important considerations, will my hon. Friend bear it in mind that the alliance needs to maintain the capability rather than a particular category of weapons systems?
    Mr. Hamilton: That is absolutely right. I am sure that my hon. Friend agrees that we need to maintain the
    734
    flexibility of nuclear response. Therefore, I sincerely hope that a tactical air-to-surface missile will be introduced as part of that—[Interruption.]
    Mr. Speaker: Order. I ask the House to settle down, please.
    Mr. O'Neill: In view of the Minister's commitment to a mix of short-range nuclear weapons, will he say where they will be deployed and against whom, given the shortness of their range in Europe?
    Mr. Hamilton: It is obvious that the hon. Gentleman is addressing his question to the wrong person. Why does the Soviet Union have both a shorter-range and ballistic missile capability? As long as it has that capability, and the ability to administer nuclear weapons at different ranges, we must be able to respond and thus maintain the nuclear stalemate in Europe.
    Mr. Dickens: Does my hon. Friend agree that what distinguishes the Conservative party from all other parties is that we are not prepared to drop our guard in defence matters? It is very important to be able to counter-punch when necessary. Mr. Gorbachev may not always be there, and we must keep up our defences.
    Mr. Hamilton: My hon. Friend is absolutely right. We are entering a period of great uncertainty, and it would be foolish during that time to drop our guard.

    Merchant Ships
    Mr. Buckley: To ask the Secretary of State for Defence if he will make it his policy to use only British merchant ships for Ministry of Defence charter; and if he will make a statement.
    Mr. Neubert: It is the Government's policy to charter vessels on the basis of availability, suitability and cost—and, subject to those conditions, to give preference to British ship operators.
    Mr. Buckley: Is the Minister aware that British-owned and registered merchant shipping has slumped from 1,143 vessels to 336, and that that is the lowest figure this century? Is the hon. Gentleman prepared, as a Defence Minister, to sustain the British merchant fleet by accepting the recommendation that it should be the only fleet to which the Ministry of Defence gives charter work?
    Mr. Neubert: There has been a decline in the size of the British merchant fleet, but that decline has been slowing down and profitability has picked up in the past few years. Most forecasters see some scope for expansion in merchant shipping worldwide. In the meantime, the Ministry of Defence—we are obviously responsible for that aspect—is chartering vessels from the merchant fleet. In 1988–89 out of 60 that were chartered, 45 were British—75 per cent.—and in the 15 months from 1 January last year until the end of March this year, of the 40 vessels chartered 32 were British. Of the eight that were not British, five of the ships were not available on the British register.
    Mr. Leigh: What are the defence implications of the present shrinkage?
    Mr. Neubert: If the decline were to continue and to gather speed, there would be grounds for concern. At

    735
    present, we have no reason to believe that, with the different arrangements that we have made, the armed forces would not have their shipping needs met in time of war.

  PRIME MINISTER

    Engagements
    Mr. Worthington: To ask the Prime Minister if she will list her official engagements for Tuesday 15 May.
    The Prime Minister (Mrs. Margaret Thatcher): This morning I had meetings with ministerial colleagues and others. In addition to my duties in the House, I shall have further meetings later today. This evening I shall attend a memorial service for the late Lord Rothschild.
    Mr. Worthington: 1990 started in January—
    Hon. Members: Hear, hear!
    Mr. Speaker: Order. This takes up a lot of time.
    Mr. Worthington: 1990—[Interruption.]
    Mr. Speaker: Order. This is to the detriment of hon. Members whom I shall not be able to call.
    Mr. Worthington: This is now May—
    Hon. Members: Hurrah!
    Mr. Speaker: Order. Hon. Members know that this takes a lot of time from others who wish to be called.
    Mr. Worthington: Why is it therefore that the Department of Employment has not yet issued application forms to voluntary organisations for European social fund money that was available from January? Why is it that 11,000 training places and £25 million are put at stake in that way? Why is it that organisations such as the Scottish Association for Mental Health and the organisation for the disabled in Glasgow, Goodwill, have their existence endangered by the Government's failure to use European social fund money? Why is it—[Interruption].
    Mr. Speaker: Order. This is a very long question.
    Mr. Worthington: Why is it that every training scheme in this country is endangered by the incompetence and inefficiency of the Department of Employment?
    The Prime Minister: It would seem from what the hon. Gentleman said at the beginning of his question that there is still time for forms to be issued and for applications to be made for those forms. I remind the hon. Gentleman that the people who attempted to defeat training schemes in this country were the trade unions which fought the youth training scheme and the employment training schemes.
    Sir William Clark: To ask the Prime Minister if she will list her official engagements for Tuesday 15 May.
    The Prime Minister: I refer my hon. Friend to the reply that I gave some moments ago.
    Sir William Clark: Will my right hon. Friend today compare the actions of Hillingdon council and Merton council? Is she aware that in Hillingdon, which has just become Conservative controlled, the community charge is being reduced by £70 this year, whereas Merton, which has
    736
    just become Labour-controlled, has promised to double the charge next year? Does my right hon. Friend agree that in Labour-controlled councils in London the average community charge is £445, whereas for Conservative-controlled councils the figure is £294? Therefore, living in a Labour-controlled council area means an extra bill of about £3 a week.
    The Prime Minister: I am grateful to my hon. Friend. Hillingdon has increased the amount spent on education, the elderly and the handicapped. That proves that Conservative councils cost less and give much better service than do Labour councils.
    Mr. Kinnock: Does the Prime Minister acknowledge that last week's higher inflation figures were largely the result of higher interest and mortgage rates, higher rents and the poll tax? Will she confirm that that is the direct result of her policies? Does she therefore accept that she is not just the Prime Minister of inflation but the prime causer of inflation?
    The Prime Minister: I remind the right hon. Gentleman that local councils set the community charge. If local councils had not overspent to the tune of £3 billion, the retail prices index would be 1 per cent. lower. The biggest overspenders were Labour, so the right hon. Gentleman bears some of the blame.
    Mr. Kinnock: Is not that typical? The major components of the rise in inflation have been identified as the consequence of Government policies, yet the right hon. Lady is trying to blame everyone else. It is a wonder that she did not get the right hon. Members for Blaby (Mr. Lawson) and for Old Bexley and Sidcup (Mr. Heath) and everybody else into that excuse. If the Prime Minister is trying, as she says, to squeeze out inflation, why does she spend so much time cramming inflation in, with higher interest rates, higher mortgage rates, higher rents and the poll tax?
    The Prime Minister: And why was it Labour's policy to persuade Labour councils to set the community charge as high as they could get away with? Yes, the retail prices index would be very much lower but for the community charge. It would also have been lower if the community charge had had the rebates taken off it and if housing rent rebates had also been deducted from it, as they were in Labour's time.
    Mr. Mates: Will my right hon. Friend take this opportunity to congratulate the leaders of Fine Gael and the Progressive Democrats in the Republic of Ireland on their robust condemnation of their country's extradition laws? When she next meets the Irish Prime Minister, will she convey to him the utter disgust of most citizens of this country—Great Britain and Northern Ireland—at the fact that those who are wanted to answer charges for terrorist offences continue to be set free in the Irish Republic because the judges say that their offences are political?
    The Prime Minister: I agree with my hon. Friend. Extradition is a very important part of upholding the rule of law and ensuring that people are brought before the courts so that they can properly hear the case and pronounce them innocent or guilty.
    Ms. Short: To ask the Prime Minister if she will list her official engagements for Tuesday 15 May.
    The Prime Minister: I refer the hon. Lady to the reply that I gave some moments ago.
    Ms. Short: Why have the Government done nothing about paedophiles who are posing as social workers and seeking to molest children throughout the country—for example, by issuing passes to genuine social workers and health visitors? Recently I visited the vice squad at New Scotland Yard. The unit that deals with child pornography and other illegal pornography is so overworked that it is unable to follow up leads that would take it to people who are sexually abusing children. Will the Prime Minister take action to strengthen that unit?
    The Prime Minister: I do not accept what the hon. Lady says. She knows full well that every hon. Member is doing his or her level best to stop child abuse and to prevent people from molesting children or women. The police are deeply concerned. Many social services departments are also doing their level best to deal with the problem. I suggest that the Opposition are playing at cheap party politics.
    Mr. Yeo: To ask the Prime Minister if she will list her official engagements for Tuesday 15 May.
    The Prime Minister: I refer my hon. Friend to the reply that I gave some moments ago.
    Mr. Yeo: Without pre-empting the conclusions of the welcome review of the community charge that is being carried out, can my right hon. Friend assure the House that the Government are not contemplating the introduction of either a roof tax or a local income tax into any part of the United Kingdom? Can she further assure the House that—as reported in the newspapers—such matters will be considered by Ministers for longer that the two minutes that it apparently took for the roof tax to be endorsed by Labour Members?
    The Prime Minister: I assure my hon. Friend that the Government believe that we should not introduce either a roof tax or a local income tax. It would be the worst of all worlds to have a tax on capital values augmented by a tax on income. It would be a high tax for all citizens. We are considering modifications to the present community charge, and we shall be in a position to announce them in a few weeks. They would not include the problem of the structure of local authorities, which is for longer-term consideration.
    Mr. Ashdown: Does the Prime Minister agree with her Chancellor's forecast of two months ago that interest rates will be "materially lower" by the end of the year, or with the statement of the Chief Secretary to the Treasury two days ago that in the present dire economic circumstances any such forecast would be foolish? Which statement is right, and which is wrong?
    The Prime Minister: I do not think that the statements are as opposite as the right hon. Gentleman suggests. I agree with my right hon. Friend the Chancellor of the Exchequer, and I also agree with my right hon. Friend the Chief Secretary to the Treasury, whose message, which was never understood or acted upon by Opposition Members on either the Front or the Back Benches, was that we must always keep public spending firmly under control. That is the essence of sound policy.
    Mr. Janman: To ask the Prime Minister if she will list her official engagements for Tuesday 15 May.
    The Prime Minister: I refer my hon. Friend to the reply that I gave some moments ago.
    Mr. Janman: Is my right hon. Friend aware of a document, publicised today, that rules out statutory incomes policy and abandons the goal of full employment? Given the publicly stated support for low interest rates and high public spending by leading members of the Labour party, is my right hon. Friend surprised to learn that that document was prepared for the home policy committee of the Labour party?
    Mr. Speaker: Order. I do not think that the Prime Minister can have any responsibility for Labour party policy.
    Mr. Winnick: To ask the Prime Minister if she will list her official engagements for Tuesday 15 May.
    The Prime Minister: I refer the hon. Gentleman to the reply that I gave some moments ago.
    Mr. Winnick: May we take it from the answers given to my right hon. Friend the Leader of the Opposition that the one person who is not to blame for the high interest and inflation rates is the same person who has headed this wretched Administration for the past 11 years? Are we to take it that when those policies were decided upon she was simply absent, as she was when the leak occurred over Westland?
    The Prime Minister: The hon. Gentleman can take it from my replies that I am glad that it was not I who was responsible for the 26·9 per cent. inflation rate under Labour: it was Harold Wilson and the right hon. Member for Leeds, East (Mr. Healey).
    Mr. Favell: To ask the Prime Minister if she will list her official engagements for Tuesday 15 May.
    The Prime Minister: I refer my hon. Friend to the reply that I gave some moments ago.
    Mr. Favell: The hon. Member for Birmingham, Ladywood (Ms. Short) referred to the problem of people posing as social workers. It is becoming an increasing crime problem, with bogus gas and electricity men preying on pensioners and others. The problem is that identification can be bogus, too. Is not it time for another look at the possibility of a national identity card scheme?
    The Prime Minister: My hon. Friend has presented his own solution, but I think that he will agree that it is up to everyone to do all that they can to support the police in their inquiries, and to be on their guard to watch for people who may come round. They must check with their local social services departments at once if they have any suspicion. That is the only way to protect the children and the family.
    Mr. Leighton: To ask the Prime Minister if she will list her official engagements for Tuesday 15 May.
    The Prime Minister: I refer the hon. Gentleman to the reply that I gave some moments ago.
    Mr. Leighton: Now that there is only one member of her original Cabinet left—the rather forlorn and semi-detached deputy Prime Minister—why does not the

    739
    Prime Minister consider sacking him as well, and then she could shout "Bingo!" And if she were to take the message of the current public opinion polls and go, we could shout "Bingo!"
    The Prime Minister: We do not take quite such a light-hearted view of politics. We believe in having the best Cabinet, and that is what I have.

Nuclear Dumping (Dounreay)
3.30 pm
Mr. Alex Salmond: 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 decision today by the Secretary of State for Scotland to allow test boring for nuclear dumping at Dounreay."
This disgraceful decision—[Interruption.]
Mr. Speaker: Order. Will hon. Members who are not staying for this Standing Order No. 20 application please leave quietly?
Mr. Salmond: This disgraceful decision is made all the more offensive by the fact that, yet again, important announcements concerning Scotland have not been made to the House of Commons, and yet again the Secretary of State is hiding from Opposition Members. We need a debate to force the Government to defend their decision before Scotland's elected representatives. The real importance of the matter lies in the fact that, once again, the Secretary of State for Scotland has shown his contempt for the clearly expressed wishes of the Scottish people.
In granting planning permission to Nirex, the Government are overriding not only the decision of the elected representatives of Highland region but also the overwhelming vote against Nirex by the people of Caithness in the referendum last November. At that time, despite the attempt to buy votes with the deep pockets of Nirex and the claims that Caithness would be a soft touch for dumping, the people said no to Nirex by a majority of 3:1.
At that time, even Nirex claimed that the views of the people would be taken into account along with other factors when the Secretary of State reached his decision. In fact, today, neither in the brief statement from the Scottish Office nor in the letter to the Nirex lawyers, is there any mention of the views of the people of Caithness. They have been dismissed as irrelevant to the consideration of the planning commission. Given that the only reason Nirex is investigating Caithness is that it claimed public support for its plans, this is a display of breath-taking hypocrisy.
The Secretary of State may claim the fiction that test drilling for nuclear dumping is a separate matter from dumping itself, but nobody in Scotland is likely to be
742
fooled. The Government and Nirex are lining Scotland up to be Europe's No. 1 dumping ground for nuclear waste. As "Spitting Image" once noted, the Tory party seems to envisage an energy exchange between Scotland and England: we give England our oil and gas and England gives us its nuclear waste.
It has not escaped our attention that the Secretary of State for Energy was unwilling to allow the dumping of low-level waste in his constituency. But the Secretary of State for Scotland seems prepared to allow major waste dumping in Scotland.
The Secretary of State may wish to run away from the wrath of Scottish Members, but his party will not be able to avoid the political consequences of his decision today. The campaigns that will be launched against the proposals in Scotland, by the SNP and by Scotland Against Nuclear Dumping, will equal in strength—[Interruption]
Mr. Speaker: Order. May I take it that the hon. Member has finished? I was about to say that, in view of the fact that I had to interrupt him, I will let him have another half minute.
Mr. Salmond: We need a debate so that the arguments deployed by local councils and local people cannot be ignored by the Secretary of State for Scotland. We know the real dangers and problems associated with the deep-level storage of nuclear waste, the inevitable risk in the transportation of that material through Scotland and the potential damage to the core industries of the north of Scotland—fishing, farming and tourism—if the public perception of our clean environment is tarnished.
We need the Secretary of State for Scotland to explain his decisions to the Scottish people, and we should like him to do that from the Treasury Bench.
Mr. Speaker: The hon. Member for Banff and Buchan (Mr. Salmond) seeks leave to move the Adjournment of the House under Standing Order No. 20, for the purpose of discussing a specific and important matter that he thinks should have urgent consideration, namely,
"the granting of permission for test bore hole drilling at Dounreay."
I have listened with care to what the hon. Member has said, but, as he knows, I have to decide only whether to give it precedence over the business set down for today or for tomorrow. I regret that the matter he has raised does not meet the requirements of the Standing Order, and I therefore cannot submit his application to the House.

Points of Order
3.35 pm
Mr. Dick Douglas: On a point of order, Mr. Speaker.
Dr. David Clark: On a point of order, Mr. Speaker.
Mr. Speaker: Dr. David Clark.
Mr. Douglas: Why? I was before him.
Mr. Speaker: Order. I have called the hon. Member on the Front Bench.
Mr. Douglas: What about looking after minorities?
Mr. Speaker: Order. This is very out of character for the hon. Gentleman, who is a long-standing Member of the House. Dr. David Clark.
Dr. Clark: The House knows, Mr. Speaker, that you have repeatedly deprecated the fact that certain Ministers have made major announcements on matters of policy outside the confines of the House, thus allowing hon. Members no opportunity to cross-examine them. Have you noticed that there is a question on the Order Paper from the hon. Member for Richmond, Yorks (Mr. Hague) which was not there yesterday—in other words, it is a planted question—and that this morning the Ministry of Agriculture, Fisheries and Food and No. 10 Downing street have been briefing the press about that question, which asks whether the Minister
"has any plans to add to his previous statement on bovine spongiform encephalopathy in the light of recent events."
In view of the considerable concern outside the House, which has been exacerbated by the announcement in the last half hour that Tory-controlled Westminster city council has banned the use of British beef in school meals, I wonder whether you have received any application from the Minister of Agriculture, Fisheries and Food to make a statement in the House, and if not, whether you would use your good offices to prevail upon the Minister to come to the House at 7 o'clock to tell us his latest plans to tackle the problem.
Mr. Speaker: I see that there is a question on the Order Paper in the name of the hon. Member for Richmond, Yorks (Mr. Hague), but that is not a statement made outside the House; it is part of our parliamentary proceedings. I have not received any requests for a statement, but I remind the hon. Gentleman that there is a prime opportunity to put questions to the Minister on Thursday in Agriculture questions.
Mr. Bill Walker: On a point of order, Mr. Speaker. May I draw your attention to columns 692 and 693 of yesterday's Official Report? Can you confirm that the contents in these columns were relevant to the comments by the hon. Member for Falkirk, East (Mr. Ewing), and can you tell the House whether an apology has been received for the discourteous and appalling comments about the Chair last night?
Mr. Speaker: I of course study Hansard every morning when I have not been in the Chair, and I have not received any such request.
Mr. Max Madden: On a point of order, Mr. Speaker.
Mr. Douglas: On a point of order, Mr. Speaker.
Mr. Speaker: I will take Mr. Dick Douglas [Interruption.] Order. I call the hon. Gentleman to speak from where he was when I called him. It is a convention of the House.
Mr. Douglas: This is a convention. I have appointed myself the leader of my party.
Mr. Speaker: Order. I shall call the hon. Member when he goes back to his seat.
Mr. Douglas: In deference to you, Mr. Speaker—
Mr. Speaker: No more bandying words with me, please. When the hon. Gentleman goes back to his seat, I will call him.
Mr. Douglas: With great deference to you, Mr. Speaker, occupation of the Front Bench is a convention. I notice that the hon. Member for East Lothian (Mr. Home Robertson), who is about to replace me as a member of the Select Committee on Defence, is still sitting on the Front Bench.
My point of order is about the Select Committee on Defence. You will have noticed, Mr. Speaker, that, after many years as a member of the Select Committee on Defence, I am to be replaced by a member of the official Opposition. I make no quarrel—
Mr. Geoffrey Dickens: He has gone into retreat.
Mr. Speaker: Order.
Mr. Douglas: I am not going to be deflected from the point I wish to make. I recognise the rules, the obligations and the establishment in the House, but the establishment on both sides protects itself.
The Chairman of the Select Committee on Defence, for whom I had great respect in the past, has an interest in defence-related organisations. I have taken the view—the Chairman of the Select Committee on Procedure has written to me that it is a personal view, so I accept the onus of the fact that it is a personal view—that anyone appearing before a Select Committee of the House should have the understanding in his or her mind that the evidence that he or she gives should be used for the purpose of that Select Committee and for no other purpose.
That may be a personal view, but I innocently—perhaps naively—thought that the House would uphold that principle. I understand that the House, the Select Committee on Procedure and the Select Committee on Members' Interests do not necessarily take that view. The Chairman of the Select Committee—
Mr. Speaker: Order. What is the point of order?
Mr. Douglas: I am coming to the point of order. It is that no Chairman of a Select Committee of the House should hold interests which place that principle in jeopardy. I take the view that the interest of the Chairman of the Select Committee on Defence in defence-related companies places that principle in jeopardy. If that is not an issue for the House, I do not know what is.
Mr. Speaker: It is not a matter for me. [HON. MEMBERS: "Why?"] Well, the hon. Gentleman knows the route he should follow. He should make his strongly held views known to the Chairman of the Select Committee concerned. As to the first point that the hon. Member raised, I know that for many years he has been a valuable member of the Select Committee on Defence. It is not a matter for me that he has been taken off, although I may have my own regret about it.
Mr. Richard Holt: Further to the point raised by my hon. Friend the Member for Tayside, North (Mr. Walker) on column 692, Mr. Speaker. I was here during the debate. I have told the hon. Member for Falkirk, East (Mr. Ewing) that I intended to raise the matter this afternoon. If standards are to mean anything in the House, when your deputy is in the Chair, he must be afforded courtesy and protection. The hon. Member for Falkirk, East has every opportunity to apologise now. If he refuses, will you please order him to do so, Mr. Speaker?
Mr. Speaker: If representations had been brought to me by the First Deputy Chairman of Ways and Means, who is a stalwart character and, I think, well able to look after his own interests, I would certainly have done that. But no such representation has been made to me.
Mr. Harry Ewing: Further to the point of order. First, may I say that I am grateful to the hon. Member for Langbaurgh (Mr. Holt) for raising the point of order; he spoke to me earlier on the Terrace of the House. One of my great weaknesses in life is attractive company. I was so distracted by the absolutely beautiful and attractive company that he was keeping on the Terrace that I missed completely what he was saying to me. I am very grateful to him now that he has raised it as a point of order. That is more than I can say for the hon. Member for Tayside, North (Mr. Walker), who did not have sufficient decency or courtesy—or the good fortune to be sharing that attractive company. He did not, therefore, bother to tell me. I have know the hon. Gentleman since his pre-House of Commons days, so nothing about him surprises me.
If I felt for one minute that I was wrong in what I said last night—[HON. MEMBERS: "You were] I have no cause to apologise. I have a great advantage over you, Mr. Speaker, today of all days. I was here last night when the exchanges took place and you were not. I am perfectly satisfied that my attitude last night reflected my anger and the fact that I felt I had been wrongly treated, that the House had been wrongly treated and that the debate had been mishandled by the Chair.
Mr. Speaker: I will not comment on that. I have had a report from the Deputy Chairman of Ways and Means on the matter. As to the hon. Gentleman's—[Interruption.] Will he listen to me, please? On his first point, I hope that he will spend more time in the Chamber, where he will find plenty of attractive company.
Mr. Tam Dalyell: Further to the point of order of the hon. Member for Dunfermline, West (Mr. Douglas), Mr. Speaker. On 3 May, the hon. Member for Hampshire, East (Mr. Mates), the Chairman of the Select Committee on Defence, wrote a courteous letter to me
746
asking for an apology in relation to a question of mine—he said "allegation", but I think that it was in question form—and he sent you a copy of the letter.
Before we take any further action—and we feel that proceedings should be kept on the Floor of the House—some of us would like to know a great deal more about the issue. Is it not highly desirable that there should be time for a debate and for some kind of explanation? Will you use your influence with the Leader of the House to try to get the matter cleared up one way or another? It is not a matter for slogans or points of order; it is a deep issue of principle and should be resolved in a civilised way.
Mr. Speaker: I do not in any way disagree with what the hon. Gentleman has said. As he well knows, the Select Committee on Members' Interests is looking at this matter—
Mr. Douglas: It is not.
Mr. Speaker: —and I hope that we shall shortly receive a report about it.
Mr. Madden: On a point of order, Mr. Speaker. At 7pm yesterday, I sought on a point of order of which I gave notice to raise the case of 33 young Chinese, including a girl who is eight months pregnant, who have sought political asylum in Britain and who are now threatened by the Home Office with deportation to Panama where, undoubtedly they would be returned to mainland China with all the risks that that would involve. I am surprised that the Home Office and the Home Secretary did not seek to make a statement about the matter today. It is unprecedented for the Home Office to seek to deport without allowing an application for a judicial review of the refusal to be heard in the courts.
Nevertheless, I ask you now, Mr. Speaker, for advice. Would it be possible for us to raise the matter with the Home Office Minister who will speak on immigration changes tonight—at a late hour, I fear—in such a way that time is not deducted from the hour and a half which has been allocated for the debate on changes to rules and procedures? If that was possible, it would be welcome to all hon. Members who are concerned about the important implications of this extraordinary behaviour and decision by the Home Office.
Mr. David Winnick: On the same point—
Mr. Speaker: Order. Allow me to deal with the matter so that we can move on to the next business.
I can tell the hon. Member for Bradford, West (Mr. Madden) that it would not be within the scope of the debate on immigration rules to raise that matter. The debate deals with the imposition of visa requirements on citizens of Morocco, Algeria and Tunisia, except for those who are qualified as residents of the United Kingdom.
Mr. Michael Mates: Further to the point of order raised by the hon. Member for Linlithgow (Mr. Dalyell). While he and you, Mr. Speaker, were absolutely right in that the wider issue of Members' interests in general is a legitimate subject for debate—[HON. MEMBERS: "Thank you]—I have never denied it—the subject of the allegation made by the hon. Member for Linlithgow was specific and wild. Had there been the remotest scintilla of truth in it, it would have been shameful if I had been behaving in the way that the hon.

747
Gentleman alleges. He asked for an answer. He has had an unequivocal answer from my right hon. Friend the Secretary of State for Defence stating that the hon. Gentleman's allegations are totally without foundation. It was on that narrow point that I consulted you, Mr. Speaker, and I have written to the hon. Member for Linlithgow asking him to withdraw his wild allegation, which received much currency, and also to apologise for the implications behind his allegation.
Mr. Dalyell: Further to that point of order, Mr. Speaker. This is part of the trouble. It was not an unequivocal answer. It was the kind of answer that was about as unequivocal—if I can put it this way—as the answers that I have received on Colin Wallace. It was that kind of Ministry of Defence answer from the Secretary of State which, it' one looked at it very carefully, was very ambiguous. That is part of the trouble and why we need a debate.
Mr. Speaker: That is just the point. I think that we should best leave the matter to the Select Committee.
Mr. Douglas rose—
Mr. Speaker: Order. I am on my feet.
Mr. Douglas: I understand that, Mr. Speaker.
Mr. Speaker: Order. We should best leave the matter to the Select Committee on Members' Interests, which is looking into that very matter. I call Mr. Winnick.
Mr. Winnick: I wonder whether I can remind you, Mr. Speaker, that last June unanimous concern was expressed in the House—there was no dissent—about the crushing of the pro-democracy movement in China. We paid tribute to the people who were fighting in a terrorist dictatorship for the principles in which we believe. [HON. MEMBERS: "What is the point of order?"] My point of order is simply this: following the point made by my hon. Friend the Member for Bradford, West (Mr. Madden), there is undoubtedly much concern that the people to whom my hon. Friend referred may well be genuine political refugees. There is a question whether they would be subject, if they were here, to judicial review. That has been denied them at the moment, and there is a great possibility that they simply will not be in the United Kingdom when the time comes. Is there not an inconsistency in that, last June, we paid tribute to the courage of those people in China while a year later in Britain we are denying some of those people the right to political asylum?
Mr. Speaker: That may well be. However, the hon. Gentleman will have to take up that matter with the Minister concerned. As I understand it, those people arrived here on Canadian visas.
Mr. Allan Stewart: Further to the point of order raised by my hon. Friend the Member for Tayside, North (Mr. Walker) and by the hon. Member for Falkirk, East (Mr. Ewing), surely the situation cannot be allowed to stand. Yesterday evening, the hon. Member for Falkirk, East said, among other things:
"You seem to make up the rules as you go along, Mr. Deputy Speaker".—[Official Report, 14 May 1990; Vol. 172, c. 692.]
The hon. Gentleman has refused to apologise for that attack on the Chair, which was made without a thread of justification. One fully accepts that he may have been in an excitable frame of mind last night, but he looked perfectly normal this afternoon. Surely the hon. Gentleman must apologise for a completely unjustified attack on the Chair.
Mr. Douglas rose—
Mr. Speaker: Order.
I say again that I discussed the matter with the First Deputy Chairman of Ways and Means this morning. He did not feel that there had been any slur or attack on him. [Interruption.] That is what he told me. His view was that he had dealt with the matter in an adequate and proper fashion, and I am sure that he did.
Mr. Douglas: Further to that point of order. Mr. Speaker.
Mr. Speaker: Order. I do not know whether it will be helpful.
Mr. Harry Ewing rose—
Mr. Speaker: Is the hon. Member now going to say something helpful?
Mr. Ewing: I just want to say, Mr. Speaker, that I am grateful that you have put it on the record that the First Deputy Chairman of Ways and Means, unlike irresponsible Conservative Members, did not think that there was anything untoward about the exchange last night. I am grateful also to the hon. Member for Eastwood (Mr. Stewart), who described me as being excited last night, but perfectly ordinary this afternoon. That is more than I can say for him. He was incompetent last night and even more incompetent this afternoon.
Mr. Douglas: Further to that point of order, Mr. Speaker.
Mr. Speaker: No. I remind the House that we have a very long day ahead of us, including the debate on the immigration rules. I propose to hear the ten-minute Bill—the Control of Toxic Waste Residues Bill. I call Mr. Frank Cook.

Control of Toxic Waste Residues
3.54 pm
Mr. Frank Cook: I beg to move,
That leave be given to bring in a Bill to protect the environment by controlling the manufacture and by regulating the disposal of toxic chemical waste residues; and for connected purposes.
I am as aware as most hon. Members that the times when ten-minute Bills have made it to the statute book are about as rare as rocking horse droppings.
My proposals can be described as two-pronged. First, I am seeking to achieve the agreement of the Secretary of State for the Environment that he should set a timetable within which chemical manufacturers should design new chemical plants with toxic neutralising units of an appropriate character and capacity at the end of each production chain. Secondly, I am asking the Secretary of State to require chemical manufacturers to fit such units on existing plants, where practical.
That twofold approach would deal with the existing problem of the stockpiles of toxic residues and go some way towards resolving the problem of the production of further toxic waste later. The irony of the dilemma with which society is faced is that, if we had neutralising units within the processed chain, which would render the residue non-toxic before it became a residue, no-one would be worried about it, whether the neutralising unit was some form of incineration unit or simply a chemical process. The problem arises when we allow a residue to become toxic and then refer to it as a toxic residue. When attention is drawn to that, people's anxieties are raised. That is why it is necessary to design new plants in such a way as I have described. That is possible, and should be encouraged. The Treasury should give some incentive for units to be retrofitted to existing plants if they are young enough.
The Bill also seeks to contain toxic wastes within the region in which they are generated. That means that each region that derives an economic benefit from the creation of the chemicals that are produced in making the waste would be saddled with the responsibility of disposing of the waste thus created. It also means that we could dispense with the necessity of transporting toxic waste from one region to another.
A further advantage of adopting that course of action would be that toxic wastes—the residues that give rise to
750
the anxiety—would be dealt with by communities that know the character and behaviour of the chemical compounds that are causing worry. Those communities know best how to draw up a disposal specification and how to ensure that that specification is adhered to stringently and responsibly.
It may not be necessary to deal with such toxic waste residues by incineration, but because many of the toxic residues come into existence through some form of heat application in a technical chemical process, many can also be disposed of by the application of heat. Incineration is a proven, safe and effective system for some chemicals, when carried out at appropriate temperatures under adequate pressure, in suitable plants, by qualified staff, using correct procedures, under proper supervision, applying constant monitoring in complete accordance with the predetermined approved specification to which I have referred.
I realise that this is an altruistic proposal and that it is pie in the sky, but I offer the Bill to the House as a means of discussing an issue that is causing great disquiet throughout the country and beyond our national borders. I offer it as a means of aiming at something better than what we already have, which is precious little.
For a start, we do not even know the size and character of the problem. I give credit to the Government, because I know they are conducting a survey. However, I do not think that it will go far enough. The audit should be more far-reaching and more specific about the nature of the chemicals and how they are dismantled. The adoption of my proposals would go some way towards meeting the requirements of society today, and I commend them to the House.
Question put and agreed to.
Bill ordered to be brought in by Mr. Frank Cook, Ms. Marjorie Mowlam, Mr. Ted Leadbitter, Ms. Joyce Quin, Mr. John Cummings, Ms. Hilary Armstrong, Mr. Don Dixon, Ms. Joan Ruddock, Mr. Tony Lloyd, Ms. Joan Walley, Mr. David Winnick and Mr. Gerald Bermingham.

Control of Toxic Waste Residues
  CONTROL OF TOXIC WASTE RESIDUES
  Mr. Frank Cook accordingly presented a Bill to protect the environment by controlling the manufacture and by regulating the disposal of toxic chemical waste residues; and for connected purposes: And the same was read the First time; and ordered to be read a Second time upon Friday 6 July and to be printed. [Bill 140.]
Orders of the Day
  Finance Bill
  (Clauses 3, 9, 10, 20, 23, 25 and 68)
  Finance Bill

    Considered in Committee
    [MR. HAROLD WALKER in the Chair]
    Ordered,
    That the order in which proceedings in Committee of the whole House on the Finance Bill are to be taken shall be Clause 68, Clause 9, Clause 10, Clause 3, Clause 20, Clause 23 and Clause 25—[Mr. Lilley.]

    Clause 68

      CONTRIBUTIONS TO TRAINING AND ENTERPRISE COUNCILS
      4.2 pm
      The Financial Secretary to the Treasury (Mr. Peter Lilley); I beg to move amendment No. 34, in Clause 68, page 55, line 34, after 'council', insert
      'or a local enterprise company'.
      The Chairman of Ways and Means (Mr. Harold Walker): With this it will be convenient to take the following amendments; No. 35, in Clause 68, line 49, after 'council', insert 'or company'.
      No. 36, in Clause 68, page 56, line 17, at end insert
      'and

      (b) "local enterprise company" means a company with which an agreement (not being one which has terminated) under which it is agreed that the company shall carry out the functions of a local enterprise company has been made by the Scottish Development Agency, the Highlands and Islands Development Board, Scottish Enterprise or Highlands and Islands Enterprise.'.

      Mr. Lilley: In line with the statement on Budget day, we announced last week that the new tax relief proposed in the clause for business contributions to training and enterprise councils in England and Wales will also be available for contributions to local enterprise companies in Scotland. The amendments simply achieve that result. They provide that the relief for contributions to LECs will be on the same basis and for the same period as that for TECs. I hope that they will be welcomed by all hon. Members. As TECs and LECs will have many similar functions, it is clearly right that the same tax relief should be available to both.
      Mr. Gerald Bermingham: I apologise for the intrusion into the Minister's brief opening remarks, but will he reassure me that tax relief granted in respect of investments in training and welfare will extend beyond what is considered to be the normal business sector, for example into professions and other such spheres, so that the broadest possible tax relief is given to training and investment in those sectors?
      Mr. Lilley: I reassure the hon. Gentleman that there is no discrimination between different sectors of industry. As long as the contribution meets the conditions of the clause, whether it is in England, Wales or Scotland, it will attract relief.
      Amendment agreed to.
      Mrs. Margaret Beckett: I beg to move amendment No. 21, in page 55, line 45, leave out 'if' and insert 'to the extent that'.
      The Chairman: With this it will be convenient to take the following amendments: No. 19, in line 47, leave out 'of any kind whatsoever' and insert
      'in money or money's worth.'.
      No. 20, in line 49, at end insert
      'provided that neither this subsection nor subsection (4)(b) below shall apply where the benefit in question comprises the training of employees of the person making the contribution and that training is wholly or mainly for the purpose of enabling those employees to better perform the duties of their employment.'.
      Mrs. Beckett: As a first priority in the debates on the Finance Bill, we sought to examine the clause that confers tax relief on contributions to training and enterprise councils. The Opposition deliberately intended to make that the first issue we raised because we share the almost universal view that good training and retraining, for employed and unemployed alike is not only beneficial and desirable for the individual, but vital for a strong economy.
      We seek by means of the amendment to probe the Government's intentions in the clause and perhaps even to improve the Bill. We do not oppose the clause itself but we believe that the more one studies it the more it throws into sharp relief the defects and inadequacies of the Government's training programme—if one can dignify it with such a name.
      The background to the clause and to our amendment is also one of almost universal agreement about the terrifying inadequacies of the scale of training in this country and of the Government's approach to that training, not to mention the inadequacies—in the view of the Opposition —of such solutions as the Government propose.
      It is rather difficult to tell to what degree the Government share our concern about the state of training, that state being identified by the fact that between 65 and 69 per cent. of 16 to 19-year olds are in training in this country, whereas in Germany more than 90 per cent. are, in Belgium more than 80 per cent. are, and in the United States and Japan similar figures obtain. The same imbalance applies to specific industries which need crafts-people to bring them up to strength.
      We thought that the Government shared this view—all the more so because on 6 December the former Secretary of State for Employment, the right hon. Member for Sutton Coldfield (Sir N. Fowler), said that Britain's training position was "mind-boggling" and because in Employment News a few months ago the word was that
      "we have a mountain to climb."
      The former Secretary of State set targets for training: that by the end of 1992 no young person should be employed without training; that two thirds of them should get to National Council for Vocational Qualifications level and a quarter to level 3; and that by 1995 all of them should be at least at level 2, and half at level 3. He went on to say:
      "Unless we set outselves these kinds of stretching targets we shall not meet the need for upgrading and multi-skilling in a decade of continuing and rapid change."
      The new Secretary of State, however, said in March:
      "My predecessor offered a framework of objectives for training … Progress … depends … on action by

      753
      organisations outside Government; they cannot be specific Government targets."—[Official Report, 8 March 1990; Vol. 168, c. 804.]
      Moreover, the consistent theme of the new Secretary of State has been not the great need for improved training but how well we are doing. That is a substantial shift of emphasis. As I said a few moments ago, that shift of emphasis is not universally shared. The CBI said a few months ago:
      "Britain's skill levels are lower than those in most of its competitor countries and the gap is widening."
      The head of the Training Agency, Roger Dawe, said:
      "At every level we are towards the bottom of the training league table, whether it is in education, youth training, higher level skills training or in management."
      A most interesting recent edition of "The Money Programme" had a number of comments to make on our training policies. On the programme, the chair of the Blackburn TEC said:
      "The situation is desperate. We are falling further down the ladder."
      Apart from the move away from targets, the new Secretary of State's second, equally alarming, shift of emphasis was to be found in the words that I have already quoted:
      "Progress on meeting the objectives"—
      for the development of training—
      "depends primarily on action by organisations outside Government; they cannot be specific Government targets."—[Official Report, 8 March 1990, Vol. 168, c. 804.]
      It seems to us that the Government are in terrible danger of repeating a mistake that they have made in other areas. The one that always springs to mind is community care. It is the mistake of picking up a perfectly reasonable policy which is in itself a good idea—in this case the idea of encouraging employers to make greater efforts to provide training—and using it as an excuse to shuffle off that part of the responsibility for the policy that properly belongs to Government and use that transfer as an excuse for cuts. Therein lies the danger, and it is one that the Government are running in community care, of discrediting the whole of a policy that might otherwise be acceptable.
      On the first occasion on which I met a senior business man who was involved in the early stages of setting up TECs, he talked about his enthusiasm for the idea. He spoke about the challenge of the needs of training and of the way in which he and his colleagues hoped to be able to begin to tackle it. However, he went on almost immediately to say anxiously that, although he thought it was a good idea and that he was looking forward to being involved, he hoped that the Government did not intend to transfer the entire responsibility for training to the shoulders of private industry.
      That concern is widely shared and was well expressed in the edition of "The Money Programme" to which I referred. One of the people interviewed said:
      "Somebody has to do it. I do not think we are necessarily the best but there is no one else."
      That was a sad commentary on that person's view of the Government initiative. However, there is still a good deal of enthusiasm in some quarters for the TEC initiative, just as there might still be some enthusiasm for the intention behind the clause if the Government had not pulled the rug from under TECs by taking away with one hand what they seemed initially to be giving with the other. I refer, of
      754
      course, to the cuts made by the Government in the support from public funds that were previously allotted to training. In a sense that was the unkindest cut of all and it was made without consultation with those on whom the burden of greater responsibility would inevitably devolve.
      There is almost no doubt that, for most of those involved in TECs, the cut in funding was a devastating blow. They were also shattered when it took place without consultation and dismayed at the timing. Even as they warmed to their task, they were already expressing concern about the restrictions placed on the flexibility that they hoped to use to develop training and to meet the training needs in their areas. They expressed the view that reductions in scope followed directly from their duty to run the existing Government programmes of employment and youth training while their initial funding seemed to be too restrictive. It did not offer the flexibility to go further and bring in new initiatives in which they were particularly interested.
      The decision substantially to cut funding has undoubtedly created immense disillusionment. In its economic report in April, the Employment Institute said that the cuts in funding are visible every year, beginning in 1988–89 with a real terms cut of 9 per cent. It was 11 per cent. in the estimate for 1989–90 and there is to be a continuing series of percentage cuts in the years ahead. The institute draws attention to the fact that, between March 1989 and March 1990, £500 million was cut from the funding of TECs.
      Apart from that overall and substantial cut, individual industries are seeing the impact on the way in which they operate. I quote again from "The Money Programme" in which reference was made to the abolition of the electrical contracting industry board, its replacement by a voluntary body, and then Government money being cut in terms of the amount per head. An industrialist appearing on the programme said:
      "It baffles me sometimes, the inconsistency of policies. Government can have a policy of encouraging and then the next minute, a bolt from the blue, cuts in funding."
      Mr. Alan Bartlett of the Association of British Chambers of Commerce said:
      "I understand what the Government are trying to do but the general feeling is that it was not appropriate for it to turn its funding taps off long before most employers had been persuaded to turn their investment taps fully on."
      An editorial in the Financial Times said:
      "The Government are right to argue that industry should spend more on training, but it is sending the wrong signals by sharply cutting its own spending just as TECs are trying to mobilise support."
      The Government's usual excuse is that those cuts in training are justified because unemployment has been falling. Leaving aside, if one can, the fact that that fall is likely shortly to be reversed, not only have the Government cut those substantial sums, but they have cut funding per head. Even though the numbers are smaller, funding is less per head in every sector of training that the Government are in any way supporting—in employment training for the long-term unemployed, in youth training and even in training for the employed or for people such as the disabled.
      4.15 pm
      Nor will the clause, even amended, do much to redress the balance. The National Council for Voluntary Organisations estimated from its survey the impact of what is taking place. Again, it identifies the fact that in its

      755
      view—after all, it is a training provider—employer contributions would have to treble to make good the fall in Government funding for employment training alone.
      It would be interesting to know—I hope that the Financial Secretary will be able to tell us—just what impact the Government expect the clause to have. I am sure that most hon. Members will be aware that, in the Red Book, the entry for this clause is marked with an asterisk, showing that it is of insignificant proportions, which I think usually means that it is expected to be less than £3 million. That is against cuts of at least £500 million which I have already identified.
      Let me give a final quote from "The Money Programme":
      "If the cuts prevent us from doing something worthwhile, most of us will think it is time to go. We will give up trying to persuade the others."
      That is a good employer who is concerned about training and who is prepared to give up time which, as we all know, is money, to try to promote training; to do the very thing that the Government want and which the Government are claiming to encourage. Such employers are now saying that they are prepared to give that time to try to encourage others to train, but they are not prepared to do so if the Government pull the rug from under them. Even as it stands, the clause is somewhat restrictive, whether intentionally or otherwise.
      The Financial Secretary will recognise, as I expect will hon. Members, that tax deductions are already available for training. The scope will be a little greater because of the impact of the clause, but there will not be a vast change. Under section 84 of the Income and Corporation Taxes Act 1988, a deduction is available to be used for the purposes of technical education at universities and similar institutions. In sections 588 and 589, there is already a deduction for the cost of retraining employees, although with limits, and elsewhere, in section 74 under the general rules for training deductions and section 75 under expenses management, there is provision for some tax deduction.
      We presume that most TEC contributions by an employer would be allocated to the local initiative fund, where the greatest flexibility exists in the operation of the TEC and where the activities are most likely to be tailored to the needs of local industry. Again, it is likely that existing law would have given a deduction for some part of the contribution and, although the relief is a little greater, it is not as generous a relief as some hon. Members might have assumed when the Chancellor announced it.
      We are particularly concerned about clause 68(3), which says that the provisions identified in subsection (1) do not apply in relation to a contribution if he—the person making a contribution or an associate—
      "receives or is entitled to receive a benefit of any kind whatsoever for or in connection with the making of that contribution".
      We interpret that as meaning that even the smallest benefit of any kind, from anyone, will result in the whole contribution being disqualified for the purpose of tax relief. We share the Government's wish to make effective anti-avoidance law, but that provision appears to go too wide. I shall explain why that is so.
      As clause 68 is worded, if a TEC agreed to train local youngsters in word processing, say, and offered free places on such a course to the employees of a particular company that had made an annual contribution of £100,000 to that
      756
      TEC, because the company was receiving a benefit from those free places, it could, as a result of its past support, lose £35,000 of tax relief on its current year's contribution.
      If clause 68 really means what it says, if a TEC offers contributors free access to its video production facilities, those companies might lose their right to tax relief—even though they might seldom, if ever, use the facilities.
      Amendment No. 21 seeks to deal with some of those issues. Clause 68(4) says that, where relief has been given and a benefit has subsequently been received, the value of that benefit shall be chargeable for tax purposes. That implies that the Government intended in subsection (3) that only the amount of the contribution equal to the value of the benefit should be denied relief. Amendment No. 21 seeks to deny relief not if a benefit has been received but only "to the extent that" a benefit has been received. We hope and believe that that was the Government's intention.
      Amendment No. 20 raises the question of whether the provision of training for a contributor's employees should be regarded as a benefit. It seems to us that it should not be so regarded, and should not result in the employer losing tax relief. If the contributing company had incurred training costs, they would have been tax deductible. If the excess of the contribution over the training costs had been paid to the TEC as a no-strings contribution, it seems that, under clause 68, tax relief would have been given. We see no reason for a different rule applying if the whole sum is given to the TEC and then it provides employee training.
      Amendment No. 19 concerns a narrower issue. We understand that the Inland Revenue may be concerned in cases where a company enjoys a tax deduction by contributing a certain sum of money and is then refunded it in a tax-free form. If that is the intention of subsection (3), it can be narrowed by applying it only if the contributor receives the benefit in cash or in money's worth from the TEC, leaving intangible benefits such as the use of facilities, advertising support, and so on, untouched.
      I refer finally to a possible drafting error, on which we have not tabled an amendment. I do not expect the Minister necessarily to answer the point today, but perhaps he will consider writing to me. We are concerned about interaction between subsections (1) and (2). Subsection (1) specifies that
      "the contributions may be deducted as an expense in computing the profits or gains of the trade"
      and subsection (2) refers to any such contribution
      "made by an investment company"
      being deductible as a management expense. Again, it appears that expenditure will not be allowable as a tax deduction under subsection (1) because it is not made by a trader for the purposes of his trade. It appears to deny the relief that subsection (2) seeks to give. If contributions are allowable under subsection (1), why is subsection (2) needed in addition?
      It may be that the intention is to interpret subsection (2) as it is meant to be interpreted—but we are concerned whether the clause as drafted gives effect to the Government's intentions. Perhaps the Financial Secretary will give us an assurance that if, on re-examination, the clause is found to be defective in that respect, it will be remedied by the Government later in the Bill.

      757
      The Opposition do not oppose the clause, but the issues that it highlights expose the Government's short-term and short-sighted approach and the weakness of their case as regards the provision of training.
      The Government seem to recognise no interest wider than that of the individual, which is perhaps a practical expression of the Prime Minister's view that there is no such thing as society. The Government seem to be seeing no interest wider than that of the individual employer or the group of employers and others from the locality who share representation on the training and enterprise councils. That may be the Government's view, but employers do not believe that—they have more sense. It is not the employers but the Government who are charged with the duty of defending the public interest in training, and employers recognise that.
      Opposition Members commend the amendments to the Committee because they represent a small improvement to a flawed policy, but they do not affect the fact that the Government's overall policy and intention is being defeated by their actions and mistakes, and that the Bill makes only a minor contribution to our substantial training needs.
      Mr. Ian Gow: I shall take up some of the words which have flowed from the lips of the hon. Member for Derby, South (Mrs. Beckett) when she quoted my right hon. Friend the Prime Minister as having said that there is no such thing as society. I am not sure of the context in which the hon. Lady suggests that my right hon. Friend made those remarks.
      Mr. D. N. Campbell-Savours: She did say that.
      Mr. Gow: Yes, but I am not sure of the context in which, according to the hon. Lady, she made that assertion.
      I shall begin my remarks by quoting with approval, what a former Conservative Prime Minister said at a St. George's day dinner. Stanley Baldwin started his speech by saying:
      "The responsibility for progress rests not only with the Government but upon evey man and woman in the country."
      That theme seems to underline the approach of my right hon. and hon. Friends on the Treasury Bench to training responsibilities.
      The clause grants tax relief for the current year which did not exist for the past year in respect of contributions made to training. The hon. Member for Derby, South made it clear that the Labour party would not oppose clause 68. She said perfectly properly that her amendments are probing amendments. The hon. Lady, the Labour party and I think even the two representatives of the once-mighty Liberal Party will not oppose clause 68. Therefore, the issue before the Committee this afternoon is whether the clause is an improvement upon the law which existed hitherto or whether the Government should go further, as the hon. Lady believes. She believes that the Government—which means her fellow countrymen and mine—ought to make further direct contributions towards training. My right hon. and hon. Friends on the Treasury Bench believe that there should be a partnership between the Government and industry for responsibility for training.
      I welcome clause 68 because it will give additional tax relief and additional encouragement to those who have a
      758
      responsibility for training—the employers. The responsibility for training rests upon employers and management. That responsibility cannot be foisted on the Government. As clause 68 provides further encouragement and additional fiscal incentives to managers and employers to carry out their responsibilities, it is a significant improvement upon the law up to 5 April 1990.
      The hon. Member for Derby, South made a compelling speech, but her philosophical proposition seemed to be that the responsibility for training rests exclusively with the Government.
      Mr. Paul Boateng: Nonsense.
      Mr. Gow: That was the impression that I formed when I listened to the hon. Lady's speech. Her proposition is, I believe, misconceived. If, therefore, she presses her amendment to Division, we shall resist it.
      Mrs. Beckett: If I gave that impression, let me correct it at once. The Opposition do not believe that the Government have the sole responsibility for training; we believe that it is the responsibility of many employers to train. Therefore, we regret the fact that so many employers in this country do not do so, but instead poach those who have been trained by others. We believe also that the partnership to which the hon. Gentleman referred is perfectly proper and that one side of that partnership—the Government side—is being dissolved.
      4.30 pm
      Mr. John Battle: A partnership is crucial, and many believe that the Government are not keeping to their side of the deal. We have to consider the matter in the context of the approaches to the Treasury by the spending Departments. We have read in the press that the spending Departments have put in bids worth £12 billion and that the Chief Secretary to the Treasury has said that he will be hard-pressed to pay out the £3 billion that is needed to cushion the effects of the poll tax if reductions are not made in the budgets of other spending Departments.
      It is interesting to consider which Departments would bear the brunt of those reductions. It was suggested yesterday in the Financial Times that one of the budgets that would be reduced in an attempt to cushion the effects of the poll tax was the training budget. Therefore, it is fair to question the Government's real commitment to properly funded training.
      The Government have cut this year's training budget by £190 million. Spending on the Department of Employment's main training programmes will be £212 million less than in 1988–89. The Government are quick to tell us at Question Time that that is due to the fall in the number of young people, but that is not the reason for the reduction. Spending per head on youth training has been cut by £8 a week.
      It is widely believed that the training and enterprise councils have been set up by the Government in an attempt to get training done privately and to keep it in the background. They are not interested in ensuring that it is properly supported by a partnership between the state and industry. It is an attempt by the Government to shuffle off their responsibilities and hope that the private sector will pick up the tab, and at the same time leave the Government the leeway to carry through further reductions. That is the prevailing view, even within the TECs.

      759
      The TECs were relatively unpopular and hard to get off the ground when they were first introduced. The tax reductions and concessions in clause 68 are an attempt to increase the incentives—a bigger carrot—in the hope that enterprises will continue to contribute to TECs on a scale that will make up for Government reductions. It is clear that the initial enthusiasm of some employers is waning, and the scheme needs a boost.
      That is the purpose of the clause. The promised levels of public funding for TECs have not been forthcoming, and participating employers are becoming reluctant to contribute to TECs when they see that the public budget—the Government's commitment to that partnership—has been cut back, squeezed and reduced.
      I hope that the Financial Secretary can assure the House that the Chief Secretary to the Treasury will not cut the Department of Employment's training budget, and that training will not pay the price for the cushioning of the poll tax. Already the Employment Institute is calling for
      "an increased public contribution to each TEC."
      Mr. Russ Mason of the Thames Valley TEC has said that TECs are a
      "picture of inadequate funding, particularly in the start-up year".
      That is precisely the year when they need guarantees of investment and income.
      Dorset TEC has had its funding for 1990–91 cut by 18 per cent. As a result, it has been forced to cut its programmes. While the Labour party would be keen and eager to back genuine training that is properly supported in a partnership between Government and business, the Government must ensure that they underpin their commitment to that partnership rather than undermining it. We know that Secretaries of State and other Ministers are in the background, bidding with the Treasury to ensure that their Departments' budgets are not reduced in these difficult times.
      The TECs have not been built on principles of partnership, or democratic principles; there are no employee representatives on their boards. There is no policy underwriting to ensure that the special needs of people with disabilities, women—whom the Government now claim that they are eager to bring into the work force—and ethnic minorities are provided for in the TECs. Positive action and programmes for such people would be welcome. They would turn the Government's training policies into genuine training policies. Such policies require a high level of commitment through public funding: that is part of the partnership.
      I hope that the Government will accept their responsibility. It would be nonsense for them to suggest that TECs are providing employment opportunities for all when they cannot do that as their budgets are being persistently cut and undermined.
      Mr. James Wallace: Other speakers, especially the hon. Member for Derby, South (Mrs. Beckett), have already pointed out that we are debating training at a time when our provision is at a low ebb compared with that of our competitors. That can be illustrated by reference to statistics. Only about 32 per cent. of young people in Britain stay on at school until they are 18, compared to some 76 per cent. in the United States and 95 per cent. in Japan. Figures show that about 39 per cent. of 16 and 17-year-olds are currently in full-time education; 9 per cent. are unemployed; 24 per cent. are on youth training schemes; and 30 per cent. are in
      760
      employment. Those in employment often receive no training. A recent survey suggested that only 5 per cent. were on day release schemes. So we start at a competitive disadvantage compared with those with whom we shall shortly be competing on even more equal terms once the single market becomes further established.
      Against that background, the Government's response in recent White Papers has been to set up TECs in England and Wales and local enterprise companies in Scotland. Just as they are getting under way in England and Wales and are about to be inaugurated in Scotland, the Government introduce the new clause, which my hon. Friends and I will not oppose. But what the Government are giving by way of tax incentives they are taking away through the cuts that are about to take place in the training budget.
      Hon. Members who, like me, are not members of the Select Committee on Employment will have seen recent televised exchanges in that Committee with the chairman of the Training Agency who, when put under pressure, eventually admitted that, with training already in a poor state in Britain, the amount actually to be spent on training, once one removed all the frills, would be cut. I understand that the youth training budget will be cut by 25 per cent. over three years, which in real terms approximates to 45 per cent.
      The Financial Secretary will probably reply by referring to the demographic changes that are taking place and the fact that there are fewer youngsters in the age group to which youth training applies. But as we accept that more should be spent on training, we have a wonderful opportunity to take advantage of those demographic changes and increase in real terms the amount that we spend on training.
      Mr. A. J. Beith: My hon. Friend may recall that, when the Treasury and Civil Service Select Committee examined witnesses on that point, they claimed that expenditure could be reduced on training because there were now fewer people unemployed, which, apart from being a doubtful prophecy for the months ahead, suggests that the Government's view is that training is necessary only when people are out of work. That represents an extraordinary failure to grasp the training problems that we face.
      Mr. Wallace: My hon. Friend, who is a distinguished member of that Select Committee, makes a valid point to which I shall return. The TECs and LECs are about to be given a remit for training, a substantial part of which is taken up with their being administrators of national training schemes—youth and employment training—which, in different parts of the country and in their own ways, no doubt have some merit, but which go nowhere near to addressing the real problems of training, in particular the need to train those who are already in employment.
      We must consider the effects of the cuts in training expenditure. Figures I was given last week by the Shetland Islands council show that, in the current year, there will be a 10 per cent. cut there in training. About £21,000 per annum will be withdrawn from training in Shetland. I understand that a similar cut will apply in the Orkney Islands council part of my constituency. That is the first of a number of instalments, and further cuts are to take place next year.

      761
      Although cuts are taking place and new contracts are coming into operation at the end of this month, there has been precious little consultation up to now about how the transition is to be achieved. One wonders, with the Government putting greater emphasis on TECs and LECs in the provision of training, what role the Government see for local authority involvement in training.
      4.45 pm
      In my constituency, the role of the local authority in pump-priming and giving additional funds to assist with training has been important, not least in helping those with special needs. If the Government see no real role for local authorities and continue to put pressure on their expenditure in other directions, we are in danger of handing over responsibility to the private sector and losing what has been a valuable partnership with the involvement of local authorities. How does the Minister see the future role of local authorities in supporting training in their localities?
      Coming to the TECs and LECs, with which the clause is concerned, the Government are taking a risk. If training is vital to our country's interests and they represent the main mechanism by which training is to be delivered, it must be in the interests of all hon. Members to be sure that that mechanism works. There is no point in wishing the TECs and LECs ill, and to the extent that the clause tries to assist what they are doing, it is to be welcomed.
      As I say, it is a risk. After all, in its White Paper entitled "Scottish Enterprise", the Scottish Office was more blunt than its English and Welsh counterparts about the role of the private sector up to now. That White Paper said:
      "Efforts to date to persuade the private sector to take greater interest in and responsibility for training have had disappointing results. Far too many firms take little interest in assessing and training for their own future needs, assuming that supply will always be there to meet demand."
      Now, having admitted the failure of the private sector, the Government are putting so many eggs in that basket that one hopes that they have properly weighed up the risk involved.
      As I said in response to the intervention by my hon. Friend the Member for Berwick-upon-Tweed (Mr. Beith), we have training that will be particularly geared to employment training and the youth training scheme, with not enough attention being given to what can be done to provide training for those who are already in employment, for those with special needs and, as the hon. Member for Leeds, West (Mr. Battle) pointed out, for the training and encouragement of women.
      An obvious example is the special allowances for employment training that are available to single parents but are not available to married women. A number of married women in my constituency have made representations to me that they would be only too willing to take up employment training if they had that additional resource. It is a short-term attitude—we frequently see such an attitude being taken by the Government—to encourage more women into the workplace without providing additional incentives. Will the TECs have flexibility to encourage training for women?
      The prospectus for the 1990s entitled "Training and Enterprise Councils", issued by the Department of Employment last year, stated:
      762
      "At least two-thirds of the directors … must be local business leaders … who are 'chairmen, chief executives or top operational managers at local level of major companies.'''
      I welcome the effort that is being made to encourage local top people from business to take that interest, although I sometimes wonder whether they are sure of the level of commitment that they are making.
      There could be an inadequacy in going for chief executives and top business leaders. We accept that, over the years, British business has been woefully inadequate in providing training. The trouble is that many of those at the top know precious little about training. They do not have expertise and skill in training. I hope that that point will be taken on board by those running the TECs and LECs.
      We need to provide for trainers, not just for trainees. We need people with skill and experience in training. The editorial in the Financial Times of 9 May 1990, to which the hon. Member for Derby, South (Mrs. Beckett) referred, pointed out:
      "The UK's educational reforms are threatened by a lack of qualified teachers. The same constraint applies in youth and adult training; the difference is that it is almost certainly more severe. After decades of neglect and the near disappearance of traditional apprenticeships in many industries, the UK lacks the human resources required for a training revolution."
      It is important for the TECs to address that problem.
      Linked to that is the need to stimulate a culture of training. People must want to learn, and I agree with those who say that this matter cannot be left entirely to the state, the Government or local authorities. They cannot command people to learn and train. It is up to all concerned—industry, parents and the schools—to generate an atmosphere in which young people see it as worth their while to stay on and achieve educational attainment or to go on a training course, and at the end of whatever they do they must see some reward for their training efforts.
      We must examine the experience of other countries. For example, firms in France that provide less training than the average in their sector pay the extra costs of the firms that provide above-average amounts of training.
      As I said in my opening remarks, other countries seem to manage training so much better than we do. We should not be ashamed or hesitant about looking at their experience and adapting some of what they do. By setting so much store by TECs and LECs, the Government are taking a risk which, if it does not come off, will put us even further behind.
      Mr. Lilley: First, I welcome the good will that has been shown by hon. Members on both sides of the House towards the substance of the clauses, although there is disagreement about what has been omitted from them and concern about some matters which the amendments address. Before I continue, let me make one general observation. Although we have had a great deal of talk about the amount of money dedicated to training, and the involvement of the public and private sectors, so far in the debate there has been no mention of specific skills or the training curriculum.
      Perhaps it is an indictment of us all, and the difference between our attitude and that on the continent, that when we talk about training we think about how much money we spend and not about the output of training, which is crucial. That is why the Government attach so much importance to TECs. We believe that the involvement of industry in the process of providing and managing training will ensure that it is orientated more to the generation of

      763
      training suitable to the needs of people and businesses, and not simply to abstract management and spending a certain amount of money.
      The hon. Member for Derby, South (Mrs. Beckett) began with an accurate description of the training desert and the total lack of Government provision for school leavers that we inherited from the last Labour Government. At that time there was no youth training scheme or equivalent of employment training, there was no direct involvement of industry in the provision and management of training, there were no training credits, for which pilot schemes are now being announced, and there was little or no contact between schools and industry. There has been a huge change on all those fronts.
      Mrs. Beckett: The Minister is right in listing all those provisions which did not exist then, but there also was not mass unemployment on a scale that made a training scheme necessary to take people off the unemployment registers. There was also a substantial number of high-quality apprenticeships run by private companies. From memory, I believe that a training company initiative to promote further training in the private sector was one of the first things that the present Government cancelled when they took office, and there was a campaign of co-operation between industry and schools. Another thing that the Government cancelled when they took office was the programme that we had started to put computers into schools, but they later reversed that decision. Whatever the Minister may imagine, I assure him that the picture he paints does not represent what was happening under the last Labour Government.
      Mr. Lilley: The hon. Lady is entitled to her view that everything was all right then, but I am inclined to think that there has been a long-term weakness. We have taken a decade to get it right, but we are now getting it right.
      We are now spending £900 million a year on youth training and £1·2 billion on employment training, and we have announced pilot programmes for training credits. The LECs will control some £2 billion out of a total budget of £2·5 billion of Government money to be spent on training. That is all good news, but the real improvement on a much larger scale has occurred in the private provision and expenditure on training. One estimate mentioned by my right hon. Friend the Chancellor of the Exchequer in his Budget speech is that no less than £20 billion a year is being spent by private industry on training. I am sure that we all welcome that.
      Last night, the hon. Member for Newcastle upon Tyne, East (Mr. Brown) reminded us of the hon. Lady's assurance that the Labour party has no spending demands beyond the two commitments to social security spending. Some scepticism was expressed in the House about whether the Labour party would be able to limit its demands for extra spending to those two commitments and, sure enough, the hon. Lady has broken her own self-denying ordinance today and called for more spending on training. The hon. Member for Leeds, West (Mr. Battle) joined in.
      Mr. Battle: The Minister will have read the account in the Financial Times—perhaps he will say that it is a speculative newspaper report—that the budget for training in the Department of Employment was to be reduced. What action did he take when he read that report?
      Mr. Lilley: I certainly do not take action every time I read reports in the Financial Times; if I did, I should be hyperactive.
      The public expenditure round proceeds on its stately course every year and all sorts of reports are made in the newspapers in ignorance of what is really happening. However, it is clear that the number of young people requiring post-school training and, happily, the number of people who have been long-term unemployed is diminishing. That means that more people are in work where they should be receiving training from employers in private companies and in the state sector, and that is what is happening.
      The hon. Lady asked specifically what is the likely impact of the clause. Obviously, that is impossible to assess as it is an enabling clause which will remove the disincentive to companies from making contributions to local employment companies.
      Mr. Wallace: The Minister said that young people who are in work should be receiving their training there and that is what is happening. What is his evidence for that? Does he contradict the recent survey that I quoted showing that only 5 per cent. of 16 and 17-year olds in employment were getting day release to undertake further training? What is his information?
      Mr. Lilley: I recall hearing one of my colleagues in the Department of Employment referring to some European statistics showing that a high and rising proportion of people in Britain are receiving training, and that we are beginning to compare favourably with a number of our continental competitors. That is good news.
      It is impossible to assess the likely response to the removal of a disincentive, but a similar incentive exists for contributions to local enterprise agencies which have raised some £35 million in recent years. Therefore, a significant but by no means enormous sum of money may be raised. The contributions that companies are making are very good news and demonstrate their sense of responsibility to their neighbourhoods and their recognition of the benefits that ultimately flow back to them from a better training environment.
      The hon. Lady asked whether a company would lose relief if it received training after making a gift, and particularly if it were the condition of making a gift. I reassure the hon. Lady that it would not. There is already full relief for any expenditure by a company on the provision of training for its own staff, whether it provides it on its own premises or whether it buys in training from a LEC or elsewhere. The clause will simply ensure that there will be relief for purely altruistic contributions which might not otherwise exist as LECs are not charities. The hon. Lady suggested in her amendments—which are helpful and well-intentioned; we accept their underlying spirit—that relief should be removed only in so far as there is any benefit. I thought about that, but it does not seem necessary and it would certainly add an extra burden of complexity.
      The hon. Lady also asked about a possible drafting error in subsections (1) and (2). I shall examine the point and write to her, although I have been given a preliminary indication that there is no problem. It is a tribute to her assiduity that she should have discovered a potential error.

      765
      5 pm
      The hon. Member for Leeds, West rightly referred to the importance of provision for the handicapped and other special needs groups. I assure him that training and enterprise councils must set out plans for the provision that they will make for the handicapped and others before they can sign a contract. Obviously that matter will be considered carefully before a contract is signed.
      The hon. Member for Orkney and Shetland (Mr. Wallace) said that other countries managed their training much better than us and that we should learn from them. Training and enterprise councils are being established partly because of the lessons we learned abroad. Germany has been successful: a major part in managing and providing training there is played by chambers of commerce. We do not have the same network of statutory chambers of commerce, but TECs will essentially involve business in the provision and management of training in a similar way, so we hope that we are learning from others.
      Technically we are discussing simply the amendments before us. I have responded specifically to those by saying that we accept their spirit but feel that they are unnecessary and might lead to unnecessary complications. I hope that the Committee will not take them to a vote.
      Mr. Battle: I found it surprising that the Minister said that the amendments would be too complicated. He said that, if a company gained benefit, it would lose the whole carrot and that it was not possible to find a way round that. We should encourage employers to come forward. Their record in the past has been bleak. That is why the Government have had to take the lead.
      The skills shortage is not a new phenomenon. In 1982, when I served as a councillor on Leeds city council, it was involved, with the local chambers of commerce, in examining the skills needs of the future. Those were the years of recession in the engineering industry and in clothing and textiles. With the dismantling of some training boards, a shortage of some skills emerged precisely in the industries with new technology. The skills shortage was being identified then, eight or nine years ago, so it is not a new phenomenon. Yet the record of companies in providing training has not been commendable. The Government have been forced to offer tax concessions to employers to encourage them to take training seriously.
      I welcome the Minister's response to the points about the disabled, women and ethnic minorities, but they need stronger emphasis. I am interested in the background to the clause and what will have to be agreed before a contract is signed. In the past companies have not been ready to provide schemes to train the disabled and women, and we may have to cajole them again. I hope the Minister agrees that it is not the case of the Government's saying, "We will have a partnership now."
      There are problems about the Government's sticking to their funding contribution. I was not happy with the Minister's response on budget speculation. There should be hard bids. If the Secretary of State for Employment believes that he should work in partnership with companies, he should defend the employment and training budget and ensure that the Treasury will not cut the provision in order to cushion the poll tax.
      Mrs. Alice Mahon: My hon. Friend has referred to gaps in training. Did he see "The Money
      766
      Programme" to which my hon. Friend the Member for Derby, South (Mrs. Beckett) has referred? In that programme we heard that invisibles had declined since 1986 and that, for the first time since the Napoleonic wars, we had a deficit in our invisible trade. One reason was that there was very little organised training for specialist functions in the financial sector. I do not think that the Minister can blame that on a Labour Government.
      Mr. Battle: My hon. Friend makes a telling point.
      The identification of skills shortages has not been a new phenomenon. As industry has changed, there has been a shift from manufacturing to service. In Leeds, we set up training institutes to train women, people from the ethnic minorities and the disabled to enable them to enter jobs requiring new technology skills.
      The Government are trying to cajole employers to fall in with their plans. Unless the Government are prepared to keep their side of the partnership bargain and give a real commitment that the training will not be subject to annual budget dealing which may put the partnership at risk, how can employers be persuaded to put in cash? We agree with the clause, but we think that our amendment should be acceptable. The Financial Secretary said that he accepted the spirit of our proposals. Why can he not accept the content?
      Mr. Lilley: I shall respond specifically to the initial concern of the hon. Member for Leeds, West (Mr. Battle) about whether the amendments are necessary to avoid frightening people off. These subsections are essentially about avoidance. They are to prevent abuse of the scheme; there is nothing particularly novel about it. There is an identical provision in the legislation that provides tax relief for contributions to local enterprise agencies. Its purpose is to ensure that relief is not available for contributions with strings attached—for example, a contribution made on the understanding that the training and enterprise council would later provide training for a member of the contributor's family in something not connected with the contributor's business. We do not want abuse where a firm will make a gift, with a rider attached that a nephew will get training on something wholly unconnected with the business. The purpose of the subsections is to see off that potential abuse.
      We did not find difficulties in the case of an almost identical provision for local enterprise agencies. I do not imagine difficulties will arise in this case. Precisely because the provision is to see off improper strings being attached to gifts, there is no case for saying that, as the improper string cost only £4,000, tax relief should be lost on only £4,000. If there is abuse and an attempt at nepotism, it is better that it should be seen off outright by the loss of tax relief in its entirety. That is why the provision is set out as it is. I am sorry that I did not spell it out at greater lengths earlier. I am glad to have had the opportunity to do so in response to the hon. Gentleman's request for further clarification.
      Mrs. Beckett: We have had an interesting though short debate. The hon. Member for Eastbourne (Mr. Gow), whose courtesy I appreciate, made, as always, a telling and effective speech. The hon. Gentleman said that responsibility for progress in training—and I think that he said that he was quoting Balfour, or perhaps it was Baldwin—rests with every man and woman in the country and, of course, we do not dispute that. He also said that there was a need

      767
      to maintain a partnership between Government and industry in the provision of training. I am happy to place on record once more the point that I made in an intervention in his speech. We recognise, of course, that it has always been the case—and we hope that it always will be—that there is a great need for industry to provide good training. Nevertheless, we believe, as industry does, that the provision of such training is a partnership between Government and industry. There is a growing belief and concern that the Government are failing to provide their side of the partnership.
      My hon. Friend the Member for Leeds, West (Mr. Battle) remarked in his first contribution on the way in which the cuts in training have been made not just in the overall budget, but in the provision of training and the cost of training being allowed per head. Again, the answer is giving in Cm 1006. In paragraph 26, table 6.5, which refers to youth training—frequently quoted in the House and outside—shows clearly the decline in the gross public cost per trainee week, not only in the estimated outturn for 1989–90, but in the coming year and the two succeeding years. It estimates a fall from about £50 per head in 1989–90 to about £33 a head by 1992–93. There is no doubt that that will be a substantial cut and will have a damaging effect.
      The Financial Times editorial, which I quoted earlier, made explicitly the point that the Opposition so often try to make to the Government and which they tend to contest—that it is not possible to provide high quality training on the cheap, which the Government are attempting to do.
      The hon. Member for Orkney and Shetland (Mr. Wallace) talked especially about the training needs and problems identified in Scotland, and about the training needs of women and the disabled which, of course, we very much endorse.
      The Financial Secretary has shown previously a trait—and I am not sure whether it is because he writes his speeches in advance and does not like to amend them—
      Mr. Lilley: No.
      Mrs. Beckett: If I have insulted the Financial Secretary, I apologise. However, he has a tendency to make remarks that do not seem to some of us to be borne out by the debate. In this case, he said that the only worry expressed by the Opposition was about the provision of public funds and that nothing had been said about the detail of training.
      That is not wholly accurate. I referred to the various targets that were needed. It is certainly the case that the Opposition in a variety of ways, including through our members of the Select Committee on Employment, have studied and been alarmed by the detail of what is happening in training. My hon. Friend the Member for Sedgefield (Mr. Blair) gave some examples in the Budget debate which were taken from studies of sector training organisations obtained by our hon. Friend the Member for Newham, North-East (Mr. Leighton), who is Chairman of the Select Committee on Employment.
      It is worth reminding the House of one or two of the points that my hon. Friend the Member for Sedgefield identified. There is likely to be a shortfall by the middle of the 1990s of 50,000 trained people in information technology. The computer services industry council presently covers 44,000 people and that number is soon to increase substantially. At present, it has five full-time staff only, although it is an area of great need in which we have
      768
      a substantial deficit. The national retailing training council covers 2·5 million people, but it has only five full-time staff. The United Kingdom Agricultural Supply Trade Association has 1·25 people covering the entire association. Only 0·6 of a person—and I do not know how the figure was arrived at—covers the National Association of Master Bakers, Confectioners and Caterers. The detailed studies of training confirm the alarm we expressed in the debate. I believe that only one in four companies train.
      The Financial Secretary then referred to the training desert. I thought that we were experiencing a wholly new phenomenon of commendable frankness, with Ministers admitting to sins of commission or omission, but I should have known better. He was talking about the previous Labour Government. I seem to recall that you, Mr. Walker, were a luminary adorning the Department of Employment. The Financial Secretary is fortunate that you are not in a position to set him straight by joining in our debate. Few who had any experience in the area would recognise the Financial Secretary's picture of the state of training then.
      5.15 pm
      The Financial Secretary referred to Opposition pressure on the Government to restore cuts in the provision of training to which we have referred in the debate. I am not sure whether it is deliberate on the part of the Ministers, or whether they simply have not grasped the distinction. In case it is the latter, let me make it plain. When we talk about the present public expenditure White Paper, about the present Budget or about Government policies, we set those remarks in the context of what we think that the Government should be doing now. We think that they should now be restoring the cuts they made in the training budget. It was in that context—
      Mr. Lilley: Spending more?
      Mrs. Beckett: Yes, spending more. The Government should spend enough to restore the cuts they made in the training budget in the public expenditure White Paper. The Minister should recall that I made a similar point earlier, although I am not sure that he was paying quite the close attention that I should have liked to every word I said. I drew his attention then to the fact that, in the debate on the public expenditure White Paper, when we called for the restoration of the cuts in spending, we made several proposals about areas in which we thought that the Government were making mistaken choices in spending money and in which we would not spend money, and several other proposals about areas in which the Government were making cuts and in which we would not make cuts.
      Ms. Diane Abbott: Does my hon. Friend agree that our concern for a full-hearted Government partnership for training is not just with the overall level of spending? We are concerned that training should be carried out not as a privatised entity, but within the framework of overall social objectives. In my constituency, the unemployment rate among young black males is one in two. Society will pay a terrible price for the Government's policy. The Government seek to back away from their responsibility for training. The training needs of young men in areas such as Hackney, inner London, Manchester and Birmingham

      769
      are ignored. This country will pay a terrible price for the Government's lack of seriousness on training, not just in terms of overall finance, but in terms of the overall social objectives which a serious Government policy on training should have.
      Mrs. Beckett: Yes, I whole-heartedly endorse what my hon. Friend has said. Her observations about the way in which all of us draw on our experience of our constituencies and the problems there challenge the Government's view about the problems and the nature of the difficulties.
      I reiterate for the benefit of the Financial Secretary, and in the perhaps vain hope that we shall not need to have these conversations over and over again that we proposed the restoration of the cuts in the public expenditure White Paper and that we also proposed cuts in spending in areas where we thought that the Government were misdirecting. I assure the hon. Gentleman that, broadly speaking, the cuts that we proposed and the cuts that we opposed balanced out. I assure him that there was no net increase in public expenditure in our package, which fits into the context of my remarks about our plans.
      That brings me to my second point on the issue. The training cuts that we were discussing were in the context of what the Government are doing this year and what we think that they should be doing. When we referred to what a Labour Government would do, possibly in one year or two years—neither the Financial Secretary nor I can predict that—we were referring to a different framework. At the moment we have a couple of specific, clearly identified commitments which are our priorities. Beyond them, there are several desirable directions in which we should like public expenditure to move, but which we cannot quantify now. There is a clear distinction there and I assure the Financial Secretary that there was no contradiction in the points made by Opposition Members.
      As we have identified, the overall context of clause 68 is one of encouraging business, through tax reliefs, to contribute to training programmes in TECs. It has been suggested in the press, and I am not aware that the Government have contradicted it, that the Government are drawing on the American experience. I remind the Financial Secretary of an article that appeared in The Economist on 21 April 1990. The article included several not very encouraging remarks about the Government's plans. It said that business men had responded to the Government's arguments with glum faces and that they were complaining that the Government might have shifted expenditure rather than reduced total investment. The article continued:
      "A glance across the Atlantic"
      at the models for these proposals
      "deepens the gloom. Despite a strong American tradition of corporate largesse,"
      the equivalent proposal in the United States
      "has never received more than a tiny proportion of their money from private industry."
      The article explains that one of the most successful training schemes in the country, in Philadelphia, raises only about 5 per cent. of its budget from the private sector.
      The Economist, which is not exactly a left-wing magazine, stated that the Secretary of State
      "and his colleagues could hardly have chosen a more effective way"—
      770
      that is, through the cuts—
      "of sending a negative signal to a movement which stands or falls on voluntary effort. Some businessemen are asking themselves why they should be generous with their time and energy when the public budget is being squeezed and their own discretion to spend it is being so tightly constrained."
      The Economist suggests that some more cynical souls are wondering whether the Government are trying to offload responsibility, even for the training schemes that they run at present.
      Mrs. Mahon: Is my hon. Friend aware that the chairman of the Blackburn TEC threatened to resign because of the cuts in funding?
      Mrs. Beckett: I was not aware that the chairman of the Blackburn TEC had threatened to resign. However, judging from the strength of his remarks and his depressed tone that he revealed in a television programme that I saw, I am sorry to say that I am not surprised to learn that he has threatened to resign.
      An article in The Guardian on 21 March 1990 referred to the leader of a midlands TEC. The article said that the Government were trying to place responsibility on the private sector for providing training. The article was lukewarm about the proposals in clause 68.
      I listened with care to the observations made by the Financial Secretary, and I am glad that the Government do not believe that people would lose as a result of the difficulties that we identified and which we sought to address in amendment No. 21. The Financial Secretary believes that our amendment is unnecessary. However, we are not entirely convinced. I do not mean to criticise the Financial Secretary when I say that the drafting of legislation is an issue on which the Government's record is, how can I put it—
      Ms. Abbott: Shocking?
      Mrs. Beckett: Shocking is probably the best way to put it. I was going to be more gentle than that. However, my hon. Friend the Member for Hackney, North and Stoke Newington (Ms. Abbott) has probably described it better.
      We have extensive experience of the Government assuring the House, in all good faith, that this or that provision in a clause meant this or that and was correctly drafted. However, we then discovered, sometimes before a Bill had completed all its stages and sometimes not until a subsequent year, that that was not so. I believe that there are some clauses in this Bill that correct something that the Government said did not need correcting from last year's Finance Act.
      With respect to the Minister, if amendment No. 21 would do no harm and is merely regarded as unnecessary, we are inclined to press it to a Division. We have reservations about whether payment, not "wholly and exclusively", as needed by section 74 of the Act will cover the case to which the Financial Secretary referred. Of course, we understand his point about drafting the clause to stop people, according to his example, providing training or education for a nephew. We would not want people to avoid tax. However, although we share the Financial Secretary's desire to rule out tax avoidance—we wish that the Government shared our view about that more often—we believe that the Bill as drafted goes over the top. I intend to advise my hon. Friends to vote for amendment No. 21.

      771
      In conclusion, I want to quote from the ubiquitous and extremely useful "Money Programme". That programme placed the context of this debate in a clear light. One of the contributors to the programme said:
      "We are moving away from the practices of our most successful competitors who supplement the market in training and regulate it heavily. We are moving towards complete dependence on the market."
      Unfortunately, that is the answer for the hon. Member for Eastbourne. We are very concerned about that and that is why we raise the issue and why I advise my hon. Friends, despite the assurance from the Financial Secretary, to be on the safe side and support amendment No. 21.
      Mr. Frank Haynes: With regard to this so-called incentive that the Government are giving to businesses in the form of tax relief to encourage them to take on their responsibilities for training, I must tell the Financial Secretary that we were telling the Government years ago that they were destroying the training of this nation.
      Ms. Abbott: And would they listen?
      Mr. Haynes: No, they would not. In fact, we were saying that before the young Minister became a Member of this House. I am sure that you, Mr. Walker, will remember this. I remember you at the Dispatch Box telling the Government of the day where they were going wrong on training.
      The Financial Secretary should listen to these things, which have had to be said about training. The Government have missed the boat. They are trying to pour a little money into the pockets of the employers to have what the Government believe will be a sensible and successful training programme. I was a member of the Standing Committee that considered the Employment Bill, the Report stage of which we will debate on Thursday. In that Committee, Ministers tried to tell us what they were going to do about training. They are part of a Government who have almost destroyed training in this country.
      Ministers now squeal at the Dispatch Box that we do not have enough people with the skills to do the new jobs that are becoming available in the new technologies. They are bawling their eyes out. Even the Prime Minister at No. 10 is doing that. The Prime Minister and the Ministers on the Treasury Bench have some lessons to learn. I am sure that, like me, Mr. Walker, you remember the training programmes that we used to have. The responsibility then was where it should be. This Government have a responsibility, but they are trying to duck out of it by chucking a bit of corn down. It will not work, and it will not help the Government to stay in office at the next general election. The Government have failed the people who need training, especially youngsters coming out of school.
      In the Minister's constituency as well as in mine, young people are put on so-called "training programmes", when they push brushes around a factory floor for about two years, but there is no job at the end of it for them, and we are now finding out that there will be an increase in unemployment because of the Government's policies.
      The Government have wasted money, and that has been at the expense of the ordinary folk that the Financial Secretary is supposed to represent and I certainly represent, back in the beautiful country of Nottinghamshire, where the Government have destroyed industry. Our mining industry used to have a first-class
      772
      training programme, but what did that lot on the Treasury Bench do? They closed the pits, with the result that the training programme has been lost as well.
      5.30 pm
      As I have said, the Government are chucking a bit of corn on to the floor of the Chamber in the hope that the employers will pick it up. The Ministers and the Government have another think coming because that will not happen. The Financial Secretary must have heard what my hon. Friend the Member for Derby, South (Mrs. Beckett) has just said about only one in four employers being interested in training. That is shocking. All of them should be involved. The Government should be encouraging employers to train.
      The Financial Secretary has a little grin on his face, but I am trying to be serious for a change. Let us face it, from time to time I have sat in the Chamber and been bored to tears. The Government have poured out statistics until I am sick of hearing them. Sometimes we hear a speech that livens up the debate and which hon. Members enjoy, including you, Mr. Walker. I have seen you with a smile on your face sometimes. Indeed, you are smiling right now.
      Nevertheless, training is a serious matter. It is all very well to dangle a carrot before the people who are supposed to be providing a proper training, but the Government have ducked their real responsibility for a number of years.
      I shall give an example of an industry in my constituency that encourages the training of disabled people without any encouragement from that lot on the Treasury Bench. It has done so ever since I have been a Member of the House. Provisions governing the employment of disabled people are supposed to be on the statute book. Although firms do not have to follow the provisions, it is recommended that about 3 per cent. of the work force should comprise disabled people. In the firm that I am talking about, disabled people make up 3·5 per cent. of the work force and they are trained, which is how it should work but, oh no, training has gone down, down, and downhill under the Government.
      Give us the opportunity at the next general election—I am sure that it is coming—and my party will sit on the Government Benches and do something about training programmes. My hon. Friend the Member for Derby, South has spelt out what should be done, but I do not think that the Financial Secretary was listening to her. He was gas-bagging to whoever was sitting next to him—
      Mr. Lilley: Withdraw.
      Mr. Haynes: No, I shall not withdraw that, because it is true. With my own eyes I saw the Financial Secretary gas-bagging instead of listening to the serious points being made. I am pleased that he is listening to me when I am trying to be serious because we are discussing a serious subject.
      The Financial Secretary was lucky enough to have a bit of training in finance—at least, that is the impression I get when I listen to him speak from the Dispatch Box. Nevertheless, he has a lot to learn. I said the same thing last night, but from a sedentary position. The young Minister has a lot to learn—he has not lived yet. I was in industry for many years and I am now 64, so the Minister can understand the point of what I am saying. I have seen good industry and good training within industry. Indeed, I participated in that training.

      773
      The Government ducked their responsibilities when they took over in 1979. Come the next election, we shall change all that. The sooner the Prime Minister calls the election, the better off will be those people who need proper training—without the incentives and the corn that the Government are chucking down to employers.
      Several Hon. Members rose—
      The Chairman of Ways and Means (Mr. Harold Walker): The debate is now getting wide, and although I have allowed a wide debate, I shall obviously have to have regard to the extent to which we have debated the general matters relating to the clause when we come to debate clause stand part. I call Mr. Martlew.
      Mr. Haynes: On a point of order, Mr. Walker. I promised earlier not to raise any points of order, but you have forced me to my feet. I hope that on Thursday when we debate the Employment Bill you will not say that I have gone wide of the scope of the debate.
      Mr. Walker: Thursday is a long way off. I call Mr. Martlew.
      Mr. Eric Martlew: I shall try to stick to the scope of our amendments and the need for them. Eleven years of this Government have reduced us from a skilled to a semi-skilled nation. I am afraid that, if the Conservative party won another election, we would be reduced to being an unskilled nation.
      If one wants to consider the decline in training in this country, one most go back to the legislation that destroyed the training boards. A Labour Government in the 1960s put in place a system that did not give incentives to employers, but approached training from the other direction. A levy was imposed on employers who had to provide training of a certain standard to receive a rebate.
      That immediately created the position of training officer. I was one for quite a while. Originally, the function of a training officer was to recoup the amount of the levy, but they soon went beyond that and started to look at companies' training needs. We found that very little training had been done between 1951, when the Conservatives took over, and 1964. Therefore, there was a need for Government intervention and the training boards were set up.
      I was involved with the food, drink and tobacco training board, which began as a bureaucratic organisation, but which created a high standard of skills in many of the companies involved. Unfortunately, that training board was destroyed. I recently served on the Committee considering the Food Safety Bill, a major proposal of which was that training in the food industry should be dramatically increased because the lack of training has contributed to the food poisoning epidemic in this country. That lack of training in the industry was caused by the Government allowing the industry to stop training.
      At one time, we used to have the right number of skilled people to match the number of jobs, but in the many years since, the Government have decimated our apprenticeships. Industry thought in the short term; because it was expensive to train an apprentice—it could amount to about £20,000 per year—firms decided to recruit direct from the labour market. Those industries
      774
      are paying for that now, because there is a skills shortage and people with skills are rightly selling them to the highest bidder.
      The Chancellor of the Exchequer stands at the Dispatch Box complaining about the high level of wage increases, but one reason is that the Government themselves have created a skills shortage, by destroying our training systems, which in turn means that those with the skills are demanding the highest price for them.
      Mrs. Mahon: Does my hon. Friend agree that it is ironic that the Government, who are attempting to privatise training with the formation of the TECs, have put in charge of the TECs the very people who failed to provide the training in the first place?
      Mr. Martlew: I could not agree more with my hon. Friend. I was discussing this matter about a year ago with one of the senior managers of a Carlisle company, who asked me what I thought about TECs. I said that I was concerned that those in charge would be the very people who had neglected training in their own companies over many years. Fortunately, one or two of the individuals on the board of the Cumbrian TEC are of a high calibre, and hopefully they will be able to carry on the job. However, one of their worries, which I share, is that they will not be given the tools and money to carry out the job. In addition, they will not have the support of the work force for TECs, because there are no workers' representatives on the TECs boards, which is another mistake, and is based on dogma, not common sense.
      A common-sense Government who were concerned about improving training and getting the TECs off the ground would have gone for a consensus approach, but the word "consensus" has been struck out of the dictionaries of Conservative Members. I think that the Prime Minister struck out the word, but I think that the Government will rue the day.
      The Opposition have said many harsh words about youth training schemes over the years, some of which have been justified. I used to be what was called a managing agent for a youth training scheme, and I used to take great pride in helping youngsters who came to my company through that initial period from school to work.
      I was not a great believer in the idea that the YTS was an ideal way to train youths, but it was better than the dole. There was no doubt that it made youngsters aware of the work ethic—it got them up in the morning, coming to work and used to working with other people. Given a reasonable level of resources and a company that did not want to make a profit out of YTS kids, the scheme just about managed to give them a decent, reasonable level of training. The company that I worked for did so; many of the youngsters continued to work for that company, and some got apprenticeships afterwards.
      To start to reduce in real terms the amount of money put into YTS schemes is an insult to those youngsters who have been unable to find employment but do not want to opt out. Many youngsters decide that they do not want to be exploited by youth training schemes and do not become involved. The youngsters who will be penalised are those who have decided to get up in the morning and do something. The Government are saying to them that they will get second-rate training, in a scheme that was not ideal to start with. The reason for reducing the amount of

      775
      money will be lost. I hope that the Minister will tell us why he proposes a reduction in the amount of money spent on YTS youngsters.
      We should have been building on the resources already there, and putting in more. Most of our youngsters not going on to higher education should be going into training schemes, highly geared to giving us the skilled work force required for the 1990s. This country does not have the natural resources of many of its competitors. North sea oil will run out before long. How will we adjust our balance of payments problems if we do not have a skilled work force?
      Are we to become screwdriver workers in screwdriver factories for the Japanese? Why are we not opening car factories in Japan? The reason is that the Government have got the training wrong. We have not got the skills, either managerial or further down. Unless the Government start to apply themselves seriously to where the country is going and what sort of work force it will need in future, we shall become an unskilled work force, depending on Japanese, Germans and Swedes, to provide not only the factories, but the quality training. That is what we have lost.
      5.45 pm
      I do not believe the TECs will work. We must be more interventionist than that. We must say to employers that they must make a contribution—not a voluntary one, but a levy that they will receive back when they reach the standard required. The free market will fail this country every time in training, because it takes the short view; training needs a long view, because it is a long-term investment. The Government give us no encouragement to believe that they have grasped that lesson. TECs are the best we have and that is why we have tabled an amendment to improve them and give them more money.
      When the Labour party returns to power, which we hope will not be too long, we shall hve to provide radical solutions to revive the skills. The Conservative Government left a mess over training for us to deal with the last time we came to power. We must support TECs, which are being short-changed. I am sure that the managers and directors who came forward to help the Government feel that they have been kicked in the teeth. They were the better managers from the more progressive companies.
      The ones who do not give a damn will never be caught sitting on the boards. They might be seen at the Rotary club, or somewhere like that, complaining about the standard of education that their children are getting, but they will not be among the school managers or on the TEC boards. Those people who have come forward have been kicked in the teeth and not been given the necessary money. They know that, and the Government know it. This provision provides a stop-gap solution to a long-term problem, and I hope that hon. Members will support the amendment.
      Mr. Lilley: Perhaps with your compliance, Mr. Deputy Speaker, I may wind up this debate by treating it as a discussion on the amendments and the clause stand part combined, by summarising the background to TECs and responding to some of the arguments that have been raised since I previously detained the House with my thoughts.
      TECs are a major new initiative designed to promote local participation in training and enterprise activities.
      776
      They are private companies with boards consisting mainly of local business, and will work under contract to the Department of Employment's Training Agency. The first TECs signed contracts in April 1990. Much of the TECs' activity will cover existing Government training programmes, such as youth training, but there will also be a discretionary local initiative fund that TECs can spend on projects of their own choice to promote training or local enterprise activities.
      The first 12 TECs signed contracts in April 1990, and a further 70 are at various stages of development. It is expected that over the next year, a national network of TECs will be established. TECs will work in conjunction with local enterprise agencies, where those already exist.
      Mr. Ian Taylor: Has my hon. Friend noted that one of the TECs that has been given permission under this scheme is one covering my constituency and the region of Kingston and Elmbridge? The measure before us has been welcomed by businesses in that area because it should enable them to give additional help to the TEC's training programmes that are being set up.
      Mr. Lilley: I am happy to recognise that, and I am sure that it reflects the interests of the local Member. I am also happy that Hertfordshire is another area in which TECs have been established, and there are a number of others that have already made good progress.
      In the absence of the special relief that the clause introduces, some TECs might have sought charitable status so that businesses could obtain tax relief on donations under existing legislation. However, not all the TECs' activities would qualify as charitable. In general, training activities could be regarded as charitable, but certain enterprise activities would not, and TECs would need to divide their activities and functions to ensure that charitable status could be obtained for the relevant part of their work, which would involve increased administrative burdens on the TECs. Hence our decision to introduce the clause.
      Overall, the Government are spending £2·5 billion a year on training programmes, and the value of tax relief on companies spending must be at least as much again. The main responsibility for training must lie with employers, who need to invest in their work force. That is a message which we cannot emphasise too much. It is employers, not Government, who are best placed to judge the skills needed in their business, and to organise training accordingly. Happily, the evidence proves that that is precisely what they are increasingly doing.
      The 1989 labour force survey, published on 9 March, showed that the number of employees receiving training increased by more than 70 per cent. in the five years up to 1989. Employers in both private and public sectors have been investing £20 billion a year in training.
      Mr. Martlew: How does the Minister get these statistics? Are they collected in forms that land on the desks of personnel managers, who then just fill them in? If so, his jubilation is misplaced.
      Mr. Lilley: The figure that I gave—£20 billion—was based on a Department of Employment publication of last year, which in turn was based on a survey originally carried out in 1986–87. It estimated the total costs of training borne by public and private employers. It was a one-off survey and a fairly significant one, which is why it

      777
      is not repeated every year. The estimate has been updated modestly to allow for a little inflation; the actual sum could now be more than £20 billion.
      It is important to recognise that companies are now spending more—a fact which should be welcomed. Such spending is a duty of companies; and it is in their interests—that is why they are spending more. They do not do it, by and large, out of altruism. However, they can spend the money because they are now profitable. There were a number of reasons that led to the inadequacies of private provision for training, one of which was that, for a long time, industries, profits were simply not sufficient. As profits have recovered, so has spending on training.
      The hon. Member for Derby, South mentioned our frequent and pleasurable exchanges on the subject of spending. I must disappoint her by saying that I enjoy them so much that I intend them to continue. The fact is that she has advocated spending more, and her hon. Friends have done so even more emphatically. She referred to the debate on public expenditure earlier this year when she claimed that her spending bids were offset by her proposals for cuts. I read the debate afterwards because I was not quite sure whether I had missed something.
      It seemed to me from the text of Hansard that most of the spending cuts that she was proposing were to do with the cost of achieving privatisations. I do not agree that those amount to cuts, because if the Government were not carrying out privatisations they would lose all the revenues—
      Mrs. Beckett: It looks as if I had better read the debate too, but I did talk about the way in which the Government have wasted money, particularly on marketing privatisations. From memory, the sort of areas that I had in mind were, for example, what the Government call the 2 per cent. incentive on personal pensions and what we call the 2 per cent. bribe; the granting of tax relief on health insurance; and so on.
      Mr. Lilley: Not much would have been gained from the hon. Lady's latter point. If she is proposing more spending in the current year, which can be accommodated in the current public expenditure round, she will have to go through the same painful processes as my right hon. Friend the Chief Secretary to the Treasury and propose more cuts. We look forward with interest to what she has to offer. Otherwise, I suppose that we can only assume that she is following the old dictum that more means less.
      The hon. Member for Halifax (Mrs. Mahon) said that the chair, as she referred to him, of the Blackburn TEC had threatened to resign. I understand that there has been no threat of resignation. Blackburn TEC is still negotiating its first budget, and as it is its first budget it cannot yet have been cut.
      I listened to the hon. Member for Ashfield (Mr. Haynes)—he is very much the Labour party's answer to my hon. Friend the Member for Eastbourne (Mr. Gow), and I listened to him with almost as much pleasure as I do to my hon. Friend—and found everything that he said beyond criticism, except in one respect: he described me as young. I regret that that is no longer so.
      The hon. Member for Carlisle (Mr. Martlew) made an interesting speech in which he referred to the old apprenticeship scheme. There is a lot of regret about its
      778
      disappearance over the years, but it is worth considering why it disappeared. One reason was the pressure on profitability, which was of two sorts—the overall lack of profitability of British industry, and the increasing insistence on adult wages for those undergoing training. That is in marked contrast to the experience in most continental countries in which there has been a far greater differential between the pay of those undergoing training and of those who are trained and on adult wages. So we were moving in the opposite direction, with the obvious consequences.
      Mr. Martlew: I would not disagree with what the Minister has said. The old apprenticeship scheme needed changing from a time-served basis to a skill basis. The fact that the wages of apprentices became nearer those of skilled workers was the fault of weak management in British industry at the time.
      Mr. Lilley: I am quite prepared to agree with the hon. Gentleman. I hope that industry is listening and will respond to our consensus of wisdom. None the less, we have to replace what has passed, and that is what the Government have been doing in the major programmes that they have announced.
      I commend the clause to the House. I believe that it provides a useful change to the legislation; it will allow a relief for altruistic contributions to TEC and LECs. We understand the reasons for the amendment. We have no disagreement in principle or substance, but we believe that the amendment would prove onerous if it were agreed to, so I shall be asking my hon. Friends to oppose it, albeit in a fairly friendly spirit.
      Question put, That the amendment be made:—
      The Committee divided: Ayes 152, Noes 244.

      Division No. 207]

      [5.56 pm

      AYES

      Abbott, Ms Diane

      Cunningham, Dr John

      Allen, Graham

      Dalyell, Tam

      Anderson, Donald

      Darling, Alistair

      Archer, Rt Hon Peter

      Davies, Ron (Caerphilly)

      Armstrong, Hilary

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

      Ashdown, Rt Hon Paddy

      Dewar, Donald

      Ashley, Rt Hon Jack

      Dixon, Don

      Barnes, Harry (Derbyshire NE)

      Dobson, Frank

      Barnes, Mrs Rosie (Greenwich)

      Doran, Frank

      Barron, Kevin

      Dunwoody, Hon Mrs Gwyneth

      Battle, John

      Eadie, Alexander

      Beckett, Margaret

      Eastham, Ken

      Beith, A. J.

      Ewing, Harry (Falkirk E)

      Bidwell, Sydney

      Fearn, Ronald

      Boateng, Paul

      Field, Frank (Birkenhead)

      Boyes, Roland

      Fisher, Mark

      Bradley, Keith

      Flannery, Martin

      Brown, Gordon (D'mline E)

      Foot, Rt Hon Michael

      Brown, Nicholas (Newcastle E)

      Foster, Derek

      Buchan, Norman

      Foulkes, George

      Buckley, George J.

      Fyfe, Maria

      Callaghan, Jim

      Garrett, John (Norwich South)

      Campbell, Menzies (Fife NE)

      Garrett, Ted (Wallsend)

      Campbell, Ron (Blyth Valley)

      Golding, Mrs Llin

      Campbell-Savours, D. N.

      Griffiths, Nigel (Edinburgh S)

      Carlile, Alex (Mont'g)

      Griffiths, Win (Bridgend)

      Cartwright, John

      Grocott, Bruce

      Clark, Dr David (S Shields)

      Harman, Ms Harriet

      Clarke, Tom (Monklands W)

      Heal, Mrs Sylvia

      Clelland, David

      Henderson, Doug

      Cohen, Harry

      Hoey, Ms Kate (Vauxhall)

      Cook, Frank (Stockton N)

      Hogg, N. (C'nauld & Kilsyth)

      Corbyn, Jeremy

      Home Robertson, John

      Cox, Tom

      Hood, Jimmy

      Cryer, Bob

      Howells, Geraint

      779

      Hughes, John (Coventry NE)

      Powell, Ray (Ogmore)

      Hughes, Robert (Aberdeen N)

      Primarolo, Dawn

      Hughes, Roy (Newport E)

      Quin, Ms Joyce

      Ingram, Adam

      Radice, Giles

      Johnston, Sir Russell

      Redmond, Martin

      Jones, Barry (Alyn & Deeside)

      Rees, Rt Hon Merlyn

      Jones, Martyn (Clwyd S W)

      Richardson, Jo

      Kilfedder, James

      Robertson, George

      Leighton, Ron

      Rogers, Allan

      Lewis, Terry

      Rooker, Jeff

      Litherland, Robert

      Ross, Ernie (Dundee W)

      Lloyd, Tony (Stretford)

      Ruddock, Joan

      McAvoy, Thomas

      Salmond, Alex

      McKay, Allen (Barnsley West)

      Sedgemore, Brian

      McLeish, Henry

      Sheerman, Barry

      Maclennan, Robert

      Sheldon, Rt Hon Robert

      McWilliam, John

      Smith, Andrew (Oxford E)

      Madden, Max

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

      Mahon, Mrs Alice

      Smith, J. P. (Vale of Glam)

      Marek, Dr John

      Snape, Peter

      Marshall, David (Shettleston)

      Soley, Clive

      Marshall, Jim (Leicester S)

      Spearing, Nigel

      Martin, Michael J. (Springburn)

      Steel, Rt Hon Sir David

      Martlew, Eric

      Steinberg, Gerry

      Maxton, John

      Strang, Gavin

      Meacher, Michael

      Straw, Jack

      Meale, Alan

      Taylor, Mrs Ann (Dewsbury)

      Michael, Alun

      Thompson, Jack (Wansbeck)

      Michie, Bill (Sheffield Heeley)

      Wallace, James

      Mitchell, Austin (G't Grimsby)

      Walley, Joan

      Molyneaux, Rt Hon James

      Wareing, Robert N.

      Moonie, Dr Lewis

      Welsh, Andrew (Angus E)

      Morgan, Rhodri

      Wigley, Dafydd

      Morley, Elliot

      Williams, Rt Hon Alan

      Morris, Rt Hon A. (W'shawe)

      Williams, Alan W. (Carm'then)

      Morris, Rt Hon J. (Aberavon)

      Wilson, Brian

      Mowlam, Marjorie

      Worthington, Tony

      Mullin, Chris

      Wray, Jimmy

      Murphy, Paul

      Young, David (Bolton SE)

      Oakes, Rt Hon Gordon

      O'Brien, William

      Tellers for the Ayes:

      Orme, Rt Hon Stanley

      Mr. Frank Haynes and Mr. Jimmy Dunnachie.

      Patchett, Terry

      Pike, Peter L.

      NOES

      Adley, Robert

      Bruce, Ian (Dorset South)

      Aitken, Jonathan

      Buck, Sir Antony

      Alexander, Richard

      Burns, Simon

      Alison, Rt Hon Michael

      Burt, Alistair

      Allason, Rupert

      Butcher, John

      Amess, David

      Butler, Chris

      Amos, Alan

      Carlisle, John, (Luton N)

      Arbuthnot, James

      Carlisle, Kenneth (Lincoln)

      Arnold, Jacques (Gravesham)

      Carrington, Matthew

      Aspinwall, Jack

      Carttiss, Michael

      Atkins, Robert

      Chalker, Rt Hon Mrs Lynda

      Atkinson, David

      Chope, Christopher

      Baker, Nicholas (Dorset N)

      Clark, Hon Alan (Plym'th S'n)

      Banks, Robert (Harrogate)

      Clark, Dr Michael (Rochford)

      Batiste, Spencer

      Clark, Sir W. (Croydon S)

      Bellingham, Henry

      Clarke, Rt Hon K. (Rushcliffe)

      Bendall, Vivian

      Colvin, Michael

      Bennett, Nicholas (Pembroke)

      Coombs, Anthony (Wyre F'rest)

      Benyon, W.

      Coombs, Simon (Swindon)

      Bevan, David Gilroy

      Couchman, James

      Blaker, Rt Hon Sir Peter

      Currie, Mrs Edwina

      Body, Sir Richard

      Curry, David

      Bonsor, Sir Nicholas

      Davies, Q. (Stamf'd & Spald'g)

      Boscawen, Hon Robert

      Davis, David (Boothferry)

      Boswell, Tim

      Day, Stephen

      Bottomley, Mrs Virginia

      Dicks, Terry

      Bowden, Gerald (Dulwich)

      Douglas-Hamilton, Lord James

      Bowis, John

      Dover, Den

      Boyson, Rt Hon Dr Sir Rhodes

      Dunn, Bob

      Braine, Rt Hon Sir Bernard

      Durant, Tony

      Brandon-Bravo, Martin

      Dykes, Hugh

      Brazier, Julian

      Eggar, Tim

      Bright, Graham

      Emery, Sir Peter

      Brown, Michael (Brigg & Cl't's)

      Evans, David (Welwyn Hatf'd)

      780

      Evennett, David

      McNair-Wilson, Sir Patrick

      Fairbairn, Sir Nicholas

      Malins, Humfrey

      Fallon, Michael

      Mans, Keith

      Favell, Tony

      Maples, John

      Field, Barry (Isle of Wight)

      Marland, Paul

      Fishburn, John Dudley

      Marshall, Michael (Arundel)

      Forman, Nigel

      Martin, David (Portsmouth S)

      Forsyth, Michael (Stirling)

      Mates, Michael

      Forth, Eric

      Maude, Hon Francis

      Fox, Sir Marcus

      Mayhew, Rt Hon Sir Patrick

      Franks, Cecil

      Mellor, David

      Freeman, Roger

      Miller, Sir Hal

      French, Douglas

      Mitchell, Andrew (Gedling)

      Fry, Peter

      Moate, Roger

      Gardiner, George

      Montgomery, Sir Fergus

      Garel-Jones, Tristan

      Morris, M (N'hampton S)

      Gill, Christopher

      Morrison, Sir Charles

      Glyn, Dr Sir Alan

      Moss, Malcolm

      Goodhart, Sir Philip

      Mudd, David

      Goodlad, Alastair

      Nicholson, David (Taunton)

      Goodson-Wickes, Dr Charles

      Norris, Steve

      Gorman, Mrs Teresa

      Onslow, Rt Hon Cranley

      Gow, Ian

      Oppenheim, Phillip

      Grant, Sir Anthony (CambsSW)

      Patnick, Irvine

      Greenway, Harry (Ealing N)

      Patten, Rt Hon John

      Gregory, Conal

      Pawsey, James

      Griffiths, Peter (Portsmouth N)

      Peacock, Mrs Elizabeth

      Ground, Patrick

      Portillo, Michael

      Grylls, Michael

      Raison, Rt Hon Timothy

      Hague, William

      Riddick, Graham

      Hamilton, Neil (Tatton)

      Ridsdale, Sir Julian

      Hanley, Jeremy

      Rifkind, Rt Hon Malcolm

      Hannam, John

      Roberts, Wyn (Conwy)

      Hargreaves, Ken (Hyndburn)

      Rossi, Sir Hugh

      Harris, David

      Rost, Peter

      Haselhurst, Alan

      Rowe, Andrew

      Hawkins, Christopher

      Ryder, Richard

      Hayhoe, Rt Hon Sir Barney

      Sackville, Hon Tom

      Hayward, Robert

      Sainsbury, Hon Tim

      Heathcoat-Amory, David

      Scott, Rt Hon Nicholas

      Heseltine, Rt Hon Michael

      Shaw, David (Dover)

      Hicks, Mrs Maureen (Wolv' NE)

      Shaw, Sir Giles (Pudsey)

      Hicks, Robert (Cornwall SE)

      Shaw, Sir Michael (Scarb')

      Higgins, Rt Hon Terence L.

      Shelton, Sir William

      Hill, James

      Shepherd, Richard (Aldridge)

      Howarth, G. (Cannock & B'wd)

      Shersby, Michael

      Howe, Rt Hon Sir Geoffrey

      Skeet, Sir Trevor

      Howell, Ralph (North Norfolk)

      Smith, Tim (Beaconsfield)

      Hughes, Robert G. (Harrow W)

      Soames, Hon Nicholas

      Hunt, Sir John (Ravensbourne)

      Speed, Keith

      Irvine, Michael

      Spicer, Sir Jim (Dorset W)

      Irving, Sir Charles

      Spicer, Michael (S Worcs)

      Jack, Michael

      Squire, Robin

      Janman, Tim

      Stanbrook, Ivor

      Jessel, Toby

      Steen, Anthony

      Jones, Robert B (Herts W)

      Stern, Michael

      Kellett-Bowman, Dame Elaine

      Stevens, Lewis

      Key, Robert

      Stewart, Allan (Eastwood)

      King, Roger (B'ham N'thfield)

      Stewart, Andy (Sherwood)

      Kirkhope, Timothy

      Stewart, Rt Hon Ian (Herts N)

      Knapman, Roger

      Stokes, Sir John

      Knight, Greg (Derby North)

      Stradling Thomas, Sir John

      Knight, Dame Jill (Edgbaston)

      Sumberg, David

      Knowles, Michael

      Tapsell, Sir Peter

      Knox, David

      Taylor, Ian (Esher)

      Latham, Michael

      Taylor, Teddy (S'end E)

      Lee, John (Pendle)

      Tebbit, Rt Hon Norman

      Leigh, Edward (Gainsbor'gh)

      Temple-Morris, Peter

      Lennox-Boyd, Hon Mark

      Thompson, D. (Calder Valley)

      Lightbown, David

      Thompson, Patrick (Norwich N)

      Lilley, Peter

      Thorne, Neil

      Lloyd, Sir Ian (Havant)

      Thornton, Malcolm

      Lloyd, Peter (Fareham)

      Thurnham, Peter

      Lord, Michael

      Townsend, Cyril D. (B'heath)

      Lyell, Rt Hon Sir Nicholas

      Tracey, Richard

      McCrindle, Robert

      Trotter, Neville

      Macfarlane, Sir Neil

      Twinn, Dr Ian

      MacKay, Andrew (E Berkshire)

      Vaughan, Sir Gerard

      Maclean, David

      Waddington, Rt Hon David

      McLoughlin, Patrick

      Walker, Bill (T'side North)

      781

      Waller, Gary

      Wolfson, Mark

      Wardle, Charles (Bexhill)

      Wood, Timothy

      Watts, John

      Woodcock, Dr. Mike

      Wells, Bowen

      Yeo, Tim

      Whitney, Ray

      Young, Sir George (Acton)

      Widdecombe, Ann

      Younger, Rt Hon George

      Wiggin, Jerry

      Wilkinson, John

      Tellers for the Noes:

      Wilshire, David

      Mr. John M. Taylor and Mr. Sydney Chapman.

      Winterton, Mrs Ann

      Question accordingly negatived.
      Amendments made: No. 35, in page 55, line 49, after 'council', insert 'or company'.
      No. 36, in page 56, line 17, at end insert

      (b) "local enterprise company" means a company with which an agreement (not being one which has terminated) under which it is agreed that the company shall carry out the functions of a local enterprise company has been made by the Scottish Development Agency, the Highlands and Islands Development Board, Scottish Enterprise or Highlands and Islands Enterprise.'. —[Mr. Lilley.]

      Clause 68, as amended, ordered to stand part of the Bill.

    Clause 9

      REGISTRATION
      Question proposed, That the clause stand part of the Bill.
      Mr. Chris Smith: Clause 9 simplifies the procedures by which businesses determine whether they must register for VAT.
      I must begin by taking slight issue with the notes on clauses issued by the Treasury, which are intended to simplify and to explain clauses. It was with some surprise and concern that I came across the following note on clause 9:
      "Sub-paragraph 1(1) provides reference to the new sub-paragraphs (3) to (5) and continues to cite the revised sub-paragraph 1(a). The revised sub-paragraph 1(1)(a) replaces the current sub-paragraphs 1(1)(a) (i) and (ii)".
      That is impenetrable and does not enlighten our consideration of the clause. I hope that in future the notes on clauses will be clearer than the clause, not less clear.
      Clause 9 has already been welcomed by many small traders, and we intend to support it. There has long been discontent that the tests to determine whether a small trader should register for VAT were too complex. Even before the new regime for VAT penalties and interest which has just been introduced, the cost of not registering when one should have done so could have been punitive, and that has become more so with the recent new system of penalties.
      Before the changes proposed in clause 9, a trader had to apply four different tests in order to see whether he should register. The first was a test of the past year's turnover exceeding a specified threshold; the second was a test of the past quarter's turnover exceeding another specified threshold; the third a test of the next month's anticipated turnover being likely to exceed a third threshold; and the fourth a test of the next year's turnover being likely to exceed a fourth threshold. Those four tests all had to be undertaken regularly by a small business in order to ascertain whether it should register. It was a complex bureaucratic procedure, which was resented by many small businesses.
      Clause 9 effectively removes two of those tests—the test of the past quarter's turnover and the test of the next year's
      782
      turnover. The removal of those two tests is welcome, but I have two questions for the Economic Secretary. First, it appears from the clause that a trader must register at the end of a month if the previous year's turnover exceeded £25,400. In other words, the trader has to make an assessment on a rolling 12-month basis with a new assessment having to be made each month about whether the two remaining tests will be exceeded. That is somewhat onerous and I hope that, in a spirit of bipartisanship, the Government will consider some change, perhaps to a calendar quarter rather than the existing calendar month with the rolling provision.
      6.15 pm
      Secondly, the increase in the threshold that the Government are introducing in the clause is an increase from £23,600 to £25,400—an increase of 7·6 per cent. Under the European Community sixth directive, the increase must be limited to a rise in real terms—that is, allowing for inflation. However, I am sure that the Government will be aware that inflation is currently running at considerably more than 7·6 per cent. It would be useful to know from the Government whether it might be possible to allow a slightly greater increase in the VAT threshold in the light of the rising level of inflation that we faced at the time of the Budget and that we certainly face now.
      I raise those two small points, but in broad terms we support the general thrust of clause 9 and wish to see it included in the Bill.
      Mr. Tim Smith: I welcome clause 9 because it considerably simplifies the arrangements for the registration of VAT traders. We have had VAT now for about 20 years, and ever since it was introduced the registration requirements have caused difficulties for small businesses. Small businesses are inevitably affected, because the threshold is so low.
      There was no great problem until 1985, when the new Keith-type default provisions were introduced. Since then, a number of cases have been decided which many felt were penal in their outcome. Therefore, clause 9 is good news and I congratulate Treasury Ministers on it. It is obviously always difficult to anticipate turnover, and it makes so much more sense to have a registration requirement based on turnover recorded in the books of a business.
      I have seen the representations made by the Institute of Taxation, to which I think the hon. Member for Islington, South and Finsbury (Mr. Smith) referred, which suggested that, despite a simplification, there was an increase in the compliance burden, because a business would have to look at its turnover at the end of each month rather than at the end of each quarter under the previous arrangement.
      I always think that small businesses are ambivalent about VAT. They complain about the compliance burden that VAT imposes, but I was interested to note that, when annual VAT accounting was introduced a couple of years ago to lessen the burden on small businesses, take-up was low. I believe that one reason is that small businesses find the obligation to complete a VAT return once every quarter a useful discipline. They are usually busy trying to make a success of themselves and do not keep their books much up-to-date. However, every quarter they are compelled to bring their books up to date by the end of the

      783
      following month, for the purpose of completing their VAT return. That is probably why take-up of monthly VAT accounting has been less than anticipated.
      I have read the views of the Institute of Taxation, but I imagine that a small and growing business would want to know fairly soon after the end of any particular month what its turnover was in the preceding four weeks. That is not a difficult figure to calculate. Although I have some sympathy with the suggestion that, in subsection (2)(1)(a), the word "month" should be replaced by the word "quarter", the new obligation is not terribly onerous. Clause 9 offers a valuable simplification for small businesses that has already been widely welcomed.
      Mr. Beith: I welcome the improvement that clause 9 represents. We should not get too excited when we remember that these days the VAT registration limit is such that any small business employing two people and paying some rent is likely to be over the threshold anyway. Therefore, we are taking only about the smallest businesses, to which monthly VAT accounting would be of advantage in many cases. It will allow some to remain free even of the threat of the requirement to register and offer them more peace of mind. Nevertheless, the complex problems of VAT, as they relate to other aspects such as bad debts, to which we shall return later, remain for a large number of other businesses. For a few, the clause will be most helpful.
      Mr. Jeremy Hanley: I first declare an interest as parliamentary adviser to the Institute of Chartered Accountants in England and Wales. I hope that the submissions that the institute lodged with the Treasury will prove helpful, not only to the Committee of the whole House but when right hon. and hon. Members repair to the Standing Committee later this week.
      There are three technical questions that I want to put to my hon. Friend the Economic Secretary, but first I echo the remarks of my hon. Friend the Member for Beaconsfield (Mr. Smith), who congratulated Treasury Ministers on simplifying the registration procedure, which will be warmly welcomed by small businesses. My only gripe was that raised also by my hon. Friend the Member for Beaconsfield and by the hon. Member for Islington, South and Finsbury (Mr. Smith): that monthly accounting could prove onerous for some businesses and that a quarterly calculation might be fairer.
      My hon. Friend the Member for Beaconsfield put his finger on the button when he argued that, as a result of hardware that was not available even four or five years ago, small businesses can calculate their monthly turnover. If they do not do so, their bank would probably be extremely interested.
      The institute suggests that, as a counterweight to the requirement placed on small businesses to monitor turnover monthly, the time limit for notifying a liability to register might be extended to two or three months. That would seem a fair bargain.
      I turn now to my three technical points. I suggest that if the words
      "in the period then ending not exceeding one year"
      was substituted for the words
      "in the period of one year then ending"
      in subsection (1)(1)(a), that would make it clear that the period does not have to be a full year. The existing words suggest that a full year must be taken into account, and I am not sure that that is what is intended.
      784
      Secondly, I know some chartered accountants who would like confirmation that the word "business" in subsection (1)(2) includes part of a business, to align with the wording that appears in article 12(1)(b) in the Value Added Tax (Special Provisions) Order 1981.
      Finally, it is not clear, having regard to section 33 (1)(a) of the Valued Added Tax Act 1983 whether the words "his taxable supplies" in subsection (2)(a) refer to the transferee or include the supplies of the transferor now transferred to the transferee.
      I acknowledge that these purely technical points may be extremely boring to the Committee, but they are important. I shall be happy if my hon. Friend the Economic Secretary will write to me about them.
      Mr. Graham Allen: In common with right hon. and hon. Members in all parts of the House, I believe that clause 9 is to be welcomed. I hope that it sets a precedent in establishing cross-party agreement on such matters, and that when my right hon. and hon. Friends present new clauses that are equally reasonable, they will similarly receive a fair hearing from Government Members. I understand from right hon. and hon. Members who served on previous Committees that that has not always been the case, but I am sure that open-minded Members of the Government Front Bench will want to prove their good will at an early point in the Committee proceedings, by accepting reasoned and reasonable amendments.
      In the past, businesses had to check their turnover on a quarterly and full-year basis, and guess at their possible future turnover, to establish whether they needed to register for VAT. The new system will provide for registration only if the turnover threshold was achieved in the previous 12 months, which is a helpful and useful improvement.
      The old system was extremely complicated, so any change that simplifies it must be welcomed. I hope that the Government will consider extending the principle to other areas—such as to people trying to complete housing benefit forms, which are also very complicated. Disposing of red tape in respect of small businesses will always have the support of my right hon. and hon. Friends. Equally, I hope that there will be support for simplifying the forms that must be completed for the purpose of poll tax rebates. I am sure that right hon. and hon. Members in all parts of the House have received letters from their constituents complaining about the complicated procedure that must be observed to obtain a rebate. I hope that clause 9 sets a precedent in simplifying procedures in that respect.
      Small businesses constitute a vociferous local lobby, and rightly so. However, if one asks them for a list of the provisions in the Finance Bill that should be reconsidered, the imposition and complexities of VAT would probably come fairly low down on it. Other matters need to be examined in some detail, particularly interest rates. Certainly the chamber of commerce and small business organisations in my constituency have made endless representations to me—and I have no doubt to the Government and the Treasury—regarding the effect on their businesses of high interest rates and the uncertainty about whether the rates will go higher.
      The one-club policy that the Government are adopting over interest rates is not merely a club but a sledge-hammer, and an ineffective one at that. The Government should show more diversity and flexibility in

      785
      their policies for dealing with the present state of the economy. High interest rates alone are not the answer—they need to be part of a more comprehensive attack on inflation and the other problems that beset us, and which particularly beset small business people. They would benefit from an attack on high interest rates and the continued development of some of the things that hon. Members mentioned earlier, such as training to ensure that the skill levels in our communities guarantee higher levels of employment and income so that small businesses can continue to grow and flourish.
      6.30 pm
      If asked to list their priorities, while small business people would welcome clarification and simplification of VAT registration, they would probably put it fairly low on the list compared with other issues that we need to consider. In Committee those other issues will be important. Small business people will make representations in Committee and, among other things, they will concentrate on the economic indicators, which show the stagnant output that undoubtedly afflicts our economy, and the need to drive the economy back towards growth with sensible rather than obsessive and dogmatic policies on interest rates.
      Small businesses have also been particularly affected by the uniform business rate. It would be remiss of us to discuss the clause without putting on record what UBR has meant to many small businesses. The Inland Revenue estimates that 252,000 businesses will face increases in bills. They are small businesses. While clarifying VAT for small businesses, surely we should consider all the other things that afflict them and VAT may not—
      The Temporary Chairman (Mr. Geoffrey Lofthouse): Order. The hon. Gentleman is going rather wide of the subject. We may discuss some of these issues at a later date, but at present we should be discussing whether clause 9 should stand part of the Bill.
      Mr. Allen: The last thing that I wish to do is to get on the wrong side of you at this early juncture, Mr. Lofthouse. Unfortunately that may happen later—who knows? In view of your comments, I shall conclude my remarks.
      Mr. Neil Hamilton: I am sure that all hon. Members present will be disappointed to learn that I shall not be serving on the Standing Committee this year as I have already sat for 270 hours in Committee on the King's Cross Bill—in which the hon. Member for Islington, South and Finsbury (Mr. Smith) has some interest. I have enjoyed Committees enough this year and should allow others, such as the hon. Member for Nottingham, North (Mr. Allen), the privilege of enjoying the Finance Bill Committee.
      Mr. Beith: Who is to assist me in scourging the Government over retrospective legislation, on which the hon. Gentleman had such a distinguished record on previous Committees?
      Mr. Hamilton: I recall the fight that the hon. Member for Berwick-upon-Tweed (Mr. Beith) and I had last year on the Standing Committee to support what I believed to be the true Conservative principles in respect of
      786
      retrospective legislation. I regret to say that even all the eloquence at his command, in addition to the few small words that fell from my lips, was not sufficient to persuade the Government of the merits of our cause. Virtually every week we had cause to join forces on the Select Committee on the Treasury and Civil Service and I hope that that will suffice in the hon. Gentleman's mind to sustain the alliance which we have held together across the Floor, which was perhaps in rather better shape than the alliance he had with his own colleagues.
      I welcome clause 9, because it increases the certainty of rules for the trader in an ingenious way and increases the effective level of registration threshold within the constraints of European Community legislation.
      One of the complaints of small businesses, as the hon. Member for Nottingham, North said, has been the onerous burden of VAT compliance over the years. Until 1984 or 1985, I recall that the annual report of Customs and Excise used to contain a useful table which revealed the yield of VAT from traders within different bands of turnover threshold. I cannot recall the figures exactly, but the overwhelming bulk of VAT receipts come not from small businesses but from relatively large businesses, although the majority of registered traders are small businesses. Therefore, it is an expensive way to collect revenue, and the expense falls not on the public departments, but on small businesses who are responsible by and large, for administration of the tax. It is a great shame that that table is no longer published. I do not know whether it caused too much embarrassment and therefore had to be removed, but I should like to see it published once again.
      Although I know that the arguments against raising the threshold too much are that it introduces inequities in competition between businesses, in particular when the VAT rate is 15 per cent., as it is in this country, we should have regard to the compliance costs of such a tax on small businesses. I am pleased that the Government have borne that in mind over the years and have made a number of useful reforms—perhaps this is one of them.
      The clause demonstrates once again that the maximum registration threshold permitted by the European Community under the sixth directive is unrealistically low. It is a great shame that we are constrained in such a way. I am certain that if we had complete freedom of action on the matter we would not choose to have such a low VAT threshold. It amazes me that we have been unable to persuade our partners in the European Community of the rightness of our arguments in favour of raising the threshold significantly. One mystifying aspect of the European Community is that so many sensible ideas put forward by the Government are not accepted by our colleagues across the water.
      The large increase in the compliance burden alluded to by my hon. Friend the Member for Beaconsfield (Mr. Smith), following the Keith report recommendations—now enshrined in legislation—and the risk that small businesses will incur penalties, make it all the more urgent for the Government to reopen in Brussels the question of a substantially increased threshold. It is not fair to expect the smallest businesses to have the same sort of resources available to understand and administer complex legislation as larger firms, which can afford to maintain their own in-house accounts and tax administrators. Consequently, it would be a great misfortune if the issue of the VAT threshold were to decline in importance over the years.

      787
      I hope that the Economic Secretary will redouble his efforts to raise the VAT threshold or to persuade our EC partners to support our campaign to raise it. That will lift a significant burden in administration and costs from businesses that are ill-equipped to carry the costs, particularly when other costs have been rising recently, as the hon. Member for Nottingham, North pointed out in his somewhat wide-ranging and discursive remarks on the community charge. I welcome the clause, and I shall support it if there is a Division.
      Mr. Haynes: I remember the last exchanges with the Economic Secretary to the Treasury. We were talking about the good old British banger. They tried to take that away from us at the other end of the building. However, we got in first.
      The hon. Member for Beaconsfield (Mr. Smith) referred to the need for small businesses to show discipline. You and I, Mr. Lofthouse, knows what discipline means. We worked in the bowels of the earth. Discipline was all about saving life and limb. The hon. Member for Beaconsfield knows that there are many small businesses in my constituency. My constituents come to see me about their financial problems, some of which are the direct result of measures introduced by this Government.
      One of my constituents with a fairly small business employed an accountant. I employ an accountant; I am no financial wizard. My constituent was in serious difficulty over VAT. He was told by the Inland Revenue that he was in deep trouble, so he came to my surgery and asked for help. I told him that I was no financial wizard and that I could not work it out for him but that I would write to Sir Lawrence Airey, who was the chairman of the Board of Inland Revenue at that time. We found out that the accountant had not done his job and that therefore his business owed the Inland Revenue £6,000 in VAT.
      Shortly afterwards, Sir Lawrence Airey was summoned before the Select Committee on the Parliamentary Commissioner for Administration to give evidence. I am a member of the Select Committee, so I had a word with him after the meeting. It turned out that although the accountant had not done his job properly, my constituent had been overcharged for VAT, so he got some of his money back. My constituent told me that he had always voted Conservative but that because he had got some of his money back he had decided to vote for me at the next election.
      Local people who have left the pits have set themselves up in small businesses with their redundancy money. They are screaming like hell back home about the way this Government are taxing small businesses. They are hitting small firms hard and VAT involves them in more and more work. I agree with the hon. Member for Beaconsfield that self-discipline is needed—that small business men ought to do their books regularly and not wait until the end of the year to sort it all out. The Government must not, however, clobber the small business man. The Prime Minister told us a long time ago that small businesses create jobs and that small businesses ought to be encouraged. However, the Government must be fairer when it comes to taxing them. I appeal to the Government to help them. Small businesses make a valuable contribution to the economy.
      6.45 pm
      Mr. Tim Smith: The hon. Gentleman says that the VAT burden is far greater now than it was 10 years ago. Will he, however, remind the Committee of the number of boxes that the registered trader had to fill in on his VAT return 10 years ago and how many he has to fill in today?
      Mr. Haynes: The hon. Gentleman referred earlier to discipline; now he talks about burdens. I remember the time when the Chancellor of the Exchequer came to the House and said that he intended to double VAT. The hon. Gentleman has forgotten that; he was not here at the time. The hon. Gentleman talks about burdens, but it is the Government who have imposed burdens on small businesses. That is why my constituents come squealing to my surgery. When the Chancellor of the Exchequer doubled VAT it caused more and more work for small business people. They are sick of it.
      In the case of some small businesses, the men still work in the pits. There are only three pits left in my constituency. The wife looks after the small business. They have to get their heads together to work out the VAT and to fill in all the flipping forms that this Government have imposed on them so that they can get in all their money. These poor souls have been down the pit all day. You know what it is like, Mr. Lofthouse, to be down the pit for eight hours a day.
      The Temporary Chairman: Order. I am fully aware of the conditions in the pits. I am also fully aware of the contents of clause 9. I hope that the hon. Gentleman will stick to it.
      Mr. Haynes: I am talking about small businesses. I hope that you are listening, Mr. Lofthouse.
      The Temporary Chairman: The hon. Gentleman is going pretty wide of the clause.
      Mr. Haynes: I do not think so, but I do not intend to have an argument with you.
      The Temporary Chairman: Order. I happen to think so.
      Mr. James Arbuthnot: I am enjoying the hon. Gentleman's speech so much that I almost hate to do this, but does he have any views on the commendable relaxation and simplification of the VAT rules that the clause introduces?
      Mr. Haynes: I welcome that change. However, the Government have imposed a great burden on small businesses. The hon. Member for Beaconsfield then dragged me into debating the burden on small businesses. The VAT burden on small businesses is being increased by the Government.
      Mr. Hanley: Does the hon. Gentleman know how many miners in his constituency who work eight hours a day down the pit then come out of the pit and do a part-time job with a turnover in excess of £25,000?
      Mr. Haynes: Would I be in order if I answered that question, Mr. Lofthouse?
      The Temporary Chairman: The hon. Gentleman can answer the question.
      Mr. Haynes: I had to ask because I did not know whether you would step in and rule me out of order if I tried to answer it.
      I am in the House five days a week so how can I keep track of everyone? What a stupid question. The matter is not funny. However, I think that I have said enough.
      The Economic Secretary to the Treasury (Mr. Richard Ryder): The hon. Member for Ashfield (Mr. Haynes) and I have been a powerful force in defence of the British banger. I am happy to say that, although there may be a mad cow disease, as yet there is no mad pig disease—not even among the Gadarene swine. If one did develop, perhaps the hon. Member for Ashfield and I should get together again to save the British banger. Millions of people are grateful to the hon. Gentleman and me for ensuring that it is still on our plates.
      Mr. Haynes: Is the Minister aware that the hon. Member for Crawley (Mr. Soames) has just walked into the Chamber and that he, like us, thinks that the British banger is the best in the world?
      The Temporary Chairman: The British banger is certainly enjoyable, but it has nothing to do with clause 9.
      Mr. Ryder: I thank the hon. Member for Ashfield for reminding me that my hon. Friend the Member for Crawley (Mr. Soames) enjoys the British banger. However, as my hon. Friend has just walked into the Chamber, I did not need the reminder.
      Let me reassure the hon. Member for Nottingham, North (Mr. Allen)—who is a member of the Standing Committee on the Finance Bill—that he will find me an open-minded, cordial, friendly, helpful and co-operative Minister who is prepared to examine every conceivable point of view that is put to me. If the hon. Gentleman would like to draw to my attention any VAT forms that he thinks require further simplification, I shall be happy to examine them.
      Mr. Allen: I thank the Minister for showing his usual generosity. I guarantee him that I will correspond with him within a fortnight with my suggestions, should I find that any amendments to VAT forms are necessary.
      Mr. Ryder: I thank the hon. Gentleman.
      All the speakers in this short debate have welcomed the general point made in clause 9. The measures for small and medium-sized businesses were central to my right hon. Friend the Chancellor's Budget, and lie at the heart of the Bill. The revenue cost of the clause, which has been welcomed by the small business community, is about £75 million.
      Clauses 9 and 10 may not grab the headlines, but together they provide for nearly a quarter of a billion in legislative assistance for the small business community. They are deliberately targeted at smaller, growing businesses, which—although perhaps less glamorous—are none the less important. Such companies produce a large proportion of our industrial output, and have grown apace during the past few years.
      The hon. Member for Islington, South and Finsbury (Mr. Smith) made some observations about the notes on clauses. I will do my best to ensure that they are made clearer than the notes for clause 9. I am only too grateful to the hon. Gentleman for not asking me to explain the notes on clauses, as I would not have been able to do so.
      790
      Clause 9 was welcomed by the hon. Member for Berwick-upon-Tweed (Mr. Beith), my hon. Friend the Member for Beaconsfield (Mr. Smith) and my hon. Friend the Member for Tatton (Mr. Hamilton)—I am sorry that he is not a member of the Standing Committee this year.
      The hon. Member for Islington, South and Finsbury asked about the liability arising at the end of a calendar quarter, for example, rather than at the end of a month. The month-end determination of liability reduces unfair competition from traders who remain unregistered. It also minimises the revenue loss, and maintains an even flow of registration work for Customs. Most businesses keep monthly records of sales and expenses in any event.
      The hon. Gentleman was also concerned about the possibility of raising the threshold still further—an argument also pursued by my hon. Friend the Member for Tatton. The original threshold of £5,000 has been increased over the years—in line with inflation—to the present level of £25,400, which is already among the highest in the EEC. A further increase would constitute a breach of our legal obligation under article 24 of the sixth VAT directive, to which my hon. Friend referred.
      However, I agree with my hon. Friend's general observations about the threshold, and it is inconceivable that his views will not be put strongly by Ministers whenever suitable opportunities arise in Brussels. As he knows, we want to ensure that the threshold is raised still further, although some industries—such as the building industry—would like it to be lowered. It is not a uniform pattern across small businesses.
      Mr. Chris Smith: The Economic Secretary rightly says that the European Commission insists that the rise in the threshold should be no greater than inflation. However, which inflation figure does he mean? Does he mean the inflation figure at the date of the Chancellor's Budget, or an average inflation figure taken over a period of 12 months? If so, which 12 months? The figure used in the calculation relating to clause 9 is 7·6 per cent., but inflation is currently at 9·4 per cent. and rising. Which figure will be used?
      Mr. Ryder: When the threshold has been raised over the years, it has not always been raised directly in relation to inflation. The hon. Member for Islington, South and Finsbury would be pursuing the wrong hare if he believed that it had been. If the threshold were raised, that would require another significant loss of revenue, and would further increase the distortion of the balance between registered and unregistered traders.
      As an accountant, my hon. Friend the Member for Richmond and Barnes raised three technical points. As he requests, I shall write to him about them as soon as possible, as I, too, would like to clarify the matter.
      This has been a valuable debate. It has shown that the House fully supports clause 9 and the important measures that my right hon. Friend the Chancellor has taken to help small businesses. I hope that the House will continue to support the Bill.
      Question put and agreed to.
      Clause ordered to stand part of the Bill.

    Clause 10

      BAD DEBTS
      Mr. Chris Smith: I beg to move amendment No. 2, in page 6, line 43, leave out 'his accounts' and insert
      'the accounting records from which the accounts of the business for the period in which the write off occurs have been or will be prepared'.
      The Temporary Chairman: With this we may take the following amendments: No. 37, in page 6, line 43, leave out 'accounts' and insert 'books and records'.
      No. 3, in page 6, line 44, leave out 'two years' and insert 'one year'.
      No. 1, page 6, line 45, after 'elapsed', insert
      ', or the company or individual liable to pay any outstanding amount of the consideration has become insolvent and (except where Paragraph 10 (1A)(b) below applies) the person has submitted a claim in the insolvency for the outstanding amount of the consideration.

      (1A) a company becomes insolvent for the purposes of this section if:

      (a) it goes into liquidation in the United Kingdom or the Isle of Man at a time when its assets are insufficient for the payment of its debts and other liabilities and the expenses of the winding up;

      (b) a person who has been appointed in Great Britain to act as the Administrator or Administrative Receiver issues a certificate of his opinion that, if it went into liquidation, the assets of the company would be insufficient to cover the payment of any dividend in respect of debts which are neither secured nor preferential; or

      (c) a composition or scheme proposed by the Directors is approved under Part I of the Insolvency Act 1986.

      (1B) An individual becomes insolvent for the purposes of this section if:

      (a) in England and Wales he is adjudged bankrupt, a deed of arrangement is made for the benefit of his creditors, a composition or scheme proposed by him is approved under Part VIII of the Insolvency Act 1986 or, after his death, his estate falls to be administered in accordance with an order under Part XV of that Act;

      (b) in Scotland, sequestration of his estate is awarded, he signs a trust deed for his creditors or, after his death, a judicial factor is appointed under Section 11A of the Judicial Factors (Scotland) Act 1889 to administer his estate;

      (c) in Northern Ireland he is adjudged bankrupt, a deed of arrangement is made for the benefit of his creditors, a resolution of his creditors is approved by the court under Section 5 of the Bankruptcy Amendment Act (Northern Ireland) 1929 or, after his death, the court makes an order for the administration in bankruptcy of his estate; or

      (d) in the Isle of Man, he is adjudged bankrupt, a deed of arrangement is made for the benefit of his creditors or, after his death, the court makes an order for the administration in bankruptcy of his estate.'.

      No. 24, in page 7, line 4, at end insert
      'but no claim may be made before 1st December 1990.'.
      No. 38, in page 7, line 18, leave out from '(b)' to the end of line 20.
      Mr. Smith: Clause 10 relates to bad debt relief for VAT. It will cost the Exchequer £150 million in a full year, so we are talking about a substantial measure and it is important to ensure that the Government have got it right. We broadly welcome the Government's aim in the clause but do not think they have it right, and we have tabled amendments to improve it. I hope that when he returns to
      792
      his place, the Economic Secretary will address the issues involved in the clause in the open-minded manner that he promised he would adopt in our discussions on the Bill.
      The Government have made much of the claim that the clause will ease the position of VAT recovery for small businesses. Our fear is that there are some limited circumstances in which the clause will make matters worse, and we have tabled amendments to correct that problem. I shall return to that issue later as I deal in detail with our amendments. It is important at the outset to recognise the context in which the debate is taking place, and to that end it is necessary to examine the overall context in which small businesses find themselves.
      Small, if useful, measures on VAT registration and bad debt relief are as nothing beside the two overwhelming and dominating facts of life for small businesses in Britain today. Those are high interest rates and the introduction of the uniform business rate.
      7 pm
      High interest rates have been adopted by the Government as the only policy that is supposed to operate as a deterrent to demand and credit in the British economy. As we know, high interest rates are not particularly good instruments as a deterrent to demand. As we pointed out on Second Reading, since the former Chancellor began to tighten credit by raising the cost of money, £150 billion-worth of additional credit has gone into the domestic economy. The profit figures announced this morning by Sainsbury show that the impact on the demand side of the economy has been imperfect at best.
      But the problem with high interest rates is that they harm the supply side of the equation, too. It becomes crucial for small businesses because of the results of the harm on the supply side. Large-scale business tends to invest out of its own profits. Small business must borrow to invest, to grow and to take the decisions about future expansion that must be taken.
      The reality is clear. For example, the chairman of the Midland bank, Sir Kit McMahon, was reported on 24 April last to have said:
      "High interest rates were hitting businesses as well as individuals and leading to a worsening of the bank's bad debts."
      That was a clear indication from the Midland bank, echoed a couple of days later by the deputy chairman of Barclays bank, that small businesses throughout the country were facing enormous difficulty as a result of the Government's high interest rate policy.
      The accountants Peat, Marwick, McLintock reported a 27 per cent. rise in the number of companies going into voluntary liquidation in the first quarter of this year. That is the background for small businesses against which we come to this debate about VAT changes for small businesses.
      At the same time as high interest rates are operating on small businesses, the uniform business rate is having a great impact, especially in the south of the country, on the small-scale retailing sector. Even the transitional protection that the Government have supposedly introduced will not make life much better for small businesses faced with the certainty of major increases in the rates that they will pay in each of the next five years.
      We must consider clause 10 against that background. Likewise, we must consider the changes that our amendments would make to the clause. There are two forms of trader who are not affected by clause 10. A

      793
      limited number of traders use either the cash accounting scheme or the retailers' standard method scheme. Under either of those, output VAT is accounted for only when cash is received. So bad debt relief is automatic for firms in those categories.
      All other traders will find the clause important. For them, VAT must at present be accounted for to Customs on the basis of VAT invoices issued, regardless of whether the money has been received. As a result, if a trader charges a customer £100 of VAT, he must at the time of his next VAT return account for that £100 to Customs and Excise, whether or not he has received the money.
      If the £100 is not received, because the customer defaults, how can the trader get his £100 back or have it recredited? Until the date of the Budget, he could get it back only if the debtor became formally insolvent, and the formal definition of insolvency—generally either bankruptcy or liquidation—was set out in section 22 of the Value Added Tax Act 1983.
      If a debtor simply did not pay or became untraceable —if he disappeared or, in the case of large companies, the debt was small—it was not worthwhile tracking the debtor down, making him bankrupt and petitioning for a company's liquidation. As a result, even where a debt had been written off and was clearly not recoverable, VAT bad debt relief was often not available. As larger debtors were chased and as larger creditors tended to pursue debts as a matter of principle, the problem tended to affect mainly relatively small debts owed to small and medium-sized traders.
      Overall, taken in total, a substantial amount of money is involved and it has been a source of great irritation to many businesses. For example, in the credit card operation of one major high street retailer, in 1988–89 £12 million of small debts, of under £500 each, was written off. By doing that, the company would have lost some £1·8 million in VAT bad debt relief. So in some instances we are talking about substantial sums of money and a substantial impact upon the cash flow of companies.
      The new relief which clause 10 introduces allows the £100 of VAT to be reclaimed or recredited after three things have happened. First, the VAT has to have been paid over by the trader to Her Majesty's Customs and Excise before it can subsequently be reclaimed under the provisions of the clause. Secondly, the debt has to be written off in the company's accounts, and thirdly—the point to which our principal amendment relates—at least two years must elapse from the date of the supply.
      Representative bodies of small businesses have been pressing for such bad debt relief for many years, so it is a welcome change. However, the pressure was for such a change to be made as an alternative to the existing system, not as a complete and total replacement for it. Our other main amendment seeks to enshrine that principle so that after Royal Assent the new clause 10 provisions are not a total replacement for the existing provisions, and to allow them to run side by side.
      Mr. Tim Smith: I do not fully understand one aspect of the hon. Gentleman's argument. I do not understand why it is thought that clause 10 is so important for small businesses. Any small business with a turnover of less than £250,000, which is not that much, can opt for cash accounting. If a company opts for cash accounting it has to account for output only when it receives the cash. Small
      794
      businesses do not have to worry about all that, so why is the clause so important for small businesses if they can opt for cash accounting?
      Mr. Chris Smith: I am surprised by the hon. Gentleman, who is normally somewhat more perceptive. Of course the clause is important to small businesses, as it is to larger businesses, but larger businesses can frequently tolerate greater ups and downs in their cash flow than can small businesses which have not opted for cash accounting. I made it clear at the beginning of my remarks that the cash accounting principle was excluded from the provisions for bad debt relief because VAT is not claimed at the point of supply. The hon. Gentleman must realise that large numbers of small businesses are affected by the provisions of clause 10 for whom the deficiencies of clause 10 are likely to be important.
      The new relief will be introduced in place of the old relief and schedule 16 of the Bill, which no doubt we shall be discussing in some weeks' time, repeals section 22 of the Value Added Tax Act 1983.
      7.15 pm
      The problem is that, where prompt relief might have been possible under the old system, it is likely to be delayed under the new system. Let me illustrate that. If a major trader, which we shall call Ryder and Co., is rendering quarterly VAT returns and in July 1990 Ryder and Co. sells goods to another company—let us call it Lilley and Co.—for £1 million plus VAT of £150,000. Payment is due in 60 days. At the end of September 1990, Ryder and Co. pays the £150,000 to Her Majesty's Customs and Excise. Lilley and Co. has not yet paid Ryder and Co.
      In October, Ryder presses Lilley for payment and hears that Lilley may be insolvent. In November Ryder petitions for Lilley's liquidation and in December Ryder submits proof to the liquidator who responds that the company is likely to receive £230,000 in due course. Ryder therefore writes off £920,000 in its year-end accounts and with December 1990 VAT return claims repayment of £120,000. Effectively, under the existing system of claim back the repayment would have taken only one VAT quarter. In practice that would be unusually quick, but not totally uncommon.
      Under the new system, Ryder and Co. would have to wait until at least July 1992—two years after the supply and seven VAT quarters after paying over the VAT—before being able to recover the £120,000 from Customs and Excise. Potentially that could be a crippling blow, because a further £800,000 would already have been lost as a result of the non-payment. At an estimated 15 per cent. cash flow cost, the cash flow cost to the company would be at least £18,000. It is therefore perfectly conceivable that under the changes that the Government have introduced, in some circumstances bad debt relief will be worse than under the existing system. In those circumstances the reforms in clause 10 could cost traders money. They would get additional relief for smaller bad debts, but would suffer delays in receiving relief for larger debts.
      The amendments seek to relieve or eliminate the problem. Amendment No. 3 is our principal amendment and unless the Government can satisfy us on it, we might divide the Committee. The amendment seeks to reduce the two-year time limit in clause 10(1)(c) to one year. If it takes an average of nine months from the date of supply to obtain bad debt relief under the old system—the period

      795
      that would normally apply if the debtor went into liquidation—and if a one-year rather than a two-year period were to operate, the new system would simply add three months' delay rather than the 15 months' delay that would apply under current proposals. The period of one year would be more appropriate and sensible. It would allow for 80 days of credit, five months of arguing—if discussions were appropriate—and six months to write off the debt.
      Amendment No. 3 would provide that instead of having to wait two years before it can get bad debt relief, a company should have to wait only one year. That seems to provide a better framework for business without causing insuperable administrative problems for Customs and Excise.
      Amendment No. 1 would reinstate the old section 22 test as an alternative to the time lapse test. As I said earlier, the amendment would set the old system for relief where liquidation took place alongside the new system, rather than allowing the new system totally to eradicate the old. If liquidation took place within a short period after the supply of goods or services, the old system operated fairly effectively. Under the Government's proposals the two-year time limit has to expire before relief can be obtained. Amendment No. 1 seeks to reinstate the old system to run in parallel with the new, and offers the two as alternatives to the business community.
      Amendment No. 2 is slightly more technical; the Liberal Democrats have tabled a similar amendment, No. 37. Amendment No. 2 has two aims. First, under new Inland Revenue regulations, small traders can present simplified accounts to support a tax return and there is no statutory requirement to produce full accounts. Some small traders may not have accounts which would satisfy clause 10(1)(b). Their three-line accounts will not identify bad debts as part of the specific acccounts prepared by the company. The amendment requires only that the account be written off in the accounting records from which the accounts, however simple, have been or will be prepared. Even smaller traders will have such records, which are a VAT requirement.
      The second reason for amendment No. 2 is that the wording of clause 10(1)(b) could in some circumstances cause problems. Let us assume that the Government were to decide that although our proposal for a 12-month period is not acceptable, none the less two years is too long, and in due course proposed shortening the period to 15 months. If a company had a debt of £1 million, with VAT of £150,000 already paid to Her Majesty's Customs, dating from March 1991, the debt would not be written off in the December 1991 accounts but would be written off in the May 1992 ledger. To satisfy the provisions of clause 10(1)(b), the company could not reclaim the VAT until the audited 1992 accounts were available, say, in April 1993.
      In the amendment, we suggest that the proof that the debt was written off should not have to wait until the published accounts but should be demonstrable by entries in the company's ledgers, which would be used in the compilation of the accounts. That would mean that the company would not have to wait, possibly for several years, for the bad debt relief.
      I wish to make three other brief points in respect of the clause. First, the power in clause 10(5)(g) to let the commissioners make regulations which
      "make different provision for different circumstances"
      796
      appear to be drawn rather widely. Obviously, we wish to ensure that the commissioners have the powers they need, but the provisions of that part of the clause seem wide. Although regulations will be promulgated under the provision, we ask the Government to ensure that any such regulations are issued in draft for comment before promulgation takes place.
      Secondly, clause 10(4)(a) is clearly aimed at the position where someone deliberately overcharges another person for a supply, crediting the VAT on the VAT return of the person receiving the supply, with the supplier then recovering it under the new rules. We wish to catch precisely such abuse as well. The wording of clause 10(4)(a)—
      "equal to or less than its open market value"—
      seems to be drawn extremely tightly. It is reminiscent of Shylock's pound of flesh when even £1 worth above the stated value would immediately disqualify the entire bad debt relief. That seems tough. We hope that the Government will consider a phrase such as, "the value of the supply not being substantially greater than the open market value".
      Thirdly, I note that the Liberal Democrats have tabled amendment No. 38 in respect of clause 10(4)(b). There might be a problem with the provision where goods are sold under hire purchase or under a Romalpa clause, whereby in strict law title remains with the vendor until the goods are fully paid for, but where the goods are not recovered by the vendor when the purchaser defaults. Unless clause 10(4)(b) is withdrawn or amended, a strict interpretation would mean that bad debt relief would not be due in such cases. It would be useful to have an assurance that the regulations will allow relief to be claimed.
      I have tried to outline on these complicated and technical matters the purpose of our amendments. We agree entirely with the aim upon which the Government have embarked in clause 10 to make life better and easier for businesses claiming bad debt relief. We do not think that the Government have got it entirely right. We have tabled the amendments in a spirit of helpfulness to the Government and in the hope that improvements will be made.
      Sir Barney Hayhoe: The hon. Member for Islington, South and Finsbury (Mr. Smith) was less than generous in his welcome to a worthwhile and overdue reform. It is no secret that sometimes Ministers, as a result of collective responsibility, have to support and take action on matters with which they are not in 100 per cent. agreement. That was certainly true for me in the mid-1980s when I was a Treasury Minister with responsibility for indirect taxation.
      Having had a hand in the reform of bad debt provision in regard to insolvency, I always recognised that very hard cases still remained in which groups of traders were suffering, because at that time we were unable, with the expertise available to the Customs and Excise, to come up with a scheme as wide in operation as that now proposed.
      I warmly congratulate my right hon. Friend the Chancellor and my hon. Friend the Economic Secretary —who has, I imagine, dealt with the detail of the provisions—on bringing forward this reform. I can remember a number of times on which I had to write letters to traders who could not believe that the system was fair. I had to say to them that VAT operated on the supply

      797
      of goods and services and not on the payment for them. It was bad enough when people defaulted on paying the fees or the charges for the goods or services supplied, but when the traders who were suffering from that bad debt had only limited redress through the insolvency provisions and often had no redress in reclaiming the VAT, one realised that the problem required Government action.
      The Government have now moved substantially in that direction at a significant cost of between £150 million and £200 million in a full year. That is a substantial contribution by the Government towards putting right something that has been wrong for too long. This is an excellent provision in what I regard as a good, fair and responsible Budget. It is with great pleasure that I commend clause 10, although I have a little trace of regret that when I had Treasury responsibility, I was unable to take the helpful action that my right hon. Friend the Chancellor and my hon. Friend the Economic Secretary have now taken.
      7.30 pm
      Mr. Beith: Clause 10 is a welcome feature of the Bill and addresses part of a major problem for smaller businesses. Bad debt is the tip of the iceberg of the problem of debt and late payment, which besets small business to such an extent that it has given rise to pleas for legislation and to private Members' Bills which have addressed the wider issue of late payment. Government Departments themselves are sometimes open to substantial criticism because many small businesses find it most difficult of all to deal with Government agencies.
      There is also a case for the Government, perhaps through training programmes, through the training and enterprise councils and through help for small businesses to direct attention towards ways of stopping bad debt problems mounting up and to encourage new businesses to put invoice and collection systems properly in place from the beginning. In my experience, many good craftsmen and tradesmen are often slow to send in their bills, so they are slow to realise that bad debts will arise.
      I am sometimes amazed by how long people who have done decent jobs wait to get paid and how often they fail to issue an initial invoice, let alone chase up the debt involved. That is often because such tradesmen are good at doing the job rather than good at the technicalities of chasing payment. However, there are so many relatively simple computer systems now that small business can be given every help and encouragement to stop the problem building up.
      Clause 10 addresses the extreme end of the problem —genuine bad debt. In a wide-ranging speech, the hon. Member for Islington, South and Finsbury (Mr. Smith) talked about the banks and their involvement. It struck me at the time that it is all very well for the banks to talk about bad debt when they have found that the worst bad debts are caused not by the expansion of demand in the retail trade, but in Third-world countries and in agriculture.
      Mr. Neil Hamilton: Does the hon. Gentleman agree that there would not have been so many bad debts if the banks had not been such bad lenders?
      Mr. Beith: The banks' readiness to lend in circumstances in which individuals should be much more
      798
      cautious about the pressure put on people to borrow money has been part of the recent economic problems, although the record of recovery at the personal debt level is very much better than it is in some other areas. I singled out agriculture and debts in Third-world countries as areas where the banks have seriously overcommitted themselves far more, to their own detriment. In personal debt, they have caused considerable damage to individuals by encouraging them to take out debts that they cannot repay.
      Sir Alan Glyn: Does the hon. Gentleman agree that by giving enormous advances to Third-world countries, which will never be repaid, the banks have made it almost impossible or far more difficult to lend to smaller businesses?
      Mr. Beith: No, because the banks still have the capacity to provide loans to small businesses. I am critical of the way in which they carried out lending operations to Third-world countries, but we shall have plenty of opportunity to talk about that when we debate other provisions in the Bill.
      I and my right hon. and hon. Friends have tabled amendments designed to improve clause 10. Amendment No. 37, which overlaps with amendment No. 2, seeks to delete the word "accounts" and to insert "books and records". It is worrying that, if full statutory accounts are required, it will be a long time before a business can make a claim for relief from VAT. It could be a process of two years to have audited accounts available and unless the word "accounts" is used in a looser and more general way, the clause could present a real obstacle and could leave small businesses wondering whether it will be worth the effort and time involved in following the matter through over so long a period. I hope that the Economic Secretary will tell us that the word "accounts" in this case does not mean final audited or statutory accounts.
      Amendment No. 38 seeks to remove clause 10(4)(b) which denies relief where the goods have been supplied under a reservation of title, or what is known as a Romalpa title in the trade, in which the title remains with the vendor until payment is received. The logic is that the vendor can simply repossess the goods to meet his VAT payments and the debt to him, but that is not always easy. A hire purchase item may mysteriously disappear from the premises of the person who has incurred the debt. A piece of equipment may be supplied to another company which, strangely, has disappeared. Access to the premises may not be easily obtained. There are many reasons why repossession may not be feasible in the circumstances.
      If the debt is treated as a bad debt, but the item is subsequently reclaimed or returns to the possession of the business, the value would come back via clause 10(5)(e) and would be repaid. There are provisions there to ensure that a bad debt that ceases to be a bad debt is not the subject of a double benefit. I hope that the Minister will either accept amendment No. 38 or find some other way to ensure that people trading in that manner can obtain VAT relief. We are dealing with a sector that is important not only in the retail hire purchase trade, but in small business generally.
      Small businesses that face difficulties in obtaining capital are frequently involved in arrangements under which they have equipment whose title remains with the vendor until payment is received or completed. It is a

      799
      common method and is an alternative to full-scale leasing which many small businesses use for the equipment they need. I look to the Minister to find a way of meeting those difficulties. If he does so, he will improve what is already a useful clause.
      Mr. David Nicholson: This is the first debate on a Finance Bill in which I have taken part which has been initiated by the hon. Member for Islington, South and Finsbury (Mr. Smith), for whom I have some admiration. However, I am sorry that he spoke at some length and somewhat controversially in the early part of his speech. He spent so long in setting the scene that I hope, Mr. Lofthouse, that you will permit me to respond to his remarks on interest rates, for example. All hon. Members recognise that interest rates are a major problem for all kinds of businesses at present. However, let the House not forget that, under the previous Labour Government, the rate of interest was normally below the rate of inflation, so savers were losing all the time. It is appropriate to make that point in the debate on a Budget that aims to help saving.
      The hon. Member for Islington, South and Finsbury also referred to the uniform business rate as a source of burdens on small businesses. He will recall that we have previously debated the Labour party's attitude to the revaluation of business rating, which is by far the greatest cause of the burdens facing many businesses at the moment. The Labour party supports that revaluation.
      We welcome the measure in clause 10 which, as has been stated, will cost between £150 million and £200 million. That is a substantial amount at a time when budgetary pressure is significant. I listened with interest to the hon. Member for Islington, South and Finsbury. Certain business organisations share some of the reservations that have been expressed. I understand that the Confederation of British Industry has expressed reservations, although I have not been in direct contact with it. I believe that it has made representations to one or two of my hon. Friends.
      I must declare an interest because I am an adviser to the Building Employers Confederation which, in collusion with the CBI, has expressed concern about the way in which the bad debt relief might work. The BEC does not want traders to have to wait two years for the relief to take effect. It also sees certain advantages in running the new system in parallel with the old so that there will be an alternative. I hope that my hon. Friend the Economic Secretary to the Treasury will address those concerns expressed by business organisations and consider further possible representations that they might make in writing after this debate.
      Mr. Allen: It is worth noting that it was a Conservative Administration who raised VAT from 8 per cent. to 15 per cent. in their first year of office. We must view some of the problems that are related to clause 10 against that background and against a wider background of small businesses suffering the highest interest rates of any G7 country and the highest rate of inflation in industrialised Europe. I must make those points as we discuss what some people outside this place might consider a rather technical clause.
      You were right, Mr. Lofthouse, to call me to order earlier when I referred to the uniform business rate. That also forms part of the background to this debate, in which
      800
      we are considering small businesses that might be forced out of business. The registration requirement might be the final straw for them. Because of the wider factors to which I have referred, many small businesses will find that any additional impositions might be enough to force them over the brink. Dun and Bradstreet estimate that in 1989 bankruptcies were running at 26·3 per cent. in London and the south-east, while the figure was 9·3 per cent. for England as a whole. Those figures appeared in March 1990.
      Mr. Hanley: Of what was that 9·3 per cent.?
      Mr. Allen: Of 100 per cent.
      We must also put the problem of late payments into perspective. My hon. Friend the Member for Ashfield (Mr. Haynes) paid tribute to his predecessor and I wanted to pay tribute to my predecessor, who was also a Conservative, Mr. Richard Ottaway. He often raised the issue of small claims and late payments. I am glad to see Conservative Back Benchers picking up on that campaign once again. I hope that they will find a ready response from the Government Front Bench.
      Mr. Hanley: Will the hon. Gentleman consider the number of liquidations against the number of new companies being formed? If he did that, he would see that in all parts of the country the net number of new companies is higher than ever in our history.
      Mr. Allen: We must be very careful about the number of companies and businesses that are being created. We must consider how long they last. The companies that become bankrupt or go out of business may be different companies from those that are being created. My hon. Friend the Member for Wrexham (Dr. Marek) has just arrived in the Chamber hot foot from his constituency. I understand that he has lost 1,000 jobs in his constituency over the past couple of days. Frankly, even a dozen new hamburger stalls would not compensate to that loss of jobs.
      Dr. John Marek: I hope that we have not yet lost those jobs. Brymbo was one of the most profitable steelworks in the country. It takes genius on the part of the Government to lose those jobs.
      Mr. Allen: All new business is welcome. However, we must ensure that the balance in our economy, which has been distorted over the past 10 years, reaches some equilibrium. We need full-time jobs that pay a reasonable rate for the job. People should not be forced into low-income employment to supplement otherwise inadequate earnings. Wives should not have to go out to work when they would rather look after young families at home when their husbands are at work.
      I understand that the measure in clause 10 will cost about £150 million. I do not want the measure to be withdrawn and I do not say that £150 million should not be spent. However, I hope that we will refer to the measure constantly in our proceedings on this Bill as an illustration of where the Government's spending priorities lie. In an earlier debate, the Department of Employment's training programmes were cut by £212 million. Today the Prime Minister refuted the need for more resources to be devoted to tracking down sex offenders—something that is close to the hearts of some Opposition Members.
      The Temporary Chairman: Order. The hon. Gentleman is straying. He should return to the amendment.
      7.45 pm
      Mr. Allen: I accept that reprimand, but I was trying to draw a perspective on the spending involved in clause 10. That spending amounts to £150 million. While I do not believe that that money will not be spent properly, there are other spending priorities, which should be examined thoroughly in our debates on this Bill.
      Mr. Tim Smith: The hon. Gentleman is complaining about the cost of the measure. However, his hon. Friend the Member for Islington, South and Finsbury (Mr. Smith) has already welcomed it. He is proposing an amendment to reduce the period to one year, and no doubt that would increase the costs a great deal. What does the hon. Gentleman say about that?
      Mr. Allen: I am sorry that my arguments went over the hon. Gentleman's head. I will try to explain them more simply, so that he can understand them. We are used to his interventions in the Public Accounts Committee, where he is usually a little more perceptive.
      We are entitled to examine the Government's spending priorities as a whole in the Finance Bill. I welcome the spending on this measure of VAT relief. I also welcome the speech of my hon. Friend the hon. Member for Islington, South and Finsbury. My point is that there are many other spending priorities, but you, Mr. Lofthouse, would draw me to order if I were to refer to them in detail. However, those other priorities should also be taken into account. They illustrate the philosophy of a Government who, in many aspects in the Budget, have decided to do very little. They are holding the ship as steady as possible while it is surrounded by icebergs. Nevertheless, other areas are involved and need to be examined.
      The first of the three amendments explained by my hon. Friend the Member for Islington, South and Finsbury seeks to ensure that the baby is not thrown out with the bath water. Although we welcome clause 10, we should ensure that companies that are insolvent retain their current abilities and are not ruled out of the provisions.
      The second of our group of amendments seeks to help with small traders' claims for relief. That point has been well covered. The final amendment in this group, on which I have no doubt that my hon. Friend the Member for Workington (Mr. Campbell-Savours) wishes to comment, relates to the delay in claiming VAT relief on all written-off debts. Again, I hope that the Government will feel that it is possible to reduce the two years to one and that they will accept the amendment as proposed. If that is not possible, I hope that the Economic Secretary will at least agree to consider the matter in some detail and that he will make some verbal commitment when he replies.
      Mr. Tim Smith: When VAT was first introduced, the position on bad debt relief was clear—there was no bad debt relief. It is important that the Committee understands how unfair that was. Value added tax was organised in such a way that a business had to pay over the VAT whether or not the registered trader had received the cash. If the trader never received the customer's cash, he never received the cash back from Customs and Excise. My right hon. Friend the Member for Brentford and Isleworth (Sir B. Hayhoe) was the Minister responsible for Customs and Excise at the time. He introduced what he has just
      802
      conceded was a step in the right direction on the issue of bad debt relief, but it provided only for businesses that were already insolvent. There was therefore still a problem, because many businesses still had to pay VAT to Customs and Excise, but were unable to recover it.
      It is important to understand that registered traders are effectively unpaid collectors of taxes. They are not dealing with their own liability; they are collecting a tax and paying it to Customs and Excise. It was a most unfair system, because they were required to pay a tax when somebody else was unable to pay it. The clause is welcome, as it introduces a comprehensive system of bad debt relief for the first time.
      The hon. Member for Nottingham, North (Mr. Allen) does not seem to understand a great deal about VAT and would do well to listen at the moment—[Interruption.] I am glad that the Opposition Front Bench spokesmen are listening. The hon. Gentleman complained about the cost of the relief and suggested that it was an indication of the Government's public spending priorities. However, we are not talking about public spending priorities; we are talking about taxation yields.
      If the cost of the relief is £150 million, we must remember that that £150 million is the bottom line for businesses that are not responsible for the fact that the tax has not been paid in the first place. It was not those businesses' fault that their customers had become insolvent or did not pay, but they had to pay the tax over to the Customs and Excise. It is because that system was so unfair that this change is so welcome.
      The only point that I did not understand in the speech of the hon. Member for Islington, South and Finsbury (Mr. Smith) was his explanation of the importance of the clause for small businesses. I remind him that, in the past few years, another important change has been made—since the introduction of VAT—
      Mr. Allen: Is the hon. Gentleman saying that providing the relief does not involve real money or real spending or certain priorities in relation to Government spending?
      Mr. Smith: Of course it involves real money, but it has nothing to do with the Government spending. The provision involves a reduction in the yield of VAT, and for the reasons that I have explained, I believe that that reduction in the yield is wholly justified.
      I was about to say that another important change that has been made to the VAT regime in recent years is the change to cash accounting. Any business with a turnover of £250,000 or less, which must accommodate a large number if not the majority of registered traders, can switch to a system of cash accounting if it so chooses, and at any time that it so chooses. It can then not only accommodate bad debts—there will be no problems about customers who have not paid—but it has a solution to the problem of customers who pay late. Cash accounting means that the trader pays the VAT to Customs and Excise only when it has been collected from the customers.
      Can my hon. Friend the Economic Secretary tell us what proportion of VAT traders have opted for cash accounting? Surely more small businesses should be encouraged to make the change, because they would not have to worry about complying with all the requirements of the provisions on bad debt relief, and they would not

      803
      have to worry if some of their debtors took a long time to pay their debts, because all those factors are taken into account in cash accounting.
      I believe that only a relatively small proportion of VAT traders have changed to cash accounting, and I wonder why. Is it because the system has not been publicised sufficiently? If more traders switched to that system, they would find substantial cash flow benefits and would no longer have to worry about the problems of bad debt relief. Clause 10 would then be relevant to large businesses with a turnover of more than £250,000. Although I hope that my hon. Friend the Economic Secretary will comment on that, I conclude by welcoming the new provisions.
      Mr. Hanley: I welcome the speech of my hon. Friend the Member for Beaconsfield (Mr. Smith), which was in stark contrast to that of the hon. Member for Nottingham, North (Mr. Allen) in that it contained great good sense and was both accurate and to the point.
      I, too, welcome clause 10. As my hon. Friend the Member for Beaconsfield said when he traced the history of bad debt relief—or the absence of bad debt relief—businesses of all kinds have been hard done by in the past, which is why the relief is so welcome.
      However, although the previous relief needed amending to some extent, it should not be thrown out altogether. The Institute of Chartered Accountants in England and Wales believes that the clause is a welcome extension to the existing bad debt reliefs, at least where there is no formal insolvency. However, either the present relief should be allowed to continue in addition to the new relief that has been proposed—perhaps the former should be amended to provide for the repayment of VAT for amounts that are subsequently recovered, with proof of the insolvency for the VAT-inclusive amount of the debt—or the requirement for a two-year period should be substantially reduced. It has been suggested that the two-year period should be reduced to one year. That would be possible, but I accept that if the period were reduced there would be many more cases of doubt in which a bad debt was initially claimed but where the amount was subsequently paid.
      We are all aware of the need for Customs and Excise to ensure that companies do not claim double relief. However, if the two systems of bad debt relief—the old system and the new system—were allowed to run in tandem, and if a VAT payer could opt for the system that he found preferable, he might be able to avoid claiming double relief simply by the inclusion of an additional box on VAT form 100, in which only the amount of the relief that has actually been claimed would need to be given. In that way, no one could enjoy double relief.
      The Institute of Chartered Accountants in England and Wales also believes that the new relief is unduly restrictive because there is an unwarranted delay where the debt has become irrecoverable within a short period after the date of supply because of the insolvency of the debtor. That point has been raised by several hon. Members, including the hon. Member for Islington, South and Finsbury (Mr. Smith).
      There is support for the fact that this is welcome relief, unless the debtor goes bankrupt, and then the delay seems far too long.
      In his brief sketch of the legislation, the hon. Member for Islington, South and Finsbury—
      Mr. Tim Smith: It was an outline.
      8 pm
      Mr. Hanley: As my hon. Friend says, it was an outline or perhaps even briefer than that. I am sure that we shall hear longer speeches from the hon. Gentleman in Committee. He also mentioned Romalpa-type goods, where goods are sold subject to reservation of title. The hon. Member for Brent, South (Mr. Boateng) would understand the legal title. Where the property and goods have not passed, the owner of those goods is placed in a difficult position. If the goods have disappeared, there is a bad debt, but, because the title has not passed, he is still deemed to own those goods, so there is a serious problem with clause 10(4)(b). It would operate unfairly if the title proved to be unenforceable. I am sure that the effect of that clause was not intended and was a straightforward slip which needs to be addressed. Hire purchase contracts or goods sold under reservation of title should not cause unfair disadvantage to those who have lost both the goods and, subsequently, the VAT.
      Clause 10(5) mentions "regulations". It would be most helpful for all hon. Members on both sides of the Committee if those regulations were issued in draft form for comment before being laid before the House. There have been many cases during the past few years where the Revenue and the Department of Trade and Industry have been helpful over company legislation, and draft regulations issued for comment have helped to reduce final inaccuracies and argument.
      That is particularly important in this clause, because accountants would like to feel that the definition of writing off a debt is at least consistent with their way of doing it. Will a debt being written off mean that the debt has to be written out of the books, or will it suffice if the full provision is made against it? The law is not clear and it would be much better if published accounts were consistent with what my hon. Friend the Economic Secretary is trying to bring into the legislation.
      Presumably, the regulations will also specify the additional records that the taxpayer will have to keep to make a claim, and in what form. It is only right that practising accountants should be able to comment on that before the regulations are presented to the Committee. The Institute of Chartered Accountants in England and Wales has written to the Treasury saying it would be happy to discuss the draft with Her Majesty's Customs and Excise if it so wishes.
      The bad debt relief should be available where a provision is made in respect of a debt, rather than its being written off. Should the amount prove recoverable, the debt would be repayable. It would be disappointing if best accounting practice was distorted as a result of the need to comply with the write-off requirements under the regulations. Therefore, I welcome the clause, but believe that the two or three issues raised by hon. Members from both sides of the Committee are worthy of comment. In that spirit, I support the clause.
      Mr. Campbell-Savours: When one misses a Finance Bill or two, one becomes quite rusty on such matters, and I must confess that I feel a little rusty on this issue.
      I should like to raise a couple of points because, if I recall correctly, early in the 1980s I spoke on an amendment to the Finance Bill in some detail having done a considerable amount of homework. I am trying to empty my mind of what I said then. Now that a scheme is in place

      805
      —at that time I was arguing for the introduction of a scheme—I am concerned about what would happen if someone claimed relief, having written off a debt, and subsequently reclaimed the goods.
      The hon. Member for Richmond and Barnes (Mr. Hanley) alluded to what would happen if relief was claimed and the goods were subsequently re-acquired—
      Mr. Hanley: If the goods were reclaimed, the relief would have to be repayable.
      Mr. Campbell-Savours: I can understand that if settlement of the account finally took place, the VAT would have to be adjusted to take that into account. However, I am not sure that it is the function of the Customs and Excise authorities to police where goods have been re-acquired by manufacturers or distributors from customers who have not paid, but have been willing to relinquish control of the goods.
      Mr. Hanley: I do not believe that the hon. Gentleman was in the House when the hon. Member for Islington, South and Finsbury made exactly the same points as I did. If the hon. Member for Workington (Mr. Campbell-Savours) disagrees with what I said, he is disagreeing with his own Front-Bench spokesman.
      Mr. Campbell-Savours: It is not unknown for me to depart from the views of my Front-Bench spokesmen. This is the House of Commons, a debating Chamber, and we are free to speak. This is hardly a matter of huge political dimension, requiring us to take an entrenched ideological position. We are discussing to and fro the merits of a scheme. I was not here earlier because I was in the Select Committee on Members' Interests, dealing with matters that I find important and interesting.
      I support the amendment to reduce the period to one year. It seems that it will be hard for Customs and Excise to police where goods have been reclaimed from customers who have had their VAT liability to the seller, distributor or supplier of the goods written off. It would be hard to monitor that.
      It might be that firm A supplies to firm B £5,000-worth of merchandise. Firm B dillies and dallies and at the end of two years, firm A claims relief. Six months later, firm A may send round a couple of wagons to firm B and say, "We know that you have the goods in there and we want them back. You never paid us. We have received the money back from Customs and Excise, but you never actually paid us and we want our goods back." Firm A may go in and secure those goods. That is a reasonable case. What would happen in that instance? Will the VAT monitoring apply equally in that case, or will it partially apply? How will it be policed? I do not know.
      I believe that the provision is a major concession. I remember the old days when purchase tax was 25 per cent. There was a time when it was even more. There was a purchase tax surcharge in the late 1960s when I was in business when it was as much as 35 or 37.5 per cent.—extremely high. At that time one could not reclaim it and when someone did not pay, it was a big wallop out of one's cash flow. We have seen purchase tax reduced to 8 per cent. as VAT and rise to 15 per cent. and I am sure that
      806
      today, while it will not be on such a high scale, it will certainly have a major effect on cash flow when companies do not pay their bills or VAT liabilities.
      I remember a particular incident in which I was involved. In 1976, in my former incarnation as a business man, I was supplying clocks to a large retailing organisation. It advertised my clock in full-page advertisements in one of the Sunday colour supplements. The company performed some clever manoeuvres when placing its orders. I was not too intelligent at the time; I was just banging out the gear, getting it into the shops to our clients, and perhaps forgetting that certain customers were building up a lot of credit. One particular customer built up credit of about £10,000—worth about £30,000 today—and then took our company for a ride. Of course, we were left to pay the bill for VAT. The rogue company never went into liquidation and we never found out what happened to it. By that time I had retired from the business to come into this blessed place. No claim was ever made, and what had previously been partly my company ended up subsidising Customs and Excise. That was wrong, and it has perhaps gone on to this day when liquidations have not taken place.
      Based on my experience, I welcome a reform of this nature. But we should also consider the implications for many businesses suffering from high interest rates. Many companies in times of comparatively declining consumption and difficult market conditions—we are now entering such a period—find it hard to use all their capacity, and often find their profits falling as a result. At a time when such companies are borrowing more and more from the banks to invest in technology, as the Government told them they should, and when they are having to pay high interest rates, concessions of this sort are important because they save companies money and have a significant and positive effect on their cash flow.
      Mr. Neil Hamilton: I mean no disrespect to my hon. Friends or even, unusually, to Opposition Members when I say that the most fascinating speech in the debate so far has been that of my right hon. Friend the Member for Brentford and Isleworth (Sir B. Hayhoe), who I well remember defending with passionate intensity in previous such debates positions that he now declares he believed all along to be indefensible. I know that the Economic Secretary will not be unfamiliar with that aspect of a Minister's life; but I have often spoken on previous Finance Bills to advocate broadly the sort of relief that the Government propose this evening. I greatly welcome it.
      I was most interested by the speech of the hon. Member for Islington, South and Finsbury (Mr. Smith). I am delighted that he accepts the recommendations of the Institute of Directors on this matter. This is a most welcome new alliance with the Labour party, and I hope that it is contagious and will extend in due course to many of the other policies of the institute. Then we will know that perestroika has come to the Labour party in a big way.
      Only one of my two amendments has been selected. They propose a slight modification of the Government's legislative proposals. In particular, they would reduce the two-year period before relief can be claimed to 13 months. It may be wondered why I selected 13 months, as opposed to 12. My first reason was that I discovered that the Labour party had selected 12—my original suggestion. However, I have been able to think up a rational

      807
      justification for my change of mind. It is that 13 months can be justified as one year from the usual due date for payment after presentation of an invoice—usually 30 days or one month.
      My second amendment seeks to bring forward the earliest date at which a claim under these rules can be made to 1 April 1991. That has been necessitated because my amendment to reduce to 13 months the period before relief can be claimed has the consequential effect, given the way the clause is drafted, of bringing forward the earliest claim date to 1 April 1990. Clearly it would be impossible to have a claim date earlier than that on which the regulations under the clause come into force, so I chose 1 April 1991 as a date which accommodates the reasonable suggestions of the Customs and Excise as to what is practically possible, but which seeks to bring forward the date on which the relief will become available in the interests of those who will be able to claim.
      8.15 pm
      I greatly welcome the Government's proposals, because proper relief of VAT on bad debts has been a notable omission from United Kingdom tax legislation, as my hon. Friend the Member for Beaconsfield (Mr. Smith) pointed out, since the inception of VAT. This inequity has been staring Governments in the face for a great many years and hon. Members on both sides of the House have campaigned strongly for many years against it, in the interests, particularly but not exclusively, of small businesses.
      It is perhaps interesting to look back over the various reforms of the past 15 years or so and to see the slow steps by which we have reached this point. Section 22 of the VAT Act 1983 re-enacted provisions in the Finance Act 1978 and gave relief in cases in which there had been a formal insolvency. Then, in 1985, as my right hon. Friend the Member for Brentford and Isleworth recalled, relief was extended to include administrative receiverships. And then, in the Finance (No. 2) Act 1987, we introduced that most valuable provision, the cash accounting scheme, for traders with a turnover of up to £250,000.
      If I may supply my hon. Friend the Member for Beaconsfield with the answer with which the hon. Member for Nottingham, North (Mr. Allen) was unable to supply him as to why we need this new relief, inasmuch as most small businesses can avail themselves of the cash accounting system which would remove the necessity for it, it is that, for whatever reason, there will be traders who do not appreciate where their true commercial tax advantage lies, and it would therefore be right to provide a catch-all relief. This provision certainly does that.
      I share the view of my hon. Friend the Member for Beaconsfield that it would be in the interests of many more firms to take up the opportunities that the Government have provided for them. They perhaps do not sufficiently realise the advantages to their cash flow that the cash accounting scheme would provide. I should be very surprised to hear from my hon. Friend the Economic Secretary figures to show that more than a very small proportion of those who qualify for the cash accounting scheme have actually taken up the opportunity with which the Government have provided them, and I hope that they will he encouraged to do so.
      In July 1988, Customs and Excise announced a review, following a commitment in the enterprise and deregulation unit's progress report earlier in the year, to look into the
      808
      matter. We have been waiting a long time for this most welcome change, which the Government have introduced after a period of consideration.
      My amendments seek to bring forward the point at which the benefits of this relief become available. One of the reasons why that is necessary is the very length of the period of gestation that I have described. Business deserves prompt and full relief without further ado, and I do not believe that the arguments for a two-year period are very compelling.
      Attention has rightly been concentrated on the cost to the Treasury of the reduced yield of VAT that these proposals would cause. If their proper relief is expensive, that is merely a measure of the unfair burden that those businesses have had to endure for many years.
      We should not be apologetic in any way about the cost to the Treasury of these proposals. That burden falls especially on small businesses which do not have the muscle that larger businesses use to make their customers pay promptly. For many small businesses, a bad debt can prove fatal. It can be the straw that breaks the camel's back, and being able to recover VAT promptly on a large bad debt can be the difference that enables a firm to survive and can stop the domino effect of default, bankruptcies and insolvencies.
      This is a valuable means of preserving businesses that might otherwise be threatened. It has job-saving potential, and also the revenue-raising potential that comes from profitable businesses paying taxes rather than becoming a charge on the taxpayer as a result of failure.
      The reason that I have sought to reduce the two-year period to 13 months, and why the Opposition have sought to reduce it to 12 months, is that, for most businesses, once a debt is over a year old, the likelihood of recovery is small. We should recognise that one year is a sensible period to choose, because at the end of that time, the debt is in practice unlikely to be recoverable. I hope that my hon. Friend the Economic Secretary to the Treasury can offer some comforting words when he replies to the points that I have made.
      My hon. Friend the Member for Richmond and Barnes (Mr. Hanley) and the hon. Member for Islington, South and Finsbury spoke of running in tandem the old section 22 relief and the proposals in the Bill. I support that contention, because I see nothing wrong with running the two in tandem. It may be more advantageous to businesses to seek the section 22 relief, and businesses that are used to doing that should be allowed to continue in that way.
      I do not wish to sound churlish because I greatly welcome the birth of this advantageous tax relief. It coincides with the appointment to his distinguished office of my hon. Friend the Economic Secretary to the Treasury. I congratulate him on building on the work of our right hon. Friend the Member for Brentford and Isleworth (Sir B. Hayhoe) who covertly and strongly fought the mandarins of the Treasury all those years ago. I congratulate the Government on their proposals.
      Mr. Ryder: I reiterate my gratitude to my right hon. Friend the Member for Brentford and Isleworth (Sir B. Hayhoe). I am sure that my right hon. Friend the Chancellor, being a generous man, would be happy to share the credit for the implementation of this clause with my right hon. Friend the Member for Brentford and Isleworth, for whose kind remarks I am grateful.

      809
      I start by responding to some specific and technical points that were made by some of my hon. Friends and by Opposition Members, including the hon. Members for Islington, South and Finsbury (Mr. Smith) and for Workington (Mr. Campbell-Savours). My hon. Friend for Richmond and Barnes (Mr. Hanley) spoke about extra boxes. I understand that the return has just been revised to make it shorter, simpler and easier for traders, and that that has been done very much along the lines that my hon. Friend suggested. That is part of the Government's deregulation drive.
      My hon. Friend the Member for Beaconsfield (Mr. Smith) asked about numbers. I think that about 83,000 have taken up cash accounting out of a total of 600,000. That represents about 15 per cent. so far. The hon. Member for Workington conceded that he was a little rusty after all these years. This is the first time that I have had to speak about VAT from the Front Bench and I can tell him that he is not the only one who feels a little rusty.
      In the debate on last year's Finance Bill, which I have read, the hon. Member for Workington spoke about corporation tax. This time he has raised the matter of policing. VAT officers will be instructed to pay special attention to bad debt relief claims during normal control visits, and they will carry out cross checking of supplies, verification and transaction testing, especially in relation to associated companies and connected persons. We have approved 20 extra staff for that very purpose and with the full implementation of the Keith committee proposals, Customs and Excise now has a fuller armoury of criminal and civil evasion powers to deal with any dishonesty that is discovered.
      Mr. Campbell-Savours: Is not there a danger that the defaulting company could claim that it has paid its account and the value added tax that was due, when in fact it has been written off by the supplying company?
      Mr. Ryder: I do not think that that is a danger. During discussions that I have had about the clause it has never been drawn to my attention that it could be a danger. If the hon. Gentleman feels that the matter is worthy of further investigation, I shall certainly carry out an examination on his behalf.
      The hon. Member for Islington, South and Finsbury raised three specific points about clause 10(5)(g) and the powers of VAT commissioners. We are looking at the feasibility of a consultation exercise on the draft regulations. If the hon. Gentleman has any specific matter that he would like to draw to our attention in connection with that exercise, we would be grateful to receive it. Clause 10(4)(a) is a straight copy of section 32(4)(a) of the Finance Act 1985. There is no case for giving more relief than the supply is worth. I think that traders might be tempted fraudulently to inflate the value. The other technical point raised by the hon. Gentleman was in the context of section 22 of the 1983 legislation, which has been superseded by section 32 of the Finance Act 1985.
      The hon. Member for Islington, South and Finsbury made a great deal of the problem that some small businesses are suffering because of high interest rates. At the moment, lower interest rates are not a viable option if inflation is to come down. I draw his attention to an article last week in the Bank of England Quarterly Bulletin which
      810
      stated that interest rates are an extremely effective policy instrument and that, if anything, their effectiveness has increased rather than decreased in recent years. I cannot share what I would describe as the hon. Gentleman's gloom merchant's analysis of small businesses. As one of my hon. Friends said in an intervention, there are now about 1,500 net new businesses starting every week.
      Ms. Abbott: How many bankruptcies are there?
      Mr. Ryder: The figure that I have given is net. The net figure during the last full year of a Labour Government was a loss of 100 rather than a gain of 1,500. It was minus 100 and not plus 1,500.
      Mr. Battle: Is not the crucial point how long those businesses last? Businesses may start up, but if they do not survive the year, the figures are meaningless.
      Mr. Ryder: If they do not survive the year, they go into the next year's figures. This is a net figure, a rolling figure. It is the figure of the new VAT regulations, which is in the public domain and constantly used by the Government.
      Mr. Campbell-Savours: I do not think the Minister understands the importance of the intervention made by my hon. Friend the Member for Leeds, West (Mr. Battle). We are discussing bad debt. If, while pressing his case, the Minister is forced to accept that a large number of companies are dropping out of business or becoming insolvent, he is accepting that there is a disproportionately higher level of debt today than previously. If people are dropping out of business, the chances are that it is because of insolvency and they will leave debts behind. Surely it cannot be the Government's policy to promote a climate of business expansion which is reliant on the odd few getting through and a majority dropping out, creating immeasurable damage in terms of bad debt liability with the consequences of that on those who survive. We cannot run a modern economy on that basis. Who is protecting whom in those circumstances?
      8.30 pm
      Mr. Ryder: I do not deny that many small businesses are experiencing serious problems. With interest rates at their present level, it would be unusual if they were not. But I gave the net figure of new businesses starting up. There is no denying that many small businesses are closing and that many that are not closing are suffering from some of the problems to which the hon. Gentleman referred.
      Clause 10 is another step towards improved conditions for small businesses, and most hon. Members who have spoken have expressed their support for it. It follows a catalogue of tax cuts undertaken by the Government since 1979. I am grateful for that support for the general thrust of the measures that have been incorporated in the clause.
      Clause 10(6) provides for the making of regulations to cover the accounting requirements of the new scheme. They will provide that any trader wishing to claim bad debt relief will be required to maintain a separate bad debt relief account. When a debt is deemed to be bad, the trader will enter the debt in the bad debt relief account. That will be regarded as write-off for the purpose of the clause, as the debt will have been tranferred from whatever form of current account the trader maintains.
      Concern has been expressed by hon. Members and by interested organisations outside the House that the requirement for write-off might not be met until a trader's

      811
      accounts are audited or approved at a general meeting. I hope that the hon. Member for Berwick-upon-Tweed (Mr. Beith) will accept that amendment No. 37 addresses an unfounded fear. However, should the accounts subsequently be rejected by the auditors or the general meeting in matters affecting bad debts, the clawback procedures would be appropriate.
      Amendment No. 38 has been tabled by the hon. Member for Berwick-upon-Tweed because he believes that traders supplying goods under certain contracts—for example, Romalpa—will be at a disadvantage. I do not think that that will be the case, because under such contracts the seller reserves title until the customer has paid for the goods. If the customer does not pay, the seller can either reclaim the goods, in which case there is no debt, or he can relinquish title to the goods and become eligible for bad debt relief. The amendment would allow the seller to do both. In other words, there would be double relief, and that would not be wholly justified.
      Mr. Beith: Does that mean that a trader can self-certify that the debt cannot be recovered and so transfer title and, in some cases, if a person cannot be traced so that transfer cannot be formally effected, he can simply report to Customs and Excise that he has surrendered title and claim VAT relief?
      Mr. Ryder: That is a possibility.
      Amendment No. 1 was echoed by an amendment in the name of my hon. Friend the Member for Basingstoke (Mr. Hunter) which was not called. It proposes that our new scheme should co-exist with the previous bad debt relief provisions which relied on formal insolvency. The argument here is that when a company goes into formal insolvency, within a period of two years the creditor is worse off under the new arrangements than he was under the old arrangements. Much has been made of that by some commentators outside the House, but I wonder how often that would arise in practice.
      I am told that it takes on average 18 months for a creditor to pursue a debt from the initial supply of goods or services to unsuccessful enforcement through county court procedures. Only then might a creditor contemplate insolvency as a means of recovering at least part of the debt owed to him. I would certainly expect companies to think twice about supplying goods or services on credit to a company which has already experienced problems in paying others.
      If we were to go down that route of dual running, there would be considerable administrative complexities for business men and for Customs and Excise, who would have to guard against the possibility of claims being made under both systems. One of the virtues of the system that we are proposing is that relief is automatic. Therefore, in principle, it should be simple to operate.
      Amendment No. 3 is the core of the debate, as was acknowledged by the hon. Member for Islington, South and Finsbury. It seeks to reduce the waiting period before bad debt relief can be claimed from two years to 12 months. A cut in the time limit also found favour with, among others, my hon. Friends the Members for Taunton (Mr. Nicholson) and for Tatton (Mr. Hamilton). My hon. Friend the Member for Tatton tabled an amendment for 13 months rather than 12 months. Amendment No. 24 in his name is a consequential amendment which would follow if amendment No. 3 were to be accepted.
      812
      I would expect a company, before it wrote off a debt, to make every attempt to recover not only the VAT, which would be a fairly small proportion of the sum, but the debt itself. In our judgment, two years is the appropriate period which should elapse before a company decides that a debt is irrecoverable.
      Mr. Campbell-Savours: Why?
      Mr. Ryder: If the hon. Gentleman waits a second, I shall explain.
      Mr. Boateng: That is what we are waiting for.
      Mr. Ryder: I always leave the good news to the end, as the hon. Gentleman, our favourite Jacobin, knows.
      Our judgment was that two years is an appropriate period of time to elapse before a company decides that a debt cannot be recovered. We are also conscious that too short a period might be open to deliberate abuse by fraudsters.
      I am aware of the strength of feeling expressed in the debate and by the many organisations that have made representations to the Treasury. For those reasons, I have concluded that there may be scope for further improvement to the scheme. We shall be examining that possibility between now and Report stage.
      I began today's proceedings by saying, in response to the hon. Member for Nottingham, North (Mr. Allen), that I was cordial, friendly, co-operative and helpful. It is in that spirit that I have put forward the views that I have. On that basis, I hope that the hon. Member for Islington, South and Finsbury will withdraw his amendment.
      Mr. Chris Smith: I begin by thanking the Economic Secretary for his remarks about possibly issuing the draft regulations relating to clause 10 for comment before they are submitted to the House. We hope that that will be done. Certainly my right hon. and hon. Friends and I will want to take a vigorous part in such a consultation exercise.
      I thank the Minister for his comments about the provisions of the clause as they effect hire purchase or Romalpa arrangements. As far as I could tell, the Economic Secretary was saying that, if title to the goods is relinquished by a decision of their supplier, bad debt relief can be claimed. I hope that I have correctly understood the Minister's remarks.
      I was not entirely convinced by the hon. Gentleman's answers to questions asked by ourselves and the Liberal Democrats concerning the precise definition of accounts and the effect that an entry in the books of a company before accounts have been audited or published might have on the provisions of the clause. Perhaps we can continue to examine that over the next month or two.
      As to the two major issues before the Committee, we have made substantial progress on amendment No. 3, and it would be churlish of me not to acknowledge that the Economic Secretary's response was extremely positive. We hope that, as our discussions progress, the Government will bring forward a new clause or amendment on Report to cover the points encompassed by amendment No. 3, and that their response is a harbinger of other changes of mind. It is good to see that happening so early in our discussions. We have struck gold. We find that the Government are accepting the wisdom and sense of amendments that we have tabled.

      813
      Accordingly, I shall happily seek permission to withdraw amendment No. 3, and await our return to the issue to which it relates.
      The Economic Secretary was somewhat less forthcoming in respect of amendment No. 1. We believe that a reduction in the time period from two years to one year would be useful; and that it would be sensible and right to run the existing system of relief in the case of insolvency together with the new one of automatic relief after a certain period has elapsed. Even with the shortened time period, in some cases—such as where insolvency occurs after three months—a supplier will have to wait another 12 months before being eligible for bad debt relief under the new system. We still want to press amendment No. 1, which seeks to allow the two systems to run alongside one another—but we give a warm welcome to the Economic Secretary's comments on amendment No. 3.
      The First Deputy Chairman of Ways and Means (Sir Paul Dean): The debate that has just taken place related to amendment No. 2. Am I to understand that the hon. Member for Islington, South and Finsbury (Mr. Smith) wishes to withdraw amendment No. 2?
      Mr. Chris Smith: Yes, Sir Paul. I beg to ask leave to withdraw the amendment.
      Amendment, by leave, withdrawn.
      Amendment proposed: No. 1, in clause 10, page 6, line 45, after 'elapsed', insert
      ', or the company or individual liable to pay any outstanding amount of the consideration has become insolvent and (except where Paragraph 10 (1A)(b) below applies) the person has submitted a claim in the insolvency for the outstanding amount of the consideration.

      (1A) a company becomes insolvent for the purposes of this section if:

      (a) it goes into liquidation in the United Kingdom or the Isle of Man at a time when its assets are insufficient for the payment of its debts and other liabilities and the expenses of the winding up;

      (b) a person who has been appointed in Great Britain to act as the Administrator or Administrative Receiver issues a certificate of his opinion that, if it went into liquidation, the assets of the company would be insufficient to cover the payment of any dividend in respect of debts which are neither secured nor preferential; or

      (c) a composition or scheme proposed by the Directors is approved under Part I of the Insolvency Act 1986.

      (1B) An individual becomes insolvent for the purposes of this section if:

      (a) in England and Wales he is adjudged bankrupt, a deed of arrangement is made for the benefit of his creditors, a composition or scheme proposed by him is approved under Part VIII of the Insolvency Act 1986 or, after his death, his estate falls to be administered in accordance with an order under Part XV of that Act;

      (b) in Scotland, sequestration of his estate is awarded, he signs a trust deed for his creditors or, after his death, a judicial factor is appointed under Section 11A of the Judicial Factors (Scotland) Act 1889 to administer his estate;

      (c) in Northern Ireland he is adjudged bankrupt, a deed of arrangement is made for the benefit of his creditors, a resolution of his creditors is approved by the court under Section 5 of the Bankruptcy Amendment Act (Northern Ireland) 1929 or, after his death, the court makes an order for the administration in bankruptcy of his estate; or

      (d) in the Isle of Man, he is adjudged bankrupt, a deed of arrangement is made for the benefit of his
      814
      creditors or, after his death, the court makes an order for the administration in bankruptcy of his estate.'.—[Mr. Chris Smith.]

      Question put, That the amendment be made:—
      The Committee divided: Ayes 165, Noes 224.

      Division No. 208]

      [8.45 pm

      AYES

      Abbott, Ms Diane

      Hughes, John (Coventry NE)

      Allen, Graham

      Hughes, Robert (Aberdeen N)

      Anderson, Donald

      Hughes, Roy (Newport E)

      Archer, Rt Hon Peter

      Ingram, Adam

      Armstrong, Hilary

      Janner, Greville

      Ashdown, Rt Hon Paddy

      Jones, Barry (Alyn & Deeside)

      Banks, Tony (Newham NW)

      Jones, Ieuan (Ynys Môn)

      Barnes, Harry (Derbyshire NE)

      Jones, Martyn (Clwyd S W)

      Barnes, Mrs Rosie (Greenwich)

      Kaufman, Rt Hon Gerald

      Barron, Kevin

      Kilfedder, James

      Battle, John

      Leighton, Ron

      Beckett, Margaret

      Lestor, Joan (Eccles)

      Beith, A. J.

      Lewis, Terry

      Benn, Rt Hon Tony

      Litherland, Robert

      Bermingham, Gerald

      Livsey, Richard

      Bidwell, Sydney

      Lloyd, Tony (Stretford)

      Boateng, Paul

      Loyden, Eddie

      Boyes, Roland

      McAllion, John

      Bradley, Keith

      McAvoy, Thomas

      Brown, Gordon (D'mline E)

      McKay, Allen (Barnsley West)

      Brown, Nicholas (Newcastle E)

      McKelvey, William

      Brown, Ron (Edinburgh Leith)

      McLeish, Henry

      Buchan, Norman

      Maclennan, Robert

      Buckley, George J.

      McWilliam, John

      Callaghan, Jim

      Madden, Max

      Campbell, Menzies (Fife NE)

      Mahon, Mrs Alice

      Campbell, Ron (Blyth Valley)

      Marek, Dr John

      Campbell-Savours, D. N.

      Marshall, David (Shettleston)

      Carlile, Alex (Mont'g)

      Marshall, Jim (Leicester S)

      Clark, Dr David (S Shields)

      Martin, Michael J. (Springburn)

      Clarke, Tom (Monklands W)

      Martlew, Eric

      Clay, Bob

      Maxton, John

      Clelland, David

      Meacher, Michael

      Cohen, Harry

      Meale, Alan

      Cryer, Bob

      Michael, Alun

      Cummings, John

      Michie, Bill (Sheffield Heeley)

      Darling, Alistair

      Mitchell, Austin (G't Grimsby)

      Davies, Ron (Caerphilly)

      Molyneaux, Rt Hon James

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

      Morgan, Rhodri

      Dewar, Donald

      Morley, Elliot

      Dixon, Don

      Morris, Rt Hon A. (W'shawe)

      Doran, Frank

      Mowlam, Marjorie

      Dunnachie, Jimmy

      Mullin, Chris

      Dunwoody, Hon Mrs Gwyneth

      Oakes, Rt Hon Gordon

      Eadie, Alexander

      O'Brien, William

      Eastham, Ken

      O'Neill, Martin

      Evans, John (St Helens N)

      Orme, Rt Hon Stanley

      Ewing, Harry (Falkirk E)

      Parry, Robert

      Fearn, Ronald

      Patchett, Terry

      Field, Frank (Birkenhead)

      Pike, Peter L.

      Fisher, Mark

      Powell, Ray (Ogmore)

      Flannery, Martin

      Primarolo, Dawn

      Foot, Rt Hon Michael

      Quin, Ms Joyce

      Forsythe, Clifford (Antrim S)

      Radice, Giles

      Foster, Derek

      Redmond, Martin

      Fraser, John

      Rees, Rt Hon Merlyn

      Fyfe, Maria

      Reid, Dr John

      Garrett, John (Norwich South)

      Richardson, Jo

      George, Bruce

      Robertson, George

      Graham, Thomas

      Rogers, Allan

      Griffiths, Nigel (Edinburgh S)

      Rooker, Jeff

      Griffiths, Win (Bridgend)

      Ross, Ernie (Dundee W)

      Harman, Ms Harriet

      Ruddock, Joan

      Haynes, Frank

      Salmond, Alex

      Heal, Mrs Sylvia

      Sedgemore, Brian

      Henderson, Doug

      Sheerman, Barry

      Hogg, N. (C'nauld & Kilsyth)

      Sheldon, Rt Hon Robert

      Home Robertson, John

      Short, Clare

      Hood, Jimmy

      Skinner, Dennis

      Howells, Geraint

      Smith, Andrew (Oxford E)

      Howells, Dr. Kim (Pontypridd)

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

      815

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

      Wareing, Robert N.

      Smith, J. P. (Vale of Glam)

      Welsh, Andrew (Angus E)

      Soley, Clive

      Wigley, Dafydd

      Spearing, Nigel

      Williams, Rt Hon Alan

      Steinberg, Gerry

      Wilson, Brian

      Strang, Gavin

      Winnick, David

      Straw, Jack

      Worthington, Tony

      Taylor, Mrs Ann (Dewsbury)

      Wray, Jimmy

      Taylor, Matthew (Truro)

      Young, David (Bolton SE)

      Thompson, Jack (Wansbeck)

      Turner, Dennis

      Tellers for the Ayes

      Wallace, James

      Mrs. Min Golding and Mr. Frank Cook.

      Walley, Joan

      Wardell, Gareth (Gower)

      NOES

      Alexander, Richard

      Fairbairn, Sir Nicholas

      Alison, Rt Hon Michael

      Fallon, Michael

      Amess, David

      Favell, Tony

      Amos, Alan

      Field, Barry (Isle of Wight)

      Arbuthnot, James

      Fishburn, John Dudley

      Arnold, Jacques (Gravesham)

      Forman, Nigel

      Arnold, Tom (Hazel Grove)

      Forsyth, Michael (Stirling)

      Aspinwall, Jack

      Forth, Eric

      Atkins, Robert

      Fowler, Rt Hon Sir Norman

      Atkinson, David

      Fox, Sir Marcus

      Baker, Nicholas (Dorset N)

      Franks, Cecil

      Baldry, Tony

      Freeman, Roger

      Banks, Robert (Harrogate)

      Galloway, George

      Batiste, Spencer

      Garel-Jones, Tristan

      Bellingham, Henry

      Gill, Christopher

      Bennett, Nicholas (Pembroke)

      Glyn, Dr Sir Alan

      Benyon, W.

      Goodlad, Alastair

      Bevan, David Gilroy

      Goodson-Wickes, Dr Charles

      Blaker, Rt Hon Sir Peter

      Gorman, Mrs Teresa

      Body, Sir Richard

      Gow, Ian

      Bonsor, Sir Nicholas

      Grant, Sir Anthony (CambsSW)

      Boscawen, Hon Robert

      Greenway, Harry (Ealing N)

      Boswell, Tim

      Gregory, Conal

      Bottomley, Mrs Virginia

      Griffiths, Peter (Portsmouth N)

      Bowden, Gerald (Dulwich)

      Ground, Patrick

      Bowis, John

      Grylls, Michael

      Boyson, Rt Hon Dr Sir Rhodes

      Gummer, Rt Hon John Selwyn

      Braine, Rt Hon Sir Bernard

      Hague, William

      Brandon-Bravo, Martin

      Hamilton, Neil (Tatton)

      Brazier, Julian

      Hanley, Jeremy

      Bright, Graham

      Hargreaves, Ken (Hyndburn)

      Brown, Michael (Brigg & Cl't's)

      Harris, David

      Bruce, Ian (Dorset South)

      Haselhurst, Alan

      Buchanan-Smith, Rt Hon Alick

      Hawkins, Christopher

      Buck, Sir Antony

      Hayhoe, Rt Hon Sir Barney

      Budgen, Nicholas

      Hayward, Robert

      Burns, Simon

      Heathcoat-Amory, David

      Burt, Alistair

      Heseltine, Rt Hon Michael

      Butler, Chris

      Hicks, Mrs Maureen (Wolv' NE)

      Carlisle, John, (Luton N)

      Hicks, Robert (Cornwall SE)

      Carttiss Michael

      Hill, James

      Chalker, Rt Hon Mrs Lynda

      Howe, Rt Hon Sir Geoffrey

      Chapman, Sydney

      Howell, Ralph (North Norfolk)

      Chope, Christopher

      Hughes, Robert G. (Harrow W)

      Clark, Dr Michael (Rochford)

      Hunt, Sir John (Ravensbourne)

      Clark, Sir W. (Croydon S)

      Hunter, Andrew

      Clarke, Rt Hon K. (Rushcliffe)

      Irvine, Michael

      Colvin, Michael

      Irving, Sir Charles

      Coombs, Anthony (Wyre F'rest)

      Jack, Michael

      Coombs, Simon (Swindon)

      Janman, Tim

      Couchman, James

      Jessel, Toby

      Currie, Mrs Edwina

      Jones, Gwilym (Cardiff N)

      Davies, Q. (Stamfd & Spald'g)

      Jones, Robert B (Herts W)

      Davis, David (Boothferry)

      Kellett-Bowman, Dame Elaine

      Day, Stephen

      Key, Robert

      Dicks, Terry

      King, Roger (B'ham N'thfield)

      Douglas-Hamilton, Lord James

      Kirkhope, Timothy

      Dover, Den

      Knapman, Roger

      Dunn, Bob

      Knight, Greg (Derby North)

      Durant, Tony

      Knight, Dame Jill (Edgbaston)

      Dykes, Hugh

      Knowles, Michael

      Eggar, Tim

      Knox, David

      Evans, David (Welwyn Hatf'd)

      Lamont, Rt Hon Norman

      Evennett, David

      Lang, Ian

      816

      Latham, Michael

      Soames, Hon Nicholas

      Lee, John (Pendle)

      Speed, Keith

      Lennox-Boyd, Hon Mark

      Speller, Tony

      Lightbown, David

      Spicer, Sir Jim (Dorset W)

      Lilley, Peter

      Spicer, Michael (S Worcs)

      Lloyd, Sir Ian (Havant)

      Squire, Robin

      Lloyd, Peter (Fareham)

      Stanbrook, Ivor

      Lord, Michael

      Stanley, Rt Hon Sir John

      Luce, Rt Hon Richard

      Stern, Michael

      Lyell, Rt Hon Sir Nicholas

      Stevens, Lewis

      Macfarlane, Sir Neil

      Stewart, Allan (Eastwood)

      MacGregor, Rt Hon John

      Stewart, Andy (Sherwood)

      Maclean, David

      Stewart, Rt Hon Ian (Herts N)

      McLoughlin, Patrick

      Stokes, Sir John

      McNair-Wilson, Sir Patrick

      Stradling Thomas, Sir John

      Malins, Humfrey

      Sumberg, David

      Mans, Keith

      Taylor, Ian (Esher)

      Maples, John

      Taylor, John M (Solihull)

      Marland, Paul

      Taylor, Teddy (S'end E)

      Marlow, Tony

      Tebbit, Rt Hon Norman

      Marshall, Michael (Arundel)

      Temple-Morris, Peter

      Martin, David (Portsmouth S)

      Thompson, D. (Calder Valley)

      Mates, Michael

      Thompson, Patrick (Norwich N)

      Maude, Hon Francis

      Thornton, Malcolm

      Mayhew, Rt Hon Sir Patrick

      Thurnham, Peter

      Meyer, Sir Anthony

      Tracey, Richard

      Miscampbell, Norman

      Trotter, Neville

      Morris, M (N'hampton S)

      Twinn, Dr Ian

      Nicholson, David (Taunton)

      Vaughan, Sir Gerard

      Norris, Steve

      Waddington, Rt Hon David

      Onslow, Rt Hon Cranley

      Walker, Bill (T'side North)

      Patnick, Irvine

      Waller, Gary

      Pawsey, James

      Wardle, Charles (Bexhill)

      Peacock, Mrs Elizabeth

      Watts, John

      Riddick, Graham

      Wells, Bowen

      Ridsdale, Sir Julian

      Whitney, Ray

      Roberts, Wyn (Conwy)

      Widdecombe, Ann

      Rost, Peter

      Wilkinson, John

      Rowe, Andrew

      Wilshire, David

      Ryder, Richard

      Wolfson, Mark

      Sainsbury, Hon Tim

      Wood, Timothy

      Scott, Rt Hon Nicholas

      Woodcock, Dr. Mike

      Shaw, David (Dover)

      Yeo, Tim

      Shaw, Sir Giles (Pudsey)

      Young, Sir George (Acton)

      Shaw, Sir Michael (Scarb')

      Younger, Rt Hon George

      Shelton, Sir William

      Shepherd, Richard (Aldridge)

      Tellers for the Noes:

      Skeet, Sir Trevor

      Mr. Tom Sackville and Mr. Kenneth Carlisle.

      Smith, Tim (Beaconsfield)

      Question accordingly negatived.
      Clause 10 ordered to stand part of the Bill.

    Clause 3

      HYDROCARBON OIL. 1979 C. 5
      Dr. Marek: I beg to move amendment No. 33, in page 2, line 16, leave out '£0·1902 and insert £0·18'.
      The First Deputy Chairman: With this it will be convenient to discuss the following amendments: No. 22, in page 2, line 23, leave out '£0·0299' and insert '£0·035'.
      No. 39, in page 2, line 23, leave out '£0·0299' and insert '£0·0383'.
      Dr. Marek: Amendments Nos. 22 and 39 are similar, but amendment 22 was tabled by the Opposition and amendment No. 39 by the Liberal party. They are important amendments as they affect our environment and what will happen to the country, and because last year, after a debate, the Government made certain welcome concessions and took steps to ensure that there was a good differential between leaded and unleaded petrol.
      The amendment would reduce the price of unleaded petrol by a modest amount. We hope that the Government

      817
      will see the sense of that and, if they cannot accept the amendment, perhaps the Economic Secretary, who is to reply to the debate, will be able to offer some concessions in future years or in future budgets.
      The Economic Secretary is, however, in great trouble. It was not a green Budget. Perhaps it could be said that the additional 2p differential on leaded petrol was a green measure. However, that was due to the 10 per cent. uprating of petrol of all types. Such a differential naturally leads to an increase in the differential between the price of leaded and unleaded petrol. The Treasury could do nothing about green measures in the Budget; it was waiting for the Secretary of State for the Environment to publish his Green Paper on the Government's intentions regarding the environment.
      We have been led to expect a carbon tax and other radical proposals in the White Paper that is to be published in the autumn. However, according to the Sunday newspapers, the green tax on petrol proposal has been ruled out and will not be included in the White Paper that is being prepared by the Secretary of State for the Environment. In March he said that a green tax was an essential part of the Government's economic policies. Now, however, it has been ruled out. According to an unattributable briefing by a working party spokesman:
      "Nobody in their right mind would expect a substantial increase in energy prices in the run-up to an election."
      The Government have their eye on the next election. Therefore, the environment does not matter. What matters to them is that they should hold on to power. They do not mind what happens to the country. They are concerned only about the election. They are not concerned about green policies and the effect of existing policies on the environment, or about protecting the environment, or creating a better one.
      9 pm
      According to the unattributable briefing, the White Paper will discuss fuel taxation but it will not commit the Government to any moves, even if they are inflation-neutral, and it will be up to the Treasury to decide what petrol duties should be. If it is for the Treasury to decide what those duties should be, the Treasury should have insisted upon being told earlier this year so that the Budget could include measures that represented Treasury thinking on petrol taxation and how it saw its role in improving the environment.
      It is important to encourage people to use unleaded petrol. In March 1989, 15 per cent. of all cars used unleaded petrol. In the previous year, the figure was only 2 to 3 per cent. That was a good increase, although not as large as some of us had wanted. By October 1989, the differential between leaded and unleaded petrol was 28 per cent. Unfortunately, the differential has remained at almost the same figure; it is now about 30 per cent. A number of organisations argue that the differential must be greater. An additional tax on leaded petrol is not required, but the Government could forgo a little tax on unleaded petrol. Last year the Treasury paid back £7 billion of the national debt, so it could offer a slightly greater differential on unleaded petrol. [Interruption.] The hon. Member for Lancaster (Dame E. Kellett-Bowman) always intervenes from a sedentary position and I can never hear her.
      Dame Elaine Kellett-Bowman: I was simply making the self-evident observation that the Opposition incur debts and we pay them back.
      Dr. Marek: That is not the case.
      Dame Elaine Kellett-Bowman: It is.
      Dr. Marek: We have the highest balance of payments deficit in our entire history. Even invisible earnings during the last few months of 1989 went into deficit for the first time ever. It comes ill from the hon. Member for Lancaster to say that the Government pay back the debts that we incur.
      Dame Elaine Kellett-Bowman: Will the hon. Gentleman give way?
      Dr. Marek: I shall give way again to the hon. Lady, if necessary, but she must make more substantial points if she wishes to gain the Committee's attention. Many hon. Members want to contribute to this important debate.
      Dame Elaine Kellett-Bowman: Ever since the French revolution, we have borrowed a good deal. Each Labour Government have borrowed more, and Conservative Governments have paid it back.
      Dr. Marek: The hon. Lady must examine the curves for the national debt in the past 150 years. It is true that it increased during the first and second world wars, but it has decreased under Labour as well as Conservative Governments. [Interruption.] Conservative Members need only examine the graph, and it will become clear. They will see that during the last war—under a coalition led by a Conservative Prime Minister—the levels were high.
      Dame Elaine Kellett-Bowman rose—
      Dr. Marek: Let us talk about unleaded petrol instead.
      The problem is that the number of cars using unleaded petrol has remained stuck at about 28 or 30 per cent. for the past six months. We need an incentive for people to change to unleaded petrol. They will not do so now, because the argument has gone off the boil.
      Mr. Keith Mans: Surely the 28 per cent. figure reflects the number of cars that cannot be changed to unleaded petrol. However, the figure is liable to go up regardless of any changes in duty that may occur in the next few months as more and more new cars run on unleaded petrol from the word go.
      Dr. Marek: More cars could change to unleaded petrol than are doing so now.
      We must remember that lead in petrol damages the heart, the kidneys and the central nervous system—[Interruption.] The hon. Member for Lancaster is moaning again, but it is true. Lead in petrol causes anaemia and high blood pressure, and can be responsible for abortion and stillbirths. It is an evil that we can do without.
      I am sorry that the hon. Member for Tatton (Mr. Hamilton) is not in his place—perhaps he is pursuing a constituency interest—because not so many years ago he argued for the retention of leaded petrol. I hope that no Conservative Member will do that tonight.

      819
      Opposition Members are not happy that the Chancellor has increased the price of petrol by 10 per cent. across the board. We had hoped for a differential between leaded and unleaded petrol, but there was none in the Budget.
      There are also the problems of the 10 per cent. of disabled people who use the Motability scheme. Those people have their vehicles on a lease basis over a three-year period. Therefore, when the price of petrol increases, they can do less mileage. I do not expect an answer now from the Economic Secretary, but perhaps he can write to me later, as the problem is serious. I remind him that there are several well-known patrons of Motability, who I hope will agree that there is a case for examining the amount of finance available to Motability. Those who participate in the scheme suffer when the price of petrol rises above the rate of inflation.
      Included among those patrons are the right hon. Member for Wallasey (Mrs. Chalker), the right hon. Member for Sutton Coldfield (Sir N. Fowler), the right hon. Member for Croydon, Central (Mr. Moore), the right hon. Member for Braintree (Mr. Newton), the right hon. Member for Chelsea (Mr. Scott), and finally, at the bottom of the list, the right hon. Member for Finchley (Mrs. Thatcher). With patrons like those, there should be no need for me to plead the case for fair treatment for Motability; However, I am doing so because the matter must be mentioned. I hope that what I have said will be considered by the Treasury—I see the Economic Secretary nodding. The EC Commission is pressing for a 30p differential between leaded petrol and DERV. At present the differential is only 20p and our amendment would widen it a little.
      Our usage of diesel accounts for about 5 per cent. of the market, which is much less than most other European countries. I have a graph, although not the actual figures, which shows that if our usage is about 5 per cent., it must be about 10 per cent. in Germany, perhaps 28 per cent. in France and about 12 per cent. in Italy. So we are behind other European countries in the use of diesel. We could do more by increasing the differential because diesel can be a better fuel. It does not contain lead and it is 30 per cent. more economical, thus reducing the level of carbon dioxide emissions. When fitted with a three-way converter, it could be cleaner than anything that a petrol engine could offer. I do not have time to elaborate on those points, but I know that some of my hon. Friends hope to speak about them.
      In summary, it is clear that more needs to be done. We had expected some green tinges to the Budget, but in the event it turned out to be grey on those issues. Perhaps the Treasury was caught out by the Secretary of State for the Environment, who was to have done great things but will not now do them. We shall be interested to hear the Economic Secretary's remarks. He will need to make some encouraging noises to prevent us from pushing the amemdment to a Division.
      Mr. Teddy Taylor: The hon. Member for Wrexham (Dr. Marek) raised the important issue of unleaded petrol. The Government will wish seriously to bear his arguments in mind, but I hope that they will bear equally in mind the plight of unfortunate people such as I who bought a British car and found that it was not capable of being converted to take unleaded petrol.
      One is often anxious to do the right thing—for example, to buy a good British car or use unleaded petrol—and
      820
      bearing in mind the balance of payments problem to which the hon. Member for Wrexham referred, I regard it as my duty to buy British whenever possible.
      The increase in the price of petrol as a result of the Budget was substantial. It went up by 10 per cent. for leaded and unleaded, adding 11p to a gallon of leaded and 9p to a gallon of unleaded petrol. The tax differential is now 15·6p per gallon and unleaded petrol now has about 30 per cent. of the market.
      As I say, it was a substantial price rise. Most people have not noticed the extent of the increase because, at the same time as we had the increase, all petrol stations seemed to make the dramatic change from gallons to litres, and it is now difficult to work out the difference. I am reminded of what happened when we switched to decimal currency; with the change of system came a substantial rise in prices.
      Whether or not the public are aware of what has happened, they would like to know whether the increases are part of a general move by the Government to implement the terms of the Single European Act and to aim to harmonise our taxation system in so far as that is necessary for the completion of the internal market.
      In the debate on the motor vehicle market on 26 April, the Government made it clear that they continued to believe that centrally imposed tax approximation was unnecessary and inappropriate. Are the Government aiming at the harmonisation of indirect taxes and excise duties by 1992 in so far as that is necessary to complete the internal market?
      The Minister will be aware that that would involve dramatic changes for Britain. It would mean, for example, a reduction of about £3 billion in the taxes on alcohol and cigarettes. That would bring joy to some, but not to those who would have to pay the £3 billion, which would have to be imposed on necessities.
      If the Minister cannot avoid those measures, the people of Britain are entitled to know. I am not saying that the Government are right or wrong, but, quite honestly, I have not the slightest idea what the Government's policy is. It is terribly important that people should know. If we are about to move towards approximation with the EEC countries, that will mean rather dramatic changes in the tax we pay. It will mean, for example, much cheaper beer, much cheaper whisky, and significantly cheaper cigarettes, but essentials will go up and petrol will have to go up quite substantially.
      The First Deputy Chairman: Order. I remind the hon. Gentleman that the clause and the amendments deal only with hydrocarbon oils.
      9.15 pm
      Mr. Taylor: That is why I stress that hydrocarbon oils are only part of the budget. We want to know whether the provisions are part of a move towards approximation.
      Finally, if the Government do not consider that approximation is necessary on motor vehicles as well as on petrol, have they taken a legal view on whether the terms of the Single European Act could require them to do so if the Commission takes the view that member states have not approximated the taxes on petrol in so far as is necessary to complete the internal market? The Minister will be well aware of the problem as it has been drawn to the Government's attention many times. Many of us who sat through the late nights considering the Single European Act were worried that, although it stated that we

      821
      had a veto, the clause states that we are committed to approximating in so far as it is necessary to complete the internal market. If the Commission does not think that we have a veto, what will happen?
      I hope that the Minister will say, purely in relation to the clause and amendments dealing with hydrocarbon oils, whether the Government intend to move towards harmonisation in so far as it is necessary to complete the internal market, and whether they have taken a legal opinion as to whether they might be obliged to do so? Whether the answer is yes or no, it will mean a great deal to the British public. I know that there are different views, as there may well be different views in the Committee, but we are entitled to know exactly what the Government's policy is on one of the most dramatic aspects of taxation in our time.
      Mr. Beith: The hon. Member for Southend, East (Mr. Taylor) has raised two points of relevance to the debate. The way in which petrol prices are displayed has a considerable effect on whether the differential appears significant to the motorist. He might have been suggesting that the fact that garages started displaying their prices in litres just when the prices were going up had something to do with Europe. But it was nothing of the kind; it was a direct result of a decision by the Government which led to an adverse report from the Select Committee on Trade and Industry and a prayer tabled against the regulations which had the signature of more than 200 right hon. and hon. Members.
      That prayer was never debated because the Government were too embarrassed to allow it to be debated, but it was entirely at the insistence of the Government and nothing to do with Europe that the rule was changed so that garage proprietors are not obliged to show prices in gallons as well as in litres. I consider that the Government made a grave mistake and that they should have responded to the pressures from hon. Members on all sides of the House not to do that. The result was to make it more difficult for motorists to compare prices, particularly when increases are taking place.
      It is still more difficult to make a realistic comparison. Perhaps I am getting old, but I still measure petrol prices in gallons because that is the term that makes sense to me. If people want measure in litres, that is fine for them, but why should not both prices be displayed? If the Government want to persuade motorists that there is a significant differential, why do they reduce the apparent differential by having the prices displayed only in litres?
      A garage can voluntarily display the prices in gallons, but the Government have removed the obligation to do so. I suggest that hon. Members should support those garages which inform their customers properly and continue to show their prices in gallons as well as litres. That is certainly my practice and I hope that others will do the same.
      There is no need whatsoever to achieve harmonisation of the duty on hydrocarbon oils across the Community to complete the single market. The only threat to the single market would be if different prices were charged in one country for commodities which came from other countries, thereby obtaining some price advantage.
      There is reasonable pressure to harmonise in adjoining countries, where travel between the two is easy. Obviously,
      822
      large differences in the price of petrol would lead to much cross-border driving to fill up with petrol in the neighbouring country—as, for example, between Northern Ireland and the Republic of Ireland. There is not the slightest reason why we should be constrained in rates of duty on petrol or on diesel by the fact that there remain differences with other countries in the European Community. It will not be worth anyone's while to pay a considerable fare to come on a ferry to get petrol cheaper here. Anyway, restrictions should be observed for safety reasons on the carriage of petrol in ferries. Harmonisation is not necessary, and I hope that the Government will remain vigorous in protesting that view in European discussions.
      There is much at stake in this little bit of the Bill, because this is the entire Treasury commitment to greenery. When Treasury Ministers appear before the electorate, or go before their maker and are asked, "What have you done as a Treasury Minister to protect the environment?", all they can say is that the Economic Secretary wore a green tie for the debates on the Bill and that they had a differential on unleaded petrol.
      I welcome the differential on unleaded petrol, for which I argued before its introduction. It is proving its value, but we expected more from the Budget. Where are the other measures which the Government could have taken—the grading of vehicle excise duty by engine size, a more rigorous approach to company car tax provisions, incentives to fit catalytic converters, measures designed to deal with noxious emissions—
      The First Deputy Chairman: Order. The hon. Gentleman will realise that he is straying from the amendments.
      Mr. Beith: I have made my case, Sir Paul. There were so many other areas into which Treasury Ministers could have gone to demonstrate that they were serious about the environment, that they place a great obligation on the leaded and unleaded petrol differential when it is their sole contribution.
      It is not unreasonable, therefore, that some of us have tabled amendments to make the differential greater. Let us at least try to get this right. Clearly, there is a need for further substantial conversion, and a wider differential would help to achieve it. The amendments are designed to make sure that there is a difference of 15p per gallon at the pumps, not in the taxation rate. A complicated calculation has to take place with the figures in the Bill to find out what the figure should be at the pumps.
      There is a case for an even larger differential. As the hon. Member for Wrexham (Dr. Marek) pointed out, the differential for diesel in other countries is much greater than it is here. In some Scandinavian countries, the price of diesel at the pumps is only half that of petrol. There are problems about diesel. Work needs to be done to make sure that, in its use, we are environmentally friendly, but it is possible to be so, as the hon. Member for Wrexham pointed out.
      I urge the Government to have a wider differential in favour of unleaded petrol and to reject the pleadings of their hon. Friends who in previous years were opposed to any differential. The hon. Member for Tatton (Mr. Hamilton), who took part in the debate last year, said that

      823
      there should be no differential. I am glad that the Government have gone at least some way along the road. I believe that they should go further.
      Mr. Mans: I am encouraged by the comments of the hon. Member for Wrexham (Dr. Marek) on unleaded petrol. Despite what other members of the Labour party have said, he at least is encouraging the use of cars rather than public transport. Apart from that, I have sympathy with his view on unleaded petrol, having introduced a short Bill on the subject some 18 months ago.
      The hon. Gentleman should make his case better. An increase in the differential would mean a larger take-up of unleaded petrol by the car-owning public. We should keep a clear idea of the objectives—to increase the number of motor cars that can use unleaded petrol and to increase the number of cars that are converted. Simply to increase the differential would be an expensive way of achieving those objectives.
      Before the previous Budget, when the differential was increased, there was already plenty of evidence, although there was only 3p or 4p difference between the two prices, that people were already converting to unleaded petrol as a result of the promotional activities by the petrol companies and the manufacturers. Unleaded petrol week, which took place at the end of 1988, achieved much. I needed to be convinced then and I need even more to be convinced now that to decrease the amount of duty, which would involve a considerable sum, is the best way of using the money to encourage people to use unleaded petrol. I should much prefer the Government once again to encourage by promotional activities through the car companies and the petrol companies the use of unleaded petrol.
      I wholly agree with some of the points made by the hon. Member for Berwick-upon-Tweed (Mr. Beith). There is not enough physical evidence at petrol stations of the price differential. In the case of some companies, such as British Petroleum, it is difficult to tell which pump has the unleaded petrol, because the new logo is green and yellow. That needs to be changed.
      Mr. Robert B. Jones: I have taken up that point with BP and it has promised to look again at the somewhat indiscriminate use of green because of the misleading impression that it gives.
      Mr. Mans: I am grateful to my hon. Friend. As I said, far more could be done at considerably less cost to the Exchequer to achieve an increase in the amount of unleaded petrol used by methods other than increasing the differential between the two fuels.
      The hon. Member for Wrexham (Dr. Marek) talked about three-way catalytic converters, but in relation to diesel fuels, he should have referred to the catalytic trap. Amendment No. 33 does not seem to relate to diesel vehicles with a catalytic trap, but to all vehicles that use diesel. Before we go down that route, there must be far more evidence that there are no risks to health from diesel fumes. I am thinking especially of diesel vehicle emissions that can be carcinogenic. Last year in Germany, for example, where there had been an increase year by year in the number of diesel cars sold, the figure went down for the first time in five or six years as a result of that worry about health. There is equal worry about photochemical smog, especially in cities, as a result of diesel emissions. It is probably a mistake at this stage to use diesel more
      824
      extensively when there is still much evidence to suggest that there are health effects about which we do not know fully.
      Mr. Allen: Clause 3 is probably the most disappointing in the Bill. Above all, it exemplifies a missed opportunity. It deals with the changes in duty on leaded and unleaded petrol and on diesel, but sadly it is, as has been said previously, the green fig leaf to a Budget which could have been very green. We all accept that the Chancellor was constrained by his predecessor, the right hon. Member for Blaby (Mr. Lawson), and by his mistakes. No doubt he was also constrained by "her next door", by the high interest rates, by the rate of inflation which is the record for the G7 countries, by the monumental trade deficit which has built up under the current Administration and by the other economic circumstances. Having said all that, with a little more ambition and imagination, the Budget could have been creative through clause 3, and other green issues could have been raised. It is a missed opportunity.
      There is nothing in the Budget on reducing VAT to encourage recycled material. There are no tax incentives to ensure the use of items that otherwise would not be used. Sadly, there is nothing in the Bill to encourage insulation.
      The First Deputy Chairman: Order. I remind the hon. Gentleman that this clause and the amendment are concerned solely with hydrocarbon oils.
      Mr. Allen: Indeed, but the clause contains no reference to the sizes of engines that use those oils, petrols and diesel fuels. Other countries have introduced a rigorous regime of pricing according to engine size, but unfortunately such a regime has not been introduced here.
      9.30 pm
      The Government have tried to get green credit by simply increasing the duty on all fuels by 10 per cent. Almost by accident there has been a very slight increase in the price differential. That has occurred not by design, but simply because all the fuels increased in price by exactly the same proportion. That is not enough.
      It has almost been taken as read in this debate, but I must repeat it again, that lead in petrol can kill. The case is overwhelming that lead in petrol causes accumulations that affect foetal development, birth weights and the size of the circumferences of children's heads. It produces all those difficulties. A high level of lead in blood is now, beyond a shadow of a doubt, a serious problem which must be tackled.
      I commend what the Government have already done to tackle that problem. However, we must continue that battle to ensure that more motorists use unleadeded or diesel. The percentage of drivers using unleaded has stagnated at around 30 per cent. Unleaded needs a further boost and the amendment would encourage that.
      The hon. Member for Southend, East (Mr. Taylor) referred to European harmonisation. Harmonisation is a million miles away and I hope that the hon. Gentleman is not too happy about harmonisation on this issue. The price of leaded fuel in some European countries is far higher than it is here. If it was a little higher here and if unleaded was a little cheaper, far more people would use unleaded. Leaded petrol in Denmark is £2·77 a gallon. In Ireland it is £2·68 and in Italy it is £2·97. Only three countries out of 12 in Europe have cheaper leaded petrol than the United Kingdom.

      825
      We have seen what other countries have done with regard to the differential. We have seen the continuing effect of that. I hope that we have a Division on this amendment because it is important that people outside this place understand that the Labour party—we hope that we shall be joined by the smaller Opposition parties—is still determined to carry on the good work that has started. I hope that they understand that that work has not ended and that it should continue until the vast majority of motorists use unleaded fuel.
      Mrs. Mahon: Like my colleagues, I do not apologise for drawing attention to the fact that lead is very dangerous. Some 80 per cent. of lead in the atmosphere comes from petrol. We should remind ourselves regularly just what lead does to us. As my hon. Friend the Member for Wrexham (Dr. Marek) said, it damages the central nervous system. It causes anaemia and it is particularly damaging to children who are vulnerable to its effects because their brains and nervous systems are still developing. Children absorb lead far more quickly than adults.
      Mr. Battle: Does my hon. Friend agree that the very close proximity of inner-city schools and playgrounds to the busiest roads is at the heart of the problem of lead affecting small children?
      Mrs. Mahon: Yes, there is well-documented, tragic evidence to that effect. At the moment there is an argument about at what level the intake of lead begins to harm people, and especially children. Evidence is growing that a threshold level at which harm starts to be caused does not exist and that the effect is a continuum. Low levels of lead can cause harm. We believe that any level is harmful. That is why one of our amendments would reduce the tax on diesel, which is lead-free and, as far as we know, much less harmful—
      Mr. Mans rose—
      Mrs. Mahon: No, I shall not give way to the hon. Gentleman because he has made his points and I should like my hon. Friend the Member for Carlisle (Mr. Martlew) to have his chance.
      Diesel is more economical and reduces the level of carbon dioxide emissions. Therefore, we contend that the differential between leaded petrol and diesel should be increased as should that between leaded and unleaded petrol.
      The pricing differential between leaded and unleaded petrol has been fairly successful. I do not think that any hon. Member would argue with the fact that it is has encouraged motorists to change to unleaded petrol. Nevertheless, as my hon. Friend the Member for Nottingham, North (Mr. Allen) said, we seem to have reached stagnation point. In March 1989, unleaded petrol sales accounted for about 15 per cent. of the market; by October 1989, they accounted for 28 per cent., but since then there is no doubt that the campaign has stalled. It is estimated that by March this year the percentage of petrol sales accounted for by unleaded fuel had climbed to about 30 per cent. However, it is also estimated that another 20 per cent. of motorists could switch to unleaded petrol without engine conversion. It is true that 6 million cars use unleaded petrol, but that leaves 9 million cars that do not. Despite all the hype there is still an awfully long way to go.
      826
      I agree that the Budget was grey rather than green. The Chancellor should at least have acknowledged the urgency of the environmental issues that are facing everybody in this country, if not in the world. I know that you, Sir Paul would rule me out of order if I were to discuss some of the issues to improve the environment for which we are calling, so I shall not do so.
      If accepted, our amendments would take us some way along the road to reducing the amount of lead in the air. As I am sure that that would be welcomed by everybody outside the House—and certainly by all Opposition Members, if not by all Conservative Members—I urge the Minister to accept our amendments.
      Mr. Martlew: The Chancellor's decision on unleaded petrol was symbolic of the whole Budget. It was a missed opportunity. His decision did not extract inflation from the economy and did not extract poison from the atmosphere. The Budget left us with an economy that will be ruined for future generations, just as many of our children's minds will be ruined because the Chancellor did not take the opportunity of increasing the differential between leaded and unleaded petrol.
      The right hon. Member for Blaby (Mr. Lawson) has been blamed for many things, but at least we could say that he had a green tinge about him. He certainly has a green tinge these days but perhaps those of us who are not getting his salary should be the ones with a green tinge.
      I am sorry that the Economic Secretary will have to reply to this debate, and not the Chancellor. When he served at the Ministry of Agriculture, Fisheries and Food, the hon. Gentleman had a very good environmental reputation. Indeed, if he had still been a Minister in that Department, I doubt whether we would have this problem with mad cow disease. I notice that the hon. Gentleman is wearing a green tie. Perhaps that is a coded message to us that he does not believe what he is going to say, but that he has to say it anyway.
      Lead is dangerous—there is no argument from either side about that. I do not accept the argument of the hon. Member for Wyre (Mr. Mans) that price differential does makes no difference to the public's buying power. That was the implication of his remarks. At one time he praised petrol companies for their efforts and then he criticised them for trying to disguise which petrol was leaded and which unleaded. That sounded a peculiar argument to me.
      The Government increased taxation on unleaded petrol by 10 per cent. That was anti-environmental and anti-green because they actually increased the cost of unleaded petrol by 10 per cent. If they had wanted to get the same amount of revenue, they could have increased the differentials. That would not have made a major difference in the total cost, but would have encouraged people to go for unleaded petrol. We should be aiming for a system in which those who do not use unleaded petrol, use diesel and all of us have catalytic converters on our cars to help the environment. But the provision has done nothing towards that.
      If the Government had not wanted to put up the price of unleaded petrol, they could have put up the road tax —that was an option. Many Opposition Members are suspicious of the Government's reasons for refusing to put up road tax. We believe that they are getting ready to do away with it, and will put its cost on the price of petrol, both leaded and unleaded, in the not too distant future. They are not honest about that because they are deeply

      827
      concerned about what rural voters will think about the abolition of the road tax. That is why the Government decided to increase the tax on unleaded petrol by 10 per cent.
      Some of my hon. Friends have been too kind to the Government. They said that it is a grey Budget. They were right; it is the colour of the Chancellor's hair. Through their action, the Government are being anti-environment and anti those of us who are consumers and decide that we want to buy environmentally friendly products.
      The only way the Budget has helped the environment is by closing some factories and reducing pollution in that way. I noticed that the job losses in the constituency of my hon. Friend the Member for Wrexham (Dr. Marek) were blamed on the downturn in the car industry. If there was a greater differential between the price of leaded and unleaded petrol, it might encourage some of us who have cars that cannot be converted to change to new cars. That would give the economy an impetus. But, of course, that is exactly what the Chancellor does not want us to do. We cannot have any growth, whether green or otherwise.
      The Government have let down the people of this country. They have let the cat out of the bag. They pay only lip service to the environment, and when it comes down to the pounds, shillings and pence, they do not give a damn.
      Mr. Ryder: I thank the hon. Member for Carlisle (Mr. Martlew) for his kind remarks. I do not know what causes mad cow disease but I hope—indeed I am sure—that it is not leaded petrol.
      Amendment No. 33 calls for the rate of excise duty on heavy oil to be reduced. It would also increase the tax differential between DERV and leaded petrol. DERV already has a duty advantage over petrol, but increasing the differential will have only a limited effect because most DERV is used for road freight lorries. It might encourage more people to switch to using diesel rather than petrol cars, but unfortunately United Kingdom manufacturers lag behind their competitors in the number and range of diesel cars they offer. I think that the hon. Member for Wrexham (Dr. Marek) would acknowledge that. For example, Ford, Peugeot Talbot and Rover have a limited production of diesel cars in the United Kingdom, but we have no long-term tradition of such production here, by contrast with some continental manufacturers, such as Mercedes-Benz, Volkswagen and Citroen.
      Increases in the cost of DERV affect virtually every United Kingdom business by raising costs. Last year we did not increase DERV duty at all. This year my right hon. Friend the Chancellor felt it necessary to make some increases, although they are a little higher than required to keep the duty in line with inflation. This is offset in some measure by freezing vehicle excise duty on buses, coaches, taxis and many lorries for this year. Although the duty on United Kingdom DERV is higher than that in some EEC countries—I readily concede that it is—many of our Community partners such as Belgium, Denmark, France, Ireland, Italy and the Netherlands apply a higher—some of them a much higher—rate of VAT to DERV than we do. And some countries such as Spain, Portugal and France do not allow their businesses to deduct all of that VAT.
      I assure my hon. Friend the Member for Southend, East (Mr. Taylor) that we have made it clear on several occasions that we do not consider a tax approximation
      828
      necessary for the completion of the single market. As he knows, the proposals require unanimity in the Council of Ministers, so our position is safeguarded.
      9.45 pm
      The hon. Member for Berwick-upon-Tweed (Mr. Beith) said that the price of DERV was too high and contrasted it with the price in some Scandinavian countries, but, as I have said, several countries with low DERV duties apply higher VAT rates than we do and do not allow businesses to deduct all the VAT that they then incur on their purchases of DERV.
      Amendments Nos. 22 and 39 call for the Government to do more of what we are doing already for unleaded petrol, by increasing the differential between leaded and unleaded petrol to 4·03p per litre, including VAT, or—I share the view of the hon. Member for Berwick-upon-Tweed about gallons—to 18·30p per gallon. I welcome that as a sign of support for our strategy over the past three Finance Acts, in which we have steadily increased the differential. As the Committee knows, we introduced the duty differential between leaded and unleaded petrol way back in 1987 to encourage the wider use of unleaded petrol. We did so because of the widespread concern about levels of lead in the atmosphere and in the blood, particularly in that of children. I know that the hon. Member for Halifax (Mrs. Mahon), and many other hon. Members are anxious about that.
      The hon. Member for Wrexham said that the consumption of unleaded petrol had not yet risen to 30 per cent., but it has risen to more than 30 per cent. now. I was not a member of the Finance Bill Committee last year, but I think I am right to say that the hon. Member threw down a challenge to the Government in that Committee that the take-up of unleaded should rise to more than 30 per cent. by this time in 1990. We have met that target and we hope and expect that the take-up of this form of petrol will increase to 40 per cent. by the end of the year. That has been helped by the fact that the proportion of filling stations that now sell unleaded petrol has increased from 50 to well over 90 per cent. in the year since the matter was debated in the Committee. There are still some filling stations, I think in rural areas, that do not sell unleaded petrol, but they are almost the only ones remaining.
      The hon. Members for Nottingham, North (Mr. Allen) and for Halifax will be pleased to know that the quantity of lead emitted into the atmosphere has been reduced by over 70 tonnes a month. That reduction has been widely welcomed by environmental groups. For example, Miss Jane Dunmore, who may be known to the hon. Member for Halifax and who is the campaign director of CLEAR, the Campaign for Lead-Free Air has said:
      "since the reduction in the amount of lead in petrol sold in Britain, the proportion of lead in the atmosphere has dropped by 50 per cent. Levels of lead in people's blood and in the air have dropped in the last two years."
      Mr. Battle: Does the Minister agree that the figures that he gave are averages? In cities such as my city of Leeds there is a great contrast between inner-city areas where there are schools situated along the main roads and on the arterial accesses to the city. In those inner-city areas the lead levels are four to five times the levels in the areas beyond the ring roads. That is the real danger. If we base our arguments on average figures we could become very complacent about the problem.
      Mr. Ryder: I agree with the hon. Gentleman The Government are not complacent or we would not be coming forward with the clause and nor would we have made such progress in the past few years. The hon. Gentleman is worried about lead in the air in his constituency. That is understandable and he is justified in being anxious. It is for that reason that we have set targets each year. Last year we were set a target of 30 per cent. by the hon. Member for Wrexham. We reached that target and, as I have said, we expect to reach 40 per cent. by the end of 1990.
      Mr. Allen: The Minister says that he has set himself a target of 40 per cent. unleaded petrol usage for next year and has prayed in aid Miss Jane Dunmore of the Campaign for Lead-Free Air. I suggest that he reads the rest of what she said. She said:
      "Some small savings in fuel and hence in pollution may result but the new waiver in favour of unleaded petrol is probably too slight to speed up greatly the pace of change."
      Mr. Ryder: I do not think that anyone could quarrel about the pace of change, because the Government have reached a 30 per cent. target in three years. We are fourth in the European league table and, as I have said, we expect to improve from 30 to 40 per cent. by the end of this year. Nobody who looks at the figures for the last three years could say that the Government have not taken the matter extremely seriously. We shall continue to do so. We compare well with many other countries in the European Community. Only the West Germans, the Danes and the Dutch have a large market share of unleaded petrol, but those countries started well ahead of us in setting tax differentials between leaded and unleaded petrol.
      Since last year's Budget, it has paid motorists to use unleaded petrol and many motorists who were able to switch to it have done so. But adjusting the price is not all that we have done to increase the take-up of unleaded petrol. Our measures last year made it more available and we also gave it a boost with a £1 million advertising campaign. My hon. Friend the Member for Wyre (Mr. Mans) mentioned that and also stressed the fact that many oil companies, notably Esso, BP and Shell, have helped by running massive advertising campaigns and promotions to encourage people to make the switch to unleaded. Car manufacturers have also played a role and I congratulate them and the oil companies for their part in the success that I have outlined to the Committee.
      I can tell my hon. Friend the Member for Southend, East that, from October this year, all new cars must be able to run on unleaded petrol. We do not believe that further increases in the duty differential would increase significantly the use of unleaded petrol. That would reduce the cost of unleaded petrol for those who have already made the switch and erode the real value of leaded petrol duty. There is a limit to the effect that a differential can have. As my hon. Friend said, about one quarter of all cars cannot run on unleaded petrol. In addition, many consumers are price-insensitive and there is nothing that the Government can do about that. Some drivers wrongly believe that leaded petrol gives better performance than unleaded petrol. However, tests by manufacturers and consumers associations show that this is not so.
      Our having made the fiscal benefit available, it is now up to those who have not yet made the switch to do so.
      830
      [Interruption.] I am pleased to welcome to the debate my hon. Friend the Minister for Roads and Traffic, who knows a great deal about this subject.
      The differential that we are proposing is the right one to encourage more motorists to switch to unleaded petrol. The incentive is there and the Government would suffer a dead weight loss of tax if the differential were too great.
      Therefore, I recommend that the Committee resists the Opposition's amendments. However, I give the assurance that in next year's Budget we shall look again at the differential, just as we have done during the past three years, and it is inconceivable that we would not take into account some of the arguments that have been put forward today and the desire of many people, irrespective of party, to see that we maintain the differential between leaded and unleaded petrol and increase the number of cars running on unleaded petrol.
      Dr. Marek: We have had a useful debate and I thank my hon. Friends the Members for Carlisle (Mr. Martlew), for Halifax (Mrs. Mahon), and for Nottingham, North (Mr. Allen) for their contributions. The Minister has made a reasonable response. He has honestly and forthrightly said that the Government hope to achieve a 40 per cent. take-up by the end of December. We shall remember that. I hope that that is well exceeded, as I am sure do hon. Members on both sides of the Committee.
      However, we still think that the Government should have done something about unleaded petrol in this year's Budget. They have not done so because of the muddle between the Department of the Environment, the proposed White Paper which was supposed to tell us exactly what the Government's green policies will be and the Treasury being unable to act. However, it now transpires that the Treasury could have acted, since many proposals will not now be included in the White Paper because of the run-up to the next general election.
      I recommend my right hon. and hon. Friends to press amendment No. 22 to a Division, but I beg to ask leave to withdraw amendment No. 33.
      Amendment, by leave, withdrawn.
      Amendment proposed: No. 22, in clause 3, page 2, line 23, leave out £0·0299' and insert £0·035'.—[Dr. Marek.]
      Question put, That the amendment be made:—
      The Committee divided: Ayes 180, Noes 233.

      Division No. 209]

      [10 pm

      AYES

      Abbott, Ms Diane

      Buchan, Norman

      Allen, Graham

      Buckley, George J.

      Anderson, Donald

      Callaghan, Jim

      Archer, Rt Hon Peter

      Campbell, Menzies (Fife NE)

      Armstrong, Hilary

      Campbell, Ron (Blyth Valley)

      Ashdown, Rt Hon Paddy

      Campbell-Savours, D. N.

      Banks, Tony (Newham NW)

      Carlile, Alex (Mont'g)

      Barnes, Harry (Derbyshire NE)

      Clark, Dr David (S Shields)

      Barnes, Mrs Rosie (Greenwich)

      Clarke, Tom (Monklands W)

      Barron, Kevin

      Clay, Bob

      Battle, John

      Clelland, David

      Beckett, Margaret

      Cohen, Harry

      Beith, A. J.

      Cook, Frank (Stockton N)

      Benn, Rt Hon Tony

      Cook, Robin (Livingston)

      Bermingham, Gerald

      Corbyn, Jeremy

      Blunkett, David

      Cryer, Bob

      Boateng, Paul

      Cummings, John

      Boyes, Roland

      Cunliffe, Lawrence

      Bradley, Keith

      Cunningham, Dr John

      Brown, Gordon (D'mline E)

      Dalyell, Tam

      Brown, Nicholas (Newcastle E)

      Darling, Alistair

      Brown, Ron (Edinburgh Leith)

      Davies, Ron (Caerphilly)

      831

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

      Maxton, John

      Dewar, Donald

      Meacher, Michael

      Dixon, Don

      Meale, Alan

      Dobson, Frank

      Michael, Alun

      Doran, Frank

      Michie, Bill (Sheffield Heeley)

      Dunnachie, Jimmy

      Mitchell, Austin (G't Grimsby)

      Dunwoody, Hon Mrs Gwyneth

      Molyneaux, Rt Hon James

      Eadie, Alexander

      Moonie, Dr Lewis

      Eastham, Ken

      Morgan, Rhodri

      Evans, John (St Helens N)

      Morley, Elliot

      Ewing, Harry (Falkirk E)

      Morris, Rt Hon A. (W'shawe)

      Fearn, Ronald

      Morris, Rt Hon J. (Aberavon)

      Field, Frank (Birkenhead)

      Mowlam, Marjorie

      Fisher, Mark

      Mullin, Chris

      Flannery, Martin

      Oakes, Rt Hon Gordon

      Foot, Rt Hon Michael

      O'Brien, William

      Forsythe, Clifford (Antrim S)

      O'Neill, Martin

      Foster, Derek

      Parry, Robert

      Fraser, John

      Patchett, Terry

      Fyfe, Maria

      Pike, Peter L.

      Galloway, George

      Powell, Ray (Ogmore)

      Garrett, John (Norwich South)

      Prescott, John

      George, Bruce

      Primarolo, Dawn

      Gould, Bryan

      Quin, Ms Joyce

      Graham, Thomas

      Radice, Giles

      Griffiths, Nigel (Edinburgh S)

      Redmond, Martin

      Griffiths, Win (Bridgend)

      Rees, Rt Hon Merlyn

      Grocott, Bruce

      Reid, Dr John

      Harman, Ms Harriet

      Richardson, Jo

      Hattersley, Rt Hon Roy

      Robertson, George

      Haynes, Frank

      Rogers, Allan

      Heal, Mrs Sylvia

      Rooker, Jeff

      Henderson, Doug

      Ross, Ernie (Dundee W)

      Hogg, N. (C'nauld & Kilsyth)

      Ruddock, Joan

      Home Robertson, John

      Salmond, Alex

      Hood, Jimmy

      Sedgemore, Brian

      Howells, Geraint

      Sheerman, Barry

      Howells, Dr. Kim (Pontypridd)

      Sheldon, Rt Hon Robert

      Hughes, John (Coventry NE)

      Short, Clare

      Hughes, Robert (Aberdeen N)

      Skinner, Dennis

      Hughes, Roy (Newport E)

      Smith, Andrew (Oxford E)

      Ingram, Adam

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

      Janner, Greville

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

      Jones, Barry (Alyn & Deeside)

      Smith, J. P. (Vale of Glam)

      Jones, Ieuan (Ynys Môn)

      Soley, Clive

      Jones, Martyn (Clwyd S W)

      Spearing, Nigel

      Kaufman, Rt Hon Gerald

      Steel, Rt Hon Sir David

      Kennedy, Charles

      Steinberg, Gerry

      Leighton, Ron

      Strang, Gavin

      Lestor, Joan (Eccles)

      Straw, Jack

      Lewis, Terry

      Taylor, Mrs Ann (Dewsbury)

      Litherland, Robert

      Taylor, Matthew (Truro)

      Livingstone, Ken

      Thompson, Jack (Wansbeck)

      Livsey, Richard

      Turner, Dennis

      Lloyd, Tony (Stratford)

      Wallace, James

      Loyden, Eddie

      Walley, Joan

      McAllion, John

      Wardell, Gareth (Gower)

      McAvoy, Thomas

      Welsh, Andrew (Angus E)

      McKay, Allen (Barnsley West)

      Wigley, Dafydd

      McKelvey, William

      Williams, Rt Hon Alan

      McLeish, Henry

      Williams, Alan W. (Carm'then)

      Maclennan, Robert

      Wilson, Brian

      McWilliam, John

      Winnick, David

      Madden, Max

      Worthington, Tony

      Mahon, Mrs Alice

      Wray, Jimmy

      Marek, Dr John

      Young, David (Bolton SE)

      Marshall, David (Shettleston)

      Marshall, Jim (Leicester S)

      Tellers for the Ayes:

      Martin, Michael J. (Springburn)

      Mrs. Llin Golding and Mr. Robert N. Wareing.

      Martlew, Eric

      NOES

      Aitken, Jonathan

      Aspinwall, Jack

      Alexander, Richard

      Atkins, Robert

      Alison, Rt Hon Michael

      Atkinson, David

      Amess, David

      Baker, Rt Hon K. (Mole Valley)

      Amos, Alan

      Baker, Nicholas (Dorset N)

      Arbuthnot, James

      Baldry, Tony

      Arnold, Jacques (Gravesham)

      Banks, Robert (Harrogate)

      Arnold, Tom (Hazel Grove)

      Batiste, Spencer

      832

      Bellingham, Henry

      Gregory, Conal

      Bendall, Vivian

      Griffiths, Peter (Portsmouth N)

      Bennett, Nicholas (Pembroke)

      Ground, Patrick

      Benyon, W.

      Gummer, Rt Hon John Selwyn

      Bevan, David Gilroy

      Hague, William

      Biffen, Rt Hon John

      Hamilton, Neil (Tatton)

      Blaker, Rt Hon Sir Peter

      Hanley, Jeremy

      Body, Sir Richard

      Hargreaves, Ken (Hyndburn)

      Bonsor, Sir Nicholas

      Harris, David

      Boscawen, Hon Robert

      Haselhurst, Alan

      Boswell, Tim

      Hawkins, Christopher

      Bottomley, Mrs Virginia

      Hayhoe, Rt Hon Sir Barney

      Bowden, Gerald (Dulwich)

      Hayward, Robert

      Bowis, John

      Heathcoat-Amory, David

      Boyson, Rt Hon Dr Sir Rhodes

      Heseltine, Rt Hon Michael

      Braine, Rt Hon Sir Bernard

      Hicks, Mrs Maureen (Wolv' NE)

      Brandon-Bravo, Martin

      Hicks, Robert (Cornwall SE)

      Brazier, Julian

      Hill, James

      Bright, Graham

      Howe, Rt Hon Sir Geoffrey

      Brown, Michael (Brigg & Cl't's)

      Howell, Ralph (North Norfolk)

      Bruce, Ian (Dorset South)

      Hughes, Robert G. (Harrow W)

      Buchanan-Smith, Rt Hon Alick

      Hunt, Sir John (Ravensbourne)

      Buck, Sir Antony

      Hunter, Andrew

      Budgen, Nicholas

      Irvine, Michael

      Burns, Simon

      Irving, Sir Charles

      Burt, Alistair

      Jack, Michael

      Butcher, John

      Janman, Tim

      Butler, Chris

      Jessel, Toby

      Carlisle, John, (Luton N)

      Jones, Gwilym (Cardiff N)

      Carlisle, Kenneth (Lincoln)

      Jones, Robert B (Herts W)

      Carrington, Matthew

      Kellett-Bowman, Dame Elaine

      Carttiss, Michael

      Key, Robert

      Chalker, Rt Hon Mrs Lynda

      Kilfedder, James

      Chapman, Sydney

      King, Roger (B'ham N'thfield)

      Chope, Christopher

      Kirkhope, Timothy

      Clark, Dr Michael (Rochford)

      Knapman, Roger

      Clark, Sir W. (Croydon S)

      Knight, Greg (Derby North)

      Clarke, Rt Hon K. (Rushcliffe)

      Knight, Dame Jill (Edgbaston)

      Colvin, Michael

      Knowles, Michael

      Coombs, Anthony (Wyre F'rest)

      Knox, David

      Coombs, Simon (Swindon)

      Lamont, Rt Hon Norman

      Couchman, James

      Lang, Ian

      Currie, Mrs Edwina

      Latham, Michael

      Davies, Q. (Stamf'd & Spald'g)

      Lee, John (Pendle)

      Davis, David (Boothferry)

      Lennox-Boyd, Hon Mark

      Day, Stephen

      Lightbown, David

      Dickens, Geoffrey

      Lilley, Peter

      Dicks, Terry

      Lloyd, Peter (Fareham)

      Douglas-Hamilton, Lord James

      Lord, Michael

      Dover, Den

      Luce, Rt Hon Richard

      Dunn, Bob

      Lyell, Rt Hon Sir Nicholas

      Durant, Tony

      Macfarlane, Sir Neil

      Dykes, Hugh

      MacGregor, Rt Hon John

      Eggar, Tim

      Maclean, David

      Evans, David (Welwyn Hatf'd)

      McLoughlin, Patrick

      Evennett, David

      McNair-Wilson, Sir Patrick

      Fairbairn, Sir Nicholas

      Malins, Humfrey

      Fallon, Michael

      Mans, Keith

      Favell, Tony

      Maples, John

      Field, Barry (Isle of Wight)

      Marland, Paul

      Fishburn, John Dudley

      Marlow, Tony

      Forman, Nigel

      Marshall, Michael (Arundel)

      Forsyth, Michael (Stirling)

      Martin, David (Portsmouth S)

      Forth, Eric

      Mates, Michael

      Fowler, Rt Hon Sir Norman

      Maude, Hon Francis

      Fox, Sir Marcus

      Mayhew, Rt Hon Sir Patrick

      Franks, Cecil

      Meyer, Sir Anthony

      Freeman, Roger

      Miscampbell, Norman

      French, Douglas

      Montgomery, Sir Fergus

      Fry, Peter

      Morris, M (N'hampton S)

      Gardiner, George

      Nicholson, David (Taunton)

      Garel-Jones, Tristan

      Onslow, Rt Hon Cranley

      Gill, Christopher

      Pawsey, James

      Glyn, Dr Sir Alan

      Peacock, Mrs Elizabeth

      Goodlad, Alastair

      Riddick, Graham

      Goodson-Wickes, Dr Charles

      Ridsdale, Sir Julian

      Gorman, Mrs Teresa

      Roberts, Wyn (Conwy)

      Gow, Ian

      Rost, Peter

      Grant, Sir Anthony (CambsSW)

      Rowe, Andrew

      Greenway, Harry (Ealing N)

      Ryder, Richard

      833

      Sainsbury, Hon Tim

      Temple-Morris, Peter

      Scott, Rt Hon Nicholas

      Thompson, D. (Calder Valley)

      Shaw, David (Dover)

      Thompson, Patrick (Norwich N)

      Shaw, Sir Giles (Pudsey)

      Thornton, Malcolm

      Shaw, Sir Michael (Scarb')

      Thurnham, Peter

      Shelton, Sir William

      Tracey, Richard

      Shepherd, Richard (Aldridge)

      Trotter, Neville

      Skeet, Sir Trevor

      Twinn, Dr Ian

      Smith, Tim (Beaconsfield)

      Vaughan, Sir Gerard

      Soames, Hon Nicholas

      Waddington, Rt Hon David

      Speed, Keith

      Walker, Bill (T'side North)

      Speller, Tony

      Waller, Gary

      Spicer, Sir Jim (Dorset W)

      Wardle, Charles (Bexhill)

      Spicer, Michael (S Worcs)

      Watts, John

      Squire, Robin

      Wells, Bowen

      Stanbrook, Ivor

      Whitney, Ray

      Stanley, Rt Hon Sir John

      Widdecombe, Ann

      Steen, Anthony

      Wilkinson, John

      Stern, Michael

      Wilshire, David

      Stevens, Lewis

      Wolfson, Mark

      Stewart, Allan (Eastwood)

      Wood, Timothy

      Stewart, Andy (Sherwood)

      Woodcock, Dr. Mike

      Stewart, Rt Hon Ian (Herts N)

      Yeo, Tim

      Stokes, Sir John

      Young, Sir George (Acton)

      Stradling Thomas, Sir John

      Younger, Rt Hon George

      Sumberg, David

      Taylor, Ian (Esher)

      Tellers for the Noes:

      Taylor, John M (Solihull)

      Mr. Tom Sackville and Mr. Irvine Patrick.

      Taylor, Teddy (S'end E)

      Tebbit, Rt Hon Norman

      Question accordingly negatived.
      Clause 3 ordered to stand part of the Bill.
      To report progress and ask leave to sit again.—[Mr. Fallon.]
      Committee report progress; to sit again tomorrow.

  Immigration Rules
  10.14 pm
  Mr. Roy Hattersley: I beg to move,
  That the Statement of Changes in Immigration Rules (House of Commons Paper No. 251), a copy of which was laid before this House on 23 March, be disapproved.
  We are to spend 90 minutes late at night debating immigration proposals that will have a profound and, in the Opposition's view, damaging effect on the lives of tens of thousands of British citizens. I propose to speak to the motion with all the speed and brevity that I can muster, as I know that several of my hon. Friends also wish to speak. I understand that the Home Secretary is to wind up the debate, so that he can deal properly with the points made by Opposition Members.
  A number of points must be clarified. I think that we all agree that primary immigration into this country is largely over. The rules that we are to debate tonight, therefore, largely concern the enforced separation of British families living in Britain with British responsibilities and, I hope, British rights. We shall debate the case of husbands who are refused permisson to join their British wives; of elderly parents who are refused permission to join their British children; and of British children who, although wrongly excluded from this country, are nevertheless refused permission to join their parents.
  Evidence now suggests that the regulations have also resulted in the intolerable treatment of young black and Asian British citizens who are in no sense immigrants, but who were born here and have lived here throughout their lives. I am sure that the Minister will correct me if I am wrong, but I understand that each month in London about 250 overstayers are detected as a result of police vigilance. No one has any objection to that. However, I also understand that, each month, 200 British citizens are interviewed on suspicion of minor road traffic offences, and are then required to prove their immigration status, although it is—on the evidence—not in doubt.
  Of course, those young men—British by birth and registration—are black. The only evidence that requires them to prove their nationality after being apprehended for a minor motoring offence is the colour of their skin. It is intolerable that colour should govern suspicion and investigation by the Metropolitan police. The blame attaches not to the police, but to a repressive immigration policy, about which I want to say four things.
  First, the harsh immigration policy and regulations, as well as doing immense damage to the welfare and happiness of divided families, do perhaps irrevocable damage to community relations. The whole spirit of the regulations implies that the black and Asian British are a problem that will increase if husbands and wives are united, or if elderly parents are allowed to join their children. That alleged problem does not apply to wives whose origin is in the European Community.
  The Secretary of State for the Home Department (Mr. David Waddington): I hope that the right hon. Member for Birmingham, Sparkbrook (Mr. Hattersley) does not think that I am discourteous to interrupt him so early in his speech, but he has mentioned a series of matters connected with immigration law none of which has anything to do with tonight's debate.

  835
  We are debating four things tonight: the extension of the visa requirement; the admission of Commonwealth citizens with a grandparent born in Britain; the financial requirements for business men and people of independent means; and the admission of people with settled status. All the matters that the right hon. Gentleman has mentioned are important, but they have nothing to do with this debate.
  Mr. Hattersley: I shall be content for you, Madam Deputy Speaker, to apply the rules of order. But I must point out to the Home Secretary that, knowing his tendencies, I inquired of the Table Office today whether all the contents of the "Statement of Changes in Immigration Rules" were debatable on the motion. I was told that the nature of the motion meant that the entire contents of the document were possible for debate. But even were that not the case, though the Table Office assured me it was, everything that I have said up to now is directly related to the points—
  Madam Deputy Speaker (Miss Betty Boothroyd): Order. The Home Secretary gave the four items with which the statement and motion pertaining to it are concerned. There are four restricted items which the Home Secretary announced to the House.
  Mr. Max Madden: On a point of order, Madam Deputy Speaker. I raised this matter with Mr. Speaker earlier today. At that stage his advice was that this was a very narrow matter, and he said that the only matter with which we were concerned tonight was the adding of some countries to the visa list. That would not seem to be the case. The document "Statement of Changes in Immigration Rules" covers the whole gamut of immigration procedures and rules, including, on page 19, the question of the political asylum of refugees.
  I raised with Mr. Speaker today the question whether it would be in order tonight to raise the issue of 33 young Chinese who have been threatened with deportation from Britain to Panama. I raised that matter deliberately because, with the Home Secretary present tonight, I hoped that the right hon. and learned Gentleman would report to the House why that extraordinary decision had been taken. I hoped that we would have the opportunity to press him to halt that threatened deportation until a judicial review of his decision had been considered by the courts.
  Ms. Clare Short: On a point of order, Madam Deputy Speaker. I am mystified by your ruling. We have been supplied by the Vote Office with a note on the changes that we are discussing, and it contains 14 items. That document has been distributed officially and is designed to help us with our business tonight. In any event, I should have thought that, as we are dealing with a "Statement of Changes in Immigration Rules", it is in order to discuss changes that should, in our view, be included but which have been excluded. Surely that must be correct.
  Madam Deputy Speaker: The motion is to disapprove the statement of changes and it is a narrow debate concerning only four items. It is not concerned with the question of asylum which the hon. Member for Bradford, West (Mr. Madden) raised.
  Mr. Jeremy Corbyn: Further to the point of order, Madam Deputy Speaker. You will recall that in 1987, the House—wrongly, in my view—passed the Immigration (Carriers' Liability) Act. In that context, the issue of the admission of people to this country for political asylum relates to the question whether they have a visa to come here. As the instrument that we are discussing relates to visas, I should have thought that the point made by my hon. Friend the Member for Bradford, West (Mr. Madden) was correct in that visas are necessary to enter from other countries to apply for asylum.
  Madam Deputy Speaker: The visa requirements relate only to citizens of Morocco, Algeria and Tunisia and the scope of the debate relates to the desirability or otherwise of the proposed changes as in the motion.
  Mr. Corbyn: But, Madam Deputy Speaker—
  Madam Deputy Speaker: Order. I am answering the hon. Member. The right hon. Member for Birmingham, Sparkbrook (Mr. Hattersley) has the Floor:
  Mr. Corbyn: Further to my point of order, Madam Deputy Speaker. I am trying, with respect, to be helpful to you. You will be aware that on many occasions asylum seekers come through a third port. In other words, if a Chinese refugee or other asylum seeker came through Morocco, it should be in order to debate that matter tonight.
  Madam Deputy Speaker: Order. The hon. Gentleman should wait to be called before making that point.
  Mr. Hattersley: It might be helpful if I continue dealing with two points that are specifically and explicitly dealt with in the statement of changes while those who advise you, Madam Deputy Speaker—of course, I defer to our judgment and ruling in all these particulars; it is not my way to argue with the Chair in general and with you in particular—consider whether it is possible, as we were advised, to suggest other changes that should be made in the regulations. That was the official advice that we were given today and while it is considered let me deal with two specific points.
  A moment ago, Madam Deputy Speaker, you mentioned that one of the changes in the statement is the extension of visa requirements to four Maghreb countries. I hope that the Home Secretary will say in some detail not only why it is regarded necessary for British immigration policy that the visa requirements should be so extended, but how the decision to extend the visa requirements to those four countries came about.
  As I understand it, it was a decision of the Trevi group comprising European Community Home Affairs and Interior Ministers. It is not an official body of the Community, meeting under the terms of Community legislation, but an informal group through which the Home Secretary and his counterparts in the Community reach common considerations about immigration and visa matters. May we be told why the Home Secretary agreed, before he came to the House, that that extension was necessary and why he thought it right to commit the United Kingdom to the extension of visa provisions to those Maghreb and Mashreq countries before he had considered it here in the House of Commons?
  Let me also ask the Home Secretary about returning citizens. He will recall that, some weeks ago, the House

  837
  debated Hong Kong. It was alleged that the object of the policy that the Government then proposed was to ensure that the citizens of Hong Kong had the right to come to Britain eventually, without having to come immediately.
  As they are understood by all those organisations and authorities that have examined the narrow, precise and detailed changes in regulations that the Home Secretary has put before us this evening, the likely effect of those changes will be the opposite of that described during the debate on Hong Kong. It will require people to come here rather than lose the right to come here. It will induce prospective immigrants to return because, unless they return within a prescribed period, they will lose the opportunity to establish the right of permanent abode. I hope that the Home Secretary will deal with those specific matters.
  I now turn to the changes that we regret have not been included in the statement. If, by such circumlocution, I am able to make those points within the rules of order, I propose to do so. First, we regret that the document does not include any alterations in the primary purpose rules. Opposition Members are all agreed that there must be some justification—
  Madam Deputy Speaker: Order. I regret to call the right hon. Gentleman to order, but the primary purpose rule is not included in the scope of the debate.
  Mr. Robert Maclennan: On a point of order, Madam Deputy Speaker. I am genuinely puzzled about your ruling and seek advice. The motion on the Order Paper is:
  "That the Statement of Changes in Immigration Rules (House of Commons Paper No. 251), a copy of which was laid before this House on 23rd March, be disapproved."
  I have heard a number of items read out as being within order, but I see no reference to those items on the Order Paper. The Order Paper refers to House of Commons Paper No. 251, so I do not understand why that document in its entirety is not debatable.
  Mr. Hattersley: Further to that point of order, Madam Deputy Speaker. I am anxious to get on with the debate and to be helpful to you—[Interruption.] I understand the objections of some Conservative Members, but we are moving a motion to disapprove a statement of changes in immigration laws. I have in my hand the document entitled "Statement of Changes in Immigration Rules". It so happens that the Government have also produced another document with the same title. With the greatest respect, I cannot for the life of me understand why my motion must apply to one document with that title but not to the other.
  Mr. Waddington: I understand why the right hon. Gentleman is in error. We are concerned tonight with very minor rule changes—[HON. MEMBERS: "No."] I am trying to help the House by clearing up a misapprehension on the part of the right hon. Gentleman and hon. Members. It was thought that the House would find it convenient if we incorporated these minor changes in a reprinted, consolidated version of the complete rules. I should have thought that it is of help to the House, when minor changes are to be debated, for it to see where those minor changes fit into the rules that still stand. So it is as plain as
  838
  a pikestaff that we are still debating minor changes, but for the convenience of the House we have presented a consolidated set of the rules.
  Mr. Hattersley: I am sure that the Home Secretary is right in describing what he has done. I am interested not in what he has done but in what the House intends. The House is debating a motion disapproving the "Statement of Changes in Immigration Rules". I repeat to you, Madam Deputy Speaker, that what I have in my hand is the "Statement of Changes in Immigration Rules". That is what it is called. The word "Changes" appears. I would have assumed that everything that appeared within the cover labelled "Statement of Changes in Immigration Rules" is appropriate for debate. I cannot contradict your ruling, Madam Deputy Speaker, but the logic of my position, if not the Standing Orders on my position, is impeccable. [Interruption.]
  Madam Deputy Speaker: Order. We are in the middle of the debate. I want to be as helpful to the House as the two Front Bench spokesmen are trying to be. I think that the right hon. Gentleman should be allowed to continue.
  Mr. Hattersley: I continue by referring to some of the things that we regret have not been included in the document. My statement of regret continues with the absence of a change in the primary purpose rule. We accept that there must be a check on the genuine as distinct from the bogus marriage, but we do not believe that that check can properly be applied by requiring an immigration officer to examine a prospective husband by asking questions that are open to ambiguity, and then making a judgment on what is going on in that man's mind and whether his answers imply a wish to marry the woman to whom he is engaged or a wish to come to this country. We would not be moving the motion to disapprove the changes with as much disagreement were such a suggestion not included.
  Our second regret concerning omissions relates to those British citizens who should be in this country because they are the children of British parents. We have argued strongly over the last five years that a number of children who applied to come here and were denied the right to do so subsequently demonstrated by DNA tests that they were covered by the phrase "related as claimed". Despite the proof that they were the children of the parents they claimed to be children to, the Home Office wrongly excluded them.
  A year ago, when we were having a debate, less interrupted by points of order, on the same subject and with the same width, the then Home Secretary said that young men and women who had applied to come here as children of British subjects, who were denied that right and who subsequently proved their relationship through DNA testing—
  Mr. Tony Marlow: On a point of order, Madam Deputy Speaker. Will you ask the right hon. Gentleman to tell the House which rule refers to DNA testing?
  Madam Deputy Speaker: That is not a point for the Chair; it is a point for debate if I were to call the hon. Member. [Interruption.] Order. The point the hon. Gentleman raised was not a point of order; it was a question for debate if he is called.
  Mr. Hattersely: Because other hon. Members want to speak, I will press the Home Secretary briefly on his proposals for young men and women who are children of British citizens, who were wrongly excluded and who are not being allowed into this country. His predecessor promised in a debate a year ago that there would be a quick reassessment of their cases. According to parliamentary answers provided to my right hon. and hon. Friends, people excluded and then proved to be related as claimed are now waiting for as long as 20 and 24 months in Islamabad and Dhaka for re-examination. That seems intolerable to us and I hope that the Home Secretary will have an answer on how that process will be speeded up.
  My third point, which is certainly covered by the rules, is the treatment of asylum seekers in several particulars. The Home Secretary will recall that paragraphs 173 and 174 of the document deal with that point. He will also recall that those paragraphs describe the way in which asylum seekers should be treated. There is now documented evidence that because of the Immigration (Carriers' Liability) Act 1987—[Interruption.]
  Madam Deputy Speaker: Order.
  Mr. Hattersley: There is now documented evidence that, because of the Immigration (Carriers' Liability) Act, airlines themselves have begun to deport asylum seekers from the United Kingdom without any authority or legal justification. We now know that some weeks ago, British Airways discovered a number of Tamils travelling to this country on documents that would have been unacceptable to the Home Office. British Airways therefore—
  Mr. Waddington: On a point of order Madam Deputy Speaker. I seek your guidance on this point—[Interruption.]
  Madam Deputy Speaker: Order.
  Mr. Waddington: Would not it be correct, Madam Deputy Speaker, to say that I should be out of order if, in my reply, I were to deal with the treatment of asylum seekers because it has nothing to do with the proposed changes in immigration rules?
  Madam Deputy Speaker: I am looking at the "Statement of Changes in Immigration Rules" and I find that paragraphs 173 and 174 refer to asylum. However, I must tell the right hon. Member for Birmingham, Sparkbrook (Mr. Hattersley) that they do not concern changes in the rules.
  Mr. Hattersley: As I tried, with perhaps some success, to do a moment ago, I am describing another change which, if it were included, might tempt us to vote in favour of the regulations. I must say through you, Madam Deputy Speaker, to the Home Secretary that I have never seen a more pathetic display than the right hon. and learned Gentleman being desperately anxious not to answer questions that are vital to the reputation of this country and to the welfare of people here.
  I want to conclude so that my hon. Friends can make their points. There is another change which, if it were included in the subsidiary document, might tempt us to feel more sympathetic towards the proposals. I repeat that a number of Tamils came to this country. British Airways judged that they did not possess documents that would allow them to enter the country according to Home Office regulations. British Airways manhandled the Tamils on to
  840
  an aeroplane and sent them back by main force to the country from which they had come, thus preventing them as asylum seekers even from enjoying the right of appeal which the primary and principal document says is theirs by right. When cross-examined on that, BA said that it could not possibly observe the rules of the Immigration (Carriers' Liability) Act, that it could see no reason why it should pay £1,000 a time for every man who travelled on its airline in a way in which it would be impossible for it to detect and that the Immigration (Carriers' Liability) Act was therefore unworkable.
  I repeat that if this change in the immigration rules involved a more acceptable system for dealing with men and women who come for asylum and who are, at present, improperly and, I believe, illegally excluded by airlines operating independently as if they were able to do so in the manner of the Home Secretary, those of us who will vote against the immigration rules changes would not do so with the same enthusiasm.
  I do not deny for a second that tonight the Home Secretary has achieved part of his purpose in diverting some of the criticism that would have been made by the Opposition about the immigration rules. I congratulate him on putting up this smokescreen around an unacceptable policy. However, since he has behaved in this extraordinary way, I must tell him that there are other ways open to us in which we can debate these matters properly—and I promise him: debate these matters properly we shall.
  10.39 pm
  Sir John Stokes: I have examined the changes in the rules, with great care and I am bound to say that any fair-minded person reading the changes would not find much to quarrel with. Why therefore do the Opposition make such a song and dance about them? Is it because their policy on immigration is almost an open door which would allow everyone to come here, or is it because the Opposition feel that at present they must oppose everything that the Government propose?
  I believe that we are a wonderfully fair country. We stick to the rules, unlike some foreign Governments. Why therefore are the Opposition trying to pillory the Government, who have been extremely fair, now that they want to make some small changes in the rules?
  Ms. Diane Abbott: Will the hon. Gentleman give way?
  Mr. Dennis Skinner: Give way.
  Sir John Stokes: If I may be forgiven, I will not give way. Many hon. Members want to speak and a great deal of time has already been used up, yet the debate has hardly started.
  Mr. Dennis Turner rose—
  Madam Deputy Speaker: Order. The hon. Gentleman is obviously not giving way.
  Sir John Stokes: I have attended many debates on immigration and the immigration rules in the 20 years that I have been a Member of this place. In debates of this kind,

  841
  I have always been struck forcibly by how much Labour and Liberal Members have distanced themselves from the feelings of ordinary people.
  Mr. David Winnick: On a point of order, Madam Deputy Speaker. I am confused. My right hon. Friend the Member for Birmingham, Sparkbrook (Mr. Hattersley) was told on several occasions that this was not a wide-ranging debate and obviously, like all Opposition Members, he accepted your ruling. However, the hon. Member for Halesowen and Stourbridge (Sir J. Stokes) is talking about immigration in general and Britain's response. Is that in order?
  Madam Deputy Speaker: I am sure that the hon. Member for Halesowen and Stourbridge (Sir J. Stokes) is just warming up and that he will come to his point any moment now.
  Sir John Stokes: That is exactly what I am trying to do and I will do so if I am allowed to get on with my speech.
  842
  In so far as the small changes in the rules reduce the flow of immigration to this country, they will be welcomed whole-heartedly by the British public. We must be careful to respect the views of the people who elected us to this place. Despite all the legislation and the rules, large numbers of people are still entering this country for settlement every year. It is true that there is some attempt to stop primary immigration, but thousands are still entering this country as relatives or for other reasons.
  Mr. Turner rose—
  Sir John Stokes: What we have heard so far from Opposition Members and the way in which they have intervened in the debate so frequently will worry and alarm many people, including many Labour supporters. The rules are reasonable and necessary. British citizenship should be a most valuable prize for anyone and it should not be granted lightly to all and sundry. I welcome the changes—small though they are—although I wish that they could have gone further.
  10.43 pm
  Mr. John Fraser: I feel a little unsure because I had wanted to congratulate the Home Secretary first on going to the trouble of consolidating the immigration rules. From the point of view of practitioners —be they professional people or advice workers—it is helpful to have a single set of rules. Secondly, enormous changes have taken place in the running of Lunar house. It has become more efficient and quicker. People there are now accessible on the telephone and there has been a complete change in the management. I am not saying that it is perfect or that I agree with he decisions that are made there—they are not always even—but there has certainly been a change.
  At that point, the plaudits cease because one can compare trying to seek entry into the United Kingdom with trying to climb a rock face. It is a slow and difficult process and just when the applicant or immigrant gets to the final ledge, the changes in the immigration rules are the stamping on the fingers that push the applicant back down the abyss. That happens time and time again. It happened under the existing rules and under the primary purpose rule. The European Court of Human Rights held that the rules were sexist because they applied to men. The Government had a chance to liberalise the immigration rules, but what did they do? They stamped on the fingers of those who might have got into this country by changing the rules to have "equal misery" and apply the monstrous primary purpose rule to both men and women alike.
  Just when West African students were beginning to find a way through the immense practical difficulties of getting an education in this country, the immigration rules were changed. Again, there was stamping on fingers and it is now impossible for people from many West African countries to come here as visitors and to change their status to student. Just when people were beginning to win deportation appeals on the grounds that there were compassionate circumstances why they should not be deported, the Government again effectively changed the rules to deny them any appeal—subject to the case of Oladahinde in which I have an interest. That has happened again under these rules.
  The history of the immigration rules is almost the history of allowing people to drown within sight of shore. Indeed, they should no longer be called "immigration" rules; "exclusion" rules would describe their purpose much more accurately. We come to that again—
  Mr. John Carlisle rose—
  Mr. Fraser: No, I cannot give way to the hon. Gentleman tonight because we are so short of time.
  At the moment, it is impossible for someone who is established here to bring his or her aged parents to the United Kingdom unless the parents are wholly or mainly dependent on the children in the United Kingdom. If they are dependent, but have an income of less than £15,000 per year or less than £150,000 in capital, they cannot settle in the United Kingdom. Nevertheless, some people save up and wait until they receive their pension or annuity from abroad and then seek to come to the United Kingdom —not to be a burden on this country, but to be with their children. But once again, their fingers are stamped on and the rungs are taken out of the ladder. Indeed, the £150,000 requirement has been unnecessarily raised to £200,000.
  844
  That can have been done only with the intention of excluding people from this country and by not treating sons and daughters with compassion.
  The same is true for those people who might have been able to establish businesses here, and be useful and provide employment, which is one of the conditions of establishing oneself as self-employed. Again, the rungs have been cut from the ladder by revising the rule for establishing businesses in the United Kingdom and by increasing the capital requirement to £200,000.
  However, the worst aspect of the rules is the change affecting returning residents. It is not a minor change in the rules and it is not intended simply to restate the existing law; it is a change of substance. I should like to give the Home Secretary an example that I have raised with his private office, which, on that occasion, was helpful. This could happen to many people. I have a friend, an Australian lady, who is aged about 80. She has lived in this country for between 30 and 40 years, but has never gone to the trouble of changing from being an Australian citizen to being a citizen of the United Kingdom.
  When she was about 79, she lost her old passport, but she got a new Australian passport and then went to France for a short time. When she returned, her passport was stamped "six months entry", not "returning resident". She paid no heed to that because, having spent most of her life in this country, where her children are established, she thought that she had every right to remain here. But she had on her passport a stamp that said six months. Under the changed rules, she would not, on her previous return to the United Kingdom, come as a returning resident and, at the age of 80 and in those circumstances—she was flying from Australia—she could have been sent back to Australia.
  A second example—these are all real examples—involves a friend of mine who is a doctor and has established himself in this country.
  Ms. Short: As I understand the new rules, they say that if people do not ask for returning resident status and receive a temporary status, that is it—they have lost their permanent status for ever. In the example given by my hon. Friend, I understand that he sought the help of the Home Secretary's private office. If the new rules were in place, the Home Secretary's private office would not be able to help.
  Mr. Fraser: That is exactly my point.
  My second case is that of someone who practises as a doctor in the United Kingdom and has indefinite leave to remain here. Under a scheme of assistance, he goes, with the blessing of the British Council, to a Third-world country to practise medicine there, dealing with poor people and trying to save their eyesight. The term of the contract is three years. He returns every year, but he no longer has a home here. The Home Secretary will appreciate that, if someone is away from the United Kingdom for more than one year, it is impossible to apply for naturalisation as a United Kingdom citizen, because one has to be here for the year preceding the date of the application. In those circumstances it could be said that a doctor who is established and has indefinite leave to remain in the United Kingdom is not coming back for the purpose of settlement, but only for the purpose of residence. That is another substantial change in the rules.

  845
  A third example involves someone under the age of 18, who is too young to be naturalised in his or her own right as a United Kingdom citizen, takes a university course —it does not matter whether it is in the United States or West Africa—and goes away for three years, instead of two. They would find it impossible to come back as returning residents, even if they had a short holiday here in the meantime.
  Time and time again people who have spent most of their lives in this country, severed all links with overseas countries, sold their properties and abandoned their homes will find themselves suddenly excluded from the United Kingdom by virtue of the change of rules. If that is not stamping on the fingers of the innocent, I do not know what is.
  10.52 pm
  Mr. Jeremy Hanley: I have been looking at the statement of changes in immigration rules, and of the 15 changes that are listed in the explanatory note issued by the Home Office, there are only four, perhaps five, of substance.
  I was greatly saddened by the speech of the right hon. Member for Birmingham, Sparkbrook (Mr. Hattersley) which, as far as I can see, was largely out of order. However, I can understand how the mistake was made. I found, when issued with the explanatory note, that it came from the Vote Office with a complete set of the immigration rules—inasmuch as they are covered by document 251. But it is clear from many of the speeches made this evening, that there is a desire to discuss immigration issues in the broader context, including those of refugee status, so perhaps it would be an idea for the Opposition to—
  Mr. Hattersley: On a point of order, Madam Deputy Speaker. The hon. Gentleman talks about the two documents which, I think, will be the subject of some discussion as the weeks go on. He referred to the document that came from the Vote Office. That document comes from the Home Office. We have not reached the point of elective tyranny when we are required to debate documents produced by Government Ministries, as distinct from the documents that have statutory force. It is the other document that has statutory force.
  Madam Deputy Speaker: That was an explanation rather than a point of order.
  Mr. Hanley: I am surprised at the right hon. Member for Sparkbrook. I was trying to say that I could understand how the error had been made by his advisers. If he wants to debate immigration, he can take every opportunity to introduce a debate on the subject of immigration on the next Supply day. Tonight we are dealing with the changes in immigration rules that we have before us. The right hon. Gentleman's protestations can easily be given expression within the next few days on the next Supply day, when he can speak at great length on any subject he likes.
  We are discussing a number of small changes. I should have thought that three of them would have been welcomed by the Opposition. First, in 1986, the rules were changed to prevent the admission of child spouses. I do not believe that the Opposition support the idea of child
  846
  spouses—if they do, perhaps one of their number should say so. This change means that no longer can a child in Britain go abroad and marry under rules that may be legal in another country and then return to this country in a married state. I find it amazing that the Opposition's absence of comment on that subject suggests that they believe that the change is wrong. By voting against the order, they are removing protection for children who may go abroad and be forced to marry under the age of consent—
  Ms. Short: The hon. Gentleman seems misinformed about procedures of this House. Just because we agree with part of a measure and disagree with other significant parts of it does not mean that we do not vote against it. The hon. Gentleman must have been in that situation himself. Opposition Members do not believe that children should be able to go abroad to marry, and none of us has said that. The hon. Gentleman's remarks are mischievous, and he must know it.
  Mr. Hanley: The hon. Lady is being ingenuous, and clearly did not listen to the speech of her right hon. Friend the Member for Sparkbrook—
  Mr. Paul Boateng: "Disingenuous", surely.
  Mr. Hanley: I am grateful to the hon. Gentleman. Knowing the fees that he charges for his legal advice, I hope that he will not be sending me a large bill in the morning.
  The right hon. Member for Sparkbrook could at least have dwelt on the changes that are being made. The one that I have mentioned is important, as it protects children in this country. The hon. Member for Birmingham, Ladywood (Ms. Short) may believe that that is only a minor change, but since it is one of only four changes of substance, I am surprised by her opinion.
  The second change concerns Commonwealth citizens who can prove that one of their grandparents was born in the United Kingdom, and who return to this country, are admitted for four years and then leave again. I seem to recall that the Opposition have regularly regarded patrials with scorn, believing that there was some sort of white-man link with those with grandparents in this country.
  I can remember major speeches by Opposition spokesmen saying that we should tighten up the rules on patrials because they favoured white over black. Perhaps historically they have done so—I certainly do not favour whites over blacks in this respect—so the rule is being tightened to stop its abuse, from which so many whites have benefited in the past. So the Opposition should support the second change, too.
  Thirdly, the Opposition have often said that the privileges granted to business people settling in this country constitute an abuse. Merely because the Government are increasing the financial limits from £150,000 to £200,000—by the rate of inflation—all the old arguments are being trotted out again, but this time from a rather strange direction. Surely the Opposition should support this third change, because it favours business people. They should support three, at least, of the four major changes in these rules.
  The next change is merely a clarification of the provision for returning residents, and it is therefore

  847
  perhaps not treated as a change of substance. The Opposition manage to find a reason for opposing that change, which is for clarification and not a change of substance.
  The fifth change is one of substance because it will require visas for people from Algeria, Morocco and Tunisia. It is fair to establish visa controls as long as there is mutual agreement about them between the countries involved. They are the best way to control immigration fairly, so that those who properly qualify to come here or to leave this country to visit other countries can do so. Such controls make sure that people have the right qualifications for travel.
  That is the only change of substance that the Opposition can get on their high horse and vote against. By voting against the change, either the Opposition want to play the race card, which is sad, or they are blowing up out of all proportion the changes to existing immigration rules for their own party purposes. That is also sad.
  I should like to see future contributions in the debate kept to changes in immigration rules. I hope that people outside, whether they are black or white and wherever they come from, will recognise that these are not major changes resulting from prejudice. They clarify existing law, correct minor spelling mistakes in the legislation and largely introduce the sort of changes that the Opposition have been demanding.
  11.1 pm
  Mr. Robert Maclennan: If anyone is trying to play the race card, it is clearly the Government, who have moved the amendment relating to grand-patrials. The idea that grand-patrials will be allowed a right of residence here for only four years is designed to remove from the immigrant list a substantial number of white people, and that will expose people from the Indian sub-continent to greater pressure. It seems to be done for no other reason, but if the Minister has any other reason, we look forward to hearing it.
  I welcome the consolidation of the rules. I cannot understand how it could seriously be argued that the document before us is not the document that we are here to debate. The title and the number of the document are on the Order Paper and it is extraordinary for the Home Secretary to try to argue anything else. It is of a piece with his argument that these are slight changes. The suggestion that the rule relating to returning residents is slight does not stand a moment's scrutiny. It will work extraordinary hardship in a large number of cases, and it must be amended.
  It is of course right that we should have a wide-ranging debate on immigration as soon as possible. That lies within the power of the Home Secretary and the Official Opposition; I hope that we can have such a debate, because there are many matters that I should like to raise. However, in this short debate, I do not wish to take up the time of the House by dealing with them.
  I have asked many questions about the extraordinary use of the Immigration (Carriers' Liability) Act 1987 to enable British Airways to act as an immigration officer. I have had the most astonishing revelations about the countries involved and the numbers of people who have been turned away since the Act was introduced. It is an
  848
  unsatisfactory way to implement the law. However, that matter is not the primary purpose of the debate, which is about the specific changes that are being made.
  I go along with the Home Secretary's desire for a one-and-a-half-hour debate. That is the best that we can hope for. There is only one respect in which Thatcher's Britain resembles heaven, and it is that it is easier for a camel to enter the eye of a needle than for someone from the Indian sub-continent to enter this country.
  Mr. Hanley: I am grateful to the hon. Gentleman for his generosity. Since the Government came to power, more than 500,000 people have been granted permanent citizenship in the United Kingdom, of which three quarters have come from the Indian sub-continent. That cannot be a record of racism.
  Mr. Maclennan: The hon. Gentleman has raised a point that would be more suitable in the debate that we are all looking forward to.
  I have just come hot foot from the Committee which is considering the British Nationality (Hong Kong) Bill, and I am rather surprised at one of the provisions that we are debating, which requires particular clarification from the Home Secretary. How are British dependent territories citizens from Hong Kong to interpret the amendment affecting returning residents?
  The Government are giving contradictory indications. On the one hand, they are trying to encourage dependent territories citizens to remain in Hong Kong, while on the other, paragraph 9 of the statement of charges makes it abundantly clear that they do not enjoy the rights of British overseas citizens and so will have to establish their rights of residence here by returning from Hong Kong under the provisions of paragraph 58. That is a most disturbing development. When that becomes widely known in Hong Kong, it will run counter to the Government's declared policy of retaining stability of population there. The Home Secretary should deal with that matter tonight.
  The hon. Member for Richmond and Barnes (Mr. Hanley) described the provisions for returning residents as clarification, but they are a clear reversal of the law as it has been established in a number of cases before the immigration tribunal. The present rule is simple, clear and easily applied. It is that people settled here in the United Kingdom are allowed to go abroad for up to two years without losing their settled status. Two new conditions will now apply.
  First, the person returning must seek admission for the purpose of settlement. That means that someone who has been normally resident here, who interrupts that residence to go abroad for whatever purpose must, when coming back, declare that it is his intention to remain settled here, despite the fact that he may be making only a short visit to see a sick parent or to deal with some business matter. Innumerable practical cases of hardship will arise as a result of that change. How it can be described as a clarification is simply beyond imagination.
  The second leg of the change is that it must also be established that the returning person had indefinite leave to remain when he last left the United Kingdom. That will also seriously restrict the operation of the returning residents rule.
  The reality is that that will have a grave effect on the practical working of the rule. The intention to settle is

  849
  extremely difficult to establish. It is rather like the primary purpose rule. It is to do with a state of mind. It is almost inviting people who come back to Britain to misrepresent their innocent reasons for coming for a short time so that they will not be deprived of their right to residence. That cannot be right.
  That is the most serious change that the Home Secretary has made, and it is very worrying. It will lead to innumerable cases of hardship, which cannot be his intention. Surely that should be avoided.
  11.9 pm
  Mr. Robert G. Hughes: I represent a constituency in which about 20 per cent. of the population have Asian connections. In studying the statement of changes, I did so as someone who would not vote for a measure that materially disadvantaged any of my constituents. I refer to the changes to the rules, not the consolidation measures with which the right hon. Member for Birmingham, Sparkbrook (Mr. Hattersley) tried to divert the House. It does not matter whether the right hon. Gentleman was in order—the fact remains that he tried to divert the attention of the House from the real subject of the debate.
  The source of problems for my Asian constituents is the uncertainty surrounding some of the technical aspects of the immigration rules, which are open to different interpretation. It is not just that I cannot be sure whether an immigrant coming to my advice bureau has a good or bad case to make, because lawyers and the United Kingdom Immigrant Advisory Service are also not necessarily able to state whether a particular case is 100 per cent. sound. That uncertainty needs to be swept away.
  As my hon. Friend the Member for Richmond and Barnes (Mr. Hanley) said, the package before us is of little or no substance, and it introduces only minor changes that will give people some confidence in interpreting the immigration rules. Is it unreasonable that the changes concerning money limits should take account of inflation over the past seven years? Is it unreasonable that a spelling mistake or some other genuine error should be corrected? As to illegal immigrants or overstayers, is it unreasonable for my right hon. and learned Friend the Home Secretary to seek clarification and certain changes?
  My hon. Friend the Member for Richmond and Barnes put a fair question to the Opposition concerning child spouses which they must answer. It is no use saying, "There are other matters in here, and this isn't really what we meant." My hon. Friend made a significant point concerning child spouses and the right hon. Member for Sparkbrook should answer it.
  Mr. Hattersley: The last publicised account of child spouses concerned two young children from my constituency who were abducted and, in my view, falsely married in Yemen. When I fought for them to be returned to this country, I was urged by the Foreign Secretary not to behave in a way that would undermine Britain's relationship with the Government of that country.
  Mr. Hughes: The right hon. Gentleman's remarks are interesting and revealing. It is right for him to raise that important matter on behalf of his constituents. However,
  850
  the right hon. Gentleman knows, as do other right hon. and hon. Members and the public, that it has nothing to do with the measure before the House.
  I shall make matters clearer, so that the Opposition can understand them. The present rules do not prevent a child settled in this country from marrying abroad and returning with his or her spouse. That is being changed—which has nothing to do with the point made by the right hon. Gentleman, and he knows it.
  We must ask the Labour party: is it on the side of illegal immigrants and overstayers? They are the subject of the only change to the rules that is of any real substance.
  Mr. Hattersley: I do not even have to ask the hon. Gentleman to think back to the Yemeni false marriage of six months ago. Forty minutes ago, I said in my speech —before the Home Secretary ruled me out order—hat none of us would complain that cases of overstayers detected by the police being sent back to their country. That is in Hansard. If the hon. Gentleman had done me the courtesy of listening to my speech, he would not have asked his absurd question.
  Mr. Hughes: I am extremely grateful to the right hon. Gentleman for his clarification. What he had to say to the House about the two matters that contain any substance is that he is not against those, but he is voting against the rules on other spurious grounds.
  Mr. Hattersley rose—
  Mr. Hughes: I have given way to the right hon. Gentleman often enough and other hon. Members wish to speak in the debate.
  Why has the Labour party brought this matter to the House? I hope that the right hon. Member for Sparkbrook is as good as his word and that we shall have a more wide-ranging debate—not about immigration but about race relations. That is the key issue and it is what affects my constituents. They want to know what hon. Members on both sides of the House have to say about the important issues that affect people of Asian origin in this country. They want to know about racial harassment and what can be done about it. They want to know about the issues that affect their families.
  Why was this issue raised? I think that the right hon. Gentleman answered that question when he referred to Hong Kong. During the debates on Hong Kong no one could be in any doubt that the Labour party's stance on the British Nationality (Hong Kong) Bill, as stated by the right hon. Member for Sparkbrook, was designed to appeal to what they regard as racist Labour voters in the inner cities. They were playing the race card. The number of Labour abstentions and sheepish looks showed that many Labour Members of Parliament knew exactly what they were doing.
  All the right hon. Member for Sparkbrook and his party are trying to do tonight is to play the other side of the coin. Now they are trying to say that they are on the side of Asian-British people, despite the racist stance that they took a couple of weeks ago. I do not think that that is going to wash with Asian-British people. They will not be very impressed with what the Labour party has had to say.
  My constituents and other Asian people in this country will welcome this minor package because, once again, they will be able to trust that what the Government say is what

  851
  they mean, that fair rules will be applied fairly and rules that are unfair will be clarified. Therefore, when the Government consider the case of someone trying to enter the country, or whether a person's status allows him or her to stay, people will know that the rules are fair and will be applied fairly. People would not be able to say that that would be the case under a Labour Government, and that has been proved yet again tonight.
  11.17 pm
  Mr. Peter L. Pike: The primary purpose rule has been referred to in the debate, and the Home Secretary should recognise the heartbreak caused by it. It is almost impossible for people to get round it if they are trying to answer honestly questions that they are asked in connection with the rule.
  The Home Secretary should understand immigration because of the ministerial offices that he has held. You will know that, Madam Deputy Speaker, because you were a candidate in the Nelson and Colne by-election when the Home Secretary was elected for that constituency, and he had to deal with immigration problems there.
  The primary purpose rule causes serious problems and the Government must deal with it at some stage.
  As regards visas, it is time that the Government and officials stopped judging people who require visas to enter Britain as though they wanted not just to visit but to become permanent residents. We all recognise that the three additions referred to in the rules are a result of the French connection whereby people can come through in a different direction. That suspicion on the part of the Government and officials makes it difficult for many people who genuinely wish to visit this country to obtain a visa.
  My right hon. Friend the Member for Birmingham, Sparkbrook (Mr. Hattersley) referred to DNA testing. Applications by dependants should be dealt with as speedily as possible. As for those who are no longer dependants, if DNA tests prove that a mistake was made in the past, they should be allowed to come to the United Kingdom.
  As for the increase in capital from £150,000 to £200,000 and in incomes from £15,000 to £20,000, I do not believe that these people should be allowed to come to this country under a different set of rules. An income of £20,000 is reasonable, but if people in Bangladesh or Pakistan want to come here and have capital of £150,000 or £200,000, they are extremely wealthy compared with the majority of people in those countries. Wealthy minorities should not be treated differently from the overwhelming number of people who apply to come to the United Kingdom. That is unjust. The rules should be fair. We want justice, but we do not have it.
  11.21 pm
  The Secretary of State for the Home Department (Mr. David Waddington): I hope that the right hon. Member for Birmingham, Sparkbrook (Mr. Hattersley) did not think it discourteous of me to interrupt him. I had only one motive — to establish the parameters of the debate and to make sure that I knew what was the Chair's ruling on the width of the debate. We now know precisely what the position is. There is no doubt whatsoever, if we compare the consolidated rules with the previous rules, that we are dealing with minor rule changes.
  852
  Despite what the hon. Member for Caithness and Sutherland (Mr. Maclennan) said, there is no link between these changes and the British Nationality (Hong Kong) Bill. The rules apply worldwide, they are not aimed at Hong Kong, they do not bear particularly on residents in the colony and they do not conflict with the British Nationality (Hong Kong) Bill. However, I shall deal with rule 58, which is worrying the right hon. Gentleman.
  Only three of the changes will have any effect on our practices or procedures. The first is the change in visa requirements. There is the new visa requirement for nationals of Algeria, Morocco and Tunisia. It came into effect on 1 April, and it applies to nationals of those countries, other than those settled here and returning after a short absence abroad. Visitors and students, along with those seeking work or settlement, have to make their case for admission at a United Kingdom mission abroad rather than at a port of entry, and those who do not qualify avoid the disappointment, expense and inconvenience of being refused entry after their journey here.
  The change certainly brings the United Kingdom into line with the majority, though by no means all, of our European Community partners. The majority—Belgium, France, Germany, Ireland, Luxembourg, the Netherlands, Portugal, and Greece for Algeria alone—also now require visas. The change became necessary for us because of the operational difficulties that were created at the ports by the arrival of an increasing number of people from the Maghreb who did not meet the requirements of the rules.
  I am glad to say that the new arrangements have been very successful. The difficulties at our ports have been resolved, which has enabled us to provide a better service for bona fide travellers, and there is at present no delay in dealing with visa applications abroad: they are all being decided within 24 hours. I commend the staff involved for the excellent job that they are doing.
  In the near future, we shall be making two further changes to our visa requirements. My hon. Friend the Member for Hove (Mr. Sainsbury), the Parliamentary Under-Secretary of State, reported to the House on 16 February that, during talks that had just taken place with representatives of the Argentine Government, it had been agreed that each country should soon abolish visa requirements relating to the other country's nationals, and on 9 April a visa abolition agreement was duly signed. It is due to come into force on 8 June.
  Mr. Hattersley: Where on this little piece of paper is Argentina dealt with? I should also like to know the position of citizens of, say, Tunisia who—this applies to many—are also French citizens, thus having dual nationality. Will they be allowed in automatically, under EC rules, or will they still need a visa?
  Mr. Waddington: If they present French passports that appear to be valid, they will be allowed in like any other French citizen. If they present Algerian passports, they will be treated as Algerian citizens, and thus be subject to the visa requirement. Surely that is logical. I think that, when dealing with the three new visa requirements, it was helpful of me to remind the House of the Argentine arrangements.
  Another visa change relates to the German Democratic Republic. As my hon. Friend the Member for Warwickshire, North (Mr. Maude)—the Minister of State —announced on 9 May, Foreign Ministers of the European Community countries agreed at a meeting in

  853
  Brussels on 7 May that all member states would abolish their visa requirements for that country. The United Kingdom welcomed that agreement, because we no longer see any need—on grounds of security or immigration control—for East Germans to obtain visas, and we now intend to negotiate a reciprocal visa abolition agreement with the GDR. No date for the lifting of visas was set at the meeting of Foreign Ministers, and we shall lay an amendment as soon as possible to remove the visa requirement for East Germans.
  Mr. Rhodri Morgan: I appreciate that an important principle lies behind what the Home Secretary has said; changing international circumstances require the adaptation of visa requirements. Will he, however, consider another application of the same basic humanitarian rule?
  An international change involving one of my constituents is the civil war in Somalia. One of the by-products of that war is the incidence of orphans, who —according to Somali rules—become the responsibility of the nearest male relative. In this instance, the nearest male relative happens to live in Cardiff, West.
  One consequence of such developments is not covered by the regulations, although I do not think that a major change would be required to deal with it. May I ask the Home Secretary to consider these people as sympathetically as the European Foreign Ministers considered GDR nationals, now that it is assumed that German reunification will not be long delayed?
  As I have told the Home Secretary in writing several times, my constituent and others like him are already taking financial responsibility, according to the iron rules of the Somalis. After all, in this country we are trying to encourage "care in the community"; the Somalis already practise it, but in their present form the regulations do not permit dependent orphan relatives to be brought here.
  Mr. Waddington: As the hon. Gentleman knows, many Somalian citizens have been admitted to this country and granted refugee status. The best advice that I can give him is this: if he will write to me about a specific case, I shall decide whether, on exceptional grounds, the person concerned should be treated as a member of the family of the person who has been admitted as a refugee. This can be dealt with only case by case. If the hon. Gentleman writes to me, I will look into the matter.
  Ms. Short: The situation in Somalia is truly dreadful. People are starving. There is a special unit in the Home Office dealing with these issues, and I have found the people in that unit extremely helpful in assisting relatives of my constituents. Is a tightening up taking place? Has there been a change recently? Up to now I have found the Home Office helpful and generous in these tragic cases. There is a suggestion that the right hon. and learned Gentleman is about to tighten the rules for Somalian refugees. Is that correct?
  Mr. Waddington: I know of no change. Apparently there has been no change in practice for those in refugee camps. The hon. Lady may have a case concerning others. If she writes to me, I will look into the matter. I know of no formal change in the situation, but there may have been some slight difference in some of the recent rulings, simply
  854
  because of different reports coming to the Home Office and the Foreign Office about the situation there. I will look into that for the hon. Lady.
  The second of the main changes in the package before us tonight concerns the admission of Commonwealth citizens with a grandparent born in the United Kingdom who wish to take or seek work here. This change will not prevent people of United Kingdom descent coming here as before. It will mean that, when they first arrive, they will be given leave to enter the country for a limited period and they will qualify for settled status if they stay here in that capacity for four years. The change brings this provision into line with the arrangements for others, such as work permit holders and business men who qualify for settlement only after four years working here.
  Ms. Short: I am not that critical of this proposal, but why does it apply only to Commonwealth citizens? This change will not apply to South Africans, who are probably the majority arriving in this category. Why has the Home Secretary exempted South Africans, for example?
  Mr. Waddington: The existing rule, the hon. Lady will remember, refers only to Commonwealth citizens who can prove that they have a grandparent who was born in this country. The only change we are making is that, whereas at present anybody who arrives at our ports and can show that he has a grandparent who was born in this country will be granted immediate settlement, under these rules he will not get settlement until he has served in this country the same time as a work permit holder must serve before he gets settlement. It is a logical change, because there is little point in granting settlement to somebody who presents himself at a port saying that he has a United Kingdom grandparent but has no intention of settling in Britain permanently but merely wishes to come for a short visit or perhaps to work for a year or so.
  The third of the main changes in the rules concerns the financial requirements for businessmen and persons of independent means. A person coming here to establish himself in business or to be self-employed must invest his own capital in that business, in addition to meeting a number of other requirements which include the creation of new employment here. A person of independent means must have either a capital sum or an income available here to support himself and his family, as well as showing that he has a close personal connection with the United Kingdom or that his admission is in the United Kingdom's general interests.
  The general structure of the criteria for admission in these categories remains unaltered. The new rules, however, increase the minimum investment required by business men to £200,000 and the capital sum or income required by persons of independent means to £200,000 in the first case and £20,000 a year in the other. Previously, the financial requirements were an investment or capital sum of £150,000, or an income of £15,000 a year. The amounts have not been raised since 1983, and the changes broadly restore the levels to their 1983 value. I can tell the hon. Member for Norwood (Mr. Fraser) that there is nothing sinister behind the change—it is a rather belated uprating of the qualifying sum to take account of the decline in the value of money over the relevant years.
  It is clearly necessary to increase the limits from time to time to maintain the effectiveness of the rules and to ensure that a substantial investment is made by people securing

  855
  admission as business men and that persons of independent means have sufficient funds to support themselves and their dependants.
  The changes in the provisions on returning residents in paragraph 58 worried the hon. Member for Caithness and Sutherland and seem to have caused some quite unnecessary concern inside and outside the House. However, they are no more than minor amendments to make clear what was always understood to be the position, until a determination of the immigration appeals tribunal cast doubt on the matter, and to restate what the High Court has decided was the correct view.
  Mr. Corbyn: Will the Home Secretary give way?
  Mr. Waddington: I think that it would be helpful if I explained what the change is. I can assure the House that the paragraph does not in any way affect adversely the position of people who being ordinarily resident in the United Kingdom travel abroad and then after a temporary absence wish to resume their residence here.
  The old rule referred to a returning resident being admitted for settlement if he had had indefinite leave to remain when he left. That was always taken to mean, "when he left for the absence from which he was returning". Surprisingly, the tribunal held differently—that a person could claim to be a returning resident on the basis that, at some time in the past, he had had indefinite leave to remain, even if subsequently he had come here temporarily and had had one or more grants of limited leave. The new rule clears up the matter by referring to when he "last" left.
  The other change arises from the fact that, although the old rule was clearly about admission for settlement, it did not state explicitly that, in order to be admitted for settlement under the rule, one had to be seeking entry for the purpose of settlement. It did not state it explicitly, but clearly that was the rule's whole purpose. It was intended to allow persons resident here to resume residence after an absence of two years. It was not intended to enable people resident overseas to maintain settled status in the United Kingdom by paying short visits once every two years when they had no real intention of resuming residence here. The position is now made clear beyond peradventure.
  Mr. Corbyn: Will the Home Secretary consider the position of people from a country of political turmoil, such as Chile was in the past, who did not apply for political asylum but received permanent resident status here in exile, and then returned to Chile or wherever they were from? If the situation in that country deteriorated again, they would seek to return here as the place where they could live with some safety. In those circumstances, would they be forced to apply for asylum, which they would not want to do as they had never done that, or would they be forced to go through the whole process of applying for permanent residence here as if they were first-time arrivals?
  Mr. Waddington: Having followed the case which the hon. Gentleman raised, I cannot see any difficulty or injustice. The hon. Gentleman is positing that someone came here to seek political refuge, but no longer needed political refuge here because the position in his own country was restored to normality. He then returned to that normal country, as there was no need for him to remain here as a refugee. If, subsequently, the conditions in his own country deteriorate, the question obviously
  856
  arises whether that deterioration is so grave that he is entitled to take refuge in this country again. I can therefore see no injustice whatsoever in his leaving this country, going back to his normal country, resuming residence in that country, and having to seek leave once again to come back here.
  Mr. Maclennan: Does the Home Secretary see no injustice in the case of someone who has been resident in this country for a substantial number of years, who is required to go abroad to look after an indigent or dying relative, who interrupts his stay abroad to come back to deal with his affairs on a temporary basis, before returning to look after his relative, losing his long-established right of residence? That cannot be fair.
  Mr. Waddington: It is a question whether he was resident in this country before he left. If his settled home was in this country and he went for a visit abroad, there should be no difficulty in his re-admission. That is the whole misunderstanding. What many of the people who are worried about the change seem to be arguing for is not a provision for returning residence, but a new status of perpetual, permanent residence to be open to someone who has his permanent home elsewhere and who makes a fleeting visit here once every two years. That did not seem to be the sort of case to which the hon. Member for Caithness and Sutherland was referring.
  Ms. Abbott: Is the Secretary of State aware that many thousands of people affected by the change of rule will be pensioners who have spent all their working lives in this country and who may have to leave here for extended periods to deal with death and illness? They will find that, unknown to them, they have lost what they assumed was a permanent right of residence. I know many people, including my own uncles and aunts, who have been in this country for 30 or 40 years and who have held on to their Jamaican passports out of sentimentality.
  They assumed that they had a sustained right of residence if they came back here within two years. Many of them will have relatives in America and Jamaica. They may well spend over two years away from here winding up the affairs of relatives, and they will have lost their right to residence through the change in the rules. It is not a minor change in the rules. It is a major change which will bring misery and confusion to people who have spent all their working lives in this country.
  Mr. Waddington: I can reassure the hon. Lady. She has overlooked paragraph 59, which deals with the very situation to which she refers. I will come to it in a moment.
  Mr. Fraser: The Home Secretary has referred to paragraph 59. If he looks at paragraph 49, he will see that, if somebody comes to this country for settlement and does not have a special voucher or prior entry clearance, that person is to be refused entry. Is the Home Secretary saying that paragraph 59 is an exception to paragraph 49?
  Mr. Waddington: No, because paragraph 59 has nothing to do with paragraph 49. Paragraph 49 deals with the admission of people with special vouchers. Paragraph 59 deals with when a returning resident should be admitted. It says plainly that, even if a person has been abroad and resumed residence elsewhere, that person may still be re-admitted here as a returning resident if he has

  857
  spent most of his life here. That was precisely the case being raised by the hon. Member for Hackney, North and Stoke Newington (Ms. Abbott).
  These cases rarely cause any difficulty. A person seeking re-admission as a returning resident within two years of having had settled status here should normally be re-admitted without further inquiry. We propose to reinforce the message that there is going to be no change in practice by issuing a specific instruction to immigration officers emphasising that in these cases it will not normally be necessary to make any further inquiries about the person's plans.
  There are two other matters I should emphasise. First, a person who has been away more than two years may still qualify as a returning resident under paragraph 59 of the rules, if, for example, he has lived here most of his life; secondly, if in any case there were difficulties in reaching a decision at the port about whether the person met there turning resident's requirements, he would normally be admitted for a limited period. This would give him the opportunity to produce the necessary evidence and apply
  for his settled status to be restored. If we concluded—
  It being one and a half hours after proceedings on the motion had been entered upon, Madam Deputy Speaker proceeded to put the Question necessary to dispose of them, pursuant to the Order [11 May].
  The House divided: Ayes 137, Noes 176.

  Division No. 210]

  [11.44 pm

  AYES

  Abbott, Ms Diane

  Dunnachie, Jimmy

  Allen, Graham

  Eastham, Ken

  Anderson, Donald

  Fisher, Mark

  Archer, Rt Hon Peter

  Foot, Rt Hon Michael

  Banks, Tony (Newham NW)

  Foster, Derek

  Barnes, Harry (Derbyshire NE)

  Fraser, John

  Barron, Kevin

  George, Bruce

  Beckett, Margaret

  Golding, Mrs Llin

  Beith, A. J.

  Graham, Thomas

  Benn, Rt Hon Tony

  Griffiths, Nigel (Edinburgh S)

  Bermingham, Gerald

  Griffiths, Win (Bridgend)

  Boateng, Paul

  Harman, Ms Harriet

  Boyes, Roland

  Hattersley, Rt Hon Roy

  Bradley, Keith

  Henderson, Doug

  Brown, Gordon (D'mline E)

  Home Robertson, John

  Brown, Nicholas (Newcastle E)

  Hood, Jimmy

  Buchan, Norman

  Howells, Geraint

  Buckley, George J.

  Hughes, John (Coventry NE)

  Caborn, Richard

  Hughes, Robert (Aberdeen N)

  Callaghan, Jim

  Ingram, Adam

  Campbell, Menzies (Fife NE)

  Jones, Barry (Alyn & Deeside)

  Campbell-Savours, D. N.

  Jones, Ieuan (Ynys Môn)

  Carlile, Alex (Mont'g)

  Kaufman, Rt Hon Gerald

  Clark, Dr David (S Shields)

  Kennedy, Charles

  Clarke, Tom (Monklands W)

  Leighton, Ron

  Clay, Bob

  Lewis, Terry

  Clelland, David

  Litherland, Robert

  Cohen, Harry

  Livingstone, Ken

  Cook, Frank (Stockton N)

  Livsey, Richard

  Cook, Robin (Livingston)

  Loyden, Eddie

  Corbyn, Jeremy

  McAllion, John

  Cryer, Bob

  McAvoy, Thomas

  Cunliffe, Lawrence

  McKay, Allen (Barnsley West)

  Cunningham, Dr John

  McKelvey, William

  Dalyell, Tam

  McLeish, Henry

  Darling, Alistair

  Maclennan, Robert

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

  McWilliam, John

  Dewar, Donald

  Madden, Max

  Dixon, Don

  Mahon, Mrs Alice

  Dobson, Frank

  Marek, Dr John

  Doran, Frank

  Marshall, David (Shettleston)

  858

  Marshall, Jim (Leicester S)

  Short, Clare

  Martin, Michael J. (Springburn)

  Skinner, Dennis

  Martlew, Eric

  Smith, Andrew (Oxford E)

  Maxton, John

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

  Meale, Alan

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

  Michael, Alun

  Smith, J. P. (Vale of Glam)

  Michie, Bill (Sheffield Heeley)

  Snape, Peter

  Moonie, Dr Lewis

  Soley, Clive

  Morgan, Rhodri

  Spearing, Nigel

  Morley, Elliot

  Steel, Rt Hon Sir David

  Mowlam, Marjorie

  Steinberg, Gerry

  Mullin, Chris

  Strang, Gavin

  O'Neill, Martin

  Taylor, Mrs Ann (Dewsbury)

  Parry, Robert

  Taylor, Matthew (Truro)

  Patchett, Terry

  Thompson, Jack (Wansbeck)

  Pike, Peter L.

  Turner, Dennis

  Powell, Ray (Ogmore)

  Wallace, James

  Prescott, John

  Walley, Joan

  Primarolo, Dawn

  Warden, Gareth (Gower)

  Quin, Ms Joyce

  Wareing, Robert N.

  Radice, Giles

  Wigley, Dafydd

  Redmond, Martin

  Winnick, David

  Reid, Dr John

  Worthington, Tony

  Richardson, Jo

  Wray, Jimmy

  Robertson, George

  Young, David (Bolton SE)

  Rogers, Allan

  Ross, Ernie (Dundee W)

  Tellers for the Ayes:

  Ruddock, Joan

  Mr. Frank Haynes and Mr. John Battle.

  Salmond, Alex

  Sedgemore, Brian

  NOES

  Alexander, Richard

  Douglas-Hamilton, Lord James

  Alison, Rt Hon Michael

  Dover, Den

  Amess, David

  Durant, Tony

  Amos, Alan

  Dykes, Hugh

  Arbuthnot, James

  Eggar, Tim

  Arnold, Jacques (Gravesham)

  Evans, David (Welwyn Hatf'd)

  Arnold, Tom (Hazel Grove)

  Fairbairn, Sir Nicholas

  Aspinwall, Jack

  Fallon, Michael

  Atkins, Robert

  Favell, Tony

  Atkinson, David

  Field, Barry (Isle of Wight)

  Baker, Rt Hon K. (Mole Valley)

  Fishburn, John Dudley

  Baker, Nicholas (Dorset N)

  Forman, Nigel

  Batiste, Spencer

  Forsyth, Michael (Stirling)

  Bennett, Nicholas (Pembroke)

  Forth, Eric

  Benyon, W.

  Fowler, Rt Hon Sir Norman

  Bevan, David Gilroy

  Fox, Sir Marcus

  Blaker, Rt Hon Sir Peter

  Franks, Cecil

  Boscawen, Hon Robert

  Freeman, Roger

  Boswell, Tim

  French, Douglas

  Bottomley, Mrs Virginia

  Garel-Jones, Tristan

  Bowden, Gerald (Dulwich)

  Gill, Christopher

  Bowis, John

  Glyn, Dr Sir Alan

  Boyson, Rt Hon Dr Sir Rhodes

  Goodhart, Sir Philip

  Brandon-Bravo, Martin

  Goodlad, Alastair

  Brazier, Julian

  Gow, Ian

  Bright, Graham

  Gregory, Conal

  Brown, Michael (Brigg & Cl't's)

  Griffiths, Peter (Portsmouth N)

  Budgen, Nicholas

  Ground, Patrick

  Burns, Simon

  Hague, William

  Burt, Alistair

  Hamilton, Neil (Tatton)

  Butcher, John

  Hanley, Jeremy

  Butler, Chris

  Hargreaves, Ken (Hyndburn)

  Carlisle, John, (Luton N)

  Harris, David

  Carlisle, Kenneth (Lincoln)

  Haselhurst, Alan

  Carrington, Matthew

  Hawkins, Christopher

  Carttiss, Michael

  Hayhoe, Rt Hon Sir Barney

  Chapman, Sydney

  Hayward, Robert

  Chope, Christopher

  Hicks, Mrs Maureen (Wolv' NE)

  Clark, Hon Alan (Plym'th S'n)

  Hicks, Robert (Cornwall SE)

  Colvin, Michael

  Howarth, G. (Cannock & B'wd)

  Coombs, Anthony (Wyre F'rest)

  Howell, Ralph (North Norfolk)

  Coombs, Simon (Swindon)

  Hughes, Robert G. (Harrow W)

  Couchman, James

  Hunt, Sir John (Ravensbourne)

  Currie, Mrs Edwina

  Hunter, Andrew

  Davies, Q. (Stamf'd & Spald'g)

  Irvine, Michael

  Davis, David (Boothferry)

  Jack, Michael

  Day, Stephen

  Janman, Tim

  Dicks, Terry

  Jones, Gwilym (Cardiff N)

  859

  Jones, Robert B (Herts W)

  Soames, Hon Nicholas

  Kellett-Bowman, Dame Elaine

  Speller, Tony

  Key, Robert

  Spicer, Sir Jim (Dorset W)

  King, Roger (B'ham N'thfield)

  Spicer, Michael (S Worcs)

  Kirkhope, Timothy

  Squire, Robin

  Knapman, Roger

  Stanbrook, Ivor

  Knight, Greg (Derby North)

  Stanley, Rt Hon Sir John

  Knight, Dame Jill (Edgbaston)

  Steen, Anthony

  Knowles, Michael

  Stern, Michael

  Lang, Ian

  Stevens, Lewis

  Lee, John (Pendle)

  Stewart, Andy (Sherwood)

  Leigh, Edward (Gainsbor'gh)

  Stewart, Rt Hon Ian (Herts N)

  Lennox-Boyd, Hon Mark

  Stokes, Sir John

  Lilley, Peter

  Stradling Thomas, Sir John

  Lloyd, Peter (Fareham)

  Sumberg, David

  Luce, Rt Hon Richard

  Taylor, Ian (Esher)

  Lyell, Rt Hon Sir Nicholas

  Taylor, Teddy (S'end E)

  Macfarlane, Sir Neil

  Thompson, D. (Calder Valley)

  MacGregor, Rt Hon John

  Thompson, Patrick (Norwich N)

  Maclean, David

  Thornton, Malcolm

  McLoughlin, Patrick

  Thurnham, Peter

  McNair-Wilson, Sir Patrick

  Tracey, Richard

  Malins, Humfrey

  Twinn, Dr Ian

  Mans, Keith

  Vaughan, Sir Gerard

  Maples, John

  Waddington, Rt Hon David

  Marshall, Michael (Arundel)

  Waller, Gary

  Maude, Hon Francis

  Wardle, Charles (Bexhill)

  Meyer, Sir Anthony

  Watts, John

  Nicholson, David (Taunton)

  Wells, Bowen

  Norris, Steve

  Whitney, Ray

  Onslow, Rt Hon Cranley

  Widdecombe, Ann

  Patnick, Irvine

  Wiggin, Jerry

  Pawsey, James

  Wilkinson, John

  Riddick, Graham

  Wilshire, David

  Roberts, Wyn (Conwy)

  Wolfson, Mark

  Rowe, Andrew

  Wood, Timothy

  Sackville, Hon Tom

  Yeo, Tim

  Shaw, David (Dover)

  Young, Sir George (Acton)

  Shepherd, Richard (Aldridge)

  Shersby, Michael

  Tellers for the Noes:

  Skeet, Sir Trevor

  Mr. John M. Taylor and Mr. David Lightbown.

  Smith, Tim (Beaconsfield)

  Question accordingly negatived.

  Skill Centres (Sale)
  Motion made and Question proposed, That this House do now adjourn.—[Mr. Nicholas Baker.]
  11.55 pm
  Mr. Bob Cryer: I raise the Adjournment debate in anger and outrage at the attack on skill centres by the Government and by this Minister, who has been in charge of it. The move to sell off the skill centres has created uncertainty. It has pushed carefully prepared budgets to one side and has created a shortage of money for the maintenance and replacement of machinery that is vital for training processes and for helping people adequately to undertake courses at skill centres.
  In the words of Geoffrey Holland, accounting officer for the Training Agency:
  "During the period of uncertainty pending the privatisation decision, capital spending was restricted to essentials". What does that really mean on the ground where people receive their training, a ground that is unfamiliar to the Minister? It means that in a skill centre with which I am familiar, the manager did not know whether to spend £400, which he could ill afford, on a milling machine—for the Minister's information, that is an important piece of machine tool equipment—or to scrap it because it was too much for the budget. That is the effect of the decision that Ministers have taken to privatise the skill centres. Indeed, that was the first aim that the Secretary of State for Employment set out when he made that announcement. However, there is more to come.
  The sale of the centres, often located on valuable land, has been carried out in a deceitful and underhand way, which calls into question sections of the civil service and their integrity, and the Government's adopted procedures, which have denied a fair bidding process. I am fundamentally opposed to the privatisation of the skill centres—they could and have worked perfectly well in the public domain and under public ownership. But if they are to be sold off, surely it is reasonable to ask that the procedure undertaken is fair and open, which is patently not the case in this process. The Government always claim that they are interested in
  "turning around a business which is currently unprofitable and creating training businesses with good prospects of viability."—[Official Report, 1 May 1990, Vol. 171, c. 472.]
  That is the sort of answer that the Minister has used in parliamentary answers and on other occasions.
  The sale announcement was made in March 1989. The document was prepared by Deloitte Corporate Finance and was issued on behalf of the Secretary of State for Employment. Incidentally, Deloitte has done quite well out of this because its fees are already more than £350,000, including VAT, and all the advisers involved can confidently expect that when the Government get round to revealing the figures in the summer, those fees will be in excess of £0·5 million of taxpayers' money.
  Copies of Deloitte's document were issued under a promise of secrecy and had to be returned—as though Deloitte was unaware that photocopying had been invented. The Minister has not yet revealed the number of documents involved, but I am sure that with the number of civil servants at his command, he will manage tomorrow to answer the questions that I have tabled for answer today.
  At least 40 groups were, to my certain knowledge, interested. Several of them made tender offers. Bidders

  861
  were invited to submit offers. What bidders did not know was that three senior civil servants, ludicrously termed a management buy-out team, were preparing a plan to buy. They were financed by the Government in that they did this in ordinary working hours and were
  "in contact with professional advisors as from the autumn of 1988."
  The advisors were paid for from taxpayers' funds.
  The only safeguard for those insider dealers, according to an answer of 27 March, was this:
  "Given their special position as a management buy-out team, in early April 1989, my Department removed the three officers concerned from direct responsibility for decisions affecting both personnel matters and the expenditure of public money. This was done to ensure that bias could not enter into decisions"—[Official Report, 27 March 1990; Vol. 170, c. 157–58.]
  The three officers were responsible for the national operation of the skill centres.
  No use was made of the rules governing acceptance of outside appointments by Crown servants. Those rules were published in 1988, and appendix B states:
  "It is in the public interest that people with experience of public administration should be able to move into business or other bodies and that the possibility of such movement should not be frustrated by unjustified public concern over a particular appointment. It is also no less important whenever a Crown servant accepts a particular outside appointment that there should be no cause for any suspicion of impropriety. The rules set out below have been designed to safeguard against such criticism both the public service and individual officers who wish to leave to take up these appointments. The aim of the rules is: (a) to counter suspicion, however unjustified, that the advice and decisions of a serving officer might be influenced by the hope or expectation of future employment with a particular firm or organisation; and (b) to avoid the risk that a particular firm or organisation might be gaining an unfair advantage over competitors by employing an officer who has had in his official career access to information which those competitors could legitimately regard as their own trade secrets."
  Appendix B also states that the rules apply to Crown servants of grade 3 level, or equivalent and above; and
  "below Grade 3 to whom an offer of appointment or employment of the kind to which the rules apply is made and who has at any time during the course of his or her official duties in the two years before leaving Crown service (or earlier if the association has been of a continued or repeated nature) had with the company or other organisation making the offer the kind of personal involvement described in paragraph 9 below."
  I mention these extracts from the document because the Minister seems somewhat unfamiliar with it. It goes on to say that the criteria for dealing with applications include the following:
  "Particular attention should be paid to appointments where the prospective employer

  (a) has a contractual relationship with the Government;

  (b) is in receipt of subsidies or their equivalent from the Government;

  (c) is one in which the Government is a shareholder;

  (d) is in receipt of loans, guarantees or other forms of financial assistance from the Government; or

  (e) is one with which Services, or Departments or branches of Government, are as a matter of course in a special relationship."

  All those criteria are met in full by the position of the three civil servants dealing with the skill centres. The rules are perfectly proper and sensible, designed to give the public confidence in the operation of civil servants, keeping companies with which they are in contact at arm's length so there can be no question or suspicion of any
  862
  impropriety or favouring or that civil servants are manoeuvring themselves into an advantageous position. They are designed to stop insider dealing in the civil service —the sort of thing that the Government have frowned on in the stock exchange. Corruption springs from insider dealing. Yet those very rules were set aside by the Minister.
  It is interesting to note how the Government apply rules to councillors. The rules that they formulate for other people are not set aside. The national code of local government conduct must now be signed by councillors and orders tabled by three Departments must be considered and approved by the House. The code of conduct says, in paragraph 6:
  "You should never do anything as a councillor which you could not justify to the public. Your conduct, and what the public believes about your conduct, will affect the reputation of your council, and of your party if you belong to one. It is not enough to avoid actual impropriety. You should at all times avoid any occasion for suspicion and any appearance of improper conduct."
  Paragraph 9 continues:
  "Interests which are not pecuniary can be just as important. You should not allow the impression to be created that you are, or may be, using your position to promote a private or personal interest, rather than forwarding the general public interest."
  Such words denote a curious sort of attitude on the part of a Government who have paid for three civil servants to have advisers to work full time on a plan to take over a publicly owned body, given that those civil servants were part of a tendering process.
  The other bidders were not just a group of cowboys, as the Minister knows. One of the consortia that bid was headed by Sir Richard O'Brien, the former chairman of the Manpower Services Commission. Not even the Minister could dismiss such a bid as irrelevant. Bidders were not informed that the Government were to provide £11 million to the successful bidder. Only Astra was told that.
  There is a stock reply. On Tuesday 1 May I asked the Secretary of State for Employment,
  "pursuant to his answer to the hon. Member for Bradford, South of 23 April, Official Report, column 99, at what stage of negotiations following the receipt of bids for skill centres it was decided that £11 million should be given to Astra Training Services; and what steps were taken to ascertain whether other bidders would revise their positions in the light of the sum being offered."
  The response from the Minister lounging on the Bench was:
  "The payment of £11 million from the Government to Astra Training Services Ltd. represented Astra's assessment of the costs of turning around a business which is currently unprofitable and creating training businesses with good prospects of viability. Deloittes, in conjunction with my Department's other advisers, evaluated all the offers and made recommendations to my Department. The Government decided that the Astra offer, including the £11 million payment, met the Government's six objectives for the sale (a copy of which was placed in the Vote Office on 13 February 1990) more fully than competing offers."—[Official Report, 1 May 1990; Vol. 171, c. 472.]
  But the competing offers were not really competing offers because they did not have the information that £11 million was available. The Minister shakes his head, but my information is that that was not made clear. If it was, why did not the Minister say so in answer to the question that I have just read out?
  In any case, the Minister has decided that the tender should be given to the very three people heading the organisation that produced a loss of £27 million, which is

  863
  why the Government decided to privatise the concern—claiming that it would be better in the marketplace. That seems a curious choice to say the least.
  The document that Deloitte put out contained some interesting information. On page 27, appendix 4, which is headed "Principal lease terms", says:
  "Many Skillcentres occupy valuable sites, several with considerable development potential. The Department considers that these properties might be too expensive for many business purchasers. Therefore, purchasers will be offered the option of: (a) acquiring the Department's freehold or long leasehold interest; or (b) taking a lease of the properties. Where a purchaser wishes to acquire the Department's interest, it will be available on terms which reflect its full value."
  That document contains a clear implication—indeed, an expression—that some of the sites will be so expensive that lease terms will be made available in order to maintain, one supposes, the skill centres. Therefore, it is rather surprising to find that 27 freehold sites have been acquired by Astra Training Services and that two of those sites are in the most valuable sector. They are grade A sites rather than grade B or C which would decrease in value. They are sites "with considerable development potential."
  What conditions are being imposed to prevent taxpayers from being ripped off? Is the £11 million being used to buy sites that will later be sold for development by Astra at a considerable profit, only a proportion of the added value being required by the Government? Will the Minister confirm that METEL, which bought the Liverpool site freehold, has just made 25 people redundant? That hardly augurs well for extending the skill centre facilities.
  The net replacement costs for all 60 sites, according to the annual report published in document No. 337, "Training Commission Accounts 1988–89", was £86,749,000. Are the sites that have been sold to Astra Training Services Ltd. worth about £40 million? Perhaps the Minister will tell us about that. What price has been received? It is not a question of commercial incompetence. These affairs involve public sites and a grant of £ 11 million to an inside tenderer. The public should know whether one of the criteria that the Secretary of State announced, that value should be obtained for any site disposed of, has been fully met. We will not be able to know that unless the Minister provides the information.
  It would be a cruel irony of the marketplace, would it not, if, after four years when the conditions no longer apply, Astra is wound up after selling off the site, the company pockets the £40 million, and the directors retire? No doubt the Minister will be keen to know that, according to information provided to me by the Library, on 8 May the three directors, diligent as no doubt they are, had failed to lodge the articles or memorandum of association or any other information with Companies house.
  The debate gives the Minister an opportunity to provide information. On the face of it, this is a sleazy conspiracy to rip off the taxpayer. Dedicated civil servants have worked for low salaries for many years to make the skill centres a success, only to find that the Government's decision has placed their future in jeopardy. Already, more than 50 have sought transfers away from the skill centres because of the lack of certainty and confidence in their future. When the Secretary of State made the statement he made it clear that he thought highly of the people who worked in the skill centres. However, the leadership, the
  864
  three civil servants concerned, were wrong to become involved. There may have been a temptation, but they were wrong. Ministers were wrong to involve them. When the Minister and the Secretary of State took up office they signed a Cabinet document placing upon them obligation not to involve civil servants in political activities.
  The sale of the skill centres, the rush to privatisation, is a political activity brought about by the ideology of the ruling party. Ministers should not have placed civil servants in that position. They should have ensured that the tendering process was open and seen to be open, provided all the information that was available to all the bidders so that the process was seen to be fair, and the insider dealing should have been stopped.
  At the very least, Ministers should have applied the ground rules governing the relationship between civil servants and the private sector. To set those rules to one side inevitably evokes criticism and suspicion and that will continue until the matter is fully investigated by the Comptroller and Auditor General or the National Audit Office. But that will take more than a year and we need the answers now.
  12.15 am
  The Minister of State, Department of Employment (Mr. Tim Eggar): As usual, the hon. Member for Bradford, South (Mr. Cryer) fully lived up to his reputation—
  Mr. Cryer: Just give me the answers.
  Mr. Eggar: I take the strongest exception to the hon. Gentleman's suggestion that there was something improper in the decision to sell the bulk of the Skills Training Agency to the management buy-out team. There is not one shred of evidence to justify his assertion and he knows that perfectly well.
  I remind the hon. Gentleman that the position of the management buy-out team was described clearly and openly to the House when the sale of the STA was announced by the then Secretary of State for Employment on 13 March 1989. The management buy-out team was removed from any direct responsibility for decisions affecting both the expenditure of public money and personnel matters. The hon. Gentleman knows that perfectly well, because it has been spelt out to him in written answers.
  Mr. Cryer: I said that in my speech. Why repeat it?
  Mr. Eggar: It is typical of the hon. Gentleman that he sits there muttering. He must exercise his responsibility—
  Mr. Cryer: Answer the questions.
  Madam Deputy Speaker (Miss Betty Boothroyd): Order. The Minister is attempting to answer the debate.
  Mr. Eggar: The hon. Gentleman must exercise his responsibility as a Member of the House. He should not use the opportunity that his privileged position gives him to cast slurs on people in the way that he has done tonight.
  The hon. Gentleman knows perfectly well that the civil servants were supported in their sale negotiations by professional advisers of experience and integrity. I am satisfied that the team acted throughout with the utmost probity, and that its success resulted from the merits of its bid, not from any other cause.

  865
  I suggest that the hon. Gentleman should, on reflection, make it clear to the House that he has no grounds for the assertions that he has made this evening. He should not use his privileged position to cast slurs on people who he knows perfectly well cannot reply.
  I take this matter extremely seriously. The purchasers of skill centres accept that the transfers are governed by the regulations and on the basis of the discussions between my Department's advisers and the purchasers. There is no reason to suppose that any breach is intended.
  The Government have virtually completed the move of the STA into the private sector. We announced our intention to do so in our White Paper in December 1988 and my right hon. and learned Friend the Secretary of State told the House in February this year that we had agreed terms of sale for more than three quarters of the business.
  That is a considerable achievement for a business which has had a long history of financial problems. In the past six years the STA has broken even financially only once. Those losses arose despite an arrangement under which the public sector purchased a fixed amount of training from the STA. That arrangement rightly ended in 1987 following criticism of it by the Public Accounts Committee.
  At that time, we took advice on the scope for turning the STA into a more competitive and viable training business, able to compete on level terms with other providers of training, without subsidies and artificial prices—which had been such a feature of its time in the public sector.
  Given the STA's massive losses—up to £30 million in the last financial year—there was no prospect of maintaining its network of training centres within my Department. To keep a network of any kind, it was necessary to sell. Therefore, the Skills Training Agency was put up for sale by public tender. It may help the hon. Gentleman—if anything ever helps the hon. Gentleman—if I describe how that sale was conducted. It had to meet the objectives that the Government set themselves at an early stage. They were as the hon. Gentleman briefly described them in his speech. It is important to recognise that those six objectives had a significant bearing on the outcome of the sale.
  It was not a privatisation, where the first objective is to ensure the maximum financial return. If we had wanted that, we would simply have shut down the STA and sold off its very considerable property assets. But we did not want to lose training capacity which we felt had the potential to become viable. Our first objective was to transfer into the private sector as much of the training business as we could.
  Our having decided on that objective, the sale process became a fairly complex one in which we had to balance the preservation of training, proper treatment of the property assets, and the taxpayers' interests in those assets —as well as the overall financial returns. Throughout the sale process, Ministers were advised by Deloitte Corporate Finance. It prepared an information memorandum that fully described the STA, the scale of its operation, the nature of its business, and the property that it occupied. That memorandum was sent to a number of organisations that had expressed serious interest in the sale.
  866
  On the basis of that memorandum and of discussions between potential purchasers and our advisers, indicative bids were received and evaluated. Some bids were rejected as inadequate, and the remainder were subjected to more detailed negotiation, which covered all aspects of the bids, ranging from the price proposed for the business and the treatment of the property, through to bidders' proposals for safeguarding the terms and conditions of staff employment and offering suitable pension agreements.
  All potential bidders were treated on the same footing, and all bids ultimately received were evaluated against the same criteria—taking full account of our six objectives.
  On the basis of that very full evaluation, we announced on 13 February that the majority of businesses would be taken over by Astra Training Services Ltd. Its offer covered 46 skill centres, plus the STA's head office and various other assets. Astra, the main successful bidder, is—as the hon. Gentleman stated—a company formed by a management buy-out team at the STA's head office. That successful management buy-out represents the first of its kind in the civil service. The Astra bid, together with the others that were successful, means that 51 of the 60 skill centres will be sold as training businesses.
  Those STA property interests not included in the sale package that was announced will be offered for sale on the open market, bringing in substantial sums to the Exchequer.
  I would have been pleased to secure Astra's bid for 46 of the skill centres. In the event, it can take only 45. It cannot take the Chesterfield centre because it was one of a number of sites where the sale of the business depended on the agreement of the landlord to transfer the centre's lease from my Department to Astra. I am sorry to tell the House that the landlord in that instance, Chesterfield borough council, which is Labour-controlled, refused to transfer the lease, thus forcing the skill centre to close and depriving Chesterfield of training services.
  I must add that news emerged today about the sale of the Liverpool skill centre to Merseyside Education Training Enterprise Ltd. I understand that, as the hon. Gentleman said, METEL has made all the staff transferred to it from the Skills Training Agency redundant, less than 24 hours after completion of the sale. The Department negotiated the sale of an established business in good faith, and had taken some comfort from the fact that METEL is a charity and from the membership of METEL's board.
  We are determined to support our former employees in enforcing their legal rights, and to ensure continuity of training for the trainees from the centre. We are currently examining the contractual position, and are offering our former employees access to legal advice.
  The hon. Member for Bradford, South referred to the clawback terms on property asset disposals. If he had done his research, he would know perfectly well that the clawback terms are a matter of public record. Development gains will be repaid to the extent of 100 per cent. on gains realised in the first three years after privatisation, 75 per cent. in the following year, 50 per cent. the year after, and 25 per cent. in the remaining five

  867
  years. That meets the requirements that my right hon. Friend the Member for Sutton Coldfield (Sir N. Fowler) set out in March—
  The motion having been made after Ten o'clock and the
  868
  debate having continued for half an hour, MADAM DEPUTY SPEAKER adjourned the House without Question put, pursuant to the Standing Order.
  Adjourned at twenty-five minutes past Twelve o'clock.

TRANSPORT

  Speed Limits (Western Avenue)
  Mr. Hanky
  To ask the Secretary of State for Transport when the speed limits on the Western avenue between the White City and the Hoover building were last assessed; and whether he intends any changes in the near future.

  Mr. Atkins
  The current speed limits along this stretch of the A40 have applied for a number of years. There are no immediate plans to make any changes to the existing limits on this stretch of the A40, but the situation will be reviewed as and when circumstances change.

  Weight Restriction Signs
  Mr. Hanley
  To ask the Secretary of State for Transport whether the weight restriction signs which were removed during the gales earlier this year on the one-way flyover at the Hogarth roundabout, at the junction of the A4 and A316, will be replaced.

  Mr. Atkins
  Yes. The damaged sign gantry will be replaced during night time hours in the week commencing 21 May.

  Bus Passengers
  Mr. Ernie Ross
  To ask the Secretary of State for Transport if he will list in the Official Report the requirements and regulations covering folding crew seats and jump seats used by bus passengers.

  Mr. Atkins
  The requirements for crew seats in buses are contained in the Public Service Vehicles (Conditions of Fitness, Equipment, Use and Certification) Regulations 1981, (SI 1981/257) as amended by SI 1982/1058. The relevant regulations are Nos. 3, 6, 25, 26, 28, 28A and 45A.

  The requirements for seat belts for bus crew seats are contained in the Road Vehicles (Construction and Use) Regulations 1986, SI 1986/1078, as amended by SI 1987/1133. The relevant regulations are Nos. 46 and 47.

  The Conditions of Fitness Regulations do not permit the use of crew seats by bus passengers. Neither do they refer to "jump seats". However, any seat used by a passenger must comply with regulation 28.

  Channel Tunnel
  Mr. Fearn
  To ask the Secretary of State for Transport if he has any plans to increase the amount of funds available for the construction of the channel tunnel rail link.

  Mr. Freeman
  We are currently considering proposals submitted by BR and its private sector partner, Eurorail, for a high-speed link between London and the channel tunnel.
  356
  Mr. Tony Lloyd
  To ask the Secretary of State for Transport what progress the health and safety at work working group has made in the establishment of compatible accident reporting systems and procedures for the exchange of information on accidents during work on the channel tunnel.

  Mr. Freeman
  Accidents are reported to the national authorities in the United Kingdom and France under existing regulations and procedures. I understand that information about accidents is exchanged through the Channel Tunnel Safety Authority and its health and safety working group, and a standard reporting form has been developed to ensure the compatibility of information about individual accidents.

  Mr. Tony Lloyd
  To ask the Secretary of State for Transport (1) on what dates the health and safety at work working group of the Channel Tunnel Safety Authority met; and what was discussed;

  (2) if he will give details of the discussions that have taken place within the health and safety at work working group of the Channel Tunnel Safety Authority on particular health and safety problems associated with the construction of the channel tunnel.

  Mr. Freeman
  I understand that the health and safety at work working group of the Channel Tunnel Safety Authority meets on average once a month to discuss various topics to do with health and safety in the channel tunnel. The group has principally been concerned over the last year with issues relating to the safety of workers on both the British and French sides during the construction phase.

  Mr. Tony Lloyd
  To ask the Secretary of State for Transport what discussions have taken place within the health and safety working group of the Channel Tunnel Safety Authority over the need to harmonise working standards and practices when the tunnels meet; and whether there will be a harmonisation of relevant national legislation.

  Mr. Freeman
  I understand that a series of discussions has been held in the health and safety working group of the Channel Tunnel Safety Authority on the health and safety arrangements which will need to be put in a place to ensure an optimum safety regime when the tunnels meet. When the safety authority reaches conclusions, the intergovernmental commission will consider how best to make arrangements within the provisions of the treaty.

  Mr. Tony Lloyd
  To ask the Secretary of State for Transport (1) on what date the safety report referred to on page 4 of the Channel Tunnel Safety Authority annual report 1988–89 was received; and what actions stemmed therefrom;

  (2) on what date the Channel Tunnel Safety Authority received an adequate preliminary risk analysis of risks and hazards from Eurotunnel.

  Mr. Freeman
  I understand that at an early stage in the design of the project Eurotunnel submitted a preliminary risk analysis for the terminals and tunnels. Since then, certain Eurotunnel submissions on individual aspects of the design and operation of the system have been accompanied by safety reports which provide elements of a safety analysis. However, as the chairman of the safety
  357
  authority said in his letter of November 1989 submitting the annual report, the authority sees a need for a full hazard analysis to be commissioned by the concessionaires and audited by the maitre d'oeuvre. The safety authority will be closely involved in designing and monitoring the study and assessing the significance of the results.

  Mr. Tony Lloyd
  To ask the Secretary of State for Transport when the Channel Tunnel Safety Authority's annual report 1989–90 will be published.

  Mr. Freeman
  I understand that the report is under preparation by the safety authority and should be published in the autumn.

  Traffic Lights
  Mr. Higgins
  To ask the Secretary of State for Transport pursuant to his reply to the right hon. Member for Worthing of 21 February,Official Report, column 818, if, he will intervene to ensure that the traffic lights at the junction of St. George's road and Garden way, London, are not operated in future.

  Mr. Atkins
  The London borough of Southwark is the responsible highway authority for St. George's road and Garden Row. Representations about the future of the traffic lights at the junction of these two roads should be directed to that council. I understand, however, that the early indications are that the pedestrian accident rate has in fact improved since the lights were installed.

  Mr. Spearing
  To ask the Secretary of State for Transport what timetable was set for the installation of additional traffic signals at the junction of Newham way, A 13 and Tollgate road, Beckton; when he now expects them to be operational; and if he will state the reasons for any delay.

  Mr. Atkins
  I regret the delay in installing the new traffic signals which was originally planned for last summer. This was due to several factors including difficulties over design and contract procedures. Tendering is in hand with a view to work starting in July for completion in October.

  Road Taxes
  Mr. Devlin
  To ask the Secretary of State for Transport what he estimates would be the approximate annual yield of a road tax of £50 per car, and £100 per coach or lorry, with 100 per cent. supplements for foreign-registered vehicles entering an exclusion zone drawn on a radius of eight miles from the Aldwych in London.

  Mr. Atkins
  I do not have annual figures for vehicles entering such an exclusion zone.

  M40
  Mr. Tim Smith
  To ask the Secretary of State for Transport in what year he expects the proposed widening of the M40 between junctions 1 and 3 to be completed; and what traffic flows, by volume, density and mix, he anticipates at Gerrards Cross and Beaconsfield at this time and in the following 10 years.

  Mr. Atkins
  Consultants are to be appointed later this year to investigate options for carrying out the work—the preferred scheme is expected to be announced in 1990.
  358
  Subsequent progress would depend upon the nature of the scheme selected and the statutory procedures involved. Completion could be achieved by the late 1990s.

  Actual traffic flows and forecasts between M25 (junction IA) and Beaconsfield (junction 2) are shown in the table.

  Year

  Vehicles per day (000s)

  Weekday HGVs

  1990

  80

  9

  2000

  120–140

  12

  2010

  140–175

  12

  Bradford-Leeds Rail Electrification
  Mr. Madden
  To ask the Secretary of State for Transport whether, following the meeting he had with the West Yorkshire passenger transport executive and others on 26 April, the authority has been asked to supply further information regarding electrification schemes between Bradford and Leeds; and if he will make a statement.

  Mr. Freeman
  The West Yorkshire passenger transport executive was asked to supply further information on 1 May. We will consider its application for credit approvals for the scheme in the light of that information and the resources available.

  Mudflaps
  Mr. Michael
  To ask the Secretary of State for Transport what steps he intends to take to ensure that mudflaps and other equipment on heavy goods vehicles are so designed as to reduce the lateral spray which can obscure the vision of other drivers, particularly when overtaking or being overtaken.

  Mr. Atkins
  Regulations requiring heavy goods vehicles and trailers to be fitted with spray reducing devices have been in existence since November 1984. The European Commission has put forward proposals for a directive on spray broadly in line with our regulations. The fitment of spray suppression devices is also a requirement of the heavy goods vehicle test.

  Difficulties can still, however, arise with spray from vehicles in adverse conditions. Research into this problem is now taking place. Any additional requirements resulting from this research would need agreement withinthe European Community.

ENVIRONMENT

  Sites of Special Scientific Interest
  Ms. Walley
  To ask the Secretary of State for the Environment if he will list for each of the last three years those sites of special scientific interest in Staffordshire which have been damaged by operations which were granted planning permission.

  Mr. Trippier
  I am advised by the Nature Conservancy Council that between 1 April 1987 and 31 March 1990 there was no reported case of damage by activities given planning permission in Staffordshire.
  359

  Radiation
  Dr. Thomas
  To ask the Secretary of State for the Environment how many successful prosecutions have been completed under the Radioactive Substances Act 1960; which organisations were found guilty; and on what dates.

  Mr. Trippier
  Since the Radioactive Substances Act 1960 came into force in 1963 there have been some 13 successful prosecutions in England for breaches of the Act. Because of the Rehabilitation of Offenders Act 1974 it is inappropriate to give details of individual convictions.

  Toxic Waste
  Mr. Devlin
  To ask the Secretary of State for the Environment, pursuant to his answer to the hon. Member for Devizes (Sir C. Morrison) of 23 April,Official Report, column 2, if he will give further details of the research being carried out into toxic and problem waste management and chemical, thermal and biological detoxification.

  Mr. Trippier
  The following two broad headings which were used in my previous answer include the listed detailed objectives:Toxic and Problem Waste Management

  To determine a variety of ways in which asbestos waste of various types may be reliably and economically destroyed.

  To determine operational quality control procedures for the assessment of cement-based solidified wastes under field conditions.

  To determine the extent of any potential hazard arising from disposing of mercury containing batteries with household waste.

  Waste Management

  To determine the general operating conditions under which PCBs can be destroyed by high temperature hydrogen reduction.

  To determine whether waste acids or other suitable chemicals may be utilised to degrade persistent pesticide wastes.

  Environmental Protection Bill
  Mr. Vaz
  To ask the Secretary of State for the Environment, how many representations he has received from(a) local authorities and (b) members of the public concerning the extra funding necessary to implement provisions in the Environmental Protection Bill; and if he will make a statement.

  Mr. Heathcoat-Amory
  My Department has received a number of comments from both local authorities and members of the public about the Environmental Protection Bill. The vast majority have been supportive of the new provisions. Some representations have been made about funding to implement relevant parts of the Bill, but I have been able to give the assurance that the new charging systems provided for in parts I and II of the Bill will provide local authorities with an entirely new source of finance from which to fund their new duties. Savings as a result of streamlined procedures for dealing with statutory nuisance under part III will also release resources. We are currently seeking local authorities' views on the cost of implementing the draft code of practice on litter and refuse in part IV of the Bill, and additionally we have commissioned consultants to undertake a survey of 20 local authorities to determine whether extra resources will be required.

  Nature Conservancy
  Mr. Dalyell
  To ask the Secretary of State for the Environment what was the latest currently available cost to him of his proposals to split nature conservancy representatives between England, Scotland and Wales.

  Mr. Trippier
  I refer the hon. Member to the reply I gave to my hon. Friend the Member for Daventry (Mr. Boswell) on 17 January,Official Report, column 252.

  Building Research Establishment
  Mr. Tim Smith
  (Beaconsfield): To ask the Secretary of State for the Environment, what specific financial, efficiency and quality of service targets he has approved for the Building Research Establishment for the current year and for the longer term.

  Mr. Chope
  My right hon. Friend's statement on 28 March,Official Report, column 238 indicated the heads under which performance targets had been set for the Building Research Establishment for 1990–91. I can give the following figures:

  Targets

  net vote cost

  £1,764,000

  untilisation rate for chargeable staff

  1 per cent, improvement on previous financial year

  non-Exchequer income as a percentage of total income

  8·4 per cent.

  Figures for other targets are commercially sensitive for the agency and will be treated in confidence. Performance targets for the longer term are currently being developed as part of the agency's corporate planning process.

  Common Land
  Sir Michael McNair-Wilson
  To ask the Secretary of State for the Environment whether he intends to introduce legislation about the administering of common land and the rights of ordinary people on land designated as common.

  Mr. Heathcoat-Amory
  I refer my hon. Friend to the reply I gave to the hon. Member for Stoke-on-Trent, North (Ms. Walley) on 11 May 1990,Official Report, column 244.

  Radioactive Substances
  Ms. Walley
  To ask the Secretary of State for the Environment if he will seek to amend the Environmental Protection Bill to take account of the concerns expressed by Dudley council concerning radioactive substances.

  Mr. Trippier
  No. The regulation of radioactive substances is a Government responsibility. The Radioactive Substances Act 1960 already requires local authorities to be consulted in respect of proposals to dispose of radioactive waste from nuclear licensed sites or where a local authority would be required to take special precautions. The Environmental Protection Bill further provides that local authorities will receive copies of every application for authorisation to dispose of radioactive waste from organisations in their area.

  Recycling, Place of Westminster
  Ms. Walley
  To ask the Secretary of State for the Environment what arrangements are made for the recycling of waste paper removed from the Palace of Westminster in bins now labelled "For Recycling Only"; how that paper is sorted; and what is the percentage efficiency and the cost over the past year of recycling waste paper from the Palace of Westminster.

  Mr. Chope
  [holding answer 14 May 1990]: Waste paper set aside for recycling is roughly sorted on site before being removed, free of charge, by the contractor.

  Local Government Finance
  Mr. Blunkett
  To ask the Secretary of State for the Environment when he expects to lay the relevant parliamentary orders specifying the budget reductions required of those authorities designated for charge capping in 1990–91.

  Mr. Portillo
  [holding answer 14 May 1990]: While there are related matters before the courts it would not be appropriate for me to comment.

  Mr. Hardy
  To ask the Secretary of State for the Environment what amount of deprivation Oxford, Cambridge, Kent, Dorset, Hampshire, Bedfordshire, the Isle of Wight and Rotherham were assumed to suffer under the determination of the standard spending assessment for 1990–91.

  Mr. Chope
  [holding answer 14 May 1990]: Standard spending assessment make no explicit assumptions about levels of deprivation. A number of the individual service elements of standard spending assessments take account of social factors. A full description of the methodology used for calculating standard spending assessments is given in the Revenue Support Grant Distribution Report (England) which was approved by the House of Commons on 18 January.

  Local Government Revenue
  Mr. Harry Barnes
  To ask the Secretary of State for the Environment, pursuant to his answer in the Official Report, 3 May, columns 617–18, to the hon. Member for Derbyshire, North-East, if he will list the local government areas in England for which equivalent figures are available.

  Mr. Chope
  [holding answer 14 May 1990]: Equivalent figures are available for the following areas:

  Avon

  Buckinghamshire

  Derbyshire

  Dorset

  Durham

  Isle of Wight

  Kent

  Lincolnshire

  Northumberland

  Surrey

  Warwickshire

  West Midlands

  West Sussex

  Wiltshire

  Toxic Chemicals
  Ms. Walley
  To ask the Secretary of State for the Environment what information he has received from the National Rivers Authority as to what investigations are 362
  taking place into the leakage of highly toxic chemicals into the River Bourne from a timber and building supplies site; what action the Government are taking to ensure that dangerous chemicals are contained in vandal-proof structures; and if he will make a statement.

  Mr. Heathcoat-Amory
  [holding answer 14 May 1990]: My officials were kept informed on this incident by the National Rivers Authority when it occurred. Since then the authority has been carrying out a full investigation but its report is not yet complete.

  No decision has yet been made on whether regulations or guidelines on the storage of dangerous substances need to be strengthened.

  Housing Transfer (Rochester and Medway)
  Mr. Soley
  To ask the Secretary of State for the Environment whether he will give details of the new funding arrangements for the housing transfer in Rochester and Medway; and if he will make a statement.

  Mr. Michael Spicer
  [holding answer 11 May 1990]: Details of the funding arrangements are a matter for the financiers and the proposed purchaser of the housing. Any requests for such details should be made to them.

  Pollution Inspectorate (Vacancies)
  Ms. Walley
  To ask the Secretary of State for the Environment how many professional vacancies remain unfilled at Her Majesty's inspectorate of pollution; what he proposes to do to remedy the situation; and if he will make a statement.

  Mr. Heathcoat-Amory
  [holding answer 11 May 1990]: There are currently 25 professional vacancies in Her Majesty's inspectorate of pollution, seven of which are reserved for successful candidates to date from the current recruitment competition. We are continuing to recruit actively to fill the remaining posts.

  Her Majesty's inspectorate of pollution has also introduced an additional assistant pollution inspector recruitment grade, for candidates with full professional qualifications and at least two years industry experience, who will qualify as pollution inspectors through further training and experience in the inspectorate. This will widen the recruitment for future pollution inspectors, while fully maintaining the present professional standards. The first recruitment competition for APIs is now in progress.

  Peat Extraction
  Ms. Walley
  To ask the Secretary of State for the Environment if he will make environmental impact assessment mandatory on all planning applications for the extraction of peat.

  Mr. Moynihan
  [holding answer 11 May 1990]: Environmental assessments cannot be made mandatory on all planning applications for peat extraction, as each case has to be considered on its merits. EAs will be required, however, where the proposed development is likely to have a significant environmental impact.

ATTORNEY-GENERAL

  Supply Index
  Mr. Devlin
  To ask the Attorney General if he will make a statement about the decision of the Lord Chancellor's department not to participate in the Government supply index.

  The Attorney-General
  The Lord Chancellor's Department has made no decision about participation in the Government supply index. It is being considered as a part of the overall strategy for the computerisation of purchasing information systems within the Department.

  Bereavement Damages
  Mr. Cunliffe
  To ask the Attorney-General how many replies he has received to his consultation paper on bereavement damages in favour of (i) increasing the limit to(a) £5,000 and (b) £10,000 or (ii) leaving the limit unchanged.

  The Attorney-General
  A total of 265 replies to the consultation paper on bereavement damages issued by the Lord Chancellor have been received and these are currently being studied and evaluated.

EDUCATION AND SCIENCE

  Race Awareness
  Mr. Sheerman
  To ask the Secretary of State for Education and Science what information he has on the extent to which race awareness training is part of the present syllabus in degree and other law courses in universities and polytechnics.

  Mr. Jackson
  None. The curriculum of universities' and polytechnics' law courses is a matter for them and for the relevant professional bodies.

  Further and Higher Education
  Mr. Matthew Taylor
  To ask the Secretary of State for Education and Science what percentage of 16-year-olds stay on in full-time education either at(a) school or (b) further/higher education institutions in (i) Cornwall and (ii) England.

  Mr. Jackson
  A total of 27 per cent. of 16-year-olds participated in full-time education in school in Cornwall in 1987–88 and 24 per cent. of them did so in further or higher education institutions. The corresponding figures for England were 27 and 20 per cent. respectively.Notes: These figures are based on the definitive census counts: the form 7 exercise in schools and the further education statistical record. They differ from the figures used to answer a slightly different question on 8 May which necessitated using a sample survey: the school leavers survey. Age is taken as at 31 August 1987.

  Private Colleges of Higher Education
  Mr. Win Griffiths
  To ask the Secretary of State for Education and Science what circumstances Her Majesty's inspectors inspect private colleges of higher education.

  Mr. Jackson
  My right hon. Friend has a duty to cause inspections to be made of all further and higher education 364
  institutions within the PCFC funding sector and those which are maintained or assisted by local education authorities. He has no such duty in respect of independent institutions. However, he may at the request of the management of such institutions, cause an inspection to take place. In those circumstances Her Majesty's inspectorate may participate in a supporting assessorial role.

TRADE AND INDUSTRY

  British Exporters
  Mr. McFall
  To ask the Secretary of State for Trade and Industry if he has any new proposals to help British exporters.

  Mr. Redwood
  The volume of United Kingdom exports has continued to grow, reflecting the strong position of United Kingdom industry. Excluding oil and erratic items, the volume of exports in the first quarter of 1990 was 8 per cent. higher than a year earlier. There is a wide range of advice and support available from my Department to assist United Kingdom exporters and of which many firms make use.

  Exports (North-West)
  Mr. Butler
  To ask the Secretary of State for Trade and Industry what information he has on the export performance of firms in the north-west.

  Mr. Redwood
  Export data are collated on a national not regional basis and it is not possible to separately identify the export performance of firms in the north-west from official trade statistics.

  However, north-west chambers of commerce survey local industry and commerce quarterly. Their findings for the first quarter of 1990 indicate that generally, compared with the fourth quarter of 1989, exports continue to grow and that the north-west region is sharing in the growth of exports nationally.

  Indonesia
  Mr. Hayward
  To ask the Secretary of State for Trade and Industry what status is held currently by Indonesia in relation to export credit guarantees; and whether this status is under review.

  Mr. Redwood
  The ECGD is currently open for short, medium and long-term cover on Indonesia. It is reviewing its policy towards those markets on which, in portfolio terms, its exposure is heavily concentrated. Indonesia is one such market. The importance of Indonesia to United Kingdom exporters is well recognised and this will be taken fully into account in the review.

  Iraq
  Mr. Caborn
  To ask the Secretary of State for Trade and Industry how many trade delegations from Iraq have visited the United Kingdom in each of the last five years.

  Mr. Redwood
  We have readily available information only on officially supported inward missions of which there were one in each of the years 1988–89 and 1989–90. There was Iraqi participation in two multi-country inward missions in 1985–86 and 1987–88.
  365
  Mr. Caborn
  To ask the Secretary of State for Trade and Industry (1) how many British trade delegations have visited Iraq in each of the last five years with the support of the Department of Trade and Industry;

  2) how many trade delegations have visited Iraq in each of the last five years with the knowledge of his Department.

  Mr. Redwood
  The number of trade delegations, including trade fair groups, missions and seminar participants, that have visited Iraq with Government support in each of the last five years is as follows:

  Number

  1985–86

  Three

  1986–87

  Four

  1987–88

  Four

  1988–89

  Three

  1989–90

  Six

  Unsupported missions are a matter for the companies concerned.

  Mr. Caborn
  To ask the Secretary of State for Trade and Industry if he will supply the names of companies who have been on trade delegations to Iraq in each of the last five years.

  Mr. Redwood
  It would not be appropriate to provide this information which is a matter between my Department and the companies concerned.

  Consultants
  Mr. Tim Smith
  To ask the Secretary of State for Trade and Industry whether he has now set the allocation of his Department's expenditure on consultants for 1990–91.

  Mr. Forth
  An allocation of £3,080,000 has been made for consultants out of Department of Trade and Industry running costs for 1990–91.

  Accounting Requirements
  Mr. Irvine
  To ask the Secretary of State for Trade and Industry what plans he has to make regulations under section 245(4) of the Companies Act 1985 as amended by section 12 of the Companies Act 1989.

  Mr. Redwood
  My Department issued a consultative document yesterday on the issues to be covered by regulations under S245(4).

  A copy has been placed in the Library of the House. Further copies are available from my Department by telephoning 071–215 3093, or writing to DTI, Room G707, 10–18 Victoria street, London SW1H 0NN.

  The deadline for comments is 20 July 1990.

  Financial Services
  Mr. Colin Shepherd
  To ask the Secretary of State for Trade and Industry what representations he has received concerning the definition of capital in respect of the requirements for capital adequacy on the part of firms in the financial services sector; what is his definition of capital for this purpose; and if it is his intention to apply this definition to any representations he may be making to the European Commission in respect of the harmonisation of requirements for 1992.
  366
  Mr. Redwood
  [holding answer 14 May 1990]: The Government will continue to take account of the views of United Kingdom financial institutions during the negotiations on the proposed EC capital adequacy directive, including views on the definition of capital. We will be pressing for a definition which takes account of the structure of the United Kingdom financial services industry. In our negotiations on the CAD the United Kingdom is pressing for capital to be related to risk, and for levels of initial capital which do not act as barriers to entry.

  Hairdressers
  Mr. Bernie Grant
  To ask the Secretary of State for Trade and Industry, pursuant to his answer of 5 April,Official Report, columns 805–6, (1) whether a person currently practising in the United Kingdom as either a qualified or unqualified Afro-Caribbean hairdresser will be allowed to practise as such in the other European Community countries after 1 January 1993; and whether he will make a statement;

  (2) whether a person qualified and practising as an Afro-Caribbean hairdresser will be allowed to continue as such after 1 January 1993;

  (3) whether a person not qualified in Afro-Caribbean hairdressing but practising as an Afro-Caribbean hairdresser will be allowed to continue as such after 1 January 1993.

  Mr. Redwood
  [holding answer 8 May 1990]: The profession of hairdresser is not regulated by law in the United Kingdom and the completion of the single European market will not alter this.

  The treaty of Rome already guarantees freedom for every EC citizen to work, to seek work or to set up business in any EC member state. However, member states are not at present obliged to recognise professional qualifications or professional experience gained in other member states, and often do not.

  Two main initiatives have been taken to remedy this. First, Council directive 82/489/EEC on hairdressing already makes it easier in certain circumstances for hairdressers who have practised in one member state to meet vocational training requirements in another.

  My Department is responsible for issuing the certificates specified in that directive. Second, the Commission has put forward a draft directive on a second general system for the recognition of professional education and training (COM(89) 372 of 8 August 1989) which is aimed at ensuring that all professional qualifications gained in one member state are recognised in another. The directive is currently under discussion in a Council working group.

SOCIAL SECURITY

  Students (Benefits)
  Mr. Andrew Smith
  To ask the Secretary of State for Social Security when he received the report of the Social Security Advisory Committee on the Government's proposals to end the entitlement of students to housing benefit, unemployment benefit and other social security benefits; and if he will publish the report immediately.

  Mrs. Gillian Shephard
  The report of the Social Security Advisory Committee on the draft Social Security Benefits
  367
  (Student Loan and Miscellaneous Amendments) Regulations 1990 was received on 27 April. We are, at present, giving careful consideration to the report which will be published with our formal response in the normal way when the regulations are laid before Parliament.

  Social Security Benefits Agency
  Mr. Brandon-Bravo
  To ask the Secretary of State for Social Security what progress his Department has made in establishing the social security Benefits Agency.

  Mr. Newton
  I announced earlier today the appointment of Michael Bichard as chief executive of the Benefits Agency following selection by open competition. This is a major step in setting up the agency which will come into being next April and which will be the largest executive agency in Government. Mr. Bichard is currently chief executive of Gloucestershire county council. He has wide experience of management and will, I am sure, make a first-rate leader of the new agency. He is being appointed for a five-year period.

  Staff Qualifications
  Mr. John Garrett
  To ask the Secretary of State for Social Security if he will publish in the Official Report the numbers and percentages of his staff in grades 1 to 7 who have (a) arts, (b) science and (c) technical degrees, (d) who are qualified accountants, (e) have postgraduate qualifications in management and (f) who were educated in (i) local authority and (ii) private schools.

  Mrs. Gillian Shephard
  [holding answer 2 May 1990]: The table relates to staff recorded on the Department's headquarters personnel computer system, including professional staff. Information about the remainder of the Department's staff is not readily available and could be obtained only at disproportionate cost.

  Number

  Per cent.

  Total number of staff in grades 1 to 7

  3422

  100

  Number with arts degrees

  72

  17

  Number with science degrees1

  198

  47

  Number with law degrees2

  41

  10

  Number with post-graduate qualifications in management

  —

  —

  Number with no degree

  111

  26

  1 One hundred and sixty-four of whom have medical degrees.

  2 There are no members of staff with other "technical" degrees.

  3 Only one of the 422 staff in grades 1 to 7 is a qualified accountant, 0·2 per cent, of the total.

  Note: No details of types of school attended are held and a separate clerical exercise to ascertain the information would involve disproportionate cost.

HEALTH

  NHS Reform
  Mr. Spearing
  To ask the Secretary of State for Health what proposals he has for restricting the role of community health councils in representing the public in future National Health Service contracts and fund-holding general practices.

  Mrs. Virginia Bottomley
  The role of community health councils (CHCs) will remain fundamentally unchanged. District health authorities will be expected to take careful 368
  account of the views of their resident population on the overall pattern of service which they plan to secure through their contracts. CHCs will play an important role in this. Fund-holding general practititioners, being in direct touch with the patients they serve, will have less need of an intermediary in this respect.

  Alternative Therapies
  Mr. Fearn
  To ask the Secretary of State for Health how many general practitioners offer alternative and complementary therapies to National Health Service patients.

  Mr. Dorrell
  This information is not held centrally.

  Abortion
  Mr. Alton
  To ask the Secretary of State for Health, pursuant to the answer to the hon. Member for Peckham (Ms. Harman), 8 May,Official Report, column 84, in how many of the 22 abortions performed after 24 weeks gestation attempts were made to save the life of the child; and if he will make a statement.

  Mrs. Virginia Bottomley
  This information is not collected centrally. Matters relating to the care of patients are confidential and are for the clinical judgment of the doctor concerned.

  Pesticides
  Mr. Simon Hughes
  To ask the Secretary of State for Health what research has been conducted to establish the incidence of chronic exposure to low levels of pesticides; what training doctors within the National Health Service are given to enable them to recognise this; and if he will make a statement on the health implications for the general public of chronic exposure to low levels of pesticides.

  Mr. Dorrell
  [holding answer 23 April 1990]: We are not aware of any United Kingdom research into the incidence of chronic exposure to pesticides. Surveys of human milk and human fat carried out as part of the regular monitoring by the working party on pesticides residues in food have indicated very low residues of fat soluble pesticides and related chemicals. Residues of pesticides found in food are generally within recommended maximum residue levels and within the safety limits.

  Pesticides are approved for use by Ministers after receiving the advice of the Advisory Committee on Pesticides which considers all relevant toxicity data including that on consumer exposures. If significant adverse health effects are a possibility, approval is not recommended.

  All doctors receive training in the diagnosis of acute poisoning, including that from exposure to pesticides. In addition, all general practitioners and hospital accident and emergency departments have been issued with a copy of the book "Pesticide Poisoning", a copy of which is in the Library. This gives guidance on the diagnosis and treatment where acute poisoning from pesticides is suspected. Chronic exposure to the levels of pesticides found in the diet are not known to have any health effects, but, if a doctor was unable to attribute symptoms in a patient to other well-recognised causes, it would be open to the doctor to consider chronic exposure to pesticides as

  369
  a possible cause of the illness. Working towards the diagnosis of obscure illness by eliminating more obvious causes is a normal part of medical training.

ENERGY

  Council of Ministers
  Mr. Ieuan Wyn Jones
  To ask the Secretary of State for Energy what proposals he will introduce at the meeting of the European Council of Energy Ministers in Brussels on 21 May.

  Mr. Peter Morrison
  Only the European Commission has the right to initiate formal legislative proposals to the Council. My right hon. Friend will suggest whatever changes he considers necessary during discussions with the other Energy Ministers.

  Nuclear Fuel (Reprocessing)
  Mr. Ieuan Wyn Jones
  To ask the Secretary of State for Energy if details of the origins, sizes and dates of spent fuel imports for reprocessing are notified to his Department for the purposes of international nuclear safeguards.

  Mr. Baldry
  My Department receives reports on all spent nuclear fuel imports, for the purposes of international nuclear safeguards.

OVERSEAS DEVELOPMENT

  Tropical Forests
  Mr. Devlin
  To ask the Secretary of State for Foreign and Commonwealth Affairs if he will make a statement on the claims made in the circular letter sent to all hon. Members by Friends of the Earth on 9 March concerning the tropical forest action plan.

  Mrs. Chalker
  I refer the hon. Member to the answer I gave the hon. Member for Stoke-on-Trent, North (Ms. Walley) on 5 April, at column 733.

  El Salvador and Nicaragua
  Mr. Corbyn
  To ask the Secretary of State for Foreign and Commonwealth Affairs what is the current level of bilateral aid and EC provisions for El Salvador and Nicaragua; what are the plans for the rest of the current financial year; and if he will make a statement.

  Mrs. Chalker
  We have a bilateral technical cooperation programme for El Salvador which will continue —£154,000 in 1988 including disaster relief. I recently announced that we were starting a modest technical cooperation programme for Nicaragua, which should get under way during the year. As regards EC provisions, EC commitments are made in respect of individual projects from within the total allocated annually for the Asia and Latin America programme. Figures for EC commitments in recent years are:

  1987

  1988

  11989

  El Salvador

  19·73 mecu

  2·87 mecu

  3·91 mecu

  Nicaragua

  21·42 mecu

  43·23 mecu

  16·49 mecu

  1 Provisional.

WALES

  Government Supply Index
  Mr. Devlin
  To ask the Secretary of State for Wales if he will make a statement about his Department's decision not to participate in the Government supply index.

  Mr. Wyn Roberts
  No such decision has been taken. The Welsh Office is actively considering participation in the Government supply index.

  Local Government Finance
  Mr. Wigley
  To ask the Secretary of State for Wales what is his latest estimate of(a) the total number of personal poll tax payers in Wales and (b) the number in receipt of community charge benefit.

  Mr. David Hunt
  The information is as follows:

  (a) 2,175,000 (including students).

  (b) 550,000.

  Birth Control
  Mr. Wigley
  To ask the Secretary of State for Wales in how many of the district health authorities of Wales there are currently proposals being considered for a cut back in the service of family planning clinics within their area; and if he will identify those authorities considering such cutbacks.

  Mr. David Hunt
  This information is not held centrally.

  Hospital Closures
  Mr. Geraint Howells
  To ask the Secretary of State for Wales if he will list the number of hospitals closed in Wales during each of the last 10 years; and if he will make a statement.

  Mr. Grist
  The number of hospitals which have closed, and are still closed, is given in the table. During the same period, seven hospitals, including four district general hospitals, have opened, and the NHS in Wales is treating a record number of patients.

  Number of hospitals closed since I January 1980

  Year

  Number

  1980

  3

  1981

  1

  1982

  –

  1983

  1

  1984

  3

  1985

  6

  1986

  3

  1987

  2

  1988

  1

  1989

  –

  Consultants
  Mr. Tim Smith
  To ask the Secretary of State for Wales whether budgets for 1990–91 for expenditure on management and computer consultancies have yet been finalised.

  Mr. David Hunt
  Yes. Most of the resources are found from within the central administration vote and in 1990–91 £230,000 has been earmarked for this purpose.

  Ophthalmic Clinics
  Mr. Michael
  To ask the Secretary of State for Wales (1) how many new out-patient attendances at ophthalmic clinics were recorded in each quarter of 1989 in each health authority area in Wales;

  (2) how many new out-patient attendances at ophthalmic clinics were recorded in each quarter of 1988 in each health authority area in Wales;

  (3) how many new out-patient attendances at ophthalmic clinics were recorded in each quarter of 1987 in each health authority area in Wales;

  (4) how many new out-patient attendances at ophthalmic clinics were recorded in each quarter of 1986 in each health authority area in Wales;

  Quarter ended

  Clwyd

  East Dyfed

  Pembrokeshire

  Dyfed1

  Gwent

  Gwynedd

  Mid Glamorgan

  Powys

  South Glamorgan

  West Glamorgan

  1986

  March

  1,049

  919

  286

  1,205

  1,732

  974

  1,035

  150

  1,866

  1,236

  June

  1,168

  1,002

  285

  1,287

  1,912

  1,034

  1,118

  160

  1,963

  1,263

  September

  1,304

  1,036

  266

  1,302

  1,753

  885

  1,204

  143

  1,862

  1,225

  December

  1,255

  1,122

  308

  1,430

  1,818

  937

  1,284

  159

  2,216

  1,284

  1987

  March

  1,178

  1,018

  329

  1,347

  1,747

  854

  1,121

  153

  2,041

  1,175

  June

  1,225

  985

  334

  1,319

  1,543

  894

  1,190

  146

  2,078

  1,430

  September

  1,169

  893

  232

  1,125

  1,481

  968

  1,151

  126

  2,298

  1,213

  December

  1,269

  1,053

  386

  1,439

  1,773

  1,012

  1,388

  177

  2,076

  1,129

  1988

  March

  1,499

  1,045

  431

  1,476

  1,801

  1,163

  1,703

  139

  2,380

  1,384

  June

  1,315

  1,044

  279

  1,323

  1,881

  1,220

  1,352

  143

  1,887

  1,159

  September

  1,335

  1,108

  303

  1,411

  1,688

  1,141

  1,485

  146

  1,759

  1,277

  December

  1,343

  1,227

  386

  1,613

  1,763

  965

  1,276

  190

  2,260

  1,361

  1989

  March

  1,369

  1,245

  320

  1,565

  2,190

  1,040

  1,347

  170

  2,221

  1,694

  June2

  1,310

  1,267

  424

  1,691

  2,178

  1,044

  1,821

  230

  2,182

  1,594

  September2

  1,445

  972

  296

  1,268

  2,023

  986

  1,981

  152

  1,956

  1,459

  December3

  1 The county of Dyfed comprises the health authorities of East Dyfed and Pembrokeshire.

  2 Provisional.

  3 Not yet available.

  Mr. Michael
  To ask the Secretary of State for Wales how many new out-patient attendances at ophthalmic clinics were recorded(a) in South Glamorgan and (b) in Wales in the first quarter of 1990.

  Mr. David Hunt
  The information is not yet available.

  Glaucoma
  Mr. Michael
  To ask the Secretary of State for Wales, further to his answers of Tuesday 8 May on glaucoma, whether he will ask each health authority and family practitioner committee in Wales to notify him of the numbers of cases of glaucoma diagnosis that were recorded in(a) 1986, (b) 1987, (c) 1988, (d) 1989 and (e) the first quarter of 1990.

  Mr. David Hunt
  I shall write to the hon. Gentleman and place a copy of my letter in the Library of the House.

  Flooding
  Mr. Barry Jones
  To ask the Secretary of State for Wales if he will meet Bishop Alwyn Rice Jones to discuss the north Wales sea floods.
  372
  (5) how many new out-patient attendances at ophthalmic clinics were recorded in each quarter of 1989 in each county in Wales;

  (6) how many new out-patient attendances at ophthalmic clinics were recorded in each quarter of 1988 in each county in Wales;

  (7) how many new out-patient attendances at ophthalmic clinics were recorded in each quarter of 1987 in each county in Wales;

  (8) how many new out-patient attendances at ophthalmic clinics were recorded in each quarter of 1986 in each county in Wales.

  Mr. David Hunt
  The table shows the number of new ophthalmology out-patients recorded in NHS hospitals in Wales, by county and district health authority:

  Mr. David Hunt
  I have received no request for a meeting from Bishop Rice Jones. If such a request is made it will be considered.

  St. David's Airfield, Pembrokeshire
  Mr. Nicholas Bennett
  To ask the Secretary of State for Wales if any of the proposed site of the over-the-horizon radar installation on the site of the former St. David's airfield, Pembrokeshire, is designated a site of special scientific interest.

  Mr. Wyn Roberts
  I understand that the proposed sites will be located entirely within the boundaries of the Ministry of Defence land at St. David's airfield and that no part of that land has been designated a site of special scientific interest.

  District Health Authorities (Loans)
  Mr. Wigley
  To ask the Secretary of State for Wales if he will publish a table in the Official Report showing for each of the district health authorities in Wales, the financial sums borrowed by them on an interest-free basis from other authorities in Wales for each year from 1984–85

  373
  to 1989–90, and where appropriate, if he will indicate whether these loans were used for revenue or capital purposes.

  Mr. David Hunt
  The information requested is shown in the table:

  Brokerage between district health authorities

  Revenue £ million

  Capital £ million

  1984–85

  Gwent

  —

  -0·287

  Mid Glamorgan

  +1·287

  —

  South Glamorgan

  -0·500

  —

  West Glamorgan

  -0·500

  —

  1985–86

  Clwyd

  —

  +0·500

  West Glamorgan

  -0·500

  —

  1986–87

  Nil

  —

  —

  1987–88

  Mid Glamorgan

  +0·750

  —

  West Glamorgan

  -0·750

  —

  1988–89

  Gwent

  +1·000

  —

  Gwynedd

  +0·780

  —

  Powys

  —

  -0·500

  South Glamorgan

  -0·780

  —

  West Glamorgan

  -0·500

  —

  1989–90

  Clwyd

  —

  -1·000

  Gwent

  +1·000

  —

  Gwynedd

  +0·500

  —

  South Glamorgan

  -0·500

  —

  Notes: (+) denotes 'borrowing'

  (-) denotes 'loans'.

  Source: Records of Revenue and Capital Allocations to District Health Authorities.

  Health Care, Gwynedd
  Mr. Wigley
  To ask the Secretary of State for Wales, pursuant to his reply of 9 May to questions concerning health care in Gwynedd, if he will publish a copy of his letter in answer in the Official Report.

  Mr. David Hunt
  No, a copy of the letters will be made available in the Library.

NATIONAL FINANCE

  Central Office of Information
  Mr. Tim Smith
  To ask the Chancellor of the Exchequer what specific financial, efficiency and quality of service targets he has approved for the Central Office of Information for the current year and for the longer term.

  Mr. Ryder
  The targets that have been approved for the Central Office of Information are set out in annex A of its framework document as follows:

  Financial

  1. To break even in current cost terms after covering all costs, including interest on borrowings.

  2. To achieve a 1 per cent. reduction in unit cost of output in real terms, which maintaining suitable levels of quality. Appropriate internal targets will be set for every budget holder to ensure achievement of the departmental target.

  Financial

  3. To achieve savings for clients on a base year of 1984–85, for incorporation in their annual returns to the CUP.

  4. To deliver all work in accordance with client specification.

  374

  5. To deliver all work on time.

  These targets have been agreed for the long term with the exception of target 2 which is subject to annual review in the light of market forces. Copies of the framework document are in the House of Commons Library.

THE ARTS

  Energy Consumption
  Mr. Dobson
  To ask the Minister for the Arts, pursuant to his answer of 1 May,Official Report, column 475, why details of energy consumption are not available for the buildings occupied by the offices for which he is responsible.

  Mr. Luce
  [holding answer 10 May 1990]: My office is located in two buildings, both shared with other Government Departments. They are not sub-metered to measure individual Departments' actual energy consumption. Charges are therefore made on the basis of the respective areas of floor space. I shall write to the hon. Member with further details.

PRIME MINISTER

  Mr. Charles Powell
  Mr. Dalyell
  To ask the Prime Minister if she will list those aspects of the supplementary question of 26 April from the hon. Member for Linlithgow concerning contacts between Mr. Charles Powell and Mr. Conrad Black which she does not accept as having a basis in fact; and if she will make a statement on the aspects of the hon. Member's interpretation which she does not accept.

  The Prime Minister
  I have nothing further to add to my reply of 26 April.

  Engagements
  Mr. McAvoy
  To ask the Prime Minister if she will list her official engagements for Tuesday 15 May.

  Mr. Watson
  To ask the Prime Minister if she will list her official engagements for Tuesday 15 May.

  Mr. Harry Greenway
  To ask the Prime Minister if she will list her official engagements for Tuesday 15 May.

  Mr. Dunnachie
  To ask the Prime Minister if she will list her official engagements for Tuesday 15 May.

  Mr. Tony Lloyd
  To ask the Prime Minister if she will list her official engagements for Tuesday 15 May.

  Mr. Stern
  To ask the Prime Minister if she will list her official engagements for Tuesday 15 May.

  The Prime Minister
  This morning I had meetings with ministerial colleagues and others. In addition to my duties in the House, I shall be having further meetings later today. This evening I shall attend a memorial service for the late Lord Rothschild.

  Executive Agencies
  Mr. Flynn
  To ask the Prime Minister whether she will list in the Official Report the subjects on which, as a result of the transfer of functions to executive agencies, Ministers will no longer answer questions.
  375
  The Prime Minister
  Ministers remain fully accountable to Parliament for all the work of their Departments, including executive agencies. However, hon. Members may often wish in the first instance to deal directly with agency chief executives on those matters for which they have delegated authority under the agency's framework document and I would encourage them to do so. In such cases the chief executive will be best placed to give them a response promptly and effectively.

HOME DEPARTMENT

  Sex Offenders
  Mr. Maclennan
  To ask the Secretary of State for the Home Department what consideration he is giving to the recommendations contained in the report published by the Suzy Lamplugh Trust entitled "Working with the Sex Offender: Issues for Policy and Training, Prevention and Treatment" a copy of which has been sent to him; and if he will make a statement.

  Mr. John Patten
  I welcome the initiatives taken by the Suzy Lamplugh Trust in focusing attention on the treatment and sentencing of sex offenders. We are considering the report's recommendations and its points for action and we shall take them into account in developing our own strategy for the treatment of sex offenders.

  Ex-offenders (Training)
  Mr. Hattersley
  To ask the Secretary of State for the Home Department if he will make a statement on recent reductions in training facilities available for ex-offenders following the renegotiation of contract for voluntary sector providers.

  Mr. Waddington
  Funding for employment training is a matter for the Department of Employment. I understand that recent reductions in funding are related to falling unemployment and a significant reduction in the numbers of young people entering the labour market. The Training Agency and the new training and enterprise councils seek to ensure that suitable training is provided for people with special needs, including ex-offenders. Officials of the Home Office and Training Agency are jointly examining the implications of the Government's recently published White Paper on dealing with offenders in the community in relation to training and enterprise programmes.

  Prisoners
  Mr. Alex Carlile
  To ask the Secretary of State for the Home Department what criteria are used to determine whether a prisoner should be held on rule 43; and if he will make a statement.

  Mr. Mellor
  Prison rule 43 provides that, where it appears desirable, for the maintenance of good order or discipline or in his own interests, that a prisoner should not associate with other prisoners, either generally or for particular purposes, the governor may arrange for the prisoner's removal from association accordingly. Segregation for more than three days requires authorisation by the board of visitors. Where a prisoner's segregation is requested or recommended for his own protection, the governor must satisfy himself that the 376
  prisoner is seriously at risk of assault by other prisoners and that his safety cannot be assured by other means. Where segregation for maintenance of good order or discipline is considered, the governor must be satisfied, in the light of information available, that the prisoner's continued association with other prisoners poses a threat to the efficient running and control of the prison. The governor may arrange at his discretion for a prisoner to resume association with other prisoners, and must do so if in any case the medical officer so advises on medical grounds.

  Women Prisoners
  Miss Emma Nicholson
  To ask the Secretary of State for the Home Department what proportion of births to women prisoners have been stillborn in each of the last 10 years.

  Mr. Mellor
  There were eight deliveries within prison service establishments between 1 January 1979 and 31 March 1989 none of which were still births. Figures for still births in outside hospitals are not collected centrally, and could be obtained only at disproportionate cost.

  Miss Emma Nicholson
  To ask the Secretary of State for the Home Department what proportion of pregnancies of women prisoners have resulted in a miscarriage in each of the last 10 years.

  Mr. Mellor
  This information is not collected centrally, and could be obtained only at disproportionate cost.

  Somali Refugees
  Sir David Steel
  To ask the Secretary of State for the Home Department what Her Majesty's Government's policy is towards Somali refugees.

  Mr. Peter Lloyd
  As with other nationalities, our policy is to grant asylum to Somali refugees for whom the United Kingdom is the most appropriate country of refuge.

  Foreigners (Language Schools)
  Mr. Simon Coombs
  To ask the Secretary of State for the Home Department what is his estimate of the number of foreign nationals who came to the United Kingdom to study English through language schools in(a) 1979, (b) 1984 and (c)

  Mr. Peter Lloyd
  The information is not available in the form requested. However, the international passenger survey results for 1984 showed that there were an estimated 477,000 visits to the United Kingdom by foreign residents who attended an English language course. It is not known what proportion of these studied at language schools. Respondents holding passports from the main English-speaking countries were not asked about their attendance on English language courses.

  Data Protection Act
  Mr. Cohen
  To ask the Secretary of State for the Home Department if he will list the prosecutions made under the Data Protection Act; and if he will give the outcome of the prosecutions.

  Mr. Mellor
  We understand that 27 prosecutions by the Data Protection Registrar have been completed. Twenty-six of these resulted in fines, averaging £466·67; and one in
  377
  a conditional discharge. Details are obtainable from the registrar. Some prosecutions have also been initiated by the Director of Public Prosecutions, but they are not separately listed.

SCOTLAND

  Nursery Education
  Mr. Dewar
  To ask the Secretary of State for Scotland how many and what percentage of children aged three and four years were in receipt of nursery education in each

  Number of 3 and 4 year olds in education authority nursery schools

  1978

  1979

  1980

  1981

  1982

  1983

  1984

  1987

  1988

  1989

  Borders

  299

  313

  301

  363

  387

  394

  359

  390

  438

  447

  Central

  1,399

  1,512

  1,681

  1,858

  1,960

  2,166

  2,210

  2,492

  2,568

  2,744

  Dumfries and Galloway

  253

  257

  266

  247

  271

  287

  316

  428

  550

  625

  Fife

  3,192

  3,235

  3,280

  3,142

  3,439

  3,805

  3,993

  4,193

  4,402

  4,329

  Grampian

  2,233

  2,196

  2,222

  2,244

  2,235

  2,425

  2,433

  2,678

  2,985

  3,171

  Highland

  331

  455

  484

  519

  567

  580

  618

  617

  645

  622

  Lothian

  6,718

  6,529

  6,795

  6,799

  7,045

  7,477

  7,966

  7,965

  8,064

  7,969

  Strathclyde

  14,501

  14,768

  14,841

  15,406

  16,071

  16,793

  17,376

  17,551

  17,828

  18,683

  Tayside

  1,841

  1,933

  2,007

  2,014

  2,097

  2,112

  2,136

  2,344

  2,516

  2,975

  Orkney

  78

  96

  93

  74

  85

  89

  92

  83

  97

  101

  Shetland

  32

  86

  99

  91

  85

  82

  102

  110

  111

  119

  Western Isles

  160

  151

  162

  156

  169

  146

  0

  0

  0

  0

  Scotland total

  31,037

  31,531

  32,231

  32,913

  34,411

  36,356

  37,601

  38,851

  40,204

  41,785

  Percentage of 3 and 4 year old children in population in receipt of nursery education

  1978

  1979

  1980

  1981

  1982

  1983

  1984

  1987

  1988

  1989

  Borders

  12·2

  12·8

  13·7

  17·1

  17·5

  16·6

  15·2

  16·6

  18·7

  19·1

  Central

  19·3

  21·4

  25·2

  28·8

  29·3

  31·2

  31·2

  37·8

  39·2

  41·9

  Dumfries and Galloway

  7·0

  7·4

  8·4

  8·0

  8·1

  7·9

  8·7

  12·7

  15·8

  17·9

  Fife

  35·4

  36·3

  38·3

  39·3

  40·8

  42·2

  42·8

  48·5

  50·4

  49·6

  Grampian

  18·2

  18·0

  18·7

  19·4

  18·3

  18·6

  18·6

  21·2

  24·0

  25·5

  Highland

  6·3

  8·5

  9·1

  10·2

  10·7

  10·3

  10·5

  11·6

  12·3

  11·9

  Lothian

  36·0

  36·6

  40·4

  43·0

  43·3

  43·8

  45·3

  47·8

  47·9

  47·3

  Strathclyde

  22·2

  23·2

  24·7

  27·7

  27·8

  27·7

  27·6

  29·6

  30·1

  31·6

  Tayside

  18·5

  20·4

  22·1

  23·2

  23·5

  23·0

  22·6

  25·1

  26·5

  31·3

  Orkney

  16·8

  19·4

  19·3

  14·9

  16·5

  17·9

  18·3

  18·3

  20·7

  21·5

  Shetland

  4·5

  11·7

  13·2

  12·1

  12·1

  11·1

  13·6

  17·7

  18·1

  19·4

  Western Isles

  19·2

  16·8

  18·4

  19·3

  19·7

  16·2

  0·0

  0·0

  0·0

  0·0

  Scotland total

  22·9

  23·8

  25·6

  27·8

  27·9

  28·0

  28·2

  30·8

  31·9

  33·1

  Note: Figures for private nursery schools within each local education authority area are not available.

  Royal Ordnance Factory, Bishopton
  Mr. Graham
  To ask the Secretary of State for Scotland (1) what will be the future role of the Strathclyde police in the protection of Royal Ordnance, Bishopton;

  (2) what would be the responsibility of the Strathclyde police for any serious incident taking place at Royal Ordnance, Bishopton.

  Lord James Douglas-Hamilton
  The police are responsible for the containment and investigation of any serious incident wherever it may take place. The chief constable of Strathclyde has discussed the future security arrangements at ROF Bishopton with the Ministry of Defence; and the role he proposes for Strathclyde police is an operational matter for him.
  378
  local education authority area for Scotland in each of the years 1978–79 to the latest date for which information is available.

  Mr. Rifkind
  The figures for local education authority nursery schools and departments at each September for which information is available are set out in the tables. Information for 1985 and 1986 is not available.

FOREIGN AND COMMONWEALTH AFFAIRS

  Visa Processing
  Mrs. Mahon
  To ask the Secretary of State for Foreign and Commonwealth Affairs what representations he has received concerning delays in the processing of visas at United Kingdom embassies and high commissions abroad.

  Mr. Sainsbury
  We receive a number of representations, both from hon. Members and from the public, about entry clearance procedures and delays at our embassies and high commissions.

  European Community
  Mr. Teddy Taylor
  To ask the Secretary of State for Foreign and Commonwealth Affairs if he will set out the evidence on which he based the statements on the second page of his Department's pamphlet entitled, "Britain in the Community: Europe in the 1990s"(a) that goods and

  379
  services will become more freely available and (b) it will become easier to move bank accounts from the United Kingdom to other European countries.

  Mr. Maude
  The single market programme includes a large number of measures to improve the availability of goods and services in the EC: for example, the removal of internal customs barriers; liberalisation of transport; and setting of common standards. The capital liberalisation directive agreed in 1988 requires most member states to lift restrictions on capital movements by 1 July 1990, thus facilitating capital flows in the EC.

  Mr. Teddy Taylor
  To ask the Secretary of State for Foreign and Commonwealth Affairs if he will list the(a) legislative and (b) other measures which have secured the policy objectives set out on the ninth page of his Department's pamphlet entitled, "Britain in the Community: Europe in the 1990s".

  Mr. Maude
  Twelve White Paper measures have so far been agreed to open up the banking, insurance and stock market sectors; nine more are being discussed; and one is still to be brought forward. Closer co-ordination of member states' economic policies was agreed by the Council decision of 12 March 1990. And state subsidies to industry have been reduced by stringent application of articles 92 and 93 on state aids.

  Mr. Teddy Taylor
  To ask the Secretary of State for Foreign and Commonwealth Affairs what was(a) the total actual expenditure of the EEC and (b) the net United Kingdom contribution in 1986, 1987, 1988 and 1989; what is the estimate for 1990; and how these figures relate to the statements made in the first, second and third paragraphs on the eighth page of his Department's pamphlet entitled, "Britain in the Community: Europe in the 1990s".

  Mr. Maude
  The table provides the relevant figures. Budgets since the 1988 Brussels European Council have stayed well within the GNP own resources ceiling established then. Community GNP has grown significantly.

  Total EC expenditure

  United Kingdom net contribution

  £ million

  £ million

  1986

  22,953

  572

  1987

  24,894

  1,721

  1988

  27,426

  1,362

  1989

  30,123

  2,315

  11990

  33,355

  2,175

  1 Estimate.

  Mr. Teddy Taylor
  To ask the Secretary of State for Foreign and Commonwealth Affairs if he will give the figures on which he bases the statement on the eighth page of his Department's pamphlet entitled, "Britain in the Community: Europe in the 1990s", that beef stocks are down by 80 per cent. and cereals by 55 per cent.; and if he will list the specific measures of budgetary control which have brought about these reductions.

  Mr. Maude
  In February 1990, beef stocks were 125,000 tonnes (a reduction of 82·4 per cent. from their highest level, in September 1985, of 711,000 tonnes); and cereals stocks 8,121,000 tonnes (a reduction of 55·4 per cent. from their highest level, in October 1985, of 18,193,000 tonnes).
  380
  Specific budgetary control measures include: reducing the number of months when intervention is available; cutting intervention prices; imposing ceilings on production for which support is available; producer taxes ("co-responsibility levies").

  Mr. Teddy Taylor
  To ask the Secretary of State for Foreign and Commonwealth Affairs if he will set out the evidence on which he based the statement on the fourth page of his Department's pamphlet, "Britain in the Community: Europe in the 1990s", that minimisation of immigration checks is a major objective of the Community; and if he will list the checks which it is proposed to remove.

  Mr. Maude
  The statement in the pamphlet "Britain in the Community" about ease of travel in the Community directly reflects articles 3(c) and 8(a) of the treaty of Rome, which specifically call for the abolition of obstacles to freedom of movement for persons, and provide that the internal market shall include such free movement of persons in accordance with the provisions of the treaty. My right hon. Friend the then Secretary of State for the Home Department explained our position in full during the debate on intra-Community frontiers on 4 May 1989.

  Falkland Islands
  Dr. Woodcock
  To ask the Secretary of State for Foreign and Commonwealth Affairs what progress is being made in introducing direct flights from the mainland of South America to the Falkland Islands.

  Mr. Sainsbury
  Several charter flights have recently been made between the Falkland Islands and Punta Arenas in Chile; more are planned, by a variety of commercial operators.

  Dr. Woodcock
  To ask the Secretary of State for Foreign and Commonwealth Affairs if he will introduce a fishery conservation area around South Georgia.

  Mr. Sainsbury
  We have no present plans to do so; fishing in the waters around South Georgia is already controlled by the Commission for the Conservation of Antarctic Marine Living Resources (CCAMLR), of which the United Kingdom is an active member. We fully support the Commission for the Conservation of Antarctic Marine Living Resources' efforts, and are working to make them more effective.

  Dr. Woodcock
  To ask the Secretary of State for Foreign and Commonwealth Affairs if he will list the voluntary restraint agreements which have been negotiated by the Foreign and Commonwealth Office with respect to waters surrounding the Falkland Islands and South Georgia outside of the Falklands Islands conservation zone.

  Mr. Sainsbury
  No formal agreements have been negotiated by the FCO. After direct negotiations with the Falkland Islands Government, fishing associations from Korea, Japan and Taiwan undertook to limit their fishing activity this year in the south Atlantic as a whole. In return their members were allocated licences to fish within the Falkland Islands interim conservation and management zone. These arrangements are intended to promote the effective conservation of migratory fish stocks.
  381
  Dr. Woodcock
  To ask the Secretary of State for Foreign and Commonwealth Affairs if he will take steps to equate the Argentinian and British military notification zones.

  Mr. Sainsbury
  The notification zones specified in the interim reciprocal information and consultation system (IRICS) agreed with Argentina in Madrid in February are part of a comprehensive and balanced package of reciprocal measures.

  As I said in reply to my hon. Friend the Member for Gravesham (Mr. Arnold) on 16 February, this series of measures is intended to increase confidence in the region.

  Dr. Woodcock
  To ask the Secretary of State for Foreign and Commonwealth Affairs (1) if he will extend the Falkland Islands fisheries conservation zone;

  (2) if he will extend the Falklands Islands territorial fishery zone to 200 miles on the same basis as that applied to the coastal waters of Argentina.

  Mr. Sainsbury
  We have no present plans to extend the Falkland Islands interim conservation and management zone (FICZ).

  Dr. Woodcock
  To ask the Secretary of State for Foreign and Commonwealth Affairs if he will discuss with representatives of the residents of the Falkland Islands their view on the possibility of incorporating the Falkland Islands into the United Kingdom.

  Mr. Sainsbury
  The elected councillors have not expressed any wish that incorporation of the islands into the United Kingdom be considered.

  Dr. Woodcock
  To ask the Secretary of State for Foreign and Commonwealth Affairs if he will list the measures being undertaken to preserve fish stocks in the waters surrounding South Georgia.

  Mr. Sainsbury
  Fishing in the waters surrounding South Georgia is controlled by the Commission for the Conservation of Antarctic Marine Living Resources (CCAMLR), of which the United Kingdom is a member. The current conservation measures imposed by CCAMLR are:

  (a) Chaenocephalus aceratus—no direct fishing allowed Pseudochaenichthys georgianus—no direct fishing allowed

  Notothenia squamifrons—no direct fishing allowed

  (b) Notothenia gibberifrons—no direct fishing allowed, total allowed by-catch 300 tonnes

  (c) Dissostichus eleginoides—no specific measures, but agreement that there will be no increase in fishing in 1990 over 1989.

  (d) Champsocephalus gunnari—Total Allowable Catch (TAC) of 8,000 tonnes

  (e) Patagonotothen brevicauda guntheri—TAC of 12,000 tonnes

  In addition, commercial fishing is not allowed within the 12-mile territorial sea.

  Israel
  Mr. Vaz
  To ask the Secretary of State for Foreign and Commonwealth Affairs what financial help the Government is giving to Israel; and if he will make a statement.

  Mr. Maude
  We do not give any aid to the Government of Israel.

  Mr. Vaz
  To ask the Secretary of State for Foreign and Commonwealth Affairs how many representations the Government have made to the Israeli Government concerning its involvement in Palestine.

  Mr. Maude
  We frequently remind the Israeli Government of our view that there is an urgent need for negotiation with the Palestinians towards a peace settlement and that, pending this, it is the responsibility of the Israelis to administer the occupied territories in accordance with their obligations and with international law.

  Mr. Vaz
  To ask the Secretary of State for Foreign and Commonwealth Affairs when he next plans to visit Israel to discuss its involvement in Palestine; and if he will make a statement.

  Mr. Maude
  My right hon. Friend the Secretary of State for Foreign and Commonwealth Affairs has at present no plans to visit Israel.

  Mr. Vaz
  To ask the Secretary of State for Foreign and Commonwealth Affairs how many representations he has received from hon. and right hon. Members and members of the public concerning Israeli involvement in Palestine.

  Mr. Maude
  We receive numerous representations about the Palestinian question and Israel's administration of the occupied territories.

  Hong Kong
  Mr. Stanbrook
  To ask the Secretary of State for Foreign and Commonwealth Affairs if he will make a statement about the current position of present and retired expatriate members of Her Majesty's overseas civil service in Hong Kong and their eligibility for pensions based on the pound sterling equivalent at the time of retirement, in view of the recent fluctuations in the pound sterling equivalent of the Hong Kong dollar.

  Mr. Maude
  All pensionable civil servants employed by the Hong Kong Government receive their pensions in Hong Kong dollars. There are no plans to change this arrangement. The Hong Kong dollar is linked to the United States dollar.

FOREIGN AND COMMONWEALTH AFFAIRS

  Hostages
  Mr. John M. Taylor
  To ask the Secretary of State for Foreign and Commonwealth Affairs how many British hostages are presently believed to be held in the Lebanon; what are their names; on what dates each of them was taken hostage; and what information he has about the organisations involved in these kidnappings.

  Mr. Maude
  There are currently three British hostages held in Lebanon. They are Mr. John McCarthy (abducted on 17 April 1986), Mr. Jack Mann (abducted on 12 May 1989) and Mr. Terry Waite (abducted on 20 January 1987). There have been no substantiated claims for them. However, the American hostage, Mr. Frank Reed, who was released on 30 April by a previously unheard-of group, the Organisation of the Islamic Dawn, has confirmed that he was held together with Mr. McCarthy.

  Mr. Cryer
  To ask the Secretary of State for Foreign and Commonwealth Affairs if he will make a statement on the efforts made by his Department to obtain the release of the hostages held captive in the middle east.

  Mr. Maude
  I refer to the answer of 18 April given by my right hon. Friend the Minister of State, Foreign and Commonwealth Office to the hon. Member for St. Helens, North (Mr. Evans) and to the answer given by my right hon. Friend, the Foreign Secretary on 9 May to the hon. Member for Derbyshire, North-East (Mr. Barnes).

  Antarctica
  Mr. Corbyn
  To ask the Secretary of State for Foreign and Commonwealth Affairs what representations he has received from the Federal Republic of Germany with regard to the forthcoming meeting of Antarctic treaty parties in November to discuss the protection of the Antarctic environment.

  Mr. Sainsbury
  None. Bilateral consultations have taken place at official level.

  Mr. Corbyn
  To ask the Secretary of State for Foreign and Commonwealth Affairs what consideration has been given to the proposals for the protection of the Antarctic environment put forward by the Australian and French Governments.

  Mr. Sainsbury
  The Franco-Australian proposals were presented to us on 3 May. We are giving them careful consideration and look forward to discussing them with our Antarctic treaty partners at the special Antarctic treaty consultative meeting in November in Santiago.

  Anthony Blunt
  Mr. Allason
  To ask the Secretary of State for Foreign and Commonwealth Affairs whether he granted permission to Professor Peyton Lyons to reproduce extracts from the transcript of Anthony Blunt's interrogation in his report to the Canadian Department of External Affairs entitled "The Loyalty of E. Herbert Norman"; and if he will make a statement.

  Mr. Sainsbury
  [holding answer 5 April 1990]: The Lyons report was a Canadian Government matter. No consultation took place with the United Kingdom authorities before it was published.

DEFENCE

  Nuclear Power Stations
  Mr. McCartney
  To ask the Secretary of State for Defence whether his Department will give consideration to contributing to the decommissioning cost of Calder Hall and Chapelcross.

  Mr. Graham
  To ask the Secretary of State for Defence whether his Department will give consideration to contributing to the decommissioning cost of Calder Hall and Chapelcross.

  Mr. Cohen
  To ask the Secretary of State for Defence whether his Department will give consideration to contributing to the decommissioning cost of Calder Hall and Chapelcross.

  Mr. Alan Clark
  The Ministry of Defence intends to meet its share of the future costs of decommissioning the reactors at Calder Hall and Chapelcross.

  Brawdy Radar Station
  Dr. Kim Howells
  To ask the Secretary of State for Defence if his Department will undertake further studies into(a) the health effects and (b) the environmental implications of the Brawdy radar.

  Mr. Morgan
  To ask the Secretary of State for Defence if his Department will undertake further studies into(a) the health effects and (b) the environmental implications of the Brawdy radar.

  Mr. Murphy
  To ask the Secretary of State for Defence if his Department will undertake further studies into(a) the health effects and (b) the environmenal implications of the Brawdy radar.

  Mr. John P. Smith
  To ask the Secretary of State for Defence if his Department will undertake further studies into(a) the health effects and (b) the environmental implications of the Brawdy radar.

  Mr. Alan Clark
  The health and environmental implications of the over-the-horizon radar transmitter which we propose to locate at St. Davids airfield will be fully addressed in the environmental impact assessment which will be undertaken over the next few months.

  NATO Eastern Boundary
  Mr. Grocott
  To ask the Secretary of State for Defence whether he has made any reassessment of the location of the eastern boundary in Europe which NATO is committed to defending.

  Mr. Archie Hamilton
  We support the wish of both German Governments that a unified Germany should be a member of the North Atlantic alliance, as this would contribute to stability and security in Europe. The implications for NATO are under consideration.

  Conventional Forces in Europe
  Mr. Martlew
  To ask the Secretary of State for Defence what United Kingdom forces have been offered for inclusion in the proposed CFE agreement; and if he will make a statement on the defence implications.
  385
  Mr. Mullin
  To ask the Secretary of State for Defence what United Kingdom forces have been offered for inclusion in the proposed CFE agreement; and if he will make a statement on the defence implications.

  Mr. David Young
  To ask the Secretary of State for Defence what United Kingdom forces have been offered for inclusion in the proposed CFE agreement; and if he will make a statement on the defence implications.

  Mr. Pike
  To ask the Secretary of State for Defence what United Kingdom forces have been offered for inclusion in the proposed CFE agreement; and if he will make a statement on the defence implications.

  Mr. Archie Hamilton
  In accordance with the agreed mandate for the CFE negotiations, all the United Kingdom's conventional armaments and equipment of the types currently under discussion in Vienna that are within the area from the Atlantic to the Urals are included in the proposed CFE agreement.

  Radiation
  . Dr. Moonie
  To ask the Secretary of State for Defence if he will make a further statement upon the exposure to radiation of(a) submariners and (b) dockyard workers.

  Mr. Hinchliffe
  To ask the Secretary of State for Defence if he will make a further statement upon the exposure to radiation of(a) submariners and (b) dockyard workers.

  Mr. Doran
  To ask the Secretary of State for Defence if he will make a further statement upon the exposure to radiation of(a) submariners and (b) dockyard workers.

  Mr. Neubert
  Exposure of Service personnel or MOD civilians to ionising radiation is authorised only on the basis that it is justified, complies with MOD and statutory limits and is as low as reasonably practicable. The same principles are followed by the civilian contractors at the royal dockyards.

  Training (Canada)
  Mr. Key
  To ask the Secretary of State for Defence when he last visited Canada to review training facilities for British service men.

  Mr. Neubert
  My right hon. Friend the Member for Ayr (Mr. Younger) visited the British Army training unit at Suffield, Alberta, in July last year.

  Arms Exports
  Mr. Cox
  To ask the Secretary of State for Defence whether his Department monitors the end use of United Kingdom-produced weapons exported to less developed countries.

  Mr. Dunnachie
  To ask the Secretary of State for Defence whether his Department monitors the end use of United Kingdom-produced weapons exported to less developed countries.

  Mr. Ronnie Campbell
  To ask the Secretary of State for Defence whether his Department monitors the end use of United Kingdom-produced weapons exported to less-developed countries.
  386
  Mr. Ray Powell
  To ask the Secretary of State for Defence whether his Department monitors the end use of United Kingdom-produced weapons exported to less-developed countries.

  Mr. Alan Clark
  It is not usually necessary to monitor the stated end use of defence exports. Where, however, there is reason to do so, we do so.

  Atomic Weapons Establishment
  Mr. Tony Lloyd
  To ask the Secretary of State for Defence whether he has received any tenders for the initial management contract at the atomic weapons establishment.

  Mr. Flynn
  To ask the Secretary of State for Defence whether he has received any tenders for the initial management contract at the atomic weapons establishment.

  Mr. Bradley
  To ask the Secretary of State for Defence whether he has received any tenders for the initial management contract at the atomic weapons establishment.

  Mr. Neubert
  An invitation to tender for the initial management contract at the atomic weapons establishment was issued on 6 April. Tenders should be received in June.

  Nuclear Submarine Bases
  Mr. Gareth Wardell
  To ask the Secretary of State for Defence what liaison his Department has with local authorities on special safety plans for areas adjoining Z-berths.

  Mr. Norman Hogg
  To ask the Secretary of State for Defence what liaison his Department has with local authorities on special safety plans for areas adjoining Z-berths.

  Ms. Walley
  To ask the Secretary of State for Defence what liaison his Department has with local authorities on special safety plans for areas adjoining Z-berths.

  Mr. Archie Hamilton
  It is MOD policy to undertake maximum consultation with all the relevant county, city and local councils and local emergency services in drawing up all Royal Navy public safety schemes.

  Training Instructors
  Mr. Ashley
  To ask the Secretary of State for Defence what steps are taken to monitor the health and fitness of training instructors before and during exercises.

  Mr. Archie Hamilton
  Training instructors are subject to the same medical examinations as the service personnel whom they are expected to train, which is the PULHHEEMS system of medical classification.

  Pipeline (Iraq)
  Mr. McKelvey
  To ask the Secretary of State for Defence what action his Department took when it was first made aware of the pipeline equipment built in the United Kingdom for Iraq having possible military implications.
  387
  Mr. Caborn
  To ask the Secretary of State for Defence what action his Department took when it was first made aware of the pipeline equipment built in the United Kingdom for Iraq having possible military implications.

  Ms. Armstrong
  To ask the Secretary of State for Defence what action his Department took when it was first made aware of the pipeline equipment built in the United Kingdom for Iraq having possible military implications.

  Mr. Ron Davies
  To ask the Secretary of State for Defence what action his Department took when it was first made aware of the pipeline equipment built in the United Kingdom for Iraq having possible military implications.

  Mr. Alan Clark
  In the light of the charges raised against certain individuals recently and in the light of continuing investigations by Customs and Excise, it would be inappropriate to give any further information.

  Low Flying
  Mr. Kennedy
  To ask the Secretary of State for Defence if he has yet had an opportunity to consider the National Audit Office report on military low flying; and if he will make a statement.

  Mr. Neubert
  I have nothing to add to the answer that I gave to the hon. Member on 6 March 1990 at column 616.

  Mr. Foulkes
  To ask the Secretary of State for Defence what recent representations he has received concerning the disturbance caused by low flying; and if he will make a statement.

  Mr. Neubert
  Between 1 March 1990 and 30 April 1990 the Ministry of Defence received 955 inquiries or complaints about military low-flying training in the United Kingdom.

  Army Manpower
  Mr. Stern
  To ask the Secretary of State for Defence what were the overall manpower needs of the British Army in 1980, 1985 and 1990.

  Mr. Archie Hamilton
  The requirement of the British Army for trained, regular, United Kingdom personnel in 1980, 1985 and 1990 was 146,890, 143,888 and 142,742 respectively.

  Forces (Europe)
  Mr. Terry Fields
  To ask the Secretary of State for Defence what consideration he has given to the defence implications of current force levels in Europe.

  Mr. Bill Michie
  To ask the Secretary of State for Defence what consideration he has given to the defence implications of current force levels in Europe.

  Mr. Roy Hughes
  To ask the Secretary of State for Defence what consideration he has given to the defence implications of current force levels in Europe.

  Mrs. Mahon
  To ask the Secretary of State for Defence what consideration he has given to the defence implications of current force levels in Europe.

  Mr. Archie Hamilton
  We are examining options for change in the structure and deployment of our armed 388
  forces which will enable us to support and preserve the key elements of our defence provision in the light of changing international circumstances.

  NATO Nuclear Planning Group
  Mr. James Lamond
  To ask the Secretary of State for Defence what decisions were made at the recent NATO nuclear planning group meeting in Alberta, Canada.

  Mr. Lewis
  To ask the Secretary of State for Defence what decisions were made at the recent NATO nuclear planning group meeting in Alberta, Canada.

  Mr. Andrew Smith
  To ask the Secretary of State for Defence if he will make a statement on the outcome of the NATO nuclear planning group meeting held at Kananaskis village, Alberta, Canada.

  Ms. Ruddock
  To ask the Secretary of State for Defence if he will make a statement on the outcome of the NATO nuclear planning group meeting held at Kananaskis village, Alberta, Canada.

  Mr. Wareing
  To ask the Secretary of State for Defence what decisions were made at the recent NATO nuclear planning group meeting in Alberta, Canada.

  Mr. Buchan
  To ask the Secretary of State for Defence if he will make a statement on the outcome of the NATO nuclear planning group meeting held at Kananaskis village, Alberta, Canada.

  Mr. Corbyn
  To ask the Secretary of State for Defence if he will make a statement on the outcome of the NATO nuclear planning group meeting held at Kananaskis village, Alberta, Canada.

  Mr. Archie Hamilton
  I refer the hon. Members to the answer that I gave earlier today to the hon. Member for Sheffield, Hillsborough (Mr. Flannery).

  Lance Missile
  Mr. Frank Cook
  To ask the Secretary of State for Defence whether Her Majesty's Government will abandon their support for a replacement to the Lance short-range nuclear missile.

  Mr. Steinberg
  To ask the Secretary of State for Defence whether Her Majesty's Government will abandon their support for a replacement to the Lance short-range nuclear missile.

  Ms. Short
  To ask the Secretary of State for Defence whether Her Majesty's Government will abandon their support for a replacement to the Lance short-range nuclear missile.

  Mr. Archie Hamilton
  I refer the hon. Members to the reply that I gave earlier today to the hon. Member for Barnsley, East (Mr. Patchett).

  Defence Procurement
  Mr. Fatchett
  To ask the Secretary of State for Defence if he will list the five largest British defence companies providing defence equipment to the United Kingdom armed forces.

  Mr. Eastham
  To ask the Secretary of State for Defence if he will list the five largest British defence companies providing defence equipment to the United Kingdom armed forces.
  389
  Mr. Battle
  To ask the Secretary of State for Defence if he will list the five largest British defence companies providing defence equipment to the United Kingdom armed forces.

  Mr. Alan Clark
  I refer the hon. Member to the answer that I gave earlier today to the hon. Member for Edinburgh, South (Mr. Griffiths).

  Merchant Ships
  Mr. Parry
  To ask the Secretary of State for Defence if he will make it his policy to use only British merchant ships for Ministry of Defence charters; and if he will make a statement.

  Mr. Clay
  To ask the Secretary of State for Defence if he will make it his policy to use only British merchant ships for Ministry of Defence charters; and if he will make a statement.

  Mr. Loyden
  To ask the Secretary of State for Defence if he will make it his policy to use only British merchant ships for Ministry of Defence charters; and if he will make a statement.

  Mr. Neubert
  I refer the hon. Members to the answer that I gave earlier today to the hon. Member for Hemsworth (Mr. Buckley).

  Over-the-Horizon Radar
  Mr. Michael
  To ask the Secretary of State for Defence if he will make a further statement on his proposal for the siting of proposed over-the-horizon radar transmitters on the former St. David's airfield in Pembrokeshire; and what progress has been made in his plans to inform and consult public opinion on the proposal.

  Mr. Alan Clark
  I recently visited St. David's, at the invitation of my hon. Friend the Member for Pembroke (Mr. Bennett), to inspect the site of the proposed installation, explain the background to our proposals to my hon. Friend's constituents, and hear their initial representations at first hand.

  The next step will be for the Ministry of Defence to commission a full environmental impact assessment in respect of this proposed installation. This will support a formal notice of proposed development which we plan to submit to the Pembrokeshire Coast National Park Authority later this year. Once we have submitted the notice of proposed development, we intend to give full public presentations of our proposals. I also understand that the national park authority will undertake wide consultation and invite representations on the notice of proposed development from all interested parties.

  Type 23 Frigates
  Mr. Jack Thompson
  To ask the Secretary of State for Defence if he will make a statement on the present status of the command system for the type 23 frigate.

  Mr. Turner
  To ask the Secretary of State for Defence if he will make a statement on the present status of the command system for the type 23 frigate.

  Mr. Allen McKay
  To ask the Secretary of State for Defence if he will make a statement on the present status of the command system for the type 23 frigate.
  390
  Mr. Neubert
  I have nothing to add to the statement that I made on 18 April at column 938.

  Trident
  Mr. Fisher
  To ask the Secretary of State for Defence what amount of money could be saved by a decision to cancel the fourth Trident submarine in the near future.

  Mr. Wray
  To ask the Secretary of State for Defence what amount of money could be saved by a decision to cancel the fourth Trident submarine in the near future.

  Mr. Madden
  To ask the Secretary of State for Defence what amount of money could be saved by a decision to cancel the fourth Trident submarine in the near future.

  Mr. McAllion
  To ask the Secretary of State for Defence what amount of money could be saved by a decision to cancel the fourth Trident submarine in the near future.

  Mr. Neubert
  No contract has yet been placed. It is our estimate that savings in the order of £500 million would result if it were decided in the near future not to proceed with the planned order for the fourth Vanguard class submarines.

  European Fighter Aircraft
  Mr. Strang
  To ask the Secretary of State for Defence whether the European fighter aircraft nose radar development contract has been allocated; and if he will make a statement.

  Mr. Alan Clark
  I refer the hon. Gentleman to the statement made by my right hon. Friend the Secretary of State on 8 May at columns 33–34.

  Armed Forces (South Dorset)
  Mr. Ian Bruce
  To ask the Secretary of State for Defence if he has any plans to increase the stationing of armed forces personnel in south Dorset.

  Mr. Archie Hamilton
  The exact number of service personnel stationed in south Dorset will fluctuate with the normal redeployment of units. There are, however, no current plans that would alter this number to any significant degree.

  Unreliable Equipment
  Mr. John Hughes
  To ask the Secretary of State for Defence what assessment he has made of the annual cost of maintaining unreliable defence equipment.

  Mr. Skinner
  To ask the Secretary of State for Defence what assessment he has made of the annual cost of maintaining unreliable defence equipment.

  Mr. David Marshall
  To ask the Secretary of State for Defence what assessment he has made of the annual cost of maintaining unreliable defence equipment.

  Mr. Neubert
  At a very broad estimate, unreliability adds £1 billion a year to the cost of maintaining the services' equipment.

  START Agreement
  Mr. Watson
  To ask the Secretary of State for Defence what United Kingdom forces have been offered for inclusion in the proposed START agreement; and if he will make a statement on the defence implications.

  Mr. McAvoy
  To ask the Secretary of State for Defence what United Kingdom forces have been offered for inclusion in the proposed START agreement; and if he will make a statement on the defence implications.

  Mr. Harry Barnes
  To ask the Secretary of State for Defence what United Kingdom forces have been offered for inclusion in the proposed START agreement; and if he will make a statement on the defence implications.

  Mr. Archie Hamilton
  I refer the hon. Members to the reply that I gave earlier today to the hon. Member for Bristol, South (Ms. Primarolo).

  Queen's Birthday Parade
  Mr. Harry Greenway
  To ask the Secretary of State for Defence how many horses and riders were on the Queen's birthday parade in each of the past three years; and if he will make a statement.

  Mr. Neubert
  The number of military riders taking part in the Queen's birthday parade in 1987 and 1988 was 251; the number of military horses taking part in each of these years was 276. In 1989, the corresponding numbers were 247 personnel and 272 horses. This includes those riders and horses forming part of the royal procession which numbered 24 in 1987 and 1988 and 20 in 1989.

  Horseshoe Barracks
  Mr. Teddy Taylor
  To ask the Secretary of State for Defence what progress has been made in determining the future use of the Horseshoe barracks in Shoeburyness.

  Mr. Archie Hamilton
  Discussions with the local planning authority and others on our plans to dispose of Horseshoe barracks, Shoeburyness, are continuing.

  Consultancies
  Mr. Tim Smith
  To ask the Secretary of State for Defence how much the Ministry of Defence expects to spend in the financial year 1990–91 on management and computer consultancy contracts.

  Mr. Alan Clark
  The Ministry of Defence expects to spend £22 million in the financial year 1990–91 on management and computer consultancy contracts.

  Royal Ordnance Factories
  Mr. Graham
  To ask the Secretary of State for Defence what representations he has received from members of the public about the withdrawal of Ministry of Defence police from royal ordnance, Bishopton.

  Mr. Neubert
  Forty three letters have been received registering protest at the plan to withdraw MDP from Bishopton.

  Mr. Graham
  To ask the Secretary of State for Defence what decision has been taken about the future deployment 392
  of the Ministry of Defence police at the royal ordnance factories at Glascoed, Bridgewater, Chorley, Nottingham and Radway Green; and if he will make a statement.

  Mr. Neubert
  Discussions with Royal Ordnance plc continue. No final decision has been taken.

  Mr. Graham
  To ask the Secretary of State for Defence how many royal ordnance company guards will replace Ministry of Defence police on 1 June at royal ordnance, Bishopton; and what powers of arrest and detention employees of the company guard force will have.

  Mr. Neubert
  Fifty-one Royal Ordnance Company guards will replace Ministry of Defence police. The guards will have only citizen's powers of arrest and detention. The Strathclyde police, with whom our arrangements have been agreed, will provide a police response quickly when required.

  Mr. Nicholas Bennett
  To ask the Secretary of State for Defence if he will provide details of the compensation arrangements made on previous occasions where the circumstances are similar to those which would pertain near the proposed over-the-horizon radar installation on the site of the former St. David's airfield, Pembrokeshire.

  Mr. Alan Clark
  On no previous occasion have the circumstances been similar to those which would pertain near to the proposed over-the-horizon radar installation at St. David's airfield, Dyfed. I refer the hon. Gentleman to my earlier answer on 23 April at column 74 on the subject of compensation.

  Mr. Nicholas Bennett
  To ask the Secretary of State for Defence if he will give details of the compensation arrangements which he will make if the proposed over-the-horizon radar installation on the site of the former St. David's airfield, Pembrokeshire, is approved.

  Mr. Alan Clark
  Where the provisions of the Land Compensation Act 1973 apply, my Department will pay compensation if the district valuer is satisfied that there is evidence of a reduction in the value of a residential property (or certain small businesses) as a consequence of bringing into use new works. The Act makes no provision for compensation where the consequence is solely the visual impact of the completed works, so there can be no assurance that its terms will apply in all or any cases that may arise under this proposal. Nonetheless, where the provisions of the Act do not apply, my Department is always prepared to consider reasonable claims for compensation if it can be demonstrated that actual loss has been sustained as a result of military activity.

  Mr. Nicholas Bennett
  To ask the Secretary of State for Defence who is to carry out the independent environmental impact assessment study on the proposed over-the-horizon radar installation on the site of the former St. David's airfield, Pembrokeshire; and if he will make a statement.

  Mr. Alan Clark
  I will announce details of the firm which is to carry out the independent environmental impact assessment on the proposed over-the-horizon radar installation at St. David's airfield, Pembrokeshire, once the contract is let.

  Devonport Dockyard
  Mr. O'Neill
  To ask the Secretary of State for Defence what assessment has been made of future redundancies at Devonport dockyard.

  Mr. Neubert
  The size of the workforce at Devonport dockyard is a matter for Devonport Management Limited.

  HMS Illustrious
  Mr. O'Neill
  To ask the Secretary of State for Defence when HMS Illustrious will start its refitting programme; and where it will be refitted.

  Mr. Neubert
  HMS Illustrious's next refit is scheduled to start as part of the core programme at Devonport dockyard in 1991 and to finish in 1993. The plans for refitting Royal Naval vessels are, however, subject to continuous review.

AGRICULTURE, FISHERIES AND FOOD

  Bovine Spongiform Encephalopathy
  Mr. Hague
  To ask the Minister of Agriculture, Fisheries and Food whether he has any plans to add to his previous statement on bovine spongiform encephalopathy in the light of recent events.

  Mr. Gummer
  The wide-ranging measures adopted by the Government have been based on the best scientific expertise available. These experts concluded that the risk to humans is remote but action has been taken:

  1. To slaughter and destroy all affected cattle so that no part can enter the human food chain;

  2. Specified offals, including the brain and spinal chord, must be removed from healthy cattle slaughtered for human consumption.

  3. Banning of the use of these offals as food or in food products.

  The removal and banning for food of these offals is a precautionary measure which goes beyond the scientific advice. These actions fully protect the public from what is a remote and theoretical risk.

  The situation is, however, being kept under constant review and hence the committee under Dr. Tyrrell has been constituted as a permanent committee to examine new information and concerns and to ensure that the advice on which the Government act is kept fully up to date.

  A major research programme has been in progress since the disease was first identified in 1986. More than £2 million has already been spent. A further £12 million has been allocated to projects, devised on the basis of advice from the Tyrrell committee, for the next three years. All the results of this research will be made publicly available.

  The source of the disease has been cut off with the ban, from July 1988, on the feeding of ruminant material to ruminants. Because of the long incubation period, cases will continue to occur for some years. We intend to eradicate this disease in cows but this will obviously take time. In the meantime the action taken demonstrates the Government's absolute commitment to protecting and reassuring the public.

  Local education authorities can therefore continue to provide beef in school meals with complete confidence. As the Minister responsible for food safety for the whole nation, I reiterate that British beef is perfectly safe to eat. This is the view not only of our top scientists but also of European Community experts.
  394
  The Ministry of Agriculture, Fisheries and Food is committed to making public all the information that we have about these matters. That is why we gave out the information about the one cat (out of Britain's 7 million) diagnosed as having an encephalopathy. There is nothing to link that encephalopathy with BSE or scrapie, or to suggest that it is transmissible. However, we were determined that all this should be in the public domain and we shall continue our investigations, the results of which will also be announced.

  Sausages
  Mr. Burt
  To ask the Minister of Agriculture, Fisheries and Food what steps his Department is taking to preserve the British sausage; and if he will make a statement.

  Mr. Maclean
  The Commission's proposals would require minced meat and sausages to be prepared from fresh, chilled meat within six days of slaughter. This would prevent the use of meat from carcases which have been matured to enhance flavour and tenderness. The use of some fit meat, including shin and skirt, would be prohibited. Chilled minced meat and sausages could not be made from frozen meat and would be required to be chilled to 2°C within an hour of preparation, leading to freeze damage. Only butchers producing minced meat and sausages on their premises for direct sale to customers would be exempt from these requirements.

  There are no sound hygiene reasons for these restrictions, which would increase costs and reduce consumer choice.

  We are negotiating hard in Brussels to secure the removal of these restrictions from the Commission's proposals. The industry are also making representation on their own behalf. Further, in co-operation with the industry, we shall be arranging to publicise the proposals in the hope that this will stimulate United Kingdom consumers to write to Members of the European Parliament, and to the Commission, protesting about the restrictions which would be put on their freedom of choice.

  Contaminated Feed
  Dr. David Clark
  To ask the Minister of Agriculture, Fisheries and Food, further to his answer to the hon. Member for South Shields on 9 May.Official Report, column 132, whether the contamination of pig feed still affects the county of Hampshire.

  Mr. Gummer
  The contamination of pig feed no longer affects any farms in Hampshire.

  Dr. David Clark
  To ask the Minister of Agriculture, Fisheries and Food whether any farms on Tyneside have received contaminated pig feed.

  Mr. Gummer
  No farms on Tyneside are reported to have received contaminated pig feed.

  Dr. David Clark
  To ask the Minister of Agriculture, Fisheries and Food whether animals other than pigs have been fed contaminated feed; and if he will make a statement.

  Mr. Gummer
  The contaminated feed ingredient was also included in feed for sheep and dairy and beef cattle, but at lower levels from those included in pig feed. There have been no reported incidence of ill effects in animals
  395
  other than pigs. Pigmeat and cows' milk samples from farms which have received contaminated feed have been tested and no evidence of any conceivable hazard to human health ensuing out of this incident has been found.

  Central Veterinary Laboratory
  Mr. Tim Smith
  To ask the Minister of Agriculture, Fisheries and Food what specific financial, efficiency and quality of service targets he has approved for the central veterinary laboratory for the current year and for the longer term.

  Mr. Maclean
  I announced the laboratory's financial and efficiency targets for 1990–91 in my written answer to my hon. Friend the Member for Ludlow (Mr. Gill) on 30 March 1990 at column 364. It is, of course, for the laboratory's customers to specify appropriate quality standards for individual contracts, but I attach great importance to all contracts being completed on time and to a high standard. The laboratory's current peer review arrangements will also continue.

  I am still considering the question of appropriate longer-term targets as I am determined that improvements in efficiency should not be made at the expense of quality or of the laboratory's ability to respond effectively in an emergency.

EMPLOYMENT

  Training
  Mr. Hind
  To ask the Secretary of State for Employment if he has any plans to review the dates for finalising training agent contracts with the Training Agency; and if he will make a statement.

  Mr. Nicholls
  Recontracting with employment training (ET) training agents, and with training managers and with YTS managing agents, should be substantially complete by 28 May 1990. I have no plans to review this date.

  Health and Safety Executive
  Mr. Andrew Welsh
  To ask the Secretary of State for Employment (1) how many monitoring visits have been undertaken in(a) Scotland and (b) Angus in each of the last 10 years by the Health and Safety Executive;

  (2) how many inspections have been undertaken by the Health and Safety Executive in (a) Scotland and (b) Angus in each of the last 10 years.

  Mr. Nicholls
  I will write to the hon. Member.

  Mr. Andrew Welsh
  To ask the Secretary of State for Employment if he will make a statement on current staffing levels in the Health and Safety Executive in Scotland.

  Mr. Nicholls
  On 1 April 1990, 177·5 staff were employed in Scotland by the Health and Safety Executive.

  Mr. Andrew F. Bennett
  To ask the Secretary of State for Employment what is the current amount of fees outstanding to the medical division (EMAS) of the Health and Safety Executive for medical examinations.

  Mr. Nicholls
  On 10 May 1990 £8,175 had been outstanding for more than three months in respect of fees for medical examinations carried out by the employment medical advisory service.
  396
  Mr. Andrew F. Bennett
  To ask the Secretary of State for Employment (1) how many former employees of the Health and Safety Executive have been re-employed as consultants by the Health and Safety Executive; what the total costs of such consultants was in fiscal year 1989–90; what is the projection for 1990–91; and what is the average hourly rate of these consultants;

  (2) what consultancy fees were paid to non-ex-Health and Safety Executive staff in 1989–90 by the Health and Safety Executive; and what is the projection for 1990–91.

  Mr. Nicholls
  Total consultancy fees paid to individuals in 1989–90 by the Health and Safety Executive were £19,787; of which £6,202 (an hourly rate of £22·55p) was to a former HSE employee. Under HSE's devolved budgeting system, recruitment of consultants is decided by divisions according to need, within the limits of their running cost budgets.

  Mr. Andrew F. Bennett
  To ask the Secretary of State for Employment what is the profit margin on the recently published Health and Safety Executive annual report; and how many shop floor sales are anticipated at the cover price.

  Mr. Nicholls
  In line with Her Majesty's Treasury rules HSE operates a policy which sets prices for its publications which will recover the full cost of production. A total of 1,300 copies of the 1988–89 report have been sold since its publication in February. It is too early to assess the eventual sales revenue and no information is available about the background of customers, both past and potential, of the publication.

  Mr. Andrew F. Bennett
  To ask the Secretary of State for Employment what proportion of the administrative staff of the Health and Safety Executive have any formal qualifications in management.

  Mr. Nicholls
  The great majority of officials in these grades are not employed in a managerial capacity. The percentage of administrative staff who are recorded as having formal academic qualifications relevant to management is 3·3.

  Training Credits
  Mr. Jack
  To ask the Secretary of State for Employment if he will make a statement on the progress of the training credits initiative.

  Mr. Eggar
  Thirty-three training and enterprise councils (TECs) have submitted proposals to operate pilot credit schemes in their area. This is clear evidence of the widespread interest in and enthusiasm for training credits for young people.

  I expect to make an announcement in early June about those TECSs which will be invited to develop a more detailed proposal.

  Training Vouchers
  Mrs. Gorman
  To ask the Secretary of State for Employment if he will make a further statement on the progress in introducing his training voucher scheme.

  Mr. Eggar
  Thirty-three training and enterprise councils (TECs) have submitted proposals to operate pilot credit schemes in their area.
  397
  I expect to make an announcement in early June about those TECs which will be invited to develop a more detailed proposal.

  Skill Centres
  Mr. Cryer
  To ask the Secretary of State for Employment when he expects to conclude negotiations to sell skill centres to Astra Training Services Ltd.; and if he will make a statement.

  Mr. Eggar
  Pursuant to my reply of 2 May 1990,Official Report, column 544, I expect to complete the sales of the training business at Barking, Southampton and Wolverhampton skill centres (including Telford Outreach) shortly.

  The sale of the training business at Chesterfield skill centre will not take place because of the Labour council's refusal to make the premises available to Astra.

  Mr. Cryer
  To ask the Secretary of State for Employment if he will list the skill centre sites sold other than to Astra Training Services Ltd., giving each purchaser and the sites acquired.

  Mr. Eggar
  The following list includes details of training businesses sold to purchasers other than Astra.

  To METEL (Merseyside Education Training Enterprise Ltd.): Liverpool skill centre. The purchaser acquired the freehold of the site.

  To the consortium headed by Mr. C. Lakin: Cumbria, East Lancs, St. Helens and Ipswich. The consortium purchased the freehold of Cumbria skill centre, and was granted leases on the other sites.

  To the Training Business: Lambeth skill centre. The purchaser acquired the leasehold interest of the site.

  Mr. Cryer
  To ask the Secretary of State for Employment whether any technical instructor grades have been offered alternative employment in the civil service before or following the sale of skill centres to private organisations; and if he will make a statement.

  Mr. Eggar
  Fifty-one staff in instructional grades in the Skills Training Agency (STA) have transferred to alternative posts in the civil service since the Secretary of State for Employment announced his intention to transfer STA to the private sector.

  Mr. Cryer
  To ask the Secretary of State for Employment what is the total value of the freehold land sold to various companies involved in the purchase of skill centres; and if he will make a statement.

  Mr. Eggar
  The Government appointed King and Company, surveyors, to value the Skills Training Agency (STA) estate, prior to the sale of STA to the private sector. The sale of the Government's residual property interests is not yet complete. The valuations are therefore confidential.

  Inspection Visits
  Mr. Andrew F. Bennett
  To ask the Secretary of State for Employment when the current chief inspector of factories last conducted a basic inspection visit alone.

  Mr. Nicholls
  The chief inspector of factories does not, as a matter of policy, undertake preventive inspections alone. This is the primary work of regional staff.
  398
  Mr. Andrew F. Bennett
  To ask the Secretary of State for Employment how many basic inspection visits are paid in a year by area directors of the Health and Safety Executive; and if he has any plans to increase the figure.

  Mr. Nicholls
  As a matter of policy area directors do not normally carry out preventive inspections alone but may, on occasions, accompany other inspectors on inspection visits.

  Mr. Andrew F. Bennett
  To ask the Secretary of State for Employment how many basic inspection visits per average working week are made by area office-based deputy superintending inspectors of factories alone; and what steps he intends to take to increase their inspection rate in 1990–91 over past years.

  Mr. Nicholls
  Deputy superintending inspectors of factories are in general employed not in an inspection role but in connection with standards formation and headquarters and management work. In total last year inspectors of this grade carried out 162 unaccompanied visits generally in connection with their other duties. There are no plans to increase this aspect of their work.

  Mr. Andrew F. Bennett
  To ask the Secretary of State for Employment when the director-general of the Health and Safety Executive last visited a factory.

  Mr. Nicholls
  Mr. Rimington's latest official visits to various categories of industrial installation regulated under the Health and Safety at Work, &c. Act are as follows:

  Installation

  Date

  a factory

  October 1987

  an oil rig

  August 1982

  an approved laboratory

  January 1990

  a nuclear power station

  June 1986

  a nuclear chemical installation

  August 1985

  a construction site

  November 1988

  a coal mine

  June 1986

  Mr. Andrew F. Bennett
  To ask the Secretary of State for Employment how many basic inspection visits per average working week are made by area office-based principal inspectors of factories alone; and what steps he intends to take to increase their inspection rate in 1990–91 over past years.

  Mr. Nicholls
  A high proportion of inspection visits concerned with the more complex issues and demanding situations is made by principal inspectors acting either alone or in some cases accompanied. These visits are not differentiated in the records and to obtain the information requested would involve disproportionate cost.

  Mr. Andrew F. Bennett
  To ask the Secretary of State for Employment how many factory visits in an average working week made in 1989–90 by the doctors and nurses employed in the field force of the employment medical advisory service (medical division) of the Health and Safety Executive.

  Mr. Nicholls
  The information is not available in the form requested. Between 1 April 1988 and 31 March 1989 medical staff in the employment medical advisory service based in the Health and Safety Executive's area offices made a total of 7,002 visits.

  Action Credit
  Ms. Primarolo
  To ask the Secretary of State for Employment if he will give(a) the full cost of the research being carried out into the viability of extending action credit to the five employment service areas, including employment service staff hours, (b) the full amount that has, and is to be paid for administering and monitoring the existing three action credit pilots including the three month extension, and (c) on what grounds he took the decision to fund new research before the initial research into the pilots was finished.

  Mr. Eggar
  The cost of the research carried out into the viability of extending action credit to employment service areas was £35,466. The involvement of employment service staff was minimal.

  The contracted cost of administering and monitoring the existing three action credit pilots, including the three month extension is £100,025. Currently there are no plans which would increase the total cost of the three pilots.

  The existing pilots are targeted only at those leaving employment training. The new research was therefore commissioned to give an insight into the reactions of all long-term unemployed people to the concept of action credit.

  Training Agency (Contracts)
  Mr. Tim Smith
  To ask the Secretary of State for Employment whether the total budget of the Training Agency for 1990–91 for management and computer consultancy contracts has now been agreed.

  Mr. Eggar
  The total budget of the Training Agency for 1990–91 for management and computer consultancy contracts has now been agreed as follows:

  £

  Management

  11,000

  Computer

  4,881,000

  Total

  4,892,000

  Channel Tunnel
  Mr. Tony Lloyd
  To ask the Secretary of State for Employment if the Health and Safety Executive have any plans to compile comparative figures for accident and serious injury rate figures for both sides of the channel tunnel construction project.

  Mr. Nicholls
  The Health and Safety Executive does not have any plans to compile comparative figures for accident and serious injury rates for both sides of the channel tunnel construction project. Information about accidents is already exchanged in the Channel Tunnel Safety Authority health and safety working group for accident prevention purposes. It is difficult to compare directly figures from the French and United Kingdom sides due to the different national procedures and criteria for accident reporting.

  Mr. Tony Lloyd
  To ask the Secretary of State for Employment what assessment the Health and Safety Executive has made of the adequacy of medical facilities on the construction site of the channel tunnel and within the tunnel itself; and what were its conclusions.
  400
  Mr. Nicholls
  The Health and Safety Executive monitors the medical facilities at the channel tunnel site and is keen to ensure that the current level of service is maintained.

  Mr. Tony Lloyd
  To ask the Secretary of State for Employment what information he has on the numbers of people employed on the channel tunnel construction project on(a) the British side and (b) the French side at the end of 1987, 1988, 1989 and the latest date for which information is available.

  Mr. Nicholls
  Available information about the total numbers of people employed on the channel tunnel construction project is as follows:

  Total employed on the project

  Year

  Number

  February 1988

  2,218

  January 1989

  5,014

  December 1989

  6,950

  Figures for the French side are not available.

  Mr. Tony Lloyd
  To ask the Secretary of State for Employment what comparative research exists within the Health and Safety Executive into accident or incident rates on(a) civil engineering and (b) construction projects within Europe.

  Mr. Nicholls
  The Health and Safety Executive has not carried out any comparative research into these matters.

  Mr. Tony Lloyd
  To ask the Secretary of State for Employment on what dates meetings took place between representatives of the Health and Safety Executive and their counterparts in France to discuss health and safety issues arising out of the construction of the channel tunnel.

  Mr. Nicholls
  Officials of the Health and Safety Executive regularly meet representatives of the French Government through the bi-national Channel Tunnel Safety Authority and its working groups, including the health and safety working group which considers safety matters arising out of the construction of the channel tunnel. The health and safety working group meets on average once a month. This year the group met on 25 January, 22 February, 13 March, 26 March and 26 April.

  Mr. Tony Lloyd
  To ask the Secretary of State for Employment what discussions have been held over the need to harmonise working standards and practices when the Channel tunnels meet; and whether there will be a harmonisation of relevant national legislation.

  Mr. Nicholls
  A series of discussions have been held. in the Channel Tunnel Safety Authority's bi-national health and safety working group on the health and safety arrangements which will need to be put in place when the tunnels meet. No final decisions have yet been taken about these arrangements.

  Mr. Tony Lloyd
  To ask the Secretary of State for Employment if he will undertake an inquiry into the safety of working practices to report as a matter of urgency on construction of the channel tunnel.

  Mr. Nicholls
  No. The prime responsibility for health and safety rests with employers. Transmanche Link has
  401
  told my right hon. and learned Friend the Secretary of State that it is to re-examine all working practices and procedures in the light of recent incidents. It has agreed to share with the Health and Safety Executive the results of an internal audit of safety arrangements and work practices. The accident prevention advisory unit of the Health and Safety Executive is already undertaking an audit of safety practice in relation to the maintenance of the tunnel boring machines.

  Mr. Tony Lloyd
  To ask the Secretary of State for Employment if he will make a statement on the death of Mr. William Cartman on Monday 7 May during work on the channel tunnel.

  Mr. Nicholls
  The accident which led to the death of Mr. William Cartman on Monday 7 May is currently under investigation by the Health and Safety Executive. My right hon. and learned Friend the Secretary of State met senior management of the channel tunnel contractors, Transmanche Link, on 10 May to discuss the safety arrangements on site. Transmanche Link has undertaken to re-examine all working practices and procedures in the light of recent incidents.

  Mr. Tony Lloyd
  To ask the Secretary of State for Employment what information and statistics exist about(a) accident rates, (b) death rates and (c) serious injury on the French and British sides of construction of the channel tunnel.

  Mr. Nicholls
  The Health and Safety Executive holds information and statistics on accidents on the channel tunnel construction site reported to it under the Reporting of Injuries, Diseases and Dangerous Occurrences Regulations 1985 (RIDDOR). The collection of information and statistics for the French side of the project is a matter for the French authorities. Information about accidents is exchanged in the Channel Tunnel Safety Authority's health and safety working group for accident prevention purposes.

  Mr. Tony Lloyd
  To ask the Secretary of State for Employment what is the relationship between the Health and Safety Executive and the Channel Tunnel Safety Authority.

  Mr. Nicholls
  The Health and Safety Executive is responsible for enforcing the Health and Safety at Work, &c. Act and the relevant statutory provisions which apply to the United Kingdom channel tunnel construction sites. The Channel Tunnel Safety Authority is a bi-national body established under the treaty of Canterbury and its duties are set out in that treaty. An HSE official is a member of the safety authority.

  European Social Fund
  Mr. Worthington
  To ask the Secretary of State for Employment on what date he submitted the United Kingdom operational programme to fulfil objectives 3 and 4 of ESF to the European Commission for the 1990 programme.

  Mr. Eggar
  The initial Great Britain operational programme applications for ESF support concerning objectives 3 and 4 were submitted to the European Commission on 31 August 1989. The Northern Ireland operational programme applications were submitted on 29 402
  August 1989. The European Commission has subsequently adopted the community support framework for these objectives, which determines the amounts and priorities for ESF support and now requires us to revise the programmes in accordance with these.

  Mr. Tony Lloyd
  To ask the Secretary of State for Employment what representations he has received from voluntary organisations about the delays in the processing of applications for the European Community social fund.

  Mr. Eggar
  I have received written representations from five voluntary organisations about the delays in processing applications for the European social fund.

  Race Discrimination
  Mr. Corbyn
  To ask the Secretary of State for Employment how many alleged cases since 1976, of race discrimination under the 1976 Act, have been lodged with the central office of industrial tribunals for England and Wales where the respondent was either a regional health authority, district health authority or formally an area health authority; and if he will give a breakdown by year naming each health authority, and the number of cases lodged; how many of these alleged cases came before a tribunal, giving a breakdown by year, naming each health authority and the number of cases heard; and how many of the cases heard by the industrial tribunal were successful, giving a breakdown by year, naming each health authority and the number of successful cases.

  Mr. Nicholls
  The information requested could be obtained only at disproportionate cost.

  Schools-Industry Compacts
  Mr. David Martin
  To ask the Secretary of State for Employment how much his Department plans to spend over the next four years to support schools-industry compacts.

  Mr. Eggar
  Over the next four years my Department plans to spend in the region of £27 million to support schools-industry Compacts in inner city areas.

  In addition, my right hon. Friend the Secretary of State for Trade and Industry announced on 24 April 1990 that the Government intend to support local business education partnerships across the country. My Department will lead this initiative from April 1991. Details of the financial provision for this initiative are yet to be finalised.

  Health and Safety Regulations
  Mr. David Young
  To ask the Secretary of State for Employment if he will make representations to the Health and Safety Executive about the case for putting prosecutions of those breaching health and safety regulations through the Crown court and not initially through the magistrates court.

  Mr. Nicholls
  All cases must by law go initially to the magistrates court. Under section 19 of the Magistrates Court Act (1980), responsibility for referral of cases to Crown court rests with the justices.

  Mr. Nellist
  To ask the Secretary of State for Employment what was the outcome of his meeting with Transmanche Link following the death of William Cartman on 7 May; and if he will make a statement.
  403
  Mr. Nicholls
  [holding answer 14 May 1990]: My right hon. and learned Friend the Secretary of State met Mr. Jack Lemley, chief executive of Transmanche Link (TML), who assured him that the highest priority would be given to safeguarding the health and safety of workers employed on the construction of the channel tunnel.

  My right hon. and learned Friend reminded TML that although the Health and Safety Commission and Executive have extensive powers which they have used and will continue to use to enforce United Kingdom safety legislation, the prime responsibility for safety at the site rested with the management, as with any contract.
  404
  HSE inspectors will continue to monitor safety standards at the site and will not hesitate to enforce action that they consider necessary.

  Ms. Ruddock
  To ask the Secretary of State for Employment if he will make it his policy to encourage people on employment training courses to train in skill shortage areas.

  Mr. Nicholls
  [holding answer 14 May 1990]: It is my right hon. and learned Friend's policy to encourage eligible unemployed people to join employment training with the aim of securing employment on completing training, including training in skill shortage occupations where appropriate, within the resources available.

Preamble
The House met at half-past two of the clock: The CHAIRMAN OF COMMITTEES on the Woolsack.
Prayers—Read by the Lord Bishop of Chester.

Baroness Eccles of Moulton
The Hon. Mrs Diana Catherine Eccles, having been created Baroness Eccles of Moulton, of Moulton in the County of North Yorkshire, for life—Was, in her robes introduced between the Baroness Elliot of Harwood and the Lord Prior.

Lord Richard
Ivor Seward Richard, QC, having been created Baron Richard, of Ammanford in the County of Dyfed, for life—Was, in his robes, introduced between the Lord Ponsonby of Shulbrede and the Baroness Ewart-Biggs.
Lord Rugby Lord Rugby— Sat first in Parliament after the death of his father.

Scotland: Inward Investment
2.50 p.m.
Baroness Carnegy of Lour Baroness Carnegy of Lour asked Her Majesty's Goverrment:
How much inward investment has been made by companies in Scotland since 1985.
The Minister of State, Scottish Office (Lord Sanderson of Bowden): My Lords, figures for the total investment made by inward investing companies since 1985 are not available, but statistics produced by Locate in Scotland show that between April 1985 and March 1990 companies locating in Scotland in these years were planning investment of some £2.6 billion.
Baroness Carnegy of Lour: My Lords, I thank my noble friend for that extremely encouraging reply. The published figures show that despite inflation and high interest rates the economy of Scotland continues to improve in relation to the economy of the UK as a whole. Will my noble friend tell the House whether this is mainly due to the massive increase in investment in oil which is now taking place or whether there are other important reasons for it?
Lord Sanderson of Bowden: Lords, it is certainly true that the recovery from the low point in 1986 in the oil industry has contributed to the figures, but so also have our export industries, particularly whisky and electronics. Those latter two industries have benefited from strong growth in world markets.
Lord Carmichael of Kelvingrove: My Lords, we are all delighted to hear of new inward investment in Scotland. The announcement today concerning Motorola is particularly welcome. However, can the Minister give us any indication of the number of jobs that have been created as opposed to those that have been promised by the Scottish Office and certainly in the newspapers? I understand that over the past five years the number of jobs that have been created has never reached more than 60 per cent. of those that were promised. Will the Minister comment on that?
Lord Sanderson of Bowden: My Lords, it is perfectly true that the difficulty lies in estimating how many jobs will result from any planned arrangements. I can do no better than to say that planned job figures are those indicated by the companies concerned when decisions to proceed with their projects are taken. Evidence over a period of years suggests that an average of around two-thirds of planned jobs are achieved. In answer to the question of the noble Lord, I can say that inward investment planned by companies locating in Scotland has totalled some £3.8 billion since 1981. Those plans are associated with the intended creation of safeguarding of over 70,000 jobs. It is difficult to give the noble Lord exact figures but I can tell him that Compaq is a good example. In 1986 that organisation planned 350 jobs in Erskine. However, in 1991 that figure will rise to 1,100 jobs. Of course it does work the other way in some cases.
Lady Saltoun of Abernethy: My Lords, while the central belt has undoubtedly benefited from all this investment, will the noble Lord indicate how he sees the industrial future of the Highlands and Islands?
Lord Sanderson of Bowden: Yes, my Lords, I can do that, but it is difficult to generalise about the Highlands and Islands. There are, as the noble Lady knows, problems in Caithness in relation to the run-down of Dounreay. In the inner Moray Firth area things are going extremely well, but the rest of the area is in many cases fragile. However, I can tell the House that 2,000 jobs have been created in fish farming. That appears in the 1989 figures and it is a good tale to tell. In various towns in the North of Scotland substantial numbers of jobs have been created. There is the example of Zonal in Invergordon, where 80 jobs were created recently. Further, 110 jobs were created in Inverness as a result of a relocation from Derbyshire.
Lord Mackie of Benshie: My Lords, will the noble Lord expand on his figure of £2.6 billion? It would be useful if he could tell the House approximately how much of that figure is due to native industry—for example, the whisky industry—and how much is due to incoming foreign investment.
Lord Sanderson of Bowden: My Lords, I cannot give the noble Lord an answer to that question. However, I can say that both the SDA and the Highlands and Islands Development Board are looking for investment from whatever source. Since 1985 £700 million of government money has been

151
produced by SDA and £147.8 million by the Highlands board. However I shall look at the question and write to the noble Lord with details.
Lord Lyell: My Lords, can my noble friend give the House the latest figures for the Locate in Scotland campaign which has contributed to the success already mentioned by my noble friend? Locate in Scotland has had a considerable impact. Does my noble friend have any recent figures?
Lord Sanderson of Bowden: My Lords, the Locate in Scotland campaign is an ongoing campaign and last year was a record year.
Lord Ezra: My Lords, although there are benefits of a short term nature from inward investment in Scotland, will the noble Lord say to what extent he believes that the large amount of money which has been invested in Scotland from outside will have long-term advantages?
Lord Sanderson of Bowden: My Lords, in answering that question it may be instructive if I tell the noble Lord that the total number of jobs in coal, steel and shipbuilding in Scotland is now 24,000. To put that into context, in 1989–90 Locate in Scotland has 64 projects totalling £853 million which are forcast to provide 12,000 jobs. That gives an indication of the swing that we are trying to achieve in Scotland to new industries and new developments from the old industries.
Baroness Carnegy of Lour: My Lords, training and local access to training for medium and small-sized companies is extremely important. Can my noble friend tell the House how the local enterprise companies are progressing, how many are planned and how many there will be in various parts of Scotland?
Lord Sanderson of Bowden: My Lords, development funding in the Scottish enterprise area has been awarded to 12 prospective local enterprise companies, including Moray which straddles the border between the Highlands and Islands enterprise area and the Scottish enterprise area. Development funding for five prospective LECs has been awarded in the Highlands and Islands enterprise area and bids in respect of a further four are currently being considered.

Civil Servants: Training
3.5 p.m.
Lord Rochester Lord Rochester asked Her Majesty's Government:
Whether they are satisfied with the standard of training of non-industrial civil servants.
The Lord Privy Seal (Lord Belstead): My Lords, in 1988–89 the Civil Service invested £356 million to provide on average over four days training for each civil servant. Overall that compares well with good practice in the private sector. Eighty per cent. of that training is provided directly by departments to meet their particular needs. The high quality of
152
the top management programme, which is provided centrally, is indicated by the high demand for places from the private sector. The Civil Service College similarly provides a high standard of training for management and for professional development.
Lord Rochester: My Lords, I thank the noble Lord the Leader of the House for his reply. However, does he accept that the National Audit Office reported recently that the training of white collar civil servants was too often subordinate to more immediate pressures on manpower? Does he also accept that it cited the high level of cancellations in respect of college training courses and referred to the limited role allowed to departmental training officers?
Lord Belstead: My Lords, the Government welcome the report which the noble Lord mentioned and the support which it gives for the work of the Office of the Minister for the Civil Service. The details of that report are under careful consideration and the noble Lord will forgive me if I do not prejudge today the consideration that is being given to the report by the Public Accounts Committee. Having said that, perhaps I may give the noble Lord an assurance that as part of improving service to the public all departments are reviewing their training provision, particularly with a view to improving the areas of management and customer service.
Lord Cledwyn of Penrhos: My Lords, can the noble Lord the Leader of the House go one step further and tell the House, on the one hand, how much is spent on in-service training and, on the other hand, how much is spent on external training? That would be helpful information. Will he be good enough also to tell us the number of non-industrial civil servants who are currently employed?
Lord Belstead: My Lords, there are 500,000 civil servants in post. I must apologise to the noble Lord for not having the figures for in-service and other training. I think I am right in saying that a recent publication of the Office of the Minister for the Civil Service entitled Civil Service Training 1987–88 and 1988–89, only breaks down the type of training in departments into induction, vocational and management. However, if I can find an answer regarding in-service training I shall write to the noble Lord and place a copy of my letter in the Library.
Lord Rochester: My Lords, the Lord Privy Seal in his reply to me said that at this stage I would not expect him to comment in more detail on the report of the National Audit Office. However, will he go a little further and acknowledge that the matters to which I referred are of such significance that they require constant monitoring by the Government quite independently of anything that the National Audit Office may have to say upon them?
Lord Belstead: Yes, my Lords, I shall gladly go just a little further and agree with the noble Lord, Lord Rochester, that he mentioned certain important matters, particularly the targeting of investment and the evaluation of the outcome of training, which the Government take particularly seriously.

153
Perhaps I may respond to what the noble Lord said about monitoring. With his interest in and experience of those matters, he will perhaps agree with mo when I say that there are limits to the extent to which a direct relationship can be drawn between training and the overall performance of a business, agency or department which many other independent factors can affect. However, despite that, I hope that the noble Lord will be pleased when I say that the week before last the Office of the Minister for the Civil Service published practical guidance on evaluation. That is designed to help establish how training contributes to performance improvements, both for the individual and for the organisations concerned.
Lord Allen of Abbeydale: My Lords, does the noble Lord think that the Civil Service College has achieved the high hopes which were held for it? It seemed not to do so in its early days. Has it become a centre of research in the way that its founders hoped that it might develop?
Lord Belstead: My Lords, on the question of the achievements of the Civil Service College, published statistics showing high pass rates for professional qualifications achieved there indicate training well above the average. That is to be welcomed. I should like to look into the question of whether it has become: a centre for research in the way envisaged and perhaps contact the noble Lord subsequently.

Homelessness: Grants
3.11 p.m.
Lord Stallard Lord Stallard asked Her Majesty's Government:
What criteria were used to determine the amount of grants to be withheld from those voluntary organisations working and advising on problems of housing and homelessness.
Lord Reay: My Lords, £2 million has been allocated to voluntary bodies concerned with homelessness this year—three times last year's total. Half will go to a new national advice service based on citizens advice bureaux and involving Shelter and SHAC, and half to a total of 26 bodies providing direct assistance and practical help to homeless people. The new arrangements for this year's grants were announced by my right honourable friend, the then Minister for Housing, in November last year. The bodies which received grant last year were warned in writing and in person that there was no guarantee of future funding.
Lord Stallard: My Lords, does the noble Lord accept that his Answer will be disappointing, to say the least, to the 12 organisations which provide special assistance to homeless groups, refugees, home owners, the single homeless, one-parent families and ex-offenders? What criteria were used to cut the Section 73 grants to those people? There has been a cut of £310,000 at a time when homelessness is higher than ever and when experienced counselling
154
will be in shorter supply. The two things do not marry up. We have not been told why the cuts were made and what criteria were used to introduce them.
Lord Reay: My Lords, as I said in my original reply, the total amount of money made available has nearly trebled from £680,000 in 1988–90 to £2. million this year. More than 30 bodies will receive grant this year compared with 21 last year. Some bodies have done very much better this year than last year and over £750,000 has gone to 23 new bodies not previously funded.
Funding decisions were difficult. All proposals were carefully and fairly considered against the criteria laid down. The programme was very much over-subscribed and some applicants were bound to be unsuccessful. The criteria were announced on publication of the Government's review of the homelessness legislation. There were to be imaginative and innovative practical projects of positive and direct assistance on the ground to help homeless people find suitable accommodation and to boost the supply of lodgings and also set up registers.
Baroness Faithfull: My Lords, as a trustee of one of the voluntary organisations whose grant has been cut, perhaps I may ask my noble friend whether, despite the figures that he gave, he thinks that it is penny-wise pound-foolish at this time, when homelessness is a growing problem, to have cut the grants to voluntary organisations which work hard and give a good service?
Lord Reay: My Lords, we have not cut the grants to voluntary bodies. We have increased them by more than three times. As I said, some bodies have done considerably better this year. For example, Shelter will receive £454,000 this year; last year it received £120,000. SHAC will receive £400,000 this year; last year it received £200,000.
Lord Murray of Epping Forest: My Lords, is the Minister aware of the emphasis rightly placed by noble Lords in all parts of the House on bringing into the public arena empty property for the use of homeless people? Is he also aware of the notable contribution made to that approach by the Empty Property Unit which on a shoestring budget has helped to make almost 40,000 such properties available on a short-term basis? Is he not concerned that a cut of £27,000—one third of its funding—will severely affect the work of the Empty Property Unit, which is in the front line of that activity? Will he urge his honourable friend the Minister for Housing to receive as a matter of urgency representatives of the Section 73 liasion committee to discuss the content of that decision at a time deep into the financial year when other funds are not available?
Lord Reay: My Lords, the noble Lord has raised a number of questions. With regard to bringing in empty property, over the past 10 years we have spent £300 million in creating 21,000 hostel places. This year and next we shall spend an extra £250 million in London and the South-East to reduce homelessness. That answers the point raised by the noble Lord.

155
As I said, there were difficult decisions to take. The Government gave priority to practical, not advisory, projects to help the young and rough sleepers and the single homeless people get back on their feet. The Government take the problem seriously. Unfortunately, we were not able to give grants to all applicants.
Lord Molloy: My Lords, we have seen an ever-increasing amount of homelessness and the growth in our cities of those appalling cardboard sectors in which people live. When do the Government intend to do something to deal with the problem and set about creating a housing programme so that such people can be housed? In the meantime, will they encourage all voluntary organisations which are prepared to give of their best to counter the hopelessness of the homeless in this country?
Lord Reay: My Lords, it is precisely in order to encourage the voluntary bodies concerned with that problem that we have increased so substantially the amounts of money allocated to them this year. The Government are concerned about the problem of those sleeping rough and about homelessness generally. The problems are complex. They relate not only to housing, but to the responsibility of a number of departments. The Government are now considering how those policies work together to ensure that appropriate assistance is available.
Baroness Macleod of Borve: My Lords, is my noble friend aware that many voluntary organsiations do not ask for or receive any government grant. Does that not help those which receive large grants? Is he further aware that those who work for the organisations act out of love and care for people in those unfortunate circumstances?
Lord Reay: My Lords, I am quite sure that my noble friend is entirely right.
Lord Dean of Beswick: My Lords, does the Minister agree that if the noble Baroness, Lady Faithfull, and my noble friend Lord Stallard are correct, resources are drawn away from some small organisations which provide a useful service? It may well be that Shelter and SHAC will be pleased that they have had their grants trebled. Set against the appalling situation of the homeless in this country, in some respects the Minister wants commendation for the fact that the Government have increased the grant to £2 million. Does he not understand that in the overall picture that is a financial pippin? Does the Minister not agree that the Government should be pumping in resources to a much greater degree? What the Government are doing at the moment is quite insufficient to deal with the problem.
Lord Reay: My Lords, the original Question asked by the noble Lord, Lord Stallard, related to funds for voluntary bodies. As I said, those funds have been increased by more than three times over the past year. And it is not only the larger organisations which have benefited. Over £750,000 goes to 23 new bodies. Perhaps I may give three examples. This year
156
Centrepoint received £110,000; last year it did not receive anything. Two smaller bodies, Bristol Cyrenians who last year received £10,000 and New to London who received £11,000 will this year receive £40,000 and £70,000 respectively. Therefore, it is not only the larger organisations which will benefit.
Lord Blease: My Lords, can the Minister indicate what the criteria are for financing measures to combat homelessness in rural areas? Attention has rightly been given to the human misery which exists in the inner cities and particularly in London. However, does the Minister not agree that there is a tremendous amount of deprivation, suffering and human misery in the rural areas? Can he indicate what criteria a voluntary body has to meet in order to qualify for a grant to deal with the situation in those areas?
Lord Reay: My Lords, I am unable to say whether there are separate criteria for rural areas. I shall look into the matter and inform the noble Lord.
Lord Stallard: My Lords, in his replies the noble Lord mentioned on a number of occasions that grants were being given to organisations helping young people who are sleeping rough. No organisation has been doing that job better and more consistently than CHAR. We all know of the work that that organisation has carried out. Can the Minister say why the grant to CHAR has been cut by £36,000? Can he further say why all the organisations received application forms for the renewal or increase of their grants in late February which had to be submitted by the beginning of March? The organisations did not know until 26th April that their grants had been cut. I am still puzzled how the organisations were categorised and what were the criteria used.
Lord Reay: My Lords, we recognise the value of the work that CHAR does. Indeed, my honourable friend the Minister for Housing will visit that organisation on Thursday. We had very difficult decisions to take and some difficult choices had to be made. As I said in my original Answer, we gave warning that we could not guarantee funding. The Government must be able to use their discretion in deciding who should receive funds according to the best criteria.

BAe: Rover Takeover
3.23 p.m.
Lord Williams of Elvel Lord Williams of Elvel asked Her Majesty's Government:
What is their most recent information about the attitude of the European Commission to the terms of the acquisition by British Aerospace plc of Rover Group plc.
The Minister of State, Department of Trade and Industry (Lord Trefgarne): My Lords, the European Commission has not concluded its inquiry into the terms of the sale of the Rover Group to British Aerospace and we have not, therefore, had any indication of its views on the matter.
Lord Williams of Elvel: My Lords, I am grateful to the Minister for his Answer so far as it goes. Does he not agree that it is profoundly unsatisfactory that a major British public company may have to return large sums of money to the Government and that there are allegations flying around that Parliament was misled and that there was government subterfuge? Does the Minister further agree that none of these matters can be resolved until the Commission pronounces? Can he confirm that the Government will do everything in their power to hasten that decision and make sure that we can debate these matters in the open light of full knowledge?
Lord Trefgarne: My Lords, the Government have no power over the Commission in this matter. We shall just have to wait in patience.
Lord Boardman: My Lords, does my noble friend expect that the European Commission will share the pleasure of the British taxpayer who sees this company, which for so long lost money in the public sector, now making money in the private sector and also making very good cars?
Lord Trefgarne: My Lords, my noble friend makes a powerful point. It is one that I have ventured to make to your Lordships in the past.
Lord Hatch of Lusby: My Lords, does the noble Lord realise that even before the publication of this long-delayed European Commission report two things were established: first, that the previous Secretary of State misled both Parliament and the Commission; and, secondly, that the Government have been conducting their business by bribery, euphemistically known as "sweeteners", which is hardly in accord with the British tradition of parliamentary democracy?
Lord Trefgarne: My Lords, I think your Lordships may agree if I suggest that the only place where those matters have been established is in the mind of the noble Lord.
Lord Molloy: My Lords, there have been articles in the newspapers.
Noble Lords: Order!
Lord Harmar-Nicholls: My Lords, my noble friend said that we have no authority over the Commission. As distinct from the European Parliament and possibly the Council of Ministers, can he tell me what power the European Commission has under the Treaty of Rome to express an attitude on the internal decisions of any member state?
Lord Trefgarne: My Lords, the Commission is undoubtedly entitled to inquire into this matter under the terms of the Treaty of Rome and to express a view which we understand it will shortly give.
Lord Bruce of Donington: My Lords, will the noble Lord reconsider the answer that he gave to a previous question in which he indicated that there was no
158
evidence of any duplicity in this matter? Has the noble Lord read the correspondence from the previous Secretary of State to British Aerospace in which alternative means of misleading Parliament as to the true nature of the purchase consideration are fully and clearly set out? Can the Minister say what the Government intend to do about that?
Lord Trefgarne: My Lords, I repeat to the noble Lord that there has never been any question of seeking to mislead Parliament.
Lord Hailsham of Saint Marylebone: My Lords, would it not be better if we awaited the report which, as my noble friend has said, will shortly be forthcoming before we attempt to establish points?
Lord Trefgarne: My Lords, I certainly agree with my noble and learned friend that it would be much better to wait on the report from the European Commission before commenting on it.
Lord Cledwyn of Penrhos: My Lords, further to the very proper point made by the noble and learned Lord, can the Minister give an assurance to the House that when the report is published a Statement will be made in both Houses?
Lord Trefgarne: My Lords, it is not for me to decide on such matters. However, I shall be very surprised indeed if that did not happen.
Lord Hatch of Lusby: My Lords, the noble Lord has suggested that the assertions I made are only in my mind. I repeat the question asked by my noble friend Lord Bruce of Donington: has the noble Lord read the correspondence which is in the Library and which indicates quite clearly that the previous Secretary of State was offering alternative means of duplicity to British Aerospace when he wrote to it? That correspondence is in the Library and not in my mind. Has the Minister read it?
Lord Trefgarne: My Lords, I suggest to the noble Lord that he takes the advice of my noble and learned friend and awaits publication of the report.

Business
3.29 p.m.
Lord Denham: My Lords, it may be for the convenience of the House to know that the Report Stage of the Law Reform (Miscellaneous Provisions) (Scotland) Bill will be adjourned at about 7.30 p.m. for about one hour, and that during this adjournment the Second Reading of the Computer Misuse Bill will be taken.

Social Security Bill
The Parliamentary Under-Secretary of State, Department of Social Security (Lord Henley): My Lords, I beg to move the Motion standing in my name on the Order Paper.
Moved, That it be an instruction to the Committee of the Whole House to whom the Social Security Bill

159
has been committed that they consider the Bill in the following order:
Clauses 1 to 7,
Schedule 1,
Clauses 8 to 11,
Schedule 2,
Clause 12,
Schedule 3,
Clauses 13 and 14,
Schedule 4,
Clauses 15 to 17,
Schedule 5,
Clauses 18 to 21,
Schedule 6,
Clauses 22 and 23,
Schedule 7.—(Lord Henley.)
On Question, Motion agreed to.

Law Reform (Miscellaneous Provisions) (Scotland) Bill [H.L.]
3.30 p.m.
Report received.
Clause 1 [Information as to recognised charities]:
Lord Cameron of Lochbroom Lord Cameron of Lochbroom moved Amendment No.1:
Page 2, line 12, at end insert:
("(b) to a designated body, information as regards any recognised body as to its name, address and its purposes so far as known to the Commissioners,").
The noble and learned Lord said: My Lords, in bringing forward the amendment, to which I shall speak with Amendments Nos. 7 and 49, I was encouraged by the comments made in Committee by the noble and learned Lord the Lord Advocate and by support from other noble Lords for the general line which they take.
Their purpose is to place on the face of the Bill provisions for the production of a register or index of charities, whether a general index or one dealing with specific areas. It would be particularly helpful for those who may wish to apply for assistance from such charities. The aim is to secure the openness which was suggested by the Government in their original consultation paper and subsequent White Paper.
I am grateful to the noble and learned Lord the Lord Advocate for arranging a meeting between Scottish Office officials, officials of the Inland Revenue and representatives of the Scottish Council for Voluntary Organisations in order to discuss the matter as referred to in Committee. Undoubtedly, it was a useful meeting but, while helpful, there appeared to be opposition to the inclusion in the Bill of enabling provisions which recognise the principle of the publication of an index covering the whole area of recognised bodies or of a separate indices covering areas such as overseas aid or mental health. They were mentioned in Committee not only by the noble and learned Lord but also by the noble Baroness, Lady Carnegy.
I remind the House that a register is already in existence in England and Wales. It is kept by the
160
Charity Commissioners and derives from the statutory powers given to them under parliamentary legislation. It has proved to be of assistance to potential applicants, prospective donors to charities and to the general public. As regards our jurisdiction, it may be a means whereby members of the public can obtain reports from specific charities and thus obtain more specific information. That is the intention of the provisions in the Bill which make specific requirements for the production of reports by charities.
I suggest that under the new regime which the Bill introduces for Scotland there should be a register similar to that in England. The present offer of information, which was made at the meeting by officials of the Inland Revenue to representatives of the Scottish Council for Voluntary Organisations, would relate only to one point in time. Therefore, any publication based upon that information might quickly become out of date. That is particularly so if the estimate of some 400 new bodies recognised annually by the Inland Revenue in Scotland is accurate.
I remind the House that charities may come and equally they may go. Clauses 8 and 9 of the Bill provide for that. Their purposes may change and those clauses also provide for that. The provision in Clause 9, secured by Amendment No. 37, will mean that the reorganised charities will be required by the Inland Revenue to become recognised bodies.
I suggest that there should be a continuance of the flow of information from the Inland Revenue in order to allow the production of new indices from time to time or the updating of the old. That will require, first, that the Inland Revenue is free of any duty of confidentiality as regards providing information where an index or register is sought to be set up. Secondly, it will require some restriction to be placed on those who go to the Inland Revenue to seek such information.
Amendment No. 1 is the key to the unlocking of the information, to take up a metaphor used by the noble Earl, Lord Perth, in Committee. It provides for the loosing of the duty of confidentiality. Amendment No. 7 ensures that the key is handed out by the Secretary of State only if he believes it proper to do so. Amendment No. 49 is consequential. They are enabling provisions and no more. I suggest that they need to be on the face of the Bill in order to make certain that the requirement for a register or index is fully understood and that it is available while the regime continues. I hope that the Government will feel able at least to accept the spirit of the amendments. I beg to move.
Lord Morton of Shuna: My Lords, I support the amendment which also stands in my name. Without the provision on the face of the Bill for an up-to-date index people will be unable to discover existing charities that may help them or existing charities to which they may give. It would be unfortunate if we allowed the Bill to pass without making provision for such a list.
Lord Macaulay of Bragar: My Lords, I add my voice on the subject to those of the noble and learned

161
Lords, Lord Cameron and Lord Morton. The matter was fully canvassed in Committee and boils down to the fact that there should be a system whereby the public can have confidence in the running of charities. People should be able to go to a source which may confirm their views on the existence and nature of the charity or which may be able to supply different information. It would also enable a reasonable check to be kept on those who run charities. As we all know, some people purport to run charities but the only charities which benefit are themselves. As regards inducing public confidence in charities I hope that the noble and learned Lord the Lord Advocate will consider the spirit of the amendment.
Baroness Carnegy of Lour: My Lords, since the Committee stage I have discussed the matter with one or two bodies which are interested in having access to such a list of charities and also with some individuals. There is a need for the list which my noble and learned friend indicated would be desirable. It should be broken down to show the types of charities which exist in order to help users of the list to find the information that they need. However, that will not be possible unless the Inland Revenue is able to release the complete list and keep it up to date.
Under the amendments the list would be protected and not widely available. However, the subsequent breaking down would make it available. Therefore, I hope that my noble and learned friend will find a way of providing a list and will take note of the fact that it must be kept up to date. It will be no good if the Inland Revenue releases the details once, but does not do so again. I hope that he can help the House although I realise that he is faced with a problem.
The Lord Advocate (Lord Fraser of Carmyllie): My Lords, the purpose behind the amendment is not to ensure that there is proper regulation of charities, as indicated by the noble Lord, Lord Macaulay, but rather to provide a more positive purpose: that those who wish to obtain grants from charities might discover which they may approach. Alternatively, someone working in a particular field may discover that there is a comparable body.
As I indicated in Committee when similar amendments were moved, the Government have some sympathy with the suggestion that a directory of charities would be useful. However, I stress again that to do as the noble and learned Lords have suggested and require the Inland Revenue to release to a designated body, in addition to the names and addresses of registered bodies, a summary of their principal objects, would not only be a major undertaking for the Revenue in Scotland; the effort would not be worthwhile. The effort would not be worthwhile because the majority of the purposes which are submitted to them are expressed in such broad and general terms as to be of restrictive value to anyone who may wish to know of the charities. Frequently such deeds list two or three broad heads of charity to preserve maximum flexibility for the
162
trustees. In most instances the name of the charity is likely to be more informative than the objects.
As I made clear during Committee, I do not believe it is a necessary function of government to maintain an index showing charitable purposes nor, for reasons I have indicated, to designate a particular body to undertake this task.
I informed your Lordships that I had asked Scottish Office officials to arrange a further meeting with the Inland Revenue and the Scottish Council for Voluntary Organisations. I am pleased to confirm that such a meeting has taken place.
As part of the publicity to precede the commencement of these provisions the Inland Revenue will issue letters to all known recognised bodies notifying them of their unique number and summarising the new arrangements for supervision. We will afford the Scottish Council for Voluntary Organisations, on a "one off basis, the opportunity of enclosing with this letter a questionnaire for completion by each charity. Completion of the questionnaire would of course be voluntary and it would be returned direct to the Scottish Council for Voluntary Organisations. The information which the questionnaire might seek could include a summary of the charity's purposes, activities or areas of interest. This should enable the Scottish Council for Voluntary Organisations if it so wishes to put in hand the preparation of an index of purposes. I understand that the Scottish Council for Voluntary Organisations has already expressed considerable interest in such a proposal.
Updating any directory will be a matter for the SCVO. It will of course enjoy the statutory access to annual reports and accounts. It will be at liberty to invite trustees to compile a directory entry in whatever format seems most useful, and to update the information and revise the format at whatever interval it judges appropriate. It will easily be able to identify newly-recognised bodies—which I believe was the point about which my noble and learned friend was particularly anxious—because the Inland Revenue will maintain, on an ongoing basis, a list of recent additions to supplement the last revision of the fiche index. I stress in view of the points made by my noble and learned friend that the Inland Revenue is prepared to provide periodically a means of identifying new recognitions to the SCVO. Therefore, it is not, as I accept appeared to be the position in Committee, that the Inland Revenue will provide that once and for all with no question of an update.
In approving new charities the Revenue seeks to ensure that the constitutional document of the body provides that there should be a charitable destination for any funds in the event that the body winds up. The Revenue will note the index whenever it comes to its notice that a charity has wound up. Though the Revenue will not necessarily know if a body ceases to function, this should become apparent on any occasion that the SCVO chooses to consult charities in order to update any directory it may have prepared.
In the case of amalgamations or the transfer of resources to another body, there is a requirement in

163
Clause 9 of the Bill to ensure that the purposes of the new trust will qualify for tax exemption. The Revenue will, of course, note the index to the effect that the former charities have wound up and amalgamated to form a new named body.
While the Government understand what lies behind these amendments, they take the view that there is no need for them. Their purpose will be achieved by the administrative action which I have described. It will not be a once and for all index by the Inland Revenue but it will be updated. Any body such as the SCVO taking up the task of providing a directory will be able to secure the necessary information. As I have indicated, that seems to me to be a better way forward because the information most useful to those who wish to have access to charities will not be available from the Inland Revenue but from the charities themselves.
I hope that what I have outlined is considered to be constructive and appropriate. In view of that I hope that the noble Lord feels able to withdraw his amendment.
3.45 p.m.
Lord Cameron of Lochbroom: My Lords, I am grateful to the noble and learned Lord for the positive way in which he has replied. I have reservations as to whether this can be done by the promise of administrative action in a regime intended to be statutory and intended to continue to be in force even if for example, the Scottish Council for Voluntary Organisations is no longer in existence.
I add that the first amendment was carefully drafted conscious of the fact that the Inland Revenue might not know the purposes, and a qualification to that effect appears at the end. However, in view of what the noble and learned Lord has said, which I shall read, I do not intend to press this matter and I beg leave to withdraw the amendment.
Amendment, by leave, withdrawn.
Lord Fraser of Carmyllie Lord Fraser of Carmyllie moved Amendment No. 2:
Page 2, line 24, leave out from ("its") to end of line 26 and insert ("explanatory document")
The noble and learned Lord said: My Lords, I shall speak also to Amendments Nos. 3 and 8. Clause 1 (3) requires a recognised body to provide to any person who requests it on payment of a reasonable charge, a copy of its trust deed or other document constituting the body. Subsection (4) enables me to instruct the Inland Revenue to note where any body has failed, on payment of a reasonable charge, to provide such a document.
Whereas most bodies should have no difficulty in complying with this request certain bodies—notably some of the long-established Churches—would be unable to provide any single document which would enable a person to ascertain the nature of the body and its charitable purposes. This amendment will permit such bodies to prepare with my approval a document which describes the bodies' charitable objects.
The amendment will meet part of the concerns expressed by such bodies as the Church of Scotland and the Scottish Churches Committee. Your Lordships will wish to know that a further meeting has taken place between officials of the Scottish Home and Health Department and the Scottish Churches Committee to discuss the possibility of more wide-ranging amendments to the Bill which would have regard to the concerns expressed by various noble Lords in Committee about the undesirability of powers enabling me to become involved when mismanagement occurs among religious bodies.
A number of points have been put to the Scottish Churches Committee which, as I understand it, are being considered urgently without, as yet, any clear indication as to whether all the points are acceptable to them in that form. Perhaps I may indicate to noble Lords that in that regard the Government intend to bring forward amendments in Committee in another place, particularly relating to the Churches in Scotland. I beg to move.
Lord Morton of Shuna: My Lords, the amendment is helpful as far as it goes. I merely raise a doubt about the wording of Amendment No. 8. My impression is that a fairly large proportion of charities would rather produce an explanatory document than the trust deed or other document constituting the body. Many of the 15,000 or more charities will produce a document which describes the nature of the body and its charitable purposes. Does the noble and learned Lord the Lord Advocate really wish to study over 10,000 documents to see that they fit the trust purposes? Would it not be better for him to have the right to veto any such documents which came to his attention which were inaccurate and to leave it to the body to define its own trust purposes?
As the noble and learned Lord mentioned the Churches, I should have thought that he would find it invidious specifically to approve any religious body's explanatory document in that way, whereas he might be happier with a power to disapprove a document which he thought did not fully and properly meet the case. The noble and learned Lord the Lord Advocate has taken on a very heavy job for which, according to the Bill's original descriptive documents, he will have a staff of eight. I doubt whether that will be possible.
Lord Fraser of Carmyllie: My Lords, I do not wish to be involved in the redrafting of the articles of faith of any religious body. I understand what the noble and learned Lord is saying. I do not envisage that there will be any particular difficulty in that regard. If I have to consider a large number of documents, clearly more lax arrangements will need to be put in place than had been envisaged.
Lord Macaulay of Bragar: My Lords, before the noble and learned Lord the Lord Advocate sits down, is he able to give an indication at this stage—I appreciate that it may be difficult—with regard to the increases in staff which may be required by his department to consider the documents that will presumably need to be submitted to the Lord

165
Advocate in terms of the amendment? The amendment states that they must be submitted before any person can request them in terms of Clause 1 (3) of the Bill. Can he give us an idea of the potential cost of that exercise?
I merely seek information. I recognise that the terms of the amendment are extremely helpful. I can see that behind it there may be a purpose in saving money and making it work for the charities concerned. Rather than having a trust deed or other documents which can be very lengthy, a simplifed document initially would serve everyone's purposes.
Lord Fraser of Carmyllie: My Lords, I clearly cannot calculate at this stage how many bodies might approach me in seeking my approval. Contrary to what the noble and learned Lord, Lord Morton, said, I envisage that most bodies which already have a clearly defined trust deed will put that forward. One needs to consider—and what I envisage will occur in relation to any directory—that often a trust deed is a long, complicated document. For their own purposes charities may wish in explaining what they do to provide a simplified explanation of their range of activities and how they expend their funds.
The amendment is intended to relate to such bodies as the Church of Scotland or the Roman Catholic Church. I would not wish for a moment to suggest what the Roman Catholic Church might put forward. I do not envisage that I shall have any difficulty in approving a document put forward by the Church.
On Question, amendment agreed to.
Lord Fraser of Carmyllie Lord Fraser of Carmyllie moved Amendment No. 3:
Page 2, line 29, leave out from ("its") to ("as") and insert ("explanatory document").
On Question, amendment agreed to.
Lord Fraser of Carmyllie Lord Fraser of Carmyllie moved Amendment No. 4:
Page 2, line 34, leave out ("Court of Session") and insert ("court").
The noble and learned Lord said: My Lords, in moving Amendment No. 4 I speak also to Amendments Nos. 6, 11, 23, 25, 45, 46 and 48. Notwithstanding that long list, these amendments seek to give effect to the undertaking given by me in Committee to allow, at my discretion, cases to be heard in the sheriff court as well as the Court of Session in all cases where I have power to apply for an interdict or order. Your Lordships will recall that I did not consider it appropriate to do so in Clause 6 in view of the gravity of the measures involved under that section. Clause 8 already contains provisions under subsection (5) for me to appoint a day for extension of proceedings to the sheriff court under that section. The amendments also provide the necessary definition in Clause 13. I beg to move.
On Question, amendment agreed to.
Lord Cameron of Lochbroom Lord Cameron of Lochbroom moved Amendment No. 5:
Page 2, line 35, after ("body") insert ("if incorporated").
The noble and learned Lord said: My Lords, in moving this amendment I speak also to Amendments Nos. 12 to 14, 24 and 27 to 30 standing in the name of my noble and learned friend Lord Morton and myself and also to Amendment No. 47 in the name of the noble and learned Lord the Lord Advocate.
These amendments are directed to a point raised by my noble and learned friend in Committee with regard to the status at law of unincorporated bodies, which certain of the recognised bodies will be. These are not legal persons in the eyes of the law of Scotland and therefore cannot be sued in any legal proceedings.
I refer particularly to Amendment No. 30, which seeks to give the court slightly wider discretion than is presently incorporated within the Bill. It is intended to be helpful. It may be that Amendment No. 47 covers the point which I seek to make in Amendment No. 5 and the remaining ones. I shall be happy to listen to what the noble and learned Lord says and I also welcome his view on Amendment No. 30. I beg to move.
Lord Fraser of Carmyllie: My Lords, the noble and learned Lord, Lord Cameron of Lochbroom, raised a question in Committee on Clause 1 (5) as to whether it was possible to interdict an unincorporated body. I undertook to give this matter further thought. According to Stair Encyclopaedia, Vol. 2, para 818, it would appear to be the case that it is not possible for such bodies to sue or be sued in the Court of Session although it may be possible in the sheriff court. I concluded that the safest course is to make specific provision. Amendment No. 47 therefore extends the present limited definition of "body" in Clause 13. I am grateful to the noble and learned Lord for drawing the matter to my attention.
It is intended that Amendment No. 47 covers the matters raised in the amendments of the noble and learned Lord, including Amendment No. 30. However, I will look at the position again to see whether there is anything that is usefully more extensive than is provided for in Amendment No. 47. I repeat my thanks to the noble and learned Lord, but hope that he will withdraw his amendment.
Lord Cameron of Lochbroom: My Lords, I am grateful to the noble and learned Lord. He has obviously taken the point on board. I will look at what he said. I am also grateful for his offer to reconsider the substance of Amendment No. 30. In those circumstances I beg leave to withdraw the amendment.
Amendment, by leave, withdrawn.
Lord Fraser of Carmyllie Lord Fraser of Carmyllie moved Amendment No. 6:
Page 2, line 37, leave out ("Court") and insert ("court").
On Question, amendment agreed to.
[Amendment No. 7 not moved.]
Lord Fraser of Carmyllie Lord Fraser of Carmyllie moved Amendment No. 8:
Page 3, line 5, at end insert:
("(8) In this section "explanatory document" means —

(a) the trust deed of a body or other document constituting the body; or

167

(b) such other document as the Lord Advocate may approve, being a document which describes the nature of the body and of its charitable purposes.").

On Question, amendment agreed to.
Clause 2 [Non-recognised bodies]:
Lord Morton of Shuna Lord Morton of Shuna moved Amendment No. 9:
Page 3, line 10, at end insert:
("(b) any Church or other body established for the advancement of religion or established for the purposes of providing, holding, maintaining, repairing or managing ecclesiastical buildings for religious purposes").
The noble and learned Lord said: My Lords, this amendment has in a sense been foreshadowed by what the noble and learned Lord the Lord Advocate said. It was tabled merely in order that something should appear on public record regarding what is happening concerning the Churches.
As the noble and learned Lord said, discussions have taken place with the Scottish Churches Committee concerning the method of dealing with them in relation to charitable purposes, but agreement has not yet been reached. We hope that it will be. At this stage—as no doubt the noble and learned Lord the Lord Advocate will deal with them in reply—I wish to mention some of the difficulties that his intended approach appears to raise.
One difficulty is that the body, the Church or religious organisation, will have to satisfy the Secretary of State that it has membership of not less than 10,000 persons. That is difficult for certain well recognised churches which tend to have numerous adherents rather than members, although those who are not members of that organisation regard the adherent as being a member in any natural sense.
There is also difficulty about various bodies such as the Baptists and the Congregational Union whose organisations perhaps do not fit the other requirement that there should be an internal organisation with a central authority in Scotland exercising supervisory and disciplinary functions. One of the difficulties about that is that if there is to be one central authority in Scotland, it perhaps raises very great difficulties in regard to whether it would fit for a Church which regards its central authority as being in Rome—its central authority on this earth, at any rate—and has eight dioceses in Scotland.
There are difficulties, and I suggest that apart from the detailed points which are still to be discussed, the only way of dealing with this problem is for the Secretary of State or the Lord Advocate to be given powers to designate specific bodies without confining himself to anything more than religious bodies, or something of that nature. Once one goes into the differences of organisations that exist between the different faiths, comparing one with another, it is difficult to obtain one central definition that would fit. I suggest that the only way is to specify the bodies—the Church of Scotland, the Roman Catholic church, the Sikh religion, the Jewish religion, and so on. That is the only way to deal with the problem. Nevertheless, I express my gratitude for the way that the Government have taken the point on board. I beg to move.
4 p. m.
Lord Cameron of Lochbroom: My Lords, before the Lord Advocate replies, perhaps I may also raise one or two further points which occurred to me having been given a copy of the proposed principles on which the Government were intending to bring forward a possible amendment.
The first has already been mentioned by my noble and learned friend regarding the membership of 10,000 and the problems of determining what constitutes a membership. That figure appears to be an arbitrary limit and could discriminate against some of the traditional Churches in Scotland which have a long history but do not rise to quite those numbers. Indeed, one might ask what happens when within such a traditional Church there is a split involving its division into two separate but identifiable units.
Further, one of the principles suggested, or the criterion to be applied, was that such bodies should have as their principal activity the regular holding of acts of public worship. However, within the Churches there are identifiable bodies whose principal activities may be related to the Church itself but directed to other aspects of Church life such as social work. That is a matter which should be taken into account. Furthermore, in the discussions there was some question of waiving certain of the provisions of the Bill in relation to these exempt bodies. I have seen those. Perhaps I may suggest that the exemptions would on any view be best if they included Clauses 1 (3) and (4) as well as (5) and also make provision for exemption wholly from Clause 5 rather than from certain parts of it. That seems to be a much cleaner way.
I simply offer these suggestions because various points have been raised and it would be advantageous to have them on record.
Lord Eraser of Carmyllie: My Lords, as I have already indicated on an earlier amendment, the Government intend to bring forward amendments in another place to deal with the position of established Churches, and I use that description in a loose sense for Scotland rather than in any particular sense.
In bringing forward such amendments, I shall have regard to the points made by noble and learned Lords. While I agree that there is a particularly strong case for exempting the major religious bodies, the amendment proposed is rather too extensive in exempting all bodies established for the advancement of religion. As your Lordships are aware from discussions we had in Committee, I am concerned that there should be a power to act where necessary against certain cult-like sects.
This aspect of charities is a most tricky area. Some are clearly the most honourable and worthwhile bodies in Scotland, but others may well be the most deceitful and dishonourable. Seeking to discover where that line should be drawn is by no means easy. A number of suggestions have been put to the Scottish Churches Committee and we have heard that there may be difficulties over applying the criteria which have been established. I hasten to add that they were not intended to be absolute in any

169
sense. It is a matter for discussion. However, I emphasise that we must insist that not all religious bodies are exempt.
At the other end of the argument, while I understand what has also been suggested in regard to listing, the proposal to list, for example, the Church of Scotland Trust and the Church of Scotland Trustees, as appears in Amendment No. 50, is probably unacceptable as it seems likely to give rise to questions of hybridity. In dealing with this issue in Scotland, that is regrettably a further complication in the way the matter is approached.
Baroness Phillips: My Lords, perhaps the Minister, or the movers of the amendment, can give me an explanation. I am a great admirer of the Lord Chancellor. I speak as a member of the Church of Rome. At least the Pope is a delegate, ultimately, for someone above. Are we considering this particular Church known as the "wee frees"? That Church did not seem to me to be of a very liberal character. I would not support the amendment if that church is to be included.
Lord Morton of Shuna: My Lords, despite the persuasive invitation from the noble Baroness, Lady Phillips I have no intention of discussing one Church as against another, let alone any Church that has recently divided itself.
The difficulty of my amendment was well recognised, but it was tabled only as a vehicle for discussion. It is very necessary that any listing or provision should cover not only the Christian Churches but the other religions which exist to a considerable extent in Scotland. While I agree that there may be one or two cults —the word used by the noble and learned Lord the Lord Advocate—which would rot be appropriate, that is a matter for his judgment. We must deal with this matter in some way, but it appears to me that the only way is to list the organisations that are to be excluded. However, at this stage I ask leave to withdraw the amendment.
Amendment, by leave, withdrawn.
Lord Cameron of Lochbroom Lord Cameron of Lochbroom moved Amendment No. 10:
Page, line 15, at end insert ("; nor—
(c) a charity having neither any permanent endowment nor any income from property amounting to move than £500 or such other sum as the Secretary of State may, by regulation, from time to time prescribe, nor the use and occupation of any heritable property").
The noble and learned Lord said: My Lords, this amendment takes up a point made within short compass in the general debate in Committee regarding Churches. It seeks to withdraw the very small charities from the prohibition in Clause 2 (1) and thus allow them to operate without the necessity to obtain recognition from the Inland Revenue. These are the small charities that have no desire to secure funds by way of gifts under convenant. Indeed, they may be of a character which would be more commonly recognised as public charitable trusts in the eyes of the law and not those which fall within the prescribed definition of a charity for taxation purposes. The existence of such public charitable
170
trusts is recognised in Clause 8 of the Bill. That is in contrast to the terms used in Clause 9, which speak about a public trust which is a recognised body. It is one which has passed the Inland Revenue test.
As the Bill is framed at present, in order to hold itself out as a charity, a small charity would be required to apply first to the Inland Revenue for recognition, although it would not wish the benefit of the taxing statutes. But only if such recognition were granted would it then be able to hold itself out as a charity. If it were refused, the prohibition would bite; and that would seem unfortunate. On the other hand, if it were granted, the small charity would then have to pass the next hurdle of being exempted from the accounting rules. Otherwise it would become liable to the accounting rules.
It seems somewhat unnecessary to make small charities pass two statutory hurdles simply to provide them with the comfort of being able to call themselves a charity. One might ask whether the Inland Revenue would welcome a further increase in the number of bodies applying for recognition in order to escape the prohibition, in particular where the Inland Revenue would have no interest in the result and the body would have no interest in the provisions of the taxing statutes which might be favourable to other charities. What is the public interest in requiring small charities to be so supervised? There seems to be a case for exempting very small charities. That is what the amendment seeks to do. It begins with the provision for the upper limit of the charity's annual income which can be altered according to events. I am anxious to hear what the noble and learned Lord the Lord Advocate has to say on the distinction between a charity under the taxing statutes and a charity as defined in Scots law generally. I beg to move.
4.15 p.m.
Lord Morton of Shuna: My Lords, the matter was discussed fairly briefly in Committee with the amendment about churches, as I recollect. It seems totally wrong that a small body such as a committee which organises a collection or a sale of work once a year to take children from a hospital to the seaside should have to register or run the risk of committing offences for which members of the committee will apparently be liable for about six months' imprisonment. That seems utterly wrong. From the discussion in Committee everyone seems to have agreed that some exemption for these very small charities was desirable from the point of view of administration and everything else. I hope that the noble and learned Lord will say something that deals with the problem.
Lord Fraser of Carmyllie: My Lords, as has been indicated, we have discussed the matter previously. It is the undoubted policy of the Bill to provide supervision over all Scottish charities. That the provision should apply to all charities, irrespective of size, was a policy strongly advocated to the Government by the Scottish Council for Voluntary Organisations. It is difficult to know what should be the appropriate cut-off point if this exception is

171
made. The figure that the noble and learned Lords have selected might be varied without much difficulty one way or the other.
We have accordingly sought to approach the matter in a different way. That is by providing in Clause 4 that the requirement to produce accounts should be tempered. Small charities are not to be required to produce an income and expenditure account—I recognise that that would be a gross imposition on them—but need prepare only a receipts and payments account. Similarly they will be relieved of the requirement to have their accounts audited professionally.
Should a charity have the use and occupation of heritable property we would still wish to supervise it. Moreover, it is open to small charities to amalgamate to form larger trusts or to reform their objects without recourse to the court under the provisions of Clause 9. Why therefore should any provision be made to exempt the small trust? We seek to achieve working efficiency by transfers and amalgamations.
My noble and learned friend Lord Cameron of Lochbroom drew attention to a point of difference that appears at present in relation to Clauses 8 and 9. On a previous occasion we have had a learned discussion as to what is a Scottish charity as opposed to a charity recognised by the Inland Revenue and what is a public trust within the law of Scotland. It would be my intention to bring that into line and ensure that under Clause 9, if there were a trust which was public according to the law of Scotland but which was not charitable according to the test in the Pemsell case, it would nevertheless be in a position to take advantage of what I have previously described as the new administrative cy près arrangements. Although the matter effectively arises at a later stage, it has been raised and I hope that I have reassured the noble and learned Lord, Lord Cameron.
In policy it is difficult to determine where the line should be drawn. However, we have taken the advice that has been proffered to us that if there is to be proper supervision of Scottish charities it should extend to all such charities. I hope that that is suitably tempered by reference to Clause 4. As a consequence of this part of the Bill, such bodies will also enjoy new opportunities by way of cy près to reorganise themselves or to amalgamate.
Lord Cameron of Lochbroom: My Lords, I am somewhat reassured by the attitude of the noble and learned Lord. I am sure that he will read what my noble and learned friend and I have said about small charities. I am not entirely sure that he has hoisted aboard the point about the local gala day which may not be held for a purpose that would be regarded as charitable under the Pemsell case but would still be a charitable purpose under the law of Scotland. It would be a curiosity that that committee would be prohibited from calling itself a charity. What otherwise would it be?
However, I recognise that the noble and learned Lord has listened. I take on board what he has said about my later amendment. In the circumstances I beg leave to withdraw the amendment.
Amendment, by leave withdrawn.
Lord Fraser of Carmyllie Lord Fraser of Carmyllie moved Amendment No. 11:
Page 3, line 17, leave out ("Court of Session") and insert ("court").
On Question, amendment agreed to.
[Amendments Nos. 12 to 14 not moved.]
Clause 4 [Annual accounts and report]:
Lord Cameron of Lochbroom Lord Cameron of Lochbroom moved Amendment No. 15:
Page 4, line 17, at end insert ("which shall include a statement of the principal charitable purposes of the body and the names of the persons concerned in its management or control during the year").
The noble and learned Lord said: My Lords, I speak also to Amendment No. 16. The purpose of the amendment is to provide for the incorporation in the reports prepared by recognised bodies information with regard to those who were responsible for the charity's activities during the year covered by the annual report and a statement of its principal purposes. Such a statement may well have been the subject of amendment by the noble and learned Lord the Lord Advocate. It would be helpful for an annual report to contain such information. It would provide for greater accountability, which is one of the matters with which the Government were concerned in this legislation. It might even be helpful in the preparation of an index by an interested body. I beg to move.
Lord Fraser of Carmyllie: My Lords, I am wholly sympathetic to the aim of the amendments but I do not believe that it is necessary for them to appear on the face of the Bill. My right honourable friend the Secretary of State has powers under Clause 4 (5) to prescribe by regulations the form and content of accounts including any information to be provided by way of notes to the accounts. An inquirer has a right to obtain a copy of the actual trust deed under the provisions of Clause 1 (3). That provision was inserted at the suggestion of the SCVO in preference to a summary of the principal objects. The notes will, however, require a summary of the body's activities over the year having regard to its charitable purposes. As my noble and learned friend suggested, this allows something of a reference back to the making up of a directory if that is what is wanted.
I can confirm that it is my right honourable friend's intention to prescribe in regulations that the names and designations of those who are or have been concerned with the management and control of the body during the financial year should be listed. I hope that my explanation meets my noble and learned friend's point. With that undertaking I trust that he will feel able to withdraw the amendment.
Lord Cameron of Lochbroom: My Lords, I am most grateful to the noble and learned Lord. I am perfectly content with what he has said. I beg leave to withdraw the amendment.
Amendment, by leave, withdrawn.
[Amendment No. 16 not moved.]
Lord Fraser of Carmyllie Lord Fraser of Carmyllie moved Amendment No. 17:
Page 4. line 36, after ("thereon") insert ("and as to the consideration of the report").
The noble and learned Lord said: My Lords, Clause 4(5)(c) makes provision enabling my right honourable friend the Secretary of State for Scotland to prescribe by regulation requirements as to auditing the accounts which recognised bodies are required to prepare in accordance with the provisions of the Bill.
Since the report which forms part of the statement of accounts will require to be consistent with the audited accounts the auditor will need to address this point in his examination. The amendment makes plain that my right honourable friend may prescribe requirements as to that aspect of the audit. I beg to move.
Lord Morton of Shuna: My Lords, this is no doubt a very good purpose but I am not entirely sure that the words actually achieve that purpose. They certainly do not make it clear. Subsection (5) (c) would now read:
"such requirements as to auditing of the balance sheet, statement of balances, income and expenditure account and receipts and payments account and any notes thereon and as to the consideration of the report as he considers appropriate".
It is not easy to take much meaning out of that sentence. Whose consideration of the report is supposed to be involved? It is not at all clear who is to do the considering. Perhaps the noble and learned Lord will consider that matter.
Lord Fraser of Carmyllie: My Lords, the powers look very similar to those provided in Section 9 of the Companies Act 1989. If they have not been entirely helpfully introduced into the clause I shall look at the matter. I hope that the noble and learned Lord will appreciate that I am not giving an undertaking to come back with anything.
On Question, amendment agreed to.
Lord Fraser of Carmyllie Lord Fraser of Carmyllie moved Amendment No. 18:
Page 4, line 42, after ("shall") insert ("(a)").
The noble and learned Lord said: My Lords, it may be helpful if I speak at the same time to Amendments Nos. 19, 21 and 22. Subsection (7) requires a recognised body to provide on payment of a reasonable charge a copy of its most recent statement of annual accounts to any person who requests it. It will not necessarily be clear to the person concerned whether the accounts are in fact the latest available or whether another set is overdue unless he can ascertain the date to which the accounts are required to be made up. In particular it will be important in the case of a body which has not at that point produced any accounts for the inquirer to be able to ascertain when the first accounts are due to be produced.
Amendments Nos. 19 and 22 provide therefore that the body will also be required to inform inquirers of that date and enable me to direct that any failure to provide this information may be noted by the Inland Revenue for the purposes of Clause 1 (2). Amendment No. 18 is consequential.
Amendment No. 21 and the first part of Amendment No. 22 also take account of the point raised in Committee by my noble and learned friend Lord Cameron that it would be unfortunate if a person were able to complain under Clause 1 (4) or Clause 4 (12) when he had requested information but had failed to tender the reasonable charge for either a copy of the body's trust deed or its accounts. I undertook to give some further thought to that. I am content that no amendment is required to Clause 1 (4), but the same point is not covered in the existing wording of Clause 4 (12) in relation to the provision of annual accounts. Accordingly, Amendment No. 21 and the first part of Amendment No. 22 make provision for this. I am grateful to the noble and learned Lord for drawing the point to my attention. I beg to move.
On Question, amendment agreed to.
Lord Fraser of Carmyllie Lord Fraser of Carmyllie moved Amendment No. 19:
Page 4, line 45, at end insert:
("(b) inform any person who requests it of its accounting reference date.").
On Question, amendment agreed to.
Lord Fraser of Carmyllie Lord Fraser of Carmyllie moved Amendment No. 20:
Page 5, line 23, leave out ("responsible for") and insert ("concerned in").
The noble and learned Lord said: My Lords, in Committee the noble and learned Lord, Lord Cameron, indicated a difference in terminology between what were formerly subsections (7) and (8) of Clause 4 and are now subsections (9) and (10). The amendment brings the terminology in subsection (10) into line with that in subsection (9). Once again I am grateful to the noble and learned Lord. I beg to move.
On Question, amendment agreed to.
Lord Fraser of Carmyllie Lord Fraser of Carmyllie moved Amendment No. 21:
Page 5, line 32, after first ("person") insert ("(a)").
On Question, amendment agreed to.
Lord Fraser of Carmyllie Lord Fraser of Carmyllie moved Amendment No. 22:
Page 5, line 33, after ("accounts") insert ("as mentioned in subsection (7) above; or
(b) fails to inform that person of its accounting reference date,").
On Question, amendment agreed to.
Lord Fraser of Carmyllie Lord Fraser of Carmyllie moved Amendment No. 23:
Page 5, line 37, leave out ("Court of Session") and insert ("court").
On Question, amendment agreed to.
[Amendment No. 24 not moved.]
Lord Fraser of Carmyllie Lord Fraser of Carmyllie moved Amendment No. 25:
Page 5, line 41, leave out ("Court") and insert ("court"). On Question, amendment agreed to.
Lord Fraser of Carmyllie Lord Fraser of Carmyllie moved Amendment No. 26:
Page 5, line 44, after ("(1)") insert ("(2),(3),").
The noble and learned Lord said: My Lords, subsections (2) and (3) of Clause 4 specify what elements must be included in statements of accounts prepared by a recognised body. However, there are separate provisions in the Companies Act 1989 governing the form and content of accounts which must be prepared by companies. The company provisions take precedence over those in the current legislation for the supervision of charities. The amendment adds subsections (2) and (3) of Clause 4 to the list of provisions which do not apply when a recognised body is a company. I beg to move.
On Question, amendment agreed to.
Clause 6 [Powers of Court of Session to deal with management of charities]:
[Amendments Nos. 27 to 30 not moved.]
Lord Fraser of Carmyllie Lord Fraser of Carmyllie moved Amendment No. 31:
Page 10, line 34, leave out from ("severally") to end of line 36.
The noble and learned Lord said: My Lords, the noble and learned Lords, Lord Morton of Shuna and Lord Cameron of Lochbroom, and the noble Lord, Lord Macaulay of Bragar, raised in Committee on 27th March the question of awarding expenses against a person who was not a party to the court proceedings and suggested that the proviso that such a person shall be entitled to be heard on the question of expenses did not go far enough. I gave an assurance that the matter would be looked at further. Having done so, I have concluded that it would be preferable to omit all reference to,
"notwithstanding that he is not a named party to the proceedings … provided that he is allowed to be heard on the question of expenses".
This formulation was intended to provide for the situation where the names of persons involved in the running of a bogus charity might come to light only in the course of an action and was drafted to provide that it would not be necessary to hear all the evidence again. However, in view of the strong representations which have been made about this provision I have decided that the better course is to delete the provision altogether. As a result of my amendment it will be open to parties to an action who wish to have an individual cited in proceedings to sist the proceedings and to call as co-defender any person whom he alleges is involved in the management or control of the body and for the court to hear that person's evidence in the normal way. As I have just indicted, this puts it in the practice and traditions of the court. I trust that now that the features that the noble and learned Lords found objectionable in this provision have been removed they may be able to support the amendment.
4.30 p.m.
Lord Macaulay of Bragar: My Lords, as a point of information, is the noble and learned Lord the Lord Advocate saying that, where it is proposed that a person might have expenses awarded against him in
176
any action, he will be formally cited to the court before any decision is made by the parties to the action? Thus there will be no instance of a case where a person suddenly finds himself liable for £400 of expenses that he had never heard of before he perhaps gets a summons or a visit from the sheriffs officer.
Lord Fraser of Carmyllie: Yes, my Lords, I can confirm that. The history of this is that we started off by thinking how can we get at these people who are behind a bogus trust. When action is taken, how do you get on to them and take some action against them? We modified that to say that if expenses were going to be awarded against them they ought at least to have the right to be heard.
Even with that modification to the original proposal there was objection from the noble and learned Lord and others to this innovation concerning what would ordinarily be the position in the Scottish courts. Having reflected on it, I have concluded that the simplest way is to stick to the ordinary arrangements and avoid any attempt at some new arrangement.
On Question, amendment agreed to.
Clause 9 [Small charities]:
Lord Cameron of Lochbroom Lord Cameron of Lochbroom: moved Amendment No. 32:
Page 13, line 16, leave out ("which is a recognised body").
The noble and learned Lord said: My Lords, the purpose of this amendment and the related amendment to which I beg leave to speak. Amendment No. 44, is simply to enable these sensible provisions to be extended to all public trusts whether or not they are recognised bodies—that is to say, bodies which have passed the Pemsell tests and been recognised by the Inland Revenue. As I say, these are sensible provisions and I understand from what the noble and learned Lord has already said that he is favourably inclined to these amendments. I beg to move.
Lord Fraser of Carmyllie: My Lords, as I have hinted previously, I have considered the suggestions made at Committee stage by the noble and learned Lord and others on this issue and have decided that there is a case for extending the facility that arises under Clause 9 to all public—and I stress the word to the noble and learned Lord, to whom it doubtless makes sense—trusts. The Government intend to bring forward amendments at Committee stage in the other place to facilitate this. In bringing forward an amendment it will be necessary to ensure that where one of the bodies in an amalgamation is already a recognised body, the objects of the reconstituted body would continue to be such.
My Lords, I have indicated that I accept the principle, advocated by the noble and learned Lord at Clause 9, that the facility to reorganise under the provisions of that clause should be extended to small public trusts irrespective of whether they are recognised bodies. Having accepted that principle, I would also accept that there is little justification for restricting the facility for very small trusts with an

177
annual income of less than £1,000 to those which have charitable purposes.
I would therefore accept in principle the amendment. However, I fear that by removing the word "charitable" without further qualification we would be opening up this facility to all trusts—not just charitable ones but public and private ones. I suspect that a further amendment may be necessary to make clear that the clause applies only to public trusts and charitable trusts. Subject to that proviso I am happy to accept the noble and learned Lord's amendment in principle, and thank him again for bringing, this matter before us. Given those assurances, I hope that he will feel able to withdraw this amendment.
Lord Cameron of Lochbroom: My Lords, I am grateful to the noble and learned Lord. In the circumstances I am happy to seek the leave of the House to withdraw the amendment.
Amendment, by leave, withdrawn.
Lord Fraser of Carmyllie Lord Fraser of Carmyllie moved Amendment No. 33:
Page 13, leave out lines 19 to 23 and insert:

("(a) that the original purposes of the trust, whether in whole or in part—

(i) have been fulfilled as far as it is possible to do so; or

(ii) can no longer be given effect to, whether in accordance with the directions or spirit of the trust deed or other document constituting the trust or otherwise;

(b) that the original purposes of the trust provide a use for only part of the property available under the trust;

(c) that the original purposes of the trust were expressed by reference to—

(i) an area which has, since the trust was constituted, ceased to have effect for the purpose described expressly or by implication in the trust deed or other document constituting the trust; or

(ii) a class of persons or area which has ceased to be suitable or appropriate, having regard to the spirit of the trust deed or other document constituting the trust, or as regards which it has ceased to be practicable to administer the property available under the trust; or

(d) that the original purposes of the trust, whether in whole or in part, have, since the trust was constituted—

(i) been adequately provided for by other means; or

(ii) ceased to be such as would enable the trust to become a recognised body; or

(iii) ceased in any other way to provide a suitable and effective method of using the property available under I he trust, having regard to the spirit of the trust deed or other document constituting the trust,").

The noble and learned Lord said: My Lords, during the Committee stage of the Bill on 27th March I undertook to bring forward at Report amendments to Clause 9 to bring its provisions into line with Clause 8. The provisions of this amendment require trustees of small charities who wish to reorganise the objects of their trust, or to amalgamate with another trust, to be satisfied on all the points a court would be required to have regard to under Clause 8. It is clearly desirable that the same basic criteria should apply to reorganisation whether it takes place in court under the provision
178
of Clause 8 or without recourse to the court under the Clause 9 provisions. I beg to move.
Lord Cameron of Lochbroom: My Lords, I wonder whether the noble and learned Lord has considered the scenario that a trust may see, and indeed obtain, leave to reconstitute itself so that new purposes come into effect and a new trust then comes into being, and some 30 years later those purposes become incapable of being fulfilled? The problem I have is that as presently drafted the words that first appear are "original purposes of the trust".
It seems to me that some thought might be given to the altered trust purposes—as, for instance, those that come under Amendment No. 37—being deemed to be original purposes, so that any subsequent rearrangement that may well come about can be comprehended by this clause. Apart from that, it seems to me that this is a helpful amendment and I would certainly support it.
On Question, amendment agreed to.
Lord Fraser of Carmyllie Lord Fraser of Carmyllie moved Amendment No. 34:
Page 13, line 29, leave out ("or").
The noble and learned Lord said: My Lords, together with Amendment No. 34 it might be useful if I were to speak also to Amendments Nos. 35 through to Amendment No. 43. These are essentially clarifying amendments the intention of which is to make plain that, as well as modifying the purposes of their trust or transferring the assets of the trust to another public trust, trustees may amalgamate with one or more public trusts. The amendments also prescribe the circumstances trustees must have regard to before resolving to amalgamate.
My Lords, Amendment No. 35 enables the trustees to determine that their trust should be amalgamated. Amendment No. 37 inserts a new subsection (9A), which enables the trustees to pass a resolution to amalgamate with one or more trusts and requires them to be satisfied that the charitable purposes of the new trust should be similar in character to the existing trust.
The same amendment inserts new subsection (9B). Under this subsection the trustees are required before passing a resolution under (9A) to have regard to any particular locality to which the trust purposes relate, to ensure that the new trust will continue to be eligible for tax exemption, and to ascertain that the trustees of the other trusts involved are agreeable to the amalgamation. Your Lordships will note that these requirements at new subsection (9B) correspond exactly with those at existing subsection (9) which relate to the transfer of assets. All the other amendments are consequential. I beg to move.
On Question, amendment agreed to.
Lord Fraser of Carmyllie Lord Fraser of Carmyllie moved Amendments Nos. 35 to 43:
Page 13, line 31, at end insert (", or
(c) that the trust should be amalgamated with one or more public trusts."),
Page 14, line 13, after second ("trust") insert ("or trusts").

179
Page 14, line 28, at end insert:
("(9A) Where the trustees determine as mentioned in subsection (2) (c) above, they may pass a resolution that the trust be amalgamated with one or more other trusts so that the charitable purposes of the trust constituted by such amalgamation will not be so dissimilar in character to those of the trust to which the resolution relates as to constitute an unreasonable departure from the spirit of the trust deed or other document constituting the last mentioned trust.
(9B) Before passing a resolution under subsection (9A) above, the trustees shall —

(a) where the trust purposes relate to a particular locality, have regard to the circumstances of the locality;

(b) ensure that the trust purposes of the trust to be constituted by such amalgamation will be such as to enable it to be granted an exemption from tax by the Commissioners of Inland Revenue under section 505 (1) of the Income and Corporation Taxes Act 1988 (exemption from tax for charities); and

(c) ascertain that the trustees of any other trust with which it is proposed that the trust will be amalgamated will agree to such amalgamation.").

Page 14, line 29, after ("assets") insert ("or an amalgamation of two or more trusts").
Page 14, line 36, leave out ("or (8)") and insert (", (8) or (9A)").
Page 14, line 44, after ("otherwise") insert ("(a)").
Page 14, line 45, leave out ("or, as the case may be") and insert ("(b)").
Page 14, line 46, after ("above") insert ("; or
(c) that the trust should not be amalgamated as mentioned in subsection (9A) above").
Page 14, line 48, at end insert ("or amalgamation").
The noble and learned Lord said: My Lords, I beg to move Amendments Nos. 35 to 43 en bloc.
On Question, amendments agreed to.
Clause 10 [Expenditure of capital]:
[Amendment No. 44 not moved.]
Lord Fraser of Carmyllie Lord Fraser of Carmyllie moved Amendment No. 45:
Page 15, line 23, leave out ("Court of Session") and insert ("court").
On Question, amendment agreed to.
Lord Fraser of Carmyllie Lord Fraser of Carmyllie moved Amendment No. 46:
Page 15, line 24, leave out ("Court") and insert ("court").
On Question, amendment agreed to.
Clause 13 [Interpretation of Part I, regulations and orders]:
Lord Fraser of Carmyllie Lord Fraser of Carmyllie moved Amendment No. 47:
Page 16, line 9, at end insert ("and, as regards any reference in this Part of this Act to the institution of proceedings in any court or to any order of a court, shall be construed—

(a) in the case of a trust, as a reference to the trustees acting in their capacity as such;

(b) in any other case, as a reference to the persons concerned in the management or control of the body;").

On Question, amendment agreed to.
Lord Fraser of Carmyllie Lord Fraser of Carmyllie moved Amendment No. 48:
Page 16, line 9, at end insert (""court", for the purposes of establishing jurisdiction to hear or determine any matter other
180
than under sections 6 and 8 of this Act, means the Court of Session or the sheriff;").
The noble and learned Lord said: I beg to move.
Lord Macaulay of Bragar: My Lords, the amendment has already been spoken to, but perhaps I may draw the noble and learned Lord's attention to the definition of "court" in Amendment No. 48. It states that the word "court" means:
"the Court of Session or the sheriff".
The sheriff is a person. He is not a court. As a matter of construction should not that read "sheriff court" rather than the sheriff as an individual? I put that forward in a helpful spirit.
Lord Fraser of Carmyllie: My Lords, I shall check that point and see what the context is. Undoubtedly the point made by the noble Lord is correct.
On Question, amendment agreed to.
[Amendments Nos. 49 and 50 not moved.]
Lord Fraser of Carmyllie Lord Fraser of Carmyllie moved Amendment No. 51:
Page 16, leave out lines 30 to 41 and insert:
("(5) A recognised body's accounting reference date is the date upon which its accounting reference period ends in each calendar year and it shall be ascertained as follows—

(a) in the case of a body which is recognised at the commencement of this section and in respect of which accounts have been prepared up to a date not more than 12 months before such commencement, its accounting reference date shall be that date;

(b) in the case of a body which is recognised at the commencement of this section and in respect of which no such accounts have been prepared, its accounting reference date shall be 31 March or such other date as the Secretary of State may, by order, prescribe;

(c) in the case of a body which is not recognised at the commencement of this section and in respect of which accounts have been prepared up to a date not more than 12 months before its recognition, its accounting reference date shall be that date; and

(d) a body which is not recognised at the commencement of this section and in respect of which no accounts have been prepared up to a date not more than 12 months before such commencement, unless it determines that its accounting reference date shall be 31 March or such other date as the Secretary of State may, by order, prescribe, shall by notice given to the Lord Advocate specify its accounting reference date.").

The noble and learned Lord said: My Lords, this is a somewhat technical amendment, but its effect is to ensure that a recognised body in preparing the annual accounts it is required to maintain under the terms of Clause 4 may exercise choice as to what should be its accounting reference date. The accounting reference date is the date to which accounts are produced. An important effect of these amendments will be to ensure that where a body already prepares accounts to a particular date it will not have to change that date because of the requirements of the Bill. I beg to move.
On Question, amendment agreed to.
Lord Fraser of Carmyllie Lord Fraser of Carmyllie moved Amendment No. 52:
Page 16, line 44, leave out from ("section") to end of line 45 and insert ("and in respect of which any accounts have been

181
prepared for a period up to a date not more than 12 months before such commencement, the period beginning with that date;
(aa) in the case of a body which is recognised at such commencement and in respect of which no such accounts have been prepared, the period beginning with such commencement").
The noble and learned Lord said: My Lords, this is a clarifying amendment to make explicit when the first accounting reference period for a recognised body is to commence. In the case of a body already recognised at the commencement of this clause of the Bill, which has completed accounts in the past 12 months, the period begins with the date of the completion of such accounts. In the case of a body also so recognised but which has not completed any such accounts, the period begins with the commencement date of this clause. I beg to move.
On Question, amendment agreed to.
Clause 14 [The Scottish Conveyancing and Confirmation Practitioners Board]:
[Amendment No. 53 not moved.]
Lord Fraser of Carmyllie Lord Fraser of Carmyllie moved Amendment No. 54:
Page 17, line 24, leave out ("Confirmation Practitioners") and insert ("Executry Services").
The noble and learned Lord said: My Lords, this involves a very extensive list of amendments. The principal amendment is Amendment No. 54, but the other important amendments within this large batch are Amendments Nos. 85, 101, 120 and 236. It is a large batch of amendments, but that is merely because they are all part of our revised scheme for the regulation of those who provide what we now refer to as executry services. By that I mean the area covered by the statutory reservation for confirmation of executors and related activities for the administration of the estate.
As I said in Committee on 27th March when we discussed amendments moved by the noble and learned Lord, Lord Morton of Shuna, I intended to have a further look at the whole area with my right honourable friend the Secretary of State for Scotland. I said then that I had some sympathy with the noble and learned Lord's amendments, but I thought that they might be too wide-ranging in the sense of imposing a strict regulatory regime for financial institutions which were already providing a satisfactory service in executry work.
The arrangements which we now propose, which are expressed in this extensive group of amendments, envisage essentially a two-tier form of regulation for those who provide executry services, as now defined, to include the administration, in-gathering, distribution and winding up of an estate as well as work connected with confirmation itself.
There will be two categories of providers. The first group comprises those who are already regulated under statute; that is to say, banks, building societies and insurance companies. Within that group lie bodies such as the main Scottish banks which already do executry work but which may not now of course
182
handle confirmation. We believe that that group is already adequately regulated to provide satisfactory consumer protection. We intend therefore to exempt bodies in that group from the offence provisions relating to the confirmation of executors. They will have to notify the board that they intend to offer executry services and that they belong to a complaints system which complies with any regulations that may be made by the Secretary of State in respect of dealing with complaints.
The board will maintain a list of such bodies and will make it available for public inspection but will not have any regulatory responsibilities for them. The exemption of those bodies from the offence provisions relating to confirmation will be dependent upon their complaints scheme operating in practice in the manner indicated to the board. If that does not prove to be the case, then the offence provisions will stand. That matter is covered by Amendment No. 101.
The regulation of other providers of executry services will, subject to some important changes which I shall explain shortly, be broadly the same as that for providers in the Bill as discussed in Committee. Prospective providers will have to apply to the board for registration and will have to satisfy the board that they are fit and proper persons to provide the services; that they comply with the requirements of the regulations governing education, conduct and practice; and that they have some form of indemnity insurance cover. If they satisfy the board in all those respects they will be admitted to the register and will be entitled to provide executry services under the title of executry practitioners.
The two additional important changes to which I have referred in passing are that the responsibility for the rules of conduct and practice will now rest with the Secretary of State and not with the board. That change is made in recognition of an extended definition of the regulated area. Provision is now made to place the Secretary of State under the statutory duty to make regulations for the maintenance of appropriate standards of conduct and practice of executry practitioners. Those regulations will be made after consultation and are broadly comparable to what is to be provided for conveyancing. That is Amendment No. 85.
The other important change is found in Amendment No. 236. It is also made in recognition of the extended definition of a regulated area in that executry practitioners will be covered by the board's compensation fund. The amendments go a long way towards meeting the concerns expressed in Committee about the degree of regulation necessary over new providers of services relating to executries while avoiding imposing an over-regulatory regime on financial institutions which are regulated separately.
I trust that I have outlined the main features of the new scheme. I apologise for the fact that it has taken some time to do so, but this is probably the most important set of amendments that I shall introduce on Report. Obviously it will be necessary to make a large number of consequential amendments, but I think that they are essentially self-explanatory. I beg to move.
Lord Morton of Shuna: My Lords, I am grateful to the noble and learned Lord for having taken wholly on board the principle which I sought to establish in the amendments I moved in Committee to extend the provision to executry. That is the reason I did not move the previous amendment. I apologise to the noble and learned Lord if I caught him short, so to speak, by not moving it. The arrangements now put forward by the Government in this group of amendments seem entirely satisfactory. I am grateful that the Government have taken them on board.
Lord Macaulay of Bragar: My Lords, I wish to adopt the views expressed by the noble and learned Lord, Lord Morton of Shuna. The areas with which the amendments deal are important for normal, ordinary individuals. The noble and learned Lord the Lord Advocate stated quite properly in relation to Amendment No. 85 that these were important matters. The terms of that amendment go to the heart of the conduct on the part of the new statutory animal, if I may call it such with no disrespectful intent.
The regulations will be directed to maintaining appropriate standards of conduct and practice of executry practitioners. Such regulations may make provision as to educational qualifications and practical training. These regulations cover a wide spectrum, therefore.
Your Lordships will note that the new subsection (11) of Clause 17 in Amendment No. 85 states that:
"Regulations under subsection (10).. shall be made by statutory instrument subject to annulment in pursuance of a resolution of either House of Parliament".
Noble Lords will find a similar provision if we move on to Amendment No. 101. Amendment No. 66 in the name of the noble and learned Lords, Lord McCluskey and Lord Morton of Shuna, of myself and the noble Lord, Lord Carmichael of Kelvingrove, has not yet been spoken to. The amendment deals with negative and affirmative resolutions and sets out to indicate that:
"No instrument shall be made under this section unless a draft of the instrument has been approved by resolution of both Houses of Parliament".
A question of principle has been raised here. My understanding of Amendment No. 66 is that it is analogous to Clause 93 of the Courts and Legal Services Bill, which recently passed through your Lordship's House in relation to English conveyancing practitioners. Of course, the question of the executry practitioners and confirmation practitioners did not arise in the course of the English Bill, as I recall.
The noble and learned Lord the Lord Chancellor conceded that the proper course in relation to these new practitioners was to have an affirmative resolution, not a negative resolution of the House. Statutory instruments leave it all to chance as to whether people discover what is being done in any sphere. I make my observations at this stage in order to ask the noble and learned Lord the Lord Advocate whether he will take away Amendment No. 85 (11 and Amendment No. 101 (5) in order to consider whether, in the light of the provisions in the
184
comparable Bill for England and Wales, it would at least be equitable that the same procedure should apply in Scotland. I await the reply of the noble and learned Lord with interest.
Lord McCluskey: My Lords, I too wish to congratulate the noble and learned Lord the Lord Advocate on having listened to representations and to the debate on this matter. I notice that we put down an amendment to line 22 of the words that appear in italics. It may be that that is part of the Bill which one cannot amend.
I wish to ask the noble and learned Lord the Lord Advocate two questions, one of which is about a matter which is not entirely clear to me. Once one has dealt with solicitors as providing executry services and then with recognised financial institutions, who else is left to be subject to the regulation and to the establishing of educational qualifications and practical training? Whom do the Government seek to regulate? This is not entirely clear to me from what has been said on previous occasions.
Further, on Amendment No. 85, to which the noble and learned Lord the Lord Advocate spoke, once again there is the use of the word "shall" in the first line and "may" in the sixth line. When the noble and learned Lord the Lord Advocate considers these matters further, I ask him to bear in mind the point that was made in relation to other parts of the Bill. It is slightly odd to lay upon the Secretary of State a duty to make regulations and then to give him total discretion as to what he may insert or omit.
The most important provision that he would insert in the regulations—and no doubt that is why it is specified in Amendment No. 85—is the making of provisions as to educational qualifications and practical training. I should have thought therefore that the noble and learned Lord the Lord Advocate would be persuaded that that was an appropriate place in which to use "shall" instead of "may". However I do not wish to spoil the party—at least not at this stage in the afternoon. Accordingly I am happy to welcome the amendments of the noble and learned Lord the Lord Advocate.
Lord Fraser of Carmyllie: My Lords, perhaps I may respond briefly to the variety of points made. Concerning "may" and "shall", we shall come to a separate amendment on that later and I shall leave it until then. Similarly, I listened carefully to what the noble Lord, Lord Macaulay, said about affirmative and negative resolutions. This related particularly to his Amendment No. 66. Perhaps I may suggest that we leave the matter to be dealt with when we reach that amendment.
The one point that I am anxious to clarify was raised by the noble and learned Lord, Lord McCluskey: whom do we seek to regulate if it is not solicitors who are already regulated as members of the Law Society and if it is not an institution provided for under the first part of the tier? What persuaded the Government to introduce this scheme was representations made not only in this House but outside. It was suggested that there might be those

185
who were solicitors and who decided that they would hive off their executry business and deal with it as confirmation practitioners. If they were to act thus, they would find that concerning the winding up of the estate, any matters of delay would take them outwith the disciplinary control of the Law Society of Scotland. I am in no position to calculate or estimate whether that would happen or whether there may be other individuals or bodies who are neither lawyers nor forward in the financial institutions to which I have already referred who would wish to set up.
It was appreciated that if such individuals or bodies sought to go into executry matters, they would be acting in an important area beyond any control. For that reason the scheme has been introduced. I hope that it will now provide a complete and full cover for all those who wish to take advantage of these people's services in the future.
The Earl of Selkirk: My Lords, I am disturbed at what the noble and learned Lord has said. He suggests that people will be thought to hold themselves out as competent professional people when they are not. That is what he suggests in making this provision. It seems to me that from the point of view of the public that could be extremely dangerous. I do not know how the noble and learned Lord will confirm that people are competent to do their job. This proposal will do so, within limits, but here are people who do not fall within this provision who may hold themselves out to be competent. They could be a great danger to the public. What does the noble and learned Lord have in mind?
Lord Fraser of Carmyllie: My Lords, it is precisely because I am concerned that there may be those who would carry out executry services in Scotland without there being any control over them that this new scheme was introduced by the Government. It followed the representations made during the Committee stage.
I do not suggest that these people should be allowed to carry out the work without regulation: it is exactly the other way round. As matters stand at present, they could carry out that work. Under the scheme that I am now introducing with these amendments, they will be regulated. I trust that that will be warmly welcomed.
On Question, amendment agreed to.
Lord Fraser of Carmyllie Lord Fraser of Carmyllie moved Amendment No. 55:
Page 17, line 25, leave out from first ("the") to end of line 31 and insert ("principal functions of regulating —

(a) the provision of conveyancing services by persons other than —

(i) solicitors providing such services in the course of practising as solicitors; and

(ii) persons mentioned in section 32 (2) of the 1980 Act (unqualifed persons who may draw and prepare documents relating to heritable estate and confirmations); and

186

(b) the provision of executry services by persons other than —

(i) solicitors providing such services in the course of practising as solicitors;

(ii) persons referred to in paragraph (a) (ii) above; and

(iii) recognised financial institutions.").

On Question, amendment agreed to. [Amendment No. 56 not moved.]
5 p. m.
Lord Fraser of Carmyllie Lord Fraser of Carmyllie moved Amendment No. 57:
Page 17, line 32, after ("may") insert (", with the consent of the Treasury,").
The noble and learned Lord said: My Lords, in moving this amendment I wish to speak also to Amendments Nos. 60, 226, 227 and 228. This group of amendments is intended to clarify our intentions with respect to how the new board will be funded. It has always been our intention that the board should be largely self-financing after an initial period when it may require the injection of relatively small amounts of public money to get it up and running. The board will charge fees to those whom it regulates and the fee revenue will be used to meet its running costs.
During our debate in Committee the noble and learned Lord, Lord McCluskey, referred to the self-financing nature of the Law Society of Scotland and called for the board to be established in a similar fashion. I indicated then that I was prepared to look again at the board's funding to see whether there was any way in which we could provide for finance of a more temporary nature so that the purposes of the board would not be put at risk but yet we could minimise any subsidy from public funds to the commercial activities of those regulated by the board.
I think that the amendments which we are now discussing will achieve this objective. It is now provided that any grant which the Secretary of State may make to the board —and I stress that his powers here are discretionary—may be made subject to specified terms and conditions which could include a requirement for repayment. The detailed arrangements for these grants would be contained in a financial memorandum from the Secretary of State to the board. The amendments also state that the fees raised by the board in connection with its regulatory functions may be applied towards repayment of any grant made by the Secretary of State. There is a further provision to put beyond doubt that the board could borrow money, for example by way of overdraft at the bank. Again the conditions for such borrowing would be laid down in the memorandum.
We have not made provision for the Secretary of State to make loans to the board. I do not think that such a provision is necessary since I believe we can achieve the desired outcome in the circumstances that I have explained by means of a repayable grant.
I indicated at the outset that in moving Amendment No. 57 I wished to speak also to Amendments Nos. 60, 226 and 227. The number for Amendment No. 60 has been omitted from the Marshalled List but I think its position in the Marshalled List is quite clear. I beg to move.
Lord Morton of Shuna: My Lords, this amendment goes some way towards meeting the difficulties I raised on the matter of level playing fields. However it does not go very far. Amendment No. 60 states that,
"Any grant… may be made subject to such terms".
This board is apparently to be set up to help the largest financial institutions which have the best resources in the world in a sense—in other words, the banks and the building societies. Why are those bodies in need of grants from the Government? The noble and learned Lord estimated that the cost of this board would be something like £ 100,000 to start off with.
I have been supplied with information from the Law Society of Scotland. That information contains calculations based on the rent for premises in central Edinburgh and on the accounts of the Scottish Legal Aid Board. The running costs of the proposed board have been calculated to be something over £350,000 a year. Why should this board, which is intended to facilitate the operations of banks and building societies, be provided with grants from the Government when the Law Society and perhaps various other bodies are not? It seems bizarre that the Government should decide that it is necessary to provide grants to banks and building societies of all people in order to enable them to do what the Government say they want them to do. Perhaps the banks and the building societies do not want to do what the Government wish. But surely that is a matter for the banks and the building societies. There is no need for grants to be provided.
In a sense it is difficult to speak to this amendment without mentioning my Amendment No. 58, which appears later on the Marshalled List. If we have to finance this board, it would be better to do so in the form of a loan rather than in the form of a nebulous power to recoup some money, as Amendment No. 60 implies.
Lord Macaulay of Bragar: My Lords, following on from what the noble and learned Lord, Lord Morton of Shuna, has just said, I must ask the noble and learned Lord the Lord Advocate what compulsion there will be on these major institutions as regards the terms and conditions for obtaining repayment to the public purse. The cost of getting the board up and running would be a drop in the ocean for those institutions, if that. These large institutions do not need public assistance. Your Lordships will recall that a heated debate took place in this House and in another place on another matter of loans. We are living in a funny country when young students are being forced into poverty and into debt by the very same Government who turn round to major financial and banking institutions and say, "Here is a little present from the Government to get you going". If the Government cannot do that for students, how can they justify handing out money to large companies which do not need one penny out of the public purse and which will benefit from the constitution of the board by being allowed into the public sector of these legal activities? That does not make any sense at all.
188
The noble and learned Lord, Lord Morton, mentioned some large figures in connection with the board. However, the noble and learned Lord the Lord Advocate said that a considerable sum would not be needed to get the board up and running. The noble and learned Lord, Lord Morton, referred to the minimum figure that the Law Society of Scotland has arrived at. That figure was arrived at on the basis of rents for offices that were not even in the best areas of Edinburgh. The Law Society calculated that the cost per square foot of office accommodation was £23.50 and that the cost of a basic custom-built computer system was £140,000. The Law Society also calculated that the cost of fitting out and equipping offices was a further £100,000. Then there are staff to be paid, the chairman to be paid and the board members to be paid. The matter was reconsidered this morning and it was estimated that there might be no change out of £500,000. I am sure there are many students throughout the United Kingdom who would be delighted to obtain even £5 of that sum.
Baroness Carnegy of Lour: My Lords, the comparison that has been made between these proposals and student loans is not relevant. The only connection is that the student loans Bill concerns loans and the various speakers in the previous debate wanted to have loans in this case rather than grants. The point that we must not miss is that we are looking for some way of providing competition for solicitors in this field. Solicitors fund their own Law Society and the Law Society is making estimates as regards what such a body may cost. I do not know whether such a body would have to be situated in central Edinburgh. I should not have thought that that was necessary. Perhaps the estimates are unnecessarily large. But the point is that the Bill should permit arrangements to be drawn up in order to find out how the process works and to get the board up and running. Once it is up and running it may well be able to fund itself However, to say in legislation that it should be stopped before it starts by putting disincentives in the way of those who may dip their feet in the water for the first time seems to me a great mistake.
Lord Mackie of Benshie: My Lords, we appear to be talking about the next amendment, which I feel is the relevant amendment. I think it is quite reasonable to lend to banks and other wealthy institutions to enable them to get a start. They should be given loans at a proper rate of interest such as the rates of interest that they charge farmers in this country. That would be quite reasonable. However, the Government are wholly inconsistent in wanting to give banks money while taking money from farmers in order to fund essential research. It is wholly inconsistent and I suggest that we move to the next amendment so that the House can decide the matter.
Lord McCluskey: My Lords, despite what the noble Lord has just said, perhaps I may be permitted to say one word on the matter. I am not happy about the grouping either. I believe that Amendment No. 57 should have been taken on its own. However, the

189
noble and learned Lord the Lord Advocate mentioned Amendment No. 60. He worried me by saying:
"it has always been our intention that the board should be largely self-financing".
That is the first time that the noble and learned Lord has said that. On a previous occasion, as I recall, he said that it was intended to provide moneys for the setting-up and starting costs but thereafter the board should be wholly self-financing. I hope that he will explain whether the use of the word "largely" represents a change of position or whether I have simply misunderstood him.
In a letter to me which he promised at Committee stage to write the noble and learned Lord said:
"As I made clear in the debate"—
and I must confess that he did not make it clear to me —
"the Board will in due course become self-financing and has been accorded a specific power to raise funds".
He went on to talk about pump priming:
"On the question of how best to provide the necessary 'pump-priming' finance before any fee income is forthcoming, the Secretary of State and I are currently considering whether it should be possible for such funding to be potentially available in the shape of loans, as well as by the means of direct grants".
So I do not know what the position of the Government is. No doubt we can explore that question in the course of dealing with the other matters.
However, there is one other matter of which I should perhaps give notice since Amendment No. 60 was spoken to by the noble and learned Lord. That is the curious notion of a grant which is subject to repayment. I know a good word to describe a grant which is subject to repayment: it is called a loan. In addition, the grants which are to be subject to repayment are to be subject to terms and conditions which may be varied after the grant is made. I notice that the noble Lord, Lord Sanderson, has decided to join us on this occasion. No doubt he has some knowledge of the Highlands and Islands Development Board lending sums of money, as will the noble Lord, Lord Mackie. However, I believe that there would be something of a hoo-ha if after the money had been received and spent the conditions for its repayment were then to be changed.
It may be that the noble and learned Lord the Lord Advocate has in mind a grant which is subject to certain conditions and if those conditions are not fulfilled the money may be clawed back, but I do not believe that that is what is said by Amendment No. 60. No doubt in due course we shall receive answers to those particular points. For the moment I should certainly not oppose Amendment No. 57.
Lord Fraser of Carmyllie: My Lords, perhaps I may reply briefly. I am sorry if the grouping is not considered satisfactory but I believe that there is at least some link between the two. As my noble friend Lady Carnegy mentioned, we appear to have ranged widely from the matter of setting up the board to the complaints of the farmers and students of Scotland.
190
I should like to make it clear that the position remains that the Government envisage that the board will in due course be self-financing. I must make it clear that I am not prepared to see a situation whereby, by putting a number of restrictions around the board, those who wish to see the board's demise should achieve its demise because it is not properly funded. It should be appreciated that that is what appears to be behind the proposal.
I hope that noble Lords will read what I have had to say because I am not anxious to repeat it in detail. We envisage that grants from the Secretary of State might be made subject to such conditions that they should be essentially repayable. They are not quite the same as a loan but there might be circumstances which would mean that they were not repaid. I stress that it is the intention that the board should be of a self-financing character. However, I am not prepared to see arrangements introduced which, if adopted, might mean that the board could not get up and running without that priming at the outset.
The Earl of Selkirk: My Lords, I find it very difficult to follow what the noble and learned Lord has said. There is nothing whatsoever in the Bill about repayment. One is left with the proposition that government money may be provided to assist those competing with independent people on the same ground. I do not understand where the Director General of Fair Trading comes into the matter. This would be regarded as a very peculiar proceeding in the commercial market and it is a very odd proceeding here. I do not understand why it has been done.
Is the noble and learned Lord prepared to state in the Bill that repayment will be demanded in due course, because that does not appear in the Bill at all? If that is the intention it should be made abundantly clear.
5.15 p.m.
Lord Fraser of Carmyllie: My Lords, I should be grateful if the noble Earl would read what I said. I have already indicated that if the Secretary of State were to make any grant to the board—and he may not—his powers would be discretionary. The grant would be subject to specified terms and conditions which could include a requirement for repayment.
The Earl of Selkirk: My Lords, should that not be in the Bill?
On Question, amendment agreed to.
Lord Morton of Shuna Lord Morton of Shuna moved Amendment No. 58.
Page 17, line 32, leave out ("grants") and insert ("loans").
The noble and learned Lord said: My Lords, in moving Amendment No. 58 I shall also speak to Amendment No. 59. Having heard what the noble and learned Lord the Lord Advocate said in the previous discussion I can do so fairly shortly because it appears clear that the Government will accept the amendment.
The purpose of the first amendment is to take out the word "grant" and insert the word "loans". I should make it clear that I am in no sense trying to

191
prevent the board being set up. I wish to make sure that there is, in the hackneyed phrase, a level playing field and to specify very much the same type of finance as was insisted on for all the bodies which were set up under the Financial Services Act, namely that they should be self-financing.
If one converts Clause 14 (2) in the way in which Amendments Nos. 58 and 59 suggest, it would read:
"The Secretary of State may make loans to the Board towards expenses incurred, or to be incurred, by them in connection with the initial establishment of the Board".
From what the noble and learned Lord the Lord Advocate said that appears to be the Government's intention. If that is so no doubt he can indicate that the amendment is acceptable. If it is not the Government's intention to accept the amendment, why do we have to retain the words:
"the discharge by the Board of their functions"?
Why is it necessary for the grant to be made to this self-financing body—as we understand it is intended to be—for the discharge of its functions? That is illogical. It certainly does not create a level playing field if banks and building societies are to be subsidised in the discharge of their functions while the solicitors, who are their competitors, are to have no such subsidy. I beg to move.
The Deputy Speaker (Lord Nugent of Guildford): My Lords, I must point out to noble Lords that if this amendment is agreed to it pre-empts Amendment No. 60. Amendment No. 60 refers to grants and will therefore become supererogatory because "loans" will have taken the place of "grants".
Lord McCluskey: My Lords, I wish to support the amendment. Again one does not need to repeat the points which have already been made. However, the noble and learned Lord referred in a previous answer to those who wish to see the board's demise. I do not number myself among them, but I do not know who it was that he had in mind. It is an unfortunate term for him to use.
As I see it, the board is essential if others are to provide conveyancing and executry services as envisaged by the Bill. I do not think that the House is at the stage of saying that the clause should be deleted altogether. That matter has already been dealt with and this House would not attempt to stop the clause coming into force.
However, to return to the specific matter of grants and loans, it seems almost too clear for argument that the financial institutions and building societies referred to in the previous amendment simply do not need financial assistance from the taxpayer to set up a board to regulate their affairs any more than did the Law Society or the bodies which my noble and learned friend Lord Morton of Shuna mentioned. I should like to know in what circumstances the Government envisage that the board could not repay a loan. If the board is set up and governs the activities of building societies, banks and other financial institutions, in what circumstances could the Government forgo repayment of the sums of money?
192
I am so puzzled by the Government's attitude in relation to the matter that I wonder whether they have thought through all the implications of what they currently say. Surely the proper answer is that the Government should be prepared, with the consent of the Treasury, to advance sums of money on commercial terms so that those bodies can be set up and in due course, out of their profits, can repay the Government's and the taxpayers' money.
Lord Stodart of Leaston: My Lords, as I understand it, the two noble and learned Lords have based a certain amount of argument on the fact that a sum of money that may have to be repaid is not a grant but a loan. There have certainly been grants in the field of rural housing. I have enjoyed them and have had to repay them. The noble and learned Lords would therefore say that they were not grants but loans. I do not know whether they were described as loans in the original legislation, but I do not think so. I have not researched the matter, so I do not know whether conditions were written into the legislation to the effect that they might have to be repaid. Certainly, the rural housing assistance scheme was known as rural housing grant, not rural housing loan, but in certain conditions it still had to be repaid.
Lord Macaulay of Bragar: My Lords, I shall not add much more to what I said in relation to the previous amendment, Amendment No. 57. However, I should like to know what negotiations have taken place with the representatives of those major institutions in relation to the primary funding of the board and whether there has been any indication from the banks and insurance companies that they cannot afford to get the board going at their own expense. Is there any reason why those institutions cannot get together, decide how much it will cost to get the thing going and collect the money together just as estate agents and solicitors get together if they want to open property centres? They bear the cost of the mutual exercise.
The noble Baroness, Lady Carnegy, suggested that some of us were here to protect the solicitors. We are certainly not here to do that. The system will run parallel with solicitors and there will be competition. The amendment is a matter of principle and concerns the difference between grants and loans in the circumstances which have already been discussed.
Baroness Carnegy of Lour: My Lords, I did not suggest that anyone was here to protect solicitors. I suggested that the point of the Bill was to present solicitors with some competition, which might be beneficial to the public. That is the point of the Bill. If solicitors were unregulated—just imagine the fantastic scene—and the government of the day considered it necessary to set up a law society and to persuade the profession to have a law society, it might well be that there would have to be a bit of inducement to persuade them. However, they have an excellent law society which they finance. The major institutions must be persuaded that the system can work. It may well be that some kind of negotiations must take place. We shall hear from my

193
noble and learned friend, in response to the noble Lord, Lord Macaulay, whether he has anything to say about that matter. It may be that various conditions will apply in negotiations.
All we are discussing is a certain flexibility in the Bill in order to get the scheme going. No one can tell me that the people who object are doing anything more than objecting to the setting up of a board, in spite of what the noble and learned Lord, Lord McCluskey, said. If we are to have the system, we need the board, but he is not too keen on the system. The provision seems perfectly reasonable to me.
Lord Fraser of Carmyllie: My Lords, we are almost rattling around the Circle Line for a second time. I must tell noble and learned Lords who have contributed to the debate that it appears to me that what they are saying depends on making a number of assumptions which may well be right. It may well be that all the major banks in Scotland will immediately seek to become involved in conveyancing practitioner work. It may be that all the building societies and other financial institutions similarly wish to take advantage of that competitive opportunity.
However, a bank to which I spoke indicated that it did not want to do so and a building society has indicated to me that it does not wish to do so either. I do not think that they will change their minds. I have no idea how many institutions will wish to participate in the scheme. I can make no assumptions and I suggest to noble and learned Lords that similarly they can make no assumptions at the outset as to the number of institutions that may choose to participate.
My noble friend Lady Carnegy is correct in that respect. We seek to allow for provision whereby in the early days the Secretary of State can make repayable grants—not loans—to enable the scheme to be set up. However, I reiterate yet again: we intend that the board should be self-financing. If the assumptions which the noble and learned Lord, Lord McCluskey, made are correct—and he may well be correct—I am wholly confident that no subsidy of any kind will be necessary.
I do not think that the issue should generate the controversy which it appears to generate. We are trying to allow for a period at the start-up during which time the Secretary of State, by grants which are subject to conditions including that of repayment, will allow the scheme to get going. I do not mean the noble and learned Lord to get touchy about my suggestion that some people might be anxious to secure the demise of the board. If he excludes himself from that, I am more than happy to accept his assertion, but it is important that we should have that arrangement at this stage to enable the board to get going.
Rather than dealing with the matter by way of loans, as is suggested here, I have spelt out in some detail the way that the Secretary of State proposes to deal with it by way of repayable grants. Anyone who knows my right honourable friend the Secretary of State for Scotland will know that, if he is subjected to any attack in Scotland, as he occasionally is, it is
194
because he is not free enough in making subsidies to institutions in Scotland, not because he is overly generous, as seems to be suggested here.
Lord Morton of Shuna: My Lords, it has been an interesting debate. The semantics of whether a repayable grant is a loan is perhaps worthy of discussion in an essay in the English language. However, that is not the point. The point is that Amendments Nos. 57 and 58 seek to make clear that the money to be provided by the Government is to be repayable and is only for setting up the board, not for the discharge by the board of its functions.
The noble Lord, Lord Stodart of Leaston, referred to agricultural grants. I am not sure what kind of grants he dealt with, but it is common to have a grant of that kind which one must repay if, for example, one sells the property. One gets a grant to repair a cottage or something, and it is only if the property is sold that the grant has to be repaid. It is a different kind of repayable grant to the one that we are talking about here.
I remain puzzled as to why, in the Financial Services Act, all these institutions that were to give financial advice were to be wholly self-financing as set up by the Act and under the framework of the Act. I do not know why we have to subsidise at the taxpayers' expense the banks and building societies who want to do conveyancing. It is an incredible puzzle.
The noble Baroness, Lady Carnegy, referred to the formation of the Law Society of Scotland. She is wrong. The society was formed at the insistence of the Government because they needed it for the Legal Aid Act. The Law Society of Scotland was financed not at all by the Government. It had to be totally self-financing in its set up. That has always been the position. So far as I am aware, we are setting up a unique new body which is to be financed partly by the taxpayer and which is to benefit the building societies and the banks.
That is totally wrong in comparison with the Financial Services Act and other circumstances. This measure does not provide what has been referred to as the level playing field. I regret that I have to ask for the opinion of the House.
5.32 p.m.
On Question, Whether the said amendment (No. 58) shall be agreed to?
Their Lordships divided: Contents, 75; Not-Contents, 95.

DIVISION NO. 1

CONTENTS

Addington, L.

Coleraine, L.

Ampthill, L.

Davies of Penrhys, L.

Ardwick, L.

Dean of Beswick, L.

Aylestone, L.

Dormand of Easington, L.

Blease, L.

Dunrossil, V.

Bottomley, L.

Ewart-Biggs, B.

Brightman, L.

Falkland, V.

Brooks of Tremorfa, L.

Fisher of Rednal, B.

Bruce of Donington, L.

Gallacher, L.

Carmichael of Kelvingrove,

Galpern, L.

L.

Gladwyn, L.

Cledwyn of Penrhos, L.

Glenamara, L.

195

Graham of Edmonton, L.

Morton of Shuna, L. [Teller.]

[Teller.]

Nicol, B.

Grantchester, L.

Northfield, L.

Gregson, L.

Oram, L.

Grey, E.

Phillips, B.

Hampton, L.

Pitt of Hampstead, L.

Hatch of Lusby, L.

Ponsonby of Shulbrede, L.

Hayter, L.

Prys-Davies, L.

Hirshfield, L.

Rea, L.

Howie of Troon, L.

Robson of Kiddington, B.

Hughes, L.

Rochester, L.

Hylton-Foster, B.

Russell, E.

Jenkins of Putney, L.

Saltoun of Abernethy, Ly.

John-Mackie, L.

Seear, B.

Kennet, L.

Selkirk, E.

Kirkhill, L.

Shannon, E.

Lloyd of Hampstead, L.

Stoddart of Swindon, L.

Longford, E.

Strabolgi, L.

Lovell-Davis, L.

Tordoff, L.

Macaulay of Bragar, L.

Turner of Camden, B.

McCluskey, L.

Underbill, L.

Mackie of Benshie, L.

Wallace of Coslany, L.

McNair, L.

Whaddon, L.

Mason of Barnsley, L.

White, B.

Milner of Leeds, L.

Williams of Elvel, L.

Molloy, L.

Winstanley, L.

Morris of Castle Morris, L.

NOT-CONTENTS

Abinger, L.

Kaberry of Adel, L.

Allenby of Megiddo, V.

Killearn, L.

Allerton, L.

Kimball, L.

Arran, E.

King of Wartnaby, L.

Ashbourne, L.

Lauderdale, E.

Auckland, L.

Layton, L.

Belhaven and Stenton, L.

Long, V. [Teller.]

Belstead, L.

Lucas of Chilworth, L.

Blatch, B.

Lyell, L.

Blyth, L.

McColl of Dulwich, L.

Borthwick, L.

Margadale, L.

Brookeborough, V.

Marshall of Leeds, L.

Buckinghamshire, E.

Merrivale, L.

Caithness, E.

Mersey, V.

Camegy of Lour, B.

Montagu of Beaulieu, L.

Carnock, L.

Morris, L.

Clanwilliam, E.

Mountevans, L.

Constantine of Stanmore, L.

Munster, E.

Cork and Orrery, E.

Murton of Lindisfarne, L.

Craigavon, V.

Nelson, E.

Craigmyle, L.

Norfolk, D.

Davidson, V. [Teller.]

Nugent of Guildford, L.

Denham, L.

Orkney, E.

Dundee, E.

Orr-Ewing, L.

Eden of Winton, L.

Park of Monmouth, B.

Elles, B.

Pender, L.

Elliot of Harwood, B.

Radnor, E.

Elliott of Morpeth, L.

Rankeillour, L.

FaithfuU, B.

Reay, L.

Fanshawe of Richmond, L.

Renton, L.

Ferrers, E.

Rodney, L.

Fortescue, E.

Sanderson of Bowden, L.

Eraser of Carmyllie, L.

Sharpies, B.

Gibson-Watt, L.

Somers, L.

Goold, L.

Stodart of Leaston, L.

Gray of Contin, L.

Strathclyde, L.

Greenway, L.

Strathmore and Kinghorne,

Grimston of Westbury, L.

E.

Harmar-Nicholls, L.

Sudeley, L.

Henley, L.

Swansea, L.

Hesketh, L.

Swinton, E.

Hives, L.

Thomas of Gwydir, L.

Holdemess, L.

Trefgarne, L.

Hooper, B.

Ullswater, V.

Howe, E.

Vaux of Harrowden, L.

Jenkin of Roding, L.

Westbury, L.

Johnston of Rockport, L.

Wynford, L.

Joseph, L.

Young, B.

Resolved in the negative, and amendment disagreed to accordingly.
5.40 p.m.
[Amendment No. 59 not moved.]
Lord Eraser of Carmyllie Lord Eraser of Carmyllie moved Amendment No. 60:
Page 17, line 35, at end insert —
("() Any grant made under subsection (2) above may be made subject to such terms and conditions (including conditions as to repayment) as the Secretary of State, with the consent of the Treasury, thinks fit and the Secretary of State may, with such consent, vary such terms and conditions after the grant is made.").
On Question, amendment agreed to.
Lord McCluskey Lord McCluskey moved Amendment No. 61:
Page 18, line 21, leave out ("may") and insert ("shall").
The noble and learned Lord said: My Lords, this is the first of a number of amendments which seek to achieve the same result; that is to remove the word "may" and replace it by the word "shall" in order to compel the Secretary of State to make regulations containing certain provisions.
I invite your Lordships' attention to Clause 15 (5) which states:
"The Secretary of State shall… by regulations make such provision as he considers appropriate as to the requirements to be satisfied by any person applying for registration under subsection (2) above, and such regulations may, in particular, require that the applicant maintains… suitable procedures for dealing with any complaints … suitable arrangements … to satisfy any successful claims made against it in connection with the provision of conveyancing services; and … suitable procedures for ensuring that the provision of conveyancing services by it complies with the regulations".
I believe that those requirements are necessary. The regulations would not be worth much if they did not contain provisions governing the requirement for suitable procedures, suitable arrangements and suitable procedures respectively as specified in subsection (5) (a), (b) and (c). In other words, there must be suitable procedures for dealing with complaints; suitable arrangements for dealing with successful claims against the new breed of paralegal practitioners; and suitable procedures as specified in subsection (5)(c).
The measure proposed in Amendment No. 61 would ensure that the regulations obtain appropriate provision. It would still give the Secretary of State a good deal of discretion by allowing him to determine what was appropriate in achieving those particular objectives. I remind the House that in Committee the noble and learned Lord the Lord Advocate said that he would reflect upon the matter. I do not see any evidence to show that the reflection has been productive of fruit but no doubt he will tell us. I beg to move.
Lord Eraser of Carmyllie: My Lords, I appreciate that the regulations made under the clause are of considerable interest not only to those in the existing legal profession but also to those who have a keen interest in protecting the consumer as regards the provision of new conveyancing services.
When we began our debates the clause contained two "mays". I conceded that one "may" should become "shall" and now another "shall" is demanded of me. I am anxious to indicate to noble

197
Lords that if I were to accept the noble and learned Lord's amendments I should be going too far down the road of prejudging the content of the code before the Secretary of State had had time to consult fully on what it should contain, taking account of all the debates on the Bill here and in another place. I can, however, assure the House that the topics listed in subsections (5) and (11) will be covered in the code and I also make it absolutely clear that there will be consultations on the regulations before they are made.
As the noble Lord, Lord Macaulay, indicated, we shall shortly debate Amendment No. 66 about the parliamentary procedure to be attached to such regulations. I shall now comment briefly upon it. I accept the point that he accurately made. Comparable provisions are contained in a Bill promoted by my noble and learned friend the Lord Chancellor. The Bill provided that such regulations should be subject to the affirmative resolution procedure rather than the negative. That is a fair point. While I am not prepared to accept Amendment No. 66 there is a strong case for allowing north of the Border what is already provided for south of the Border. I do not say that lightly or in an attempt to put off matters. However, it appears that under the existing arrangement contained in the clause, particularly if there is attached the requirement that the regulations should be subject to affirmative resolution, the anxieties that have been expressed in various quarters are not as well founded as was feared.
I have reflected on the matter but not to the extent that the noble and learned Lord may have wished; namely, to introduce "shall" instead of "may". In Committee my noble friend Lord Renton asked whether, if "may" remained in the clause, the Secretary of State could be subjected to judicial review. My reflection on the matter is that yes, undoubtedly he could.
I hope that in those circumstances the noble and learned Lord will withdraw the amendments, particularly in the light of my comments on Amendment No. 66.
The Earl of Perth: My Lords, is my noble friend saying that he agrees that the provisions in subsection (5) (a), (b) and (c) will be included?
Lord Fraser of Carmyllie: My Lords, yes.
The Earl of Perth: My Lords, that is equivalent to "shall".
Lord Fraser of Carmyllie: My Lords, as I have said, I do not wish to prejudge too precisely the content of the code. That is a matter for the Secretary of State for Scotland. However if at that stage he considers that the contents of the code are insufficient —and it is important that we should have consultations—I shall look seriously at introducing the affirmative resolution procedure. That would appear to be consistent with the line taken by my noble and learned friend the Lord Chancellor in the Courts and Legal Services Bill.
Lord McCluskey: My Lords, I am content with the noble and learned Lord's reply and shall not seek to divide the House. He has said in terms that the topics contained in subsections (5) and (11) will be covered in the regulations. He has also indicated that the affirmative resolution procedure would be appropriate in that case. Therefore, if the Secretary of State were to omit them the House will have in mind those words. I trust implicitly and completely the Lord Advocate and the Secretary of State in relation to this matter and I am happy with the assurances that I have been offered. In those circumstances I beg leave to withdraw the amendment. I shall not move Amendment No. 62.
Amendment, by leave, withdrawn.
[Amendment No. 62 not moved]
Lord Morton of Shuna moved Amendment No. 63:
Page 19, line 18, at end insert ("including a requirement that conveyancing practitioners must offer each prospective conveyancing client an interview with a solicitor at a place convenient to that client, at which any possible conflict of interest will be reviewed and the scope of the service being provided explained.").
The noble and learned Lord said: My Lords, as is usual in these debates, the amendment reverts to a matter raised in Committee. It is the requirement that:
"conveyancing practitioners must offer each prospective conveyancing client an interview with a solicitor".
I recollect that there was general agreement that that should be done. I do not wish to take up the time of the House and I beg to move.
Lord McCluskey: My Lords, this amendment is also in my name. It is worthwhile emphasising that in Scottish law as well as in English law an agent has a duty to disclose to his principal all the benefits which he obtains from a transaction in which he acts as agent. He must account for any secret profits.
The purpose of this amendment and Amendment No. 65 is to ensure that these paralegals also make full disclosure of all such matters as may bear upon their interest in the transaction. The best that can be hoped for is that if full disclosure is made to the client or customer then that client or customer will be able to make his own judgment as to whether he should continue to be represented in the transaction by the person acting under this clause.
This is a matter of some importance and it received support in Committee from all quarters of the House. I hope that the Government will respond positively.
Lord Gray of Contin: My Lords, I like the wording of these amendments, particularly Amendment No. 63. I like the thought behind it that the opinion of a solicitor, who is after all an independent adviser, will be available.
There were two matters about this legislation which I disliked when we considered it earlier. As regards the first (the anxiety which I had for the future of solicitors in rural areas), my noble and learned friend has given me some consolation —if I may put it that way —by telling me that the Secretary

199
of State will have another look at the situation and will have research carried out of which we shall all receive the benefit. If that research reveals that there is likely to be hardship, then the assumption is that the necessary action will be taken. It does not go quite so far as I should have liked, but it is at least recognition by the Secretary of State that the problem exists.
My second objection to the Bill is the whole question of what I see as the unhealthy—and I mean unhealthy for the consumer—relationship which is now developing and likely to develop further between building societies, banks, estate agents and insurance companies. It is on that point that I wish to relate my remarks on this amendment.
Most people require a mortgage to purchase a home. In the case of young couples—and sometimes not so young—borrowing involves a multiplier of three or even four times. For the benefit of the uninitiated, the multiplier is the number of times the borrower's gross annual salary which the lender regards as a safe level for loan purposes. Such borrowing involves severe repayment and interest pressures. In relation to the level of the multiplier, there is a very clear connection between that and the extent of the funds available to the lending institutions. With 100 per cent. loans and immediate interest charges, the old presumption that the property can always be sold to repay the amount borrowed has been breached. The surplus of funds for lending has led to many lenders paying commissions to intermediaries for placing loans with borrowers.
Lenders of their subsidiaries not only make profits from lending mortgages but also from ancillaries connected to those mortgages such as survey fees, building and contents policies and premiums, mortgage guarantee premiums—and most profitable of all, the sale of mortgage linked insurance products. Insurance companies pay commission to the intermediary who sells the policy to the investor. The amounts vary but in some cases over 60 per cent. of the first year or two years' premiums may be paid. Therefore it is only after two years that the policy acquires any investment value whatever to the purchaser. Investment insurance is inextricably linked to the house market and estate agencies. That is demonstrated clearly by the recent and continuing buying up of estate agencies by banks, building societies or insurance companies which see those agencies as the ideal sales point for their particular financial product.
Furthermore, that trend continues with banks and building societies becoming tied to particular insurance companies thereby not only avoiding the most arduous responsibilities associated with the Financial Services Act, including the need to disclose commission, but also obtaining higher commission levels which are paid through, although not by, the insurance company. The commission is deducted from the policy premium and is paid by the consumer.
Estate agents view their business today as not only to sell houses but in ever increasing numbers to sell mortgages and insurance related products. That means that they must act as buyer as well as seller;
200
and given the substantial sums of commission involved, there is a great temptation to ensure that the buyer with their insurance product obtains the house.
In relation to mortgage linked policies, there has developed an appalling malpractice known as churning. That is the practice by unscrupulous financial advisers of persuading mortgagees to unnecessarily surrender existing endowment or other investment policies linked to mortgages when the mortgagee comes to increase or change the mortgage on a change of house. The adviser then sells a new mortgage for the full amount of the law loan thereby maximising the adviser's commission. The Law Society of Scotland estimates that as much as £70 million per year may be lost by the unnecessary surrender of life policies.
If this Bill is passed in its present form, it is quite obvious that in due course some lenders will offer to waive conveyancing charges altogether which will be done in-house. However, it will in effect be paid for by the purchaser—in other words, the consumer—through the huge commission which the lender is receiving through the sale of insurance-related accessories on behalf of that self same consumer.
One remedy might be the requirement that all commissions be made known to prospective clients in advance, and other associated loopholes can perhaps be remedied by appropriate amendments to the Financial Services Act. Not surprisingly, I fear deeply that the lack of independent advice, which may be the result of this legislation unless every care is taken, could leave the consumer in a very much less favourable position than presently exists.
The wording of this amendment involves the consultation with a solicitor and therefore maintaining the independent advice. I am afraid that I should become deeply suspicious not of the professional virtues of the solicitor who works for the building society, but of his general attitude in as much as he will be torn between two loyalties—his loyalty in offering the best possible advice to the client and his loyalty to the building society, bank or insurance company which pays his cheque. I do not believe that that is a healthy situation and is something which I find worrying.
In Scotland we have a proud record in relation to our solicitors. We have a conveyancing system which is comparable with that of any other country and is envied by many of them. I should not like to see that conveyancing system tainted by some of the practices which I have outlined this afternoon.
6 p.m.
Lord Macaulay of Bragar: My Lords, I should like to add my support to the spirit of Amendment No. 63. Other amendments are tabled along the same lines and the question of independent advice is central to the operation of the new conveyancing system.
The way in which the amendment has been phrased is perhaps a little narrow when dealing with conflicts of interest because that means different things to different people. Most people look upon it

201
as a conflict between the buyer and the seller. However, I support the spirit of the amendment which is in keeping with what was proposed when the new conveyancers were introduced by the Bill.
Baroness Carnegy of Lour: My Lords, my noble and learned friend the Lord Advocate wrote to me because he observed that I had a great interest in this subject. He explained that the regulations to which the noble and learned Lord, Lord McCluskey, referred will require practitioners to offer all potential clients an interview before any instructions are accepted. The idea is that that provision should be contained in regulation rather than on the face of the Bill.
I heard from the bodies representing consumers that they are very pleased with the amendments being accepted by the Government on various aspects of the Bill and are pleased with the progress on this matter. There is one important aspect of the amendment which I should like my noble and learned friend on the Front Bench to confirm. It is not only important that there should be a free interview, but that it should be held at a place convenient to the client. There is no point in holding an interview somewhere where the client finds it difficult to attend. That needs to be made plain, if not in the Bill then in the regulations. Perhaps that point could be confirmed.
My noble friend Lord Gray of Contin spoke at length on matters discussed at an earlier stage and certainly threw additional light upon them. He spoke partly about the process known as "churning", in which I too have taken an interest. The interview is extremely important. My noble and learned friend the Lord Advocate explained that it will be free in the sense that if the client decides not to proceed with that particular practitioner, there will be nothing to pay for the interview. As several noble Lords mentioned in Committee, the cost will have to be added to the fees charged for interviews. The people who are paying fees will pay for the interviews which were free to the people who did not take up the arrangement with that particular practitioner.
I hope that the point on the place of the interview being convenient to the client will be incorporated in the regulations whether or not the amendment is accepted.
Lord Coleraine: My Lords, I support the amendment. I anticipate that my noble and learned friend will say, as was said during the passage of the English Bill, that these matters are better dealt with by regulation than on the face of the Bill. If that is so, I have taken careful note of the comments of the noble Lord, Lord Macaulay of Bragar. It seems to me that my noble and learned friend should say that any interview envisaged between the conveyancing practitioner and the client or customer should clearly include provision for the conveyancing practitioner to outline potential conflict of interest not just between vendor and purchaser, but between the conveyancing practitioner and the client or customer.
Lord Fraser of Carmyllie: My Lords, this has been an interesting debate on what is undoubtedly an important part of the Bill. Perhaps I can deal first with a number of matters raised by my noble friend Lord Gray of Contin before turning to the specific provisions of the amendment.
The noble Lord, Lord Gray, raised a number of issues which are of concern both to those who provide the services and to those with a consumer interest in mind. What emerged clearly from the examples and estimates of calculations that he gave was that many of the problems he envisages for the future are problems which exist at present. I suggest that we need to tackle the issue of the provision of financial services not exclusively in relation to the conveyancing regime, but as the Securities and Investments Board are doing at the moment, reviewing the rules that apply to all who provide financial services. Ministers of the Department of Trade and Industry recently stated their clear intention to tighten up elements of malpractice by estate agents which have been identified; but those exist at present, not just in relation to what might be provided for under the Bill.
The noble Lord also made the point regarding "churning". That was taken up by my noble friend Lady Carnegy. That is a matter better dealt with in the broader context of financial services. Perhaps I can say that one matter appears to have been overlooked as we consider this part of the Bill. It is that the tying-in of financial services to conveyancing is prohibited for the whole of Great Britain in the Courts and Legal Services Bill. The reason it appeared in that provision is because it is possible that those who might be offering the financial services could be on this side of the Border rather than in Scotland. In any event, the tying-in prohibition is there for the whole of Great Britain.
Turning to the specific amendments, as I said at Committee, I have no difficulty in accepting that the matters which these amendments seek to import into the statutory code of conduct for conveyancing practitioners are important features of our proposed scheme. The draft conveyancing code which was set out in the Secretary of State's consultation paper, The Legal Profession in Scotland, and the further suggestions made in the statement, The Scottish Legal Profession: the Way Forward, deal in terms with all the points. Where I part company with what is suggested is that it is desirable to include such detail in the list of items which guide the Secretary of State in framing the regulations. Various suggestions can readily be accommodated within the list of items we have. The requirement to offer an interview with prospective clients would be part of what is Clause 11; the manner in which conveyancing practitioners conduct the provision of conveyancing services.
Perhaps I could say to my noble friend Lady Carnegy that we will be consulting on what will be the contents of the conveyancing code, but it is certainly the intention that the location should be convenient to the prospective client. I should not like to tie it down absolutely by saying that it has to be at his home. If, for example, in a part of the country which she knows someone who worked in Dundee wished to purchase a house in the rural

203
areas of Angus, it may be convenient for that person to see a conveyancing practitioner in Dundee. What is important is that we should focus on the idea that it is a point of meeting convenient to the client to whom the services may be offered.
I am grateful to my noble friend for underlining what I said with regard to that interview—that it should be free. It will be free in the sense that if the services are not taken up, the prospective client will not have to pay. But somehow, of course, someone will have to pay. We cannot fashion interviews in the time of professional men out of nothing.
Turning to conflicts of interests, as your Lordships will be aware it is spelt out in the simplest of terms that under subsection (11)(c) conflicts of interest are to be covered by the code. It seems to me important that conflicts of interest stated in that broad fashion should be allowed to stay on the face of the Bill. However, I confirm that specific prohibitions on acting for specific combinations of parties whose interests conflict are envisaged as being contained in the code. It is a difficult issue. There may well be circumstances in which purchaser and seller wish one person to act for them both. It might appear to be an unnecessary restriction if that possibility were to be excluded in all circumstances. I suggest that we leave that to consultation and the code of conduct.
I can assure the House that the matters referred to in these amendments will all feature in appropriate terms in the regulations issued for consultation. There could be no end to the detailed list of items for inclusion in the code. Indeed, the draftsman would be concerned. The more items that are suggested, the less scope there is for measured reflection on what is important as distinct from how that importance is expressed. We would not wish to restrict conflicts of interest too much in case such a step curbed what the Secretary of State can do.
With the clear appreciation that these matters are important and should be contained in the code of conduct but not on the face of the Bill, I hope the amendment can be withdrawn.
Lord Morton of Shuna: My Lords, it is always difficult to work out what should be on the face of the Bill. I agree with the noble Baroness, Lady Carnegy, that this is a crucial item and it is difficult to see why it is not in the Bill. It does not add very much to the length of the Bill which seems in any case to get longer as it proceeds through this House.
I am aware that the grouping suggests that Amendment No. 63 should be debated with Amendment No. 65. I deliberately spoke only to Amendment No. 63 because it appeared to me that the grouping was not particularly useful. I am sorry if that was not clear. Therefore, I shall speak separately to Amendment No. 65. Perhaps others will also do so. However, at this stage I ask leave to withdraw Amendment No. 63 more in disappointment than appreciation.
Amendment, by leave, withdrawn.
Lord Macaulay of Bragar Lord Macaulay of Bragar had given notice of his intention to move Amendment No. 64:
Page 19, line 18, at end insert ("including, in particular, provisions for a reasonable opportunity for customer interviews and regular communication").
The noble Lord said: My Lords, I listened to what the noble and learned Lord the Lord Advocate said in relation to Amendment No. 63. It is clear from the points made in support of Amendment No. 64, which is associated with Amendment No. 68—I believe these came from the citizens advice bureaux—that the Lord Advocate has in mind the review of the matters contained in these amendments. In the circumstances, and particularly in the light of the partial concession made in relation to Amendment No. 66, we shall await with interest what comes out at the end of the day.
Lord McCluskey: My Lords, before the noble Lord sits down, does he intend to move the amendment?
Lord Macaulay of Bragar: My Lords, I do not intend to move it.
The Deputy Speaker (Lord Hayter): My Lords, is the noble Lord moving the amendment?
Lord Macaulay of Bragar: My Lords, it is not moved.
[Amendment No. 64 not moved.]
6.15 p.m.
Lord Morton of Shuna Lord Morton of Shuna moved Amendment No. 65:
Page 19, line 22, at end insert ("including, in particular, provisions restricting practitioners from providing their services both to the owner of any property and to the purchaser or prospective purchaser of that property;").
The noble and learned Lord said: My Lords, the amendment covers a slightly different but crucial issue. There should be provision that no person can act for, or provide services to, both the owner of a property and the purchaser or prospective purchaser of a property. This is obviously a matter that has to be dealt with. It is included in the list of matters to be considered in the regulations. I accept that the regulations may allow for the exceptions one would expect; for example, a parent conveying his house to a child, or something of that nature. That would be excluded from the regulations.
However, I suggest that it is necessary that there should be a prohibition from acting for both sides put on the face of the Bill in the sense that it has to be in the regulations. This simple but crucial point must be dealt with.
I emphasise that the wording of the amendment refers to services in general so that it covers rather more than merely providing the conveyancing. It provides for various other services such as insurance, and so on. It is an important amendment which I hope will be acceptable to the Government. I beg to move.
Lord McCluskey: My Lords, the noble and learned Lord, Lord Morton of Shuna, and I owe an apology to the Deputy Speaker, the noble Lord, Lord Hayter, and others who have occupied the Woolsack, because many of these amendments have been tabled in both our names. My name has appeared first, followed by that of the noble and learned Lord, Lord Morton, who has risen to his feet first. Both of us have had

205
judicial duties today and it was uncertain whether both of us could be here. To the delight, I am sure of the noble and learned Lord the Lord Advocate both of us have managed to be present.
In supporting this amendment I simply refer back to what the Lord Advocate said. He said that this type of provision would feature in the regulations. Again, if I am right in thinking that the affirmative resolution procedure is contemplated for these regulations I am sure that the House is happy to have that assurance. That gives a sound basis for criticising the Secretary of State in the unlikely event that that undertaking is not honoured.
I draw attention to one word which the noble and learned Lord the Lord Advocate used a few moments ago. I refer to the word "restricting" which I consider to be important. I do not envisage that one should prohibit altogether the possibility of a solicitor or conveyancer who is not a solicitor acting for both parties. I can envisage circumstances in which persons fully aware of what is happening are prepared to trust the solicitor or other conveyancer to act for both sides. I believe I mentioned that in Committee. This amendment would allow representations to be made to the Secretary of State on what the restrictions should be rather than move towards total prohibition. For those reasons I support the amendment.
Lord Fraser of Carmyllie: My Lords, bearing in mind the grouping of these amendments I believe I have already made my views clear. However, perhaps I may tell the noble and learned Lord, Lord Morton, that it was precisely his observation that there might be perfectly reasonable circumstances where there is nothing wrong in one solicitor or conveyancing practitioner acting for both sides that underlined my concern about writing such a matter on to the face of the Bill. I repeat, I consider that clearly there are circumstances which should be spelt out in which there would be an unacceptable conflict of interests if a conveyancing practitioner were to act for both parties.
The simplest way in which I can underline my concern is in relation to the present conflicts of interests rules of the Law Society which were introduced in recent years. As I understand those rules, there are no fewer than six specific exceptions to the general rule that one should not act for both parties. If there are six specific exceptions—perhaps six is too many; maybe there should be only four and we should be restricting the code of practitioners to another number—and if we are referring to numbers of that sort it would seem to be appropriate to leave the Bill as it stands whereby conflicts of interest are to be dealt with on the clear undertaking that the Secretary of State recognises the concern. As I further indicated, such matters are likely to be subject to the affirmative resolution procedure.
Baroness Carnegy of Lour: My Lords, before my noble friend sits down, may I ask whether he recollects that at Committee stage I moved an amendment suggesting that the provisions in these regulations should be incorporated into the rules of
206
the Law Society? That was not accepted by the Government or by the House. We did not take it to a vote. If the amendment were taken to a vote and carried, would be consider that matter again? We seem to be asking something that is not required of solicitors. As the noble and learned Lord has just said, that would not be a level playing field in the other direction.
Lord Fraser of Carmyllie: My Lords, perhaps I may comment briefly on that. The issue would emerge in this way. If after consultation some representation was made that the list of exceptions as applied to conveyancing practitioners was to be shorter or indeed longer than that applied to the Law Society, one would have to consider very carefully what the exceptional circumstances were that brought about the difference. I envisage that my right honourable friend the Secretary of State for Scotland would take as his starting point on conflict rules the rule which applies to the Law Society of Scotland. That does not bind him in any sense to provide for that in the regulations.
However, as my noble friend has said, it would seem appropriate in these circumstances that any rules that are applied, and any exceptions to rules, should relate equally to solicitors and conveyancing practitioners.
Lord Morton of Shuna: My Lords, I shall not press the amendment to a vote. However, I should have thought that the amendment is restricting practitioners and is not a prohibition. Some of the comments of the noble and learned Lord the Lord Advocate may have been made on the basis that the amendment contained a prohibition. It does not. I agree wholeheartedly with the noble Baroness, Lady Carnegy, that the restrictions should be the same for the Law Society as for the conveyancing practitioner. Perhaps I would go further than she would—we usually agree on this matter—by saying that the restrictions should be tighter than has the Law Society at present. With that expression of a purely personal view, I beg leave to withdraw Amendment No. 65.
Amendment, by leave, withdrawn.
Lord McCluskey Lord McCluskey moved Amendment No. 66:
Page 19, line 37, leave out ("subject to annulment in pursuance of a resolution of either House of Parliament.") and insert:
("(2) No instrument shall be made under this section unless a draft of the instrument has been approved by resolution of both Houses of Parliament.").
The noble and learned Lord said: My Lords, I shall deal with the amendment briefly, although it is an important matter. The House understands that what is being introduced is an entirely new system in relation to conveyancing and executry services. No one has any clear idea how it will work although many people have expectations or fears. There have been no pilot studies. There is no parallel that we can look at in England. The consultation before the Bill was relatively minimal and did not appear to me to be very effective although certainly there have been considerable improvements since the Bill was read a second time in this House.
Finally, the content of the regulations is rather imprecise. The noble and learned Lord the Lord Advocate has satisfied many of us by indicating what the contents will be. In those circumstances, given what he said earlier, I hope that he will be able to accept the amendment and to allow the affirmative resolution procedure in relation to those instruments. I beg to move.
Lord Fraser of Carmyllie: My Lords, having given those previous indications, I hope that I too can deal with the amendment briefly. In view of what has happened in the Courts and Legal Services Bill, as has been fairly pointed out by the noble Lord, Lord Macaulay, it would appear to me appropriate that these regulations ought to be subject to affirmative resolution. I give that undertaking that that should be the case. However, I am not prepared to accept the amendment as it stands, on the undertaking that it will be brought forward in another place.
The noble Lord, Lord Macaulay, raised a further matter: that provisions in relation to executry services are subject to negative resolution. I do not go so far in relation to those provisions at the present time. However, I appreciate the point that he has made: that if these matters are subject to affirmative resolution, there is a case for subjecting provisions in relation to executry services also to affirmative resolution.
Lord McCluskey: My Lords, in the light of what has been said, I see no need to press the amendment. I beg leave to withdraw it.
Amendment, by leave, withdrawn.
Lord Morton of Shuna Lord Morton of Shuna moved Amendment No. 67:
Page 19, line 47, at end insert ("and to imprisonment for a period not exceeding one month").
The noble and learned Lord said: My Lords, in moving the amendment, I speak also to Amendments Nos. 73, 74, 99 and 100. I can put the purpose of the amendments very briefly. It is to create a level playing field for the imposition of penalties upon solicitors and practitioners who offend. I beg to move.
Lord Fraser of Carmyllie: My Lords, I am aware of the comparable provisions that apply to solicitors in Scotland which admit the possibility of imprisonment; and the arguments about the level playing field. I am not convinced that the quality of treatment would necessarily require the use of the Scottish solicitors' model. The parallel provisions for English solicitors and licensed conveyancers provide only for fines. I intend to bring forward an amendment on Thursday which will remove the penalty for imprisonment for offences under the Solicitors Act. I can do so in view of the schedules attached to the Bill. It is a more sensible step that preserves that legendary level playing field. In those circumstances, I invite the noble and learned Lord to withdraw the amendment.
Lord Morton of Shuna: My Lords, certainly. I beg leave to withdraw the amendment. It seems a very satisfactory solution.
Amendment, by leave, withdrawn.
[Amendment No. 68 not moved.]
Lord Macaulay of Bragar Lord Macaulay of Bragar moved Amendment No. 69:
After Clause 15, insert the following new clause:
("Beneficial interest of practitioners
It shall not be lawful for any conveyancing practitioner, or solicitor, or any employee or associate of a conveyancing practitioner or solicitor, to have any beneficial interest in any transaction relating to heritable property other than by way of fees from the client. ".
The noble Lord said: My Lords, the provision refers back to the discussion that began at Amendment No. 63. It is another aspect of the regulations that apply to the conveyancing practitioner. It ensures that solicitors and other conveyancers have only their clients' interests at heart. In view of the discussions that we have had, I do not propose to take up the time of the House in going over the ground again.
I do not withdraw the amendment at this stage because it is linked with Amendments Nos. 72, 97, 98 and 102 which deal with the contravention by anyone of the rules of conveyancing practice. Those are very important matters.
At page 21, line 20, the Bill states that:
"Any person who—

(a) wilfully and falsely —

(i) pretends to be a qualified conveyancer; or

(ii) takes or uses any name, title, addition or description implying that he is a qualified conveyancer; or

(b) being a qualified conveyancer, provides conveyancing services at a time when his registration as such is suspended,

shall be guilty of an offence and liable on summary conviction to a fine not exceeding level 4 on the standard scale".
The subsequent amendment seeks to make provision for proceedings on indictment. The view is taken that anyone who indulges in these activities should not be dealt with at summary level. It has to be spelt out in the Act that to behave in the way suggested in that paragraph is a serious matter, and that the courts and prosecution will take a serious line on such activities. I beg to move.
6.30 p.m.
Lord Fraser of Carmyllie: My Lords, I must ask the House to resist the amendments. They would have the effect of paralysing the Government's intention that providers should be able to offer conveyancing services and undertake confirmation work for their clients. Our policy is to increase choice, and one way in which we wish to do this is by allowing financial institutions to provide a straight through service to clients in house purchase and executry services. We do not pretend that the services will be identical to those offered by solicitors, although the amendments will also severely restrict the capacity of solicitors to earn income from services related to conveyancing.

209
Of course independent financial advice will not be available to the client who chooses to obtain a mortgage and have conveyancing done by a building society, We are however committed to a whole range of measures which will allow the client to make an informed choice of legal adviser. It will be a requirement of the code of practice that the conveyancing practitioner makes clear to the prospective client that independent financial advice is not available about particular financial products and, at the same time, the adviser will be bound by the terms of the Financial Services Act to give best advice to the client. This will extend, for example, to advising on particular types of house purchase finance as distinct from particular products. Failure to comply with the code will be a disciplinary offence subject to investigation and disposal by the board. The powers of the board will extend to revoking the right to practice.
We have therefore made provision for clients to be informed about the nature of the services being offered by conveyancing practitioners who are also financial institutions. In pursuing the policy, which we believe is right for clients to give them greater freedom of choice, we cannot place restrictions in the way of financial institutions which would prevent them providing a straight through service to clients. With that explanation, I hope that the noble Lord will feel able to withdraw the amendment.
Lord Macaulay of Bragar: My Lords, I am grateful to the noble and learned Lord for that explanation. As with all other new legislation, only time will tell whether the regulations will have the effect on the practices of conveyancing practitioners, and so on, that it is hoped they will have. In the light of the explanation, I beg leave to withdraw the amendment.
Amendment, by leave, withdrawn.
Clause 16 [Qualified conveyancers]:
Lord McCluskey Lord McCluskey moved Amendment No. 70:
Page 2 1, line 2, after ("required") insert ("either").
The noble and learned Lord said: My Lords, in moving the amendment, I shall speak at the same time to Amendment No. 71. As noble Lords will see, Clause 16 (10) as it is worded implies that the recording and registration of deeds are cumulative steps. In fact they are alternative methods of dealing with deeds. Accordingly, a warrant is required either for a recording or for a registration. The amendments simply reword the provision in order to make that clear. I beg to move.
Lord Fraser of Carmyllie: My Lords, I admire the confidence with which the noble and learned Lord addressed the two amendments on the difficult issue of the registration of deeds in the Registers of Scotland.
While I understand the purpose of this amendment, I have to say that statutory authority is not required in order to register deeds in the Books of Council and Session alone. The amendments are therefore unnecessary in this respect. On that basis I would therefore invite the noble and learned Lord
210
to withdraw the amendments. There is however a technical point which has arisen in relation to the existing terms of Clause 16 (10) (a) in so far as it relates to dual registration of a deed —registration in both the General Register of Sasines and in the Books of Council and Session. The point will be pursued with the Keeper of the Registers of Scotland, and I undertake to bring forward at a later stage any amendment necessary to place a qualified conveyancer in the same position as a solicitor regarding registration of deeds. I hope that that is entirely clear to the noble and learned Lord.
Lord McCluskey: My Lords, the noble and learned Lord the Lord Advocate has recognised the shallowness of my learning in these matters. Nonetheless, I understood what he said. I beg leave to withdraw the amendment.
Amendment, by leave, withdrawn.
[Amendment Nos. 71 to 74 not moved.]
Clause 17 [Confirmation practitioners]:
Lord Fraser of Carmyllie Lord Fraser of Carmyllie moved Amendment No. 75:
Page 21, line 30, leave out ("confirmation") and insert ("executry").
On Question, amendment agreed to.
Lord Fraser of Carmyllie Lord Fraser of Carmyllie moved Amendment No. 76:
Page 21, line 33, leave out from ("applicant") to end of line 38 and insert ("fulfils the conditions specified in subsection (2A) below,").
The noble and learned Lord said: My Lords, I spoke to this amendment with Amendment No. 54. I beg to move.
On Question, amendment agreed to.
[Amendments Nos. 77 and 78 not moved.]
Lord Fraser Lord Fraser of Carmyllie moved Amendment No. 79:
Page 21, line 40, leave out ("confirmation") and insert ("executry").
On Question, amendment agreed to.
Lord Fraser of Carmyllie Lord Fraser of Carmyllie moved Amendments Nos. 80 to 85:
Page 21, line 40, at end insert:
("(2A) The conditions referred to in subsection (2) above are that the applicant —

(a) is a fit and proper person to provide executry services;

(b) complies with the requirements prescribed by regulations made under subsection (10) below; and

(c) maintains suitable arrangements (whether by means of insurance policies or otherwise) to satisfy any successful claims made against it in connection with the provision of executry services.")

Page 21, leave out from beginning of line 44 to end of line 7 on page 22
Page 22, line 22, leave out ("a confirmation") and insert ("an executry")
line 29, leave out ("confirmation") and insert ("executry")
line 31, leave out ("confirmation") and insert ("executry")
leave out lines 32 to 43 and insert—
("(10) The Secretary of State shall, subject to section 32 of this Act and after consultation with such persons as he considers

211
appropriate, by regulations make such provision as he thinks fit with a view to maintaining appropriate standards of conduct and practice of executry practitioners and such regulations may, in particular, make provision as to educational qualifications and practical training.
(11) Regulations under subsection (10) above shall be made by statutory instrument subject to annulment in pursuance of a resolution of either House of Parliament.")
The noble and learned Lord said: My Lords, I spoke to Amendments Nos. 80 to 85 with Amendment No. 54. I beg to move.
On Question, amendments agreed to.
Lord Macaulay of Bragar Lord Macaulay of Bragar had given notice of his intention to move Amendment No. 86:
Page 22, line 32, leave out ("may") and insert ("shall").
The noble Lord said: My Lords, we have already been through the "may" and "shall" argument. The House will see that subsection (10) reads:
"The Board may, subject to subsection (11) below, make rules with a view to the maintenance of appropriate standards of conduct and practice of confirmation practitioners".
The noble and learned Lord, Lord McCluskey, has already given his views on "may" and "shall". I adopt those arguments in relation to this matter. If the board is to be given power to make the rules with a view to maintaining appropriate standards of conduct and practice, that should be made compulsory within the framework of the Bill. It should not be left to the board itself perhaps to make up its mind to do or not to do something.
The Deputy Speaker: My Lords, I apologise to the noble Lord. I should have said that if the House agreed to Amendment No. 85, which it has done, I could not call Amendment No. 86.
[Amendment No. 86 not moved.]
[Amendments Nos. 87 and 88 not moved.]
Lord Fraser of Carmyllie Lord Fraser of Carmyllie moved Amendments Nos. 89 to 96:
Page 22, line 46, leave out ("a confirmation") and insert ("an executry").
Page 22, line 47, leave out ("confirmation") and insert ("executry").
Page 23, line 2, leave out ("a confirmation") and insert ("an executry").
Page 23, line 3, leave out ("rules") and insert ("regulations").
Page 23, line 8, leave out ("a confirmation") and insert ("an executry").
Page 23, line 10, leave out ("a confirmation") and insert ("an executry").
Page 23, line 11, leave out ("a confirmation") and insert ("an executry").
Page 23, line 11, leave out second ("confirmation") and insert ("executry").
The noble and learned Lord said: My Lords, I spoke to Amendments Nos. 89 to 96 with Amendment No. 54. I beg to move.
On Question, amendments agreed to.
[Amendments Nos. 97 and 98 not moved.]
Lord McCluskey Lord McCluskey moved Amendment No. 99:
Page 23, line 14, at end insert ("and to imprisonment for a period not exceeding one month.
(12) Where an offence under this section has been committed by a body corporate and it is proved to have been committed
212
with the consent or connivance of or attributable to neglect on the part of any director, manager, secretary or other similar officer of the body corporate, or any person purporting to act in any such capacity he as well as the body corporate shall be guilty of the offence and liable on summary conviction to the same penalties.").
The noble and learned Lord said: My Lords, the amendment repeats the point about imprisonment for a period not exceeding one month. I do not intend to repeat any submission in relation to that. However, it also contains a proposed new subsection (12) which deals with offences by bodies corporate and makes the officers in certain circumstances liable to prosecution also.
This is a usual type of provision to find in a statute creating offences capable of being committed by a body corporate. Responsibility should, if possible, be personal. Officials of a company—the guiding hand of the company as it were—should not be able to shuffle off that responsibility by getting the company to pay a fine. It ties in to some extent with the imprisonment proposal but it can survive without it. In these circumstances, I ask that the Government should explain their position in this relation, and I beg to move.
Lord Fraser of Carmyllie: My Lords, I shall have to look at this. I understood that what was being put forward was in the context of the imprisonment provision. That may be a misunderstanding on my part of what was being proposed. I thought that it had been covered by what I said in relation to Amendment 67. I shall have to come back to the noble and learned Lord on this.
Lord McCluskey: My Lords, I do not want to take up time by developing this argument. There is a slightly different point. There may be circumstances in which it is appropriate to bring the individual to court even if it is not a question of imprisonment. Sometimes the moral opprobrium is worth directing against a person who has been guilty of some particularly reprehensible act. However, in the circumstances, I beg leave to withdraw the amendment.
Amendment, by leave, withdrawn.
Lord Macaulay of Bragar Lord Macaulay of Bragar moved Amendment No. 100:
Page 23, line 14, at end insert ("or on conviction on indictment to a fine or to imprisonment for a period not exceeding two years or to both such imprisonment and fine.").
The noble Lord said: My Lords, this is a probing amendment to obtain the Government's views on the question of taking proceedings on indictment. As was mentioned on more than one occasion, we seem to be limiting the punishment to summary procedure, and in the context of this amendment, although it could apply to others as well, we should like to know whether the Government are ruling out using solemn procedure in relation to offences in this section of the Bill. I beg to move.
Lord Fraser of Carmyllie: My Lords, in debating Amendment No. 67 I thought that we were covering Amendment No. 100. I indicated that on Thursday

213
I shall be bringing forward an amendment that deals with the imprisonment point. I suggest that this matter might be left until we discuss that.
Lord Macauiay of Bragar: My Lords, in those circumstances, I beg leave to withdraw the amendment.
Amendment, by leave, withdrawn.
Lord Fraser of Carmyllie Lord Fraser of Carmyllie moved Amendment No. 101:
After Clause 17, insert the following new clause:
{"Executry services by recognised financial institutions

.—(1) A recognised financial institution may provide executry services if it has notified the Board that—

(a) it intends to do so; and

(b) it is a member of, or otherwise subject to, a scheme which —

(i) has been established (whether or not exclusively) for the purpose of dealing with complaints about the provision of executry services; and

(ii) complies with such requirements as may be prescribed by regulations made by the Secretary of State with respect to matters relating to such complaints.

(2) In this section "recognised financial institution" means any institution which is —

(a) an institution authorised by the Bank of England to operate a deposit-taking business under Part I of the Banking Act 1987;

(b) a building society authorised to raise money from its members by the Building Societies Commission under section 9 of the Building Societies Act 1986;

(c) a body authorised to carry on insurance business under section 3 or 4 of the Insurance Companies Act 1982; or

(d) any subsidiary (as defined by section 736 (1) of the Companies Act 1985) of a body falling within paragraph (a), (b) or (c) above whose business, or any part of whose business, consists of the provision of executry services.

(3) The Board shall maintain a list of recognised financial institutions which have given notice under subsection (1) above and shall make the list available to any person without charge.

(4) The Board shall, as soon as practicable after 1st April in each year, send a copy of the list maintained under subsection (3) above to each sheriff clerk.

(5) Regulations under subsection (1) above shall be made by statutory instrument subject to annulment in pursuance of a resolution of either House of Parliament.").

The noble and learned Lord said: My Lords, I have already spoken to this in relation to Amendment No. 54. I beg to move.
On Question, amendment agreed to.
Lord Macaulay of Bragar Lord Macaulay of Bragar moved Amendment No. 102:
After Clause 17, insert the following new clause:
("Beneficial interest in funds invested etc.
No confirmation practitioner or solicitor shall have any beneficial interest, directly or indirectly, in the investment or deposit of—

(a) executry or trust funds; or

(b) funds which, immediately before any investment or deposit, were transferred to a beneficiary from an executry or trust under the control of the practitioner or solicitor, unless the beneficiary was a client or customer of the practitioner or solicitor before instructions to obtain confirmation were received.").

The noble Lord said: My Lords, this is another mirror of the previous amendment that we discussed. This relates to beneficial interest in funds invested. It is directed towards preventing the practitioner,
214
or solicitor, having any beneficial interest either directly or indirectly in the deposit of the executry or trust funds, or where people have become beneficiaries in putting the money under the control of the practitioner or solicitor unless the beneficiary agrees. It is a protection to the client and to the fund which is sought to be brought in by Amendment 102. I beg to move.
Lord Fraser of Carmyllie: My Lords, looking at the groupings I had understood that we were discussing this amendment along with Amendment No. 69, which was subsequently withdrawn. In any event I do not think that I have anything to add to what I said in relation to Amendment 69.
Lord Macaulay of Bragar: My Lords, in the light of that explanation, short as it is, I shall look back at what was said in relation to Amendment 69. In the meantime, I beg leave to withdraw the amendment.
Amendment, by leave, withdrawn.
Clause 18 [Professional misconduct, inadequate professional services, etc.]:
Lord Fraser of Carmyllie Lord Fraser of Carmyllie moved Amendment No. 103:
Page 23, line 17, leave out ("a confirmation") and insert ("an executry").
On Question, amendment agreed to.
Lord Fraser of Carmyllie Lord Fraser of Carmyllie moved Amendment No. 104:
Page 23, line 21, leave out ("rules made under section").
The noble and learned Lord said: My Lords, I spoke to this in relation to Amendment 54. I beg to move.
On Question, amendment agreed to.
6.45 p.m.
Lord McCluskey Lord McCluskey moved Amendment No. 105:
Page 24, line 23, at end insert:
("(5A) The Secretary of State may by order made by statutory instrument which shall be subject to annulment in pursuance of a resolution of either House of Parliament amend subsection (3) (e) or (4) (b) above by substituting another sum for the sum of money for the time being specified in that provision.").
The noble and learned Lord said: My Lords, in Clause 18 (3) (e) and (4) (b) fines are described as,
"a fine not exceeding £10,000".
The purpose of this amendment is simply to allow that sum to be altered without the need to return to the House for primary legislation. Accordingly it is proposed that an order may be made by the Secretary of State, (and it is quite sufficient for this purpose that it be subject to a negative resolution procedure) to allow that sum to be changed. It simply introduces some flexibility. I beg to move.
Lord Fraser of Carmyllie: My Lords, the only comment I have to make on this amendment is that following shortly I have Amendment No. 108, which I consider in a slightly improved fashion covers the same point. I think that the point at issue is precisely the same, and on that basis I would invite the noble and learned Lord to withdraw this amendment.
Lord McCluskey: My Lords, I will accept that invitation, and beg leave to withdraw the amendment.
Amendment, by leave, withdrawn.
Lord Fraser of Carmyllie Lord Fraser of Carmyllie moved Amendment No. 106:
Page 24. line 42. leave out ("confirmation") and insert ("executry").
The noble and learned Lord said: My Lords, I spoke to this in relation to Amendment 54. I beg to move.
On Question, amendment agreed to.
Lord Morton of Shuna Lord Morton of Shuna moved Amendment No. 107:
Page 24, line 45, at end insert:
("(a) where a practitioner or qualified conveyancer is found guilty of professional misconduct or of providing an inadequate professional service and").
The noble and learned Lord said: My Lords, in speaking to this amendment I shall also speak to Amendment No. 267, which is an amendment to the same purpose as is intended here to the solicitors discipline tribunal rules. What is provided for here is that the board where it is dealing with a misdemeanour or a complaint, so to speak, investigates it and publishes its decision. What is sought to be done by this amendment and Amendment No. 267 for solicitors is, if a complaint if found to be not made out, that there should be no reason to publish that decision.
If somebody makes a complaint that turns out to be unfounded, why should the fact of the complaint require to be published? It is for that reason that this is put forward. Certainly it would be a very considerable step for solicitors and could cause damage to them if they published the fact that there was a complaint against them which had in fact been found to be unfounded. It could do great damage to the solicitor, to his partners and to his business.
Of course we cannot say what would happen to the practitioners under this particular amendment because there are not any, but I would imagine it would have the same effect. It would appear that if the board, or the discipline tribunal, finds that a complaint is not made out and acquits, there should be no requirement that that should be published. I beg to move.
Lord Fraser of Carmyllie: My Lords, I recognise that this amendment seeks to give effect to a matter which was discussed during Committee stage; namely that named publicity for decisions of the discipline tribunal should be mandatory only in cases where the solicitor was found guilty of professional misconduct or of providing an inadequate professional service. I indicated in moving a comprehensive amendment about the procedures of the discipline tribunal that I wished to look again at this question.
The present position is that my right honourable friend the Secretary of State has considered, along with the Lord President of the Court of Session, whether a change should be made along the lines proposed in these amendments. He has resolved that
216
such a change should be made. Clearly whatever is decided for the discipline tribunal should also apply to the conveyancing board, as the noble and learned Lord underlined in moving this amendment.
I can assure the House that this matter will be resolved when the Bill reaches another place. I should, however, indicate at this stage that, in restricting the mandatory publicity only to guilty findings, we would nevertheless wish to retain a discretion for the tribunal and board to withhold names, even where there has been a finding of guilty, where the interests of third parties might be seriously affected. I accept that the change should be made along the lines that the noble and learned Lord has indicated and, with that assurance, I hope that he will withdraw Amendment No. 107.
Lord Morton of Shuna: My Lords, I am grateful to the noble and learned Lord. A wise decision has been made—if not by him, he supports it. I ask leave to withdraw the amendment.
Amendment, by leave, withdrawn.
Lord Fraser of Carmyllie Lord Fraser of Carmyllie moved Amendment No. 108:
Page 25, line 17, at end insert:
("() The Secretary of State may, by order made by statutory instrument subject to annulment in pursuance of a resolution of either House of Parliament, amend subsections (3) (c) and (4) (b) above by substituting for the amount for the time being specified in those provisions such other amount as appears to him to be justified by a change in the value of money.").
The noble and learned Lord said: My Lords, I referred to this amendment when we discussed Amendment No. 105. It is the fruit of a discussion which took place in Committee between the noble and learned Lord, Lord Morton of Shuna, and myself. The amendment closely corresponds to a provision in the Solicitors (Scotland) Act 1980 which enables the upper limit on fines imposed by the Scottish Solicitors Discipline Tribunal to be varied by order of the Secretary of State.
The purpose of the power is merely to ensure that the deterrent value of the fine is not eroded by gradual inflation. While I do not expect any change in the fine maximum to be necessary for a considerable period of time, especially since it has been set in the Bill at the sizeable sum of £10,000, it is as well, as the noble and learned Lord, Lord McCluskey, indicated, to have the provisions relating to the fining powers of the board and the tribunal as alike as possible. I beg to move.
On Question, amendment agreed to.
Lord Fraser of Carmyllie Lord Fraser of Carmyllie moved Amendments Nos. 109 to 115:
Page 25, line 18, leave out ("confirmation") and insert ("executry").
Page 25, line 20, leave out ("confirmation") and insert ("executry").
Clause 19, page 25, line 25, after ("by") insert ("(a)").
Page 25, line 26, leave out ("a confirmation") and insert ("an executry").
Page 25, line 27, after ("client") insert:
("; or
(b) a recognised financial institution in the course of providing executry services for a client,").

217
Page 25, line 29, leave out ("body") and insert ("practitioner or institution").
Page 25, line 36, leave out ("a conveyancing practitioner and a confirmation practitioner") and insert:
("(a) a conveyancng practitioner;
an executry practitioner; and
(c) a recognised financial institution in relation to the provision of executry services,").
The noble and learned Lord said: My Lords, I spoke to these amendments when speaking to Amendment No. 54. I beg to move.
On Question, amendments agreed to.
The Deputy Speaker (Lord Hayter): My Lords, I cannot call Amendment No. 116 as the House has already agreed to Amendment No. 115.
[Amendment No. 116 not moved.]
Clause 20 [Interpretation of section 14 to 18].
Lord Fraser of Carmyllie Lord Fraser of Carmyllie moved Amendment No. 117:
Page 2), line 38, leave out ("18") and insert ("19").
The noble and learned Lord said: My Lords, in speaking to Amendment No. 117 I shall speak also to Amendment No. 118. The amendments are consequential upon the insertion by the Committee of what is now Clause 19. I beg to move.
On Question, amendment agreed to.
Lord Fraser of Carmyllie Lord Fraser of Carmyllie moved Amendment No. 118:
Page 25, line 39, leave out ("Confirmation Practitioners") and insert ("Executry Services").
On Question, amendment agreed to.
Lord Fraser of Carmyllie Lord Fraser of Carmyllie moved Amendment No. 119:
Page 25, leave out lines 41 to 45.
The noble and learned Lord said: My Lords, in speaking to Amendment No. 54 I spoke also to Amendment No. 119. I beg to move.
On Question, amendment agreed to.
Lord Fraser of Carmyllie Lord Fraser of Carmyllie moved Amendment No. 120:
Page 26, line 7, at end insert:
(""executry practitioner" means a person registered under section 17 in the register of executry practitioners; "executry services" means the drawing and preparation of papers on which to found or oppose an application for a grant of confirmation of executors and services in connection with the administration, ingathering, distribution and winding up of the estate of a deceased person, but does not include anything which constitutes investment business within the meaning of the Financial Services Act 1986;").
On Question, amendment agreed to.
Lord Hayter: My Lords, I cannot call Amendment No. 121.
[Amendment No. 121 not moved.]
Lord Fraser of Carmyllie Lord Fraser of Carmyllie moved Amendments Nos. 122 to 124:
Page 26, line 5, leave out ("a confirmation") and insert ("an executry").
Page 26, line 16, leave out ("and").
Page 26, line 18, at end insert:
("; and "recognised financial institution" has the meaning given to it in section (Executry services by recognised financial institutions) (2)").
The noble and learned Lord said: My Lords, I spoke to these amendments with Amendment No. 54. I beg to move.
On Question, amendments agreed to.
Clause 21, [Rights of audience in the Court of Session, the House of Lords, the Judicial Committee of the Privy Council and the High Court of Justiciary]:
Lord Morton of Shuna Lord Morton of Shuna moved Amendment No. 125:
Page 27, line 28, at end insert ("which shall correspond as nearly as may be to those which apply to advocates.")
The noble and learned Lord said: My Lords, the amendment is the same as one which I moved in Committee and which the noble and learned Lord the Lord Advocate informed me was acceptable in principle. As he has not come forward with an amendment, at any rate so far as I can see, I have repeated the amendment to see what is to happen to it.
The purpose of the amendment is to ensure that the rules of conduct for the solicitor advocate are the same as the rules of conduct for the advocate. It is obviously desirable that they should be the same because they appear in the same courts. It is also desirable for the Council of the Law Society to make rules of conduct for any other purpose and it can now look at the rules of conduct of the Faculty of Advocates and use them as a base or even adopt them wholly. Something of that nature is necessary because there should be more or less just one set of rules of conduct. In the hope that this time the noble and learned Lord will accept the amendment in fact and not merely in principle, I beg to move.
Lord McCluskey: My Lords, I wish to add just two points. One purpose that the amendment would serve would be to give the Lord President clear guidance as to what he should be looking for in the draft rules prepared by the Law Society. Also, if the rules contained appropriate provisions of that kind, the judges would have greater confidence that all appearing before them would be observing the same standards, as it were, behind the scenes, in the preparation and conduct of cases. I support the amendment for all the reasons given by the noble and learned friend Lord Morton plus those additional reasons.
Lord Macaulay of Bragar: My Lords, I too support the spirit of the amendment. It does not stipulate that the rules must be the same. The words:
"as nearly as may be",
are perhaps of some significance, because they give scope to take account of the different branches of

219
the profession doing the same job. There may be situations where the rules cannot be the same for both sets of people, but they should be as nearly the same as possible.
Baroness Carnegy of Lour: My Lords, is,
"as nearly as may be",
something that can be interpreted in law? I am fascinated. The noble and learned Lord, Lord Morton of Shuna, is nodding. Perhaps the expression is a legal one. I wondered how a judge would interpret it.
Lord Fraser of Carmyllie: My Lords, at this stage of the Bill, I am not in the business of making my intentions opaque. I had thought that the noble and learned Lord would appreciate that what I propose in Amendment No. 131 is intended to cover the matter which I undertook to take away when we discussed it in Committee. The latter amendment provides:
"and in considering any rules made by the Council under subsection (5), the Lord President shall have regard to the desirability of there being common principles applying in relation to the exercising of rights of audience by all practitioners appearing before the Court of Session and the High Court of Justiciary".
As the noble and learned Lord, Lord McCluskey, said, it would give the Lord President a signal. I indicated during that discussion in Committee that I was—I do not depart from it—sympathetic to the amendment's aim. I shall invite the House to approve Amendment No. 131, which I believe achieves broadly the same objective as that put forward in Committee and again in Amendment No. 125.
In my view, the Lord President is in the best position to judge the precise extent to which the rules governing solicitors practising in the Supreme Court should correspond to those governing the conduct of advocates. Amendment No. 131 therefore places a duty on the Lord President, when considering such rules, to have regard to the desirability of ensuring that both sets of rules are based on the same principles. The amendment will serve not just to ensure that the same high standards of conduct are required of all Supreme Court practitioners, but that their professional conduct will be determined by the same principles. I shall move the amendment in the hope that it will meet the concerns which were expressed in Committee.
It is interesting to note that in the preface to the guide to rules of conduct for advocates prepared by the Dean of Faculty, there is quoted the Royal Commission on Legal Services in Scotland. Reporting in 1980, it recommended that:
"The Faculty of Advocates should promulgate an authoritative written guide to the professional conduct expected of advocates which should be supplied to advocates and be available to the public".
In so recommending, the royal commission said:
"We believe that professional rules for advocates could be stated … succinctly in the form of general principles".
My point in moving Amendment No. 131 is that what is to be established—and the Lord President is well placed to do it —is the general principles that
220
ought to be observed. It may be that the formulation of those principles in terms of rules may vary for solicitors and advocates. What is intended by Amendment No. 131 is that there should be that common core of principles governing those who are in practice. That seems to me to be the right way round.
Perhaps I may quote again from the preface to the faculty's guide:
"In places, it has been found convenient to state 'the rule' or 'the general rule'. Although convenient, use of the word 'rule' would be misleading if it were thought to imply that the rule is absolute and subject to no exceptions whatever the circumstances. The Guide must be read as a whole and interpreted according to its spirit rather than its letter. For the same reasons, it must not be assumed that it is enough for an advocate to keep within the letter of a 'rule' as stated in the Guide".
That further underlines the approach that I consider to be appropriate. The Lord President can be expected to consider what are those principles, and in the application of the particular rules put forward by the Faculty of Advocates, or more precisely in these circumstances the Law Society, he will see that there is a common spirit to both of them.
Lord McCluskey: My Lords, with the leave of the House, perhaps I may make one point in reply. I am perfectly happy with what the noble and learned Lord the Lord Advocate said. I apologise that I did not pick up the true import of Amendment No. 131, to which we shall come. However the House will appreciate that, in common with other noble Lords, I was a stranger to about 200 of the amendments until late last night when fortunately the noble and learned Lord the Lord Advocate faxed me a copy of all his amendments. I have been trying to digest them ever since and I have obviously not been entirely successful.
7 p. m.
The Earl of Selkirk: My Lords, where does the Lord President come in? In the rules in the book, the council should make these rules under this section. Does this override that section, or is it primarily a matter for the council to deal with?
Lord Morton of Shuna: My Lords, perhaps I may reply to the noble Earl. The council can only make rules with the approval of the Lord President. Therefore when the provision mentions the council making rules, it shows that the Lord President could have exercised his veto over them if he had wished to do so.
I am happy to withdraw the amendment. My excuse comes rather later in time because I did not see the government amendments until half-past one today. They were not available to me until then. Also no doubt a rather lame excuse is that I understood that the Government had some say in the groupings. If we were to interpret Amendment No. 131 as an answer to Amendment No. 125, they might have been grouped together. However, that is no doubt a lame excuse. I ask leave to withdraw Amendment No. 125.
Amendment, by leave, withdrawn.
Lord Fraser of Carmyllie Lord Fraser of Carmyllie moved Amendment No. 126:
Page 27, leave out ("an appropriate") and insert ("a").
The noble and learned Lord said: My Lords, in speaking to Amendment No. 126 perhaps I may also speak to Amendments Nos. 128 and 130. These amendments refine subsection (6) of Clause 21 along the lines of our discussions at Committee stage. In particular, they seek to meet the points raised in the helpful intervention of the noble and learned Lord, Lord Emslie. As I indicated during the Committee's consideration of Amendment No. 223A, I am mindful of the need to ensure that the integrity of supreme court pleaders is beyond doubt in every case. The second of these amendments therefore requires the council, when making rules relating to the acceptance of instructions by solicitors with rights of audience in the supreme courts, to set out those matters to which a solicitor should have regard when deciding whether to accept instructions from a particular client.
I would expect this part of the rules to be based largely, though not entirely, in paragraph 4. 5. 4 of the Guide to the Professional Conduct of Advocates, since the considerations set out therein will be material for all supreme court pleaders. I do not think it would be appropriate to set out in detail on the face of the statute the precise matters to which solicitor advocates should have regard in deciding whether to accept instructions and I hope that the House is content to leave this to the council to decide. Of course, as the noble and learned Lord, Lord Morton, has indicated in response to the noble Earl, any rules made under this clause by the council will require the approval of the Lord President.
The third of these amendments meets another point raised by the noble and learned Lord, Lord Emslie, and enables the council, when making rules of precedence between courts for the purposes of establishing where a solicitor advocate's proper duty lies, to distinguish between the Inner and Outer Houses of the Court of Session and between the High Court of Justiciary sitting either as a court at first instance or as a court of appeal.
These amendments therefore clarify the way in which subsection (6) is going to work in practice and make it clear that solicitor advocates will be bound by broadly comparable obligations to ensure representation to those who need it as are advocates. I beg to move.
Lord Morton of Shuna: My Lords, in dealing with this amendment the noble and learned Lord said, I think, that he was also dealing with Amendments Nos. 128 and 130. I quite see that the rules should provide for various positions. However, it is difficult if one puts into a statute that the rules are to deal with orders of precedence of courts. Those courts differ, depending on what is being done in which court. One cannot just state that one court has precedence over another because it may be that the continuation of a case before a lower court has precedence over something relatively insignificant in a higher court. Therefore I am not sure that Amendment No. 130 sits happily with the others, nor that it is necessary at all. In a sense I am
222
foreshadowing the discussion that we may have on Amendment No. 127, which would remove the question of the council establishing an order of precedence.
Lord Fraser of Carmyllie: My Lords, perhaps I may respond to say that the noble and learned Lord is correct. In speaking to Amendment No. 126 I was also dealing with Amendments Nos. 128 and 130. The noble and learned Lord may recollect from his knowledge of the guide for the Faculty of Advocates, to which I have already referred, that in it not only is an order of precedence for the courts set out but in a subsequent paragraph the types of circumstances are spelt out where one would not necessarily follow that order of precedence.
The obvious example is where one had a single bill to appear before the Inner House and was halfway through a proof in the Outer House. There are general criteria to be set out which would establish for the solicitor-advocate that he ought to have regard to his duty to complete that continued proof rather than take up the single bill in the Inner House.
That is what Amendment No. 128 intends. It points the Council of the Law Society in the direction that I quoted in paragraph 4. 5. 4. Generally, I accept that just setting the order of precedence does not answer all the questions of what instructions one should follow. I hope that by giving this indication to the Council of the Law Society—it being well aware, as I know, of what is provided in the guide for the Faculty of Advocates—the matter will be truly dealt with.
Lord McCluskey: My Lords, I am reasonably satisfied with what the noble and learned Lord the Lord Advocate said in relation to this subject. The problem arises with a number of different amendments. However, I am still puzzled, as I was at Committee stage, by a concept contained in this clause and repeated in the amendments. The Bill states in subsection (6), page 27, line 29 onwards, the concept of a solicitor being instructed to appear in a court. In Amendment No. 128 the noble and learned Lord the Lord Advocate refers to the solicitor determining whether or not to accept instructions.
As I have already pointed out, as regards the Court of Session or the High Court of Justiciary, I understand the position to be that counsel is instructed not by the client but by the solicitor. The instruction will take the form of a letter which is sent to him requiring him to appear in a particular case on a particular day. Those are his instructions. However, I do not understand how that concept works in relation to a solicitor because he is dealing directly with a client. Unless the client is a corporate body or someone in that position, he is unlikely to issue the solicitor with a formal letter stating that he instructs the solicitor to appear in a particular court on a particular day. I do not know how this provision will work. I do not know whether the Government have considered it deeply or whether they are content simply that the matter should be left to the Council of the Law Society. I am not sure that these provisions will work until someone has grasped that particular nettle.
Lord Cameron of Lochbroom: My Lords, I am bound to say that I disagree with the noble and learned Lord. I should have thought that the word "instructions" is capable of being read in various lights according to the relationship between the client and his solicitor or that between the client, the solicitor and the advocate. I can conceive of a situation where a client may give general instructions to a solicitor to appear for him in a matter which involves criminal proceedings. I should have thought those instructions would be covered by the word that appears in Amendment No. 128. However, if the word were read as narrowly as the noble and learned Lord suggested, there could be problems, but I am bound to say that I would not read it as narrowly as that.
Lord Fraser of Carmyllie: My Lords, I did not envisage the word "instructions" in this context to be a term of art that applied only to advocates. However, I shall ask the Law Society of Scotland whether it envisages any difficulty in determining what the word "instructions" amounts to. If the matter needs to be looked at again, it can be dealt with in another place.
On Question, amendment agreed to.
Lord Morton of Shuna Lord Morton of Shuna moved Amendment No. 127:
Page 27, leave out lines 34 and 35.
The noble and learned Lord said: My Lords, this amendment concerns rather a different point. It is a fairly straightforward, easy point. The noble and learned Lord, Lord Emslie, has spoken on this matter. It is bizarre that the council should make rules establishing the order of precedence of those courts. The Council of the Law Society should not make rules establishing the order of precedence of the High Court of Justiciary or of the Court of Session. That is a matter for the courts.
I suggest it would be proper for subsection (6)(a) of the proposed new Section 25A to be left out because that would not make any difference to the rules that the council will make. However, it would remove the suggestion that the Council of the Law Society is setting the order of precedence of the supreme courts in Scotland. That is the purpose of the amendment. I beg to move.
Lord Macaulay of Bragar: My Lords, perhaps the noble and learned Lord, Lord Morton of Shuna, is reading this part of the Bill rather narrowly by suggesting that the council will make the rules establishing the order of precedence. I should have thought the provision was more directed towards the matter of publication of the existing rule; in other words the council itself will not make the rules. I realise that the provision states that it shall make rules but I doubt whether that was the intention behind the wording. I should imagine that the rules will be set and can be published for guidance.
New practitioners coming into what is a complicated field should be given as much guidance as possible regarding where they should be at any particular time, and in particular which court takes precedence over another. Perhaps the noble and
224
learned Lord the Lord Advocate may wish to reconsider the wording of subsection (6) (a) of the proposed new Section 25A and adopt my view, if that is the right view. Of course if it is the wrong view, the noble and learned Lord will inform me of that.
Lord Fraser of Carmyllie: My Lords, I certainly do not envisage that the Law Society of Scotland will stand on its head the order of precedence of the courts in Scotland. Indeed the order of precedence of courts is a matter extending beyond the jurisdiction of the Scottish Courts into Europe. There is such an order of precedence set out in the guide of the Faculty of Advocates. I have referred to that. I envisaged that the Law Society would follow that guide. Frankly I cannot imagine any circumstances in which the Law Society is likely to depart from that established order of precedence. However, it is important that that should be set out in rules for the benefit of a new practitioner who may have had little experience of these matters. In any event, if there is any risk of the Law Society going off the rails in this matter, I can only repeat the point that the noble and learned Lord, Lord Morton of Shuna, made earlier, which is that the rules would be subject to the approval of the Lord President.
Lord McCluskey: My Lords, another point that arises in connection with this matter is again one which I sought to raise in Committee. However, it came out in rather a confused fashion in the report of the proceedings. The position is that it is not simply a matter of precedence as between courts. An advocate or a solicitor may be instructed—if that is a possible concept—to appear at a planning inquiry or before an industrial tribunal. Someone has to determine whether his appearance in a summary criminal court which may last for half an hour takes precedence over his duty to appear for his client in a planning inquiry which may last for half a year. There must be some solution to a conflict of this kind. I do not think that the Bill, as it stands at present, addresses that matter at all. I have found no trace of that matter either in the Bill or in the proposed amendments.
7.15 p.m.
Lord Morton of Shuna: My Lords, the matter is merely a question of English. The Bill states:
"the Council shall make rules establishing the order of precedence".
If the word "establishing" was replaced by "stating", the position might be much clearer. It is the concept of the Council of the Law Society establishing the order of precedence that gives a sense of power to the council. That is inappropriate. That was all my amendment sought to suggest. However, in the hope that the noble and learned Lord may see there is some force in the argument, and in the hope that he may put the matter right elsewhere, I beg leave to withdraw the amendment.
Amendment, by leave, withdrawn.
Lord Fraser of Carmyllie Lord Fraser of Carmyllie moved Amendment No. 128:
Page 27 line 35, at end insert:
("() stating general criteria to which solicitors should have regard in determining whether to accept instructions in particular circumstances; and").
The noble and learned Lord said: My Lords, I have a ready spoken to this amendment in relation to Amendment No. 126. I beg to move.
On Question, amendment agreed to.
Lord Macaulay of Bragar Lord Macaulay of Bragar moved Amendment No. 129:
Page 27. line 37, leave out ("possible") and insert ("reasonably practicable").
The noble Lord said: My Lords, this amendment comes within the area we have just been discussing. It considers the issue of how practical it will be for solicitors to follow the practice of advocates whereby the latter are from time to time taken out of one case and put into another. That occurs particularly where there is a shortage of criminal practitioners. Subsection (6) of the proposed new Section 25A states:
"Where a solicitor having an appropriate right of audience in any of the courts mentioned in subsection (1) is instructed to appear in that court, those instructions shall take precedence before any of his other professional obligations, and the Council shall make rules securing, through such of their officers as they think appropriate, that, where possible, any person wishing to be represented before any of those courts by a solicitor holding an appropriate right of audience is so represented".
It appears that the Council of the Law Society must, through its officers, find an advocate-solicitor, if the client wishes to obtain one. As the provision presently stands, the words "where possible" are used. However, what is possible may not be reasonably practical. It may be easy enough, for example, to take an advocate-solicitor from the south of Scotland up to Inverness to conduct a criminal trial, but whether it would be reasonably practicable for him to do so is another matter. He may have an existing contract with the present client. He may be in the middle of a difficult case. He cannot leave that case, as matters stand, without laying himself open to an action for damages at the hands of the client although he is literally forced to leave the client and fulfil his duties under the terms of subsection (6)(b) of the proposed new Section 25A.
The purpose of the amendment is to take reality into account and give the broader base of reasonable practicability in the instruction rather than the narrower one of possibility. It has to be borne in mind that we do not know how many solicitors in Scotland will take advantage of the provisions of the Bill and seek rights of audience in the higher courts. We hear varying accounts of how many people will do so, ranging from four in Edinburgh, four in Glasgow, and two in Aberdeen, to 200 solicitors. If the number is at the lower end of the scale and the Law Society is forced to use one of a very small number of advocate solicitors that would create great difficulty for the advocate solicitor. It would make it easier for everyone if the broader concept of reasonable practicability were adopted. I beg to move.
Lord Mackie of Benshie: My Lords, it might also make it reasonably possible.
Lord Fraser of Carmyllie: My Lords, this is a point which has been raised before. It is one on which I believe the Law Society of Scotland is unduly sensitive. The society is required to make rules;
"securing, through such of their officers as they think appropriate, that, where possible, any person wishing to be represented before any of those courts by a solicitor holding an appropriate right of audience is so represented".
We are dealing with a situation in which somebody needs to be represented in court not just by an advocate or a solicitor advocate but exclusively by a solicitor advocate rather than by a member of the Faculty of Advocates with rights of audience. I find some difficulty in believing that such a set of circumstances will arise very often.
I see little to be gained by accepting the amendment. The provision makes perfect sense as it is drafted and the distinction between what is possible and what is reasonably practicable seems a nice one. It is reasonable to expect the Law Society to fulfil its duty under subsection (6) where it is possible for it to do so. I am aware that it does not in any way wish to diminish the importance of that duty. Since I am confident that it will take all possible steps to fulfil its obligations, I see little to be gained by accepting the amendment. I hope that if the society reflects on the matter it will be reassured that the likelihood of any difficulty arising is extremely limited.
Lord McCluskey: My Lords, I support the amendment. The noble and learned Lord the Lord Advocate said that there is little to be gained by accepting it. I wonder whether there is anything to be lost by accepting it. "Possible" and "practicable" in law almost certainly mean the same in a context such as this. "Practicable" means able to be achieved by known means and resources; "reasonably practicable" introduces a concept of flexibility and allows for some tolerance.
I sympathise with the difficulties. It may well be that those difficulties will be experienced in the early days but not thereafter. It may be that the council could modify its rules in due course. However, unless the noble and learned Lord the Lord Advocate believes that there is something wrong with the proposal rather than a matter of semantics, since people feel quite strongly about the subject I believe there is something to be said for it. I support the amendment.
Lord Fraser of Carmyllie: My Lords, I am not prepared to make any firm undertaking on the subject. The impositions on the Faculty of Advocates where someone wishes to secure the services of an advocate are very stern indeed. If the Law Society of Scotland is prepared to accept that its members are to be given rights of audience it should not enjoy any lesser duty. "Possible" seems to me to be an appropriate test. If in very rare circumstances there were difficulties I have to say, so be it. The rights of audience are to be the same as those given to members of the Faculty of Advocates. However, I shall reflect on the matter so long as that is not taken

227
as an indication of a promise to bring anything forward.
The Earl of Selkirk: My Lords, as someone looking at the matter from the outside I believe the amendment to be much more sensible because it is practicable. If something is possible that means that one goes to almost any lengths to do it, which is not what is intended. I believe that what is intended is what is most practicable and satisfactory for solicitors.
Lord Macaulay of Bragar: My Lords, I do not believe that the Law Society wishes to be difficult or sensitive about this matter. It has to face up to the realities of life in the courts. It was in an effort to be helpful that the amendment was tabled. As has already been observed, there is no difference between the two sets of words in terms of practicability. There would be no harm in the Government thinking again and taking the wording proposed by the Law Society. In the meantime I beg leave to withdraw the amendment.
Amendment, by leave, withdrawn.
Lord Fraser of Carmyllie Lord Fraser of Carmyllie moved Amendment No. 130:
Page 27, line 40, at end insert;
("and for the purposes of rules made under this subsection the Inner and Outer Houses of the Court of Session, and the High Court of Justiciary exercising its appellate jurisdiction, may be treated as separate courts.").
The noble and learned Lord said: My Lords, in speaking to Amendment No. 126 I also spoke to Amendment No. 130.
Lord Renton: My Lords, although my noble and learned friend has spoken to the amendment, I believe that it is within the rules of order for me to suggest that the word "may" should be "shall".
Lord Fraser of Carmyllie: My Lords, I was not conscious that I had finished moving the amendment. I beg to move.
On Question, amendment agreed to.
Lord Fraser of Carmyllie Lord Fraser of Carmyllie moved Amendment No. 131:
Page 27, line 46, at end insert ("and in considering any rules made by the Council under subsection (5), the Lord President shall have regard to the desirability of there being common principles applying in relation to the exercising of rights of audience by all practitioners appearing before the Court of Session and the High Court of Justiciary.").
The noble and learned Lord said: My Lords, when we debated Amendment No. 125 I explained at some length the purpose of Amendment No. 131. There may be other points that I can answer on the amendment. I beg to move.
Lord McCluskey: My Lords, I do not want to keep noble Lords from their dinner, but I should like to congratulate the noble and learned Lord the Lord Advocate on using a gerund in the third line of the amendment. I hope that this reformation in his character and syntax will pervade other parts of the Bill in due course.
On Question, amendment agreed to.
Lord McCluskey Lord McCluskey moved Amendment No. 132:
Page 28, line 38, leave out subsection (15).
The noble and learned Lord said: My Lords, noble Lords will recognise that I am returning to a matter which greatly concerned me at the Committee stage. This is the first of several provisions —although there are slight differences in relation to particular clauses—which provide that:
"Where a function is conferred on any person by this Section he shall exercise that function as soon as is reasonably practicable".
The only persons on whom a function is conferred by this clause are the Secretary of State and the Lord President, because, if I am right, the Council of the Law Society is not a person. Accordingly, although it has many functions which are conferred by subsections (2), (3), (4), (9), (12) and (14) the obligation which is laid upon the Secretary of State and the Lord President to carry out those functions quickly is not conferred upon the Council of the Law Society. I wonder why the Council of the Law Society, which has most of the functions, is to be free from the obligation to exercise its functions as soon as is reasonably practicable.
Why is it, on the other hand, that the obligation is laid upon two great officers of state? On a previous occasion I asked why it was that this provision was included and no precedent could be found for it. I asked which of those great officers of state is not to be trusted. I was told that both could be trusted. I want to ask what is the hurry about this, because, as we know, the Secretary of State does not necessarily intend to bring in this provision by commencement order immediately. It may be postponed.
My last point is a question for the noble and learned Lord the Lord Advocate, of which he has had ample notice. Is it intended that there should be judicial review in relation to a failure by the Lord President or the Secretary of State to move as soon as is reasonably practicable? In other words, can any person who can qualify an interest in a title say to the Lord President, "You are not moving quickly enough", raise an action for judicial review and have the inactivity of the Lord President or the Secretary of State brought under review by a judge in the Court of Session? That is a question of some importance which arises more than once.
In those circumstances I believe that there is some value in the amendment. I beg to move.
7.30 p.m.
Lord Cameron of Lochbroom: My Lords, I support my noble and learned friend on this matter. At first blush it seems to me that there is no necessity for the provision. Having read through it again, like my noble and learned friend, I still fail to understand why it should be there when the only persons to whom it could possibly relate are the two persons whom he identified. I can see no other identifiable person.
The Earl of Selkirk: My Lords, I find the same problem. I have never understood what the provision meant, why it meant what it did and who was gaining or losing. It does not make sense. I thought that it referred entirely to solicitors and that they must

229
use their right of audience straightaway, otherwise someone would take it away from them. That is the only sense that I can make of the provision, although I am sure that it is wrong. Can my noble and learned friend make any sense or useful purpose of this small and rather ridiculous provision?
Lord Fraser of Carmyllie: My Lords, in view of the expressions about the last provision in Clause 21, it might be appropriate to break for dinner after this amendment. If I understand the groupings correctly, the noble and learned Lord was also speaking to the comparable provision in Clause 22.
Lord McCluskey: My Lords, perhaps I may assist the noble and learned Lord. There are slight differences and I do not want to deprive myself of the right to add a few words in relation to the other amendment.
Lord Fraser of Carmyllie: My Lords, that may be so, but I believe that the noble and learned Lord made a slip because he indicated that the Secretary of State might delay in introducing Clause 21. I do not think that I have ever indicated that. However, I have certainly indicated that, to avoid the Lord President and the court being over-taxed in those matters, the Secretary of State would have it in mind to delay the introduction of Clause 22. That is why I thought that the noble and learned Lord was dealing with both provisions.
The noble and learned Lord said that the council appears, to be excluded from the provisions of subsection (15). That was not intended. If it has been omitted from that extremely useful provision in Clause 21, steps can certainly be taken to ensure that it is subjected to it.
When the provision comes into effect, it is important that all due progress should be made on it. It has been considered by the Government and I can only repeat what was said at length in Committee; namely, that it was considered desirable that anyone who had a function conferred on him or her should exercise that function as soon as was reasonably practicable.
We want to ensure that there will be no delay in bringing the provisions into effect once the commencement order has been secured. In a sense, that applies with greater force to Clause 22. That is why I am keen to link it to the provision with regard to the elaborate arrangements set out in the clause.
I know that the noble and learned Lord does not like the provision. He alternates between saying that it is anodyne and/or nonsensical and suspecting that there is something deeply sinister behind it. I do not think that it is anodyne and I certainly do not consider it to be sinister. It is a useful indication for the legislature to give to those who have functions to perform. I suggest that it should remain within the clause.
Lord McCluskey: My Lords, I do not think that the provision is anodyne or sinister; it is just silly. That is the point that I have sought to make from the beginning.
230
I was not guilty of making a slip. I appreciate what the noble and learned Lord said about the Secretary of State not bringing into force the then Clause 21 until Clause 20 had been brought into force. The provisions of Clause 62 permit the Secretary of State not to bring the clause into force once it is a section, so it might be six months or 10 years before it is brought into force. There is nothing to compel him to do that.
Those who want to be conveyancers will recall the disappointment that was felt in England when the then Lord Chancellor, the noble and learned Lord, Lord Hailsham, failed to bring into force the provisions which allowed certain people to do conveyancing. The Secretary of State could do precisely the same here in relation to these matters.
I am surprised to hear the noble and learned Lord the Lord Advocate confess that he thought the word "person" embraced the Council of the Law Society. That seems to me to be a glaring error. I cannot imagine that the Council of the Law Society, distinguished though it may be, would allow itself to be called a person. The functions conferred upon it are not therefore struck at by the provision.
That is just one of the reasons why I think the provision is silly. However, at this time of night I do not propose to divide the House. In the circumstances, and for the moment, I beg leave to withdraw the amendment.
Amendment, by leave, withdrawn.
The Earl of Strathmore and Kinghorne: My Lords, I beg to move that further consideration on Report be now adjourned. In moving this Motion, perhaps I may suggest that the Report stage begin again at twenty-five minutes to nine.
Moved accordingly, and, on Question, Motion agreed to.

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

Computer Misuse Bill
7.37 p.m.
Viscount Colville of Culross: My Lords, I beg to move that this Bill be now read a second time.
This is a Private Member's Bill. It has passed through another place in the hands of my honourable friend the Member for Romsey and Waterside. He has acquired considerable acclaim for the way in which he has handled it and, having read the Official Report, I can see why.
I do not pretend that the text of the Bill is easy, but that is because the subject matter with which it deals is in itself complicated. It deals with the mischief which is caused by those who are rather too dextrous on a computer keyboard —those who go in for what is called hacking; those who exceed their authority as employees when they already have

231
access to a computer; and those who use computers as a way in to more serious crimes or attempted crimes—and with the general area of what are commonly called viruses, to which I shall return later.
The Bill is complicated for four reasons. Because many of the processes —indeed all of them except the initial stages—are electronic, they are instantaneous and hard to detect. The most malicious misusers of computers have sinister motives in that they pave the way for other serious offences such as blackmail or fraud, even though those may not in the end occur. The Bill must therefore fit in with the criminal law on the difficult subjects of attempts, conspiracies and incitement. Computers work at high speed across international boundaries, not least the jurisdictional boundaries within the United Kingdom, where there are three such boundaries—between England and Wales, Scotland and Northern Ireland. All you need is a home computer and a telephone connection called a modem. Then, through the ever-expanding international telephone network, you can try to gain access into computers worldwide, including mainframe computers. I may say that it is usually done at somebody else's expense.
The Law Commissions both in England and Wales and, before them, in Scotland, have consulted widely. Their reports are the basis of this Bill. Indeed, it is the beginning of the Explanatory Memorandum which your Lordships will see on the front page. The Scottish report came out in 1987 and the English one as recently as October of last year. So no time has been wasted in implementing what the Law Commissions have suggested to us.
The Law Commissions have continued to assist in the preparation of the Bill and in its passage through another place. As your Lordships will see, the drafting has been very carefully worked out so that it applies to all three domestic jurisdictions in the United Kingdom to which I have referred.
The Law Commissions found that the misuse of computers is increasing and at an alarming rate. There are in fact no reliable statistics, but anecdotal evidence from computer users and from the police points to a serious problem which is increasing. Indeed, the police stated in the press last week that the number of cases coming to their attention rose sharply last year. One of the reasons why it is difficult to gauge the measure of the problem is because some of the users are too embarrassed to report the fact that their computers have, as it were, been broken into.
One of the troubles is that there is a sub-culture which sees no harm in invading other people's computer systems. It merely demonstrates (so these people think) the computer skills of the person who does it. It may even be the basis for an application for a job. However, as I said a little while ago, there are also much more sinister motives.
The Bill addresses the protection of the trustworthiness and integrity of computer systems as such and not the protection of the information which is in them. The protection of the information contained in them is a different and a more
232
controversial matter and it is not part of the scheme of this Bill.
The integrity of the system itself is plainly necessary because there are all kinds of confidences including commercial and industrial matters and the world of personnel, quite apart from matters such as defence secrets and other data affecting national security which are nowadays held on computers.
At the other end of the scale there is material like forthcoming exam papers which some students might be only too anxious to know about in advance. Expensive technology has been installed to try to protect these computers. If that protection is breached it is extremely expensive to put matters right again and meanwhile the whole system is suspect.
The Bill contains three elements. The first three clauses contain three new criminal offences. After that, Clauses 4 to 9 contain new rules governing the jurisdiction of the courts to try computer misuse cases. That arises from the international element in this matter. The last clauses in the Bill, Clauses 10 to 18, are largely consequential and technical, including definitions. The exception is Clause 14, which provides powers of entry, search and seizure for the police in the case of an offence under Clause 1. I shall return to that in a moment because it has attracted considerable interest.
The three new criminal offences are these: Clause 1 creates a new offence which is triable summarily in the magistrates' court in England and Wales and Northern Ireland and in the sheriff court in Scotland. It is the offence of unauthorised access to programs and data held in computers, for which the maximum penalty is six months or a fine or £2,000. The terminology in this Bill may not appeal to the English purists among your Lordships but it is the current way in which computers are described and in which all their processes arc normally referred to. It seems sensible, therefore, to use the terms that arc familiar to the users of computers.
The objective of Clause 1 is to deter deliberate, unauthorised access or attempts to gain access to computers. To some extent that is hacking but it may also include those insiders who arc authorised to use some parts of the computer system but who go beyond their remit. That is only if the conduct is intentional. The essence of this offence is that it should be intentional and not merely the result of being inattentive, careless or improperly informed; those who go beyond their remit by mistake are excluded.
Clause 2 creates a more serious offence. It is triable both ways—that is to say, either summarily or on indictment. It relates to unauthorised access with intent to commit or facilitate the commission of a further, more serious, offence. I referred to these earlier as fraud, blackmail or something of that kind. There are substantially more serious penalties which carry a maximum of five years' imprisonment on indictment and an unlimited fine. It makes an offence under Clause 2 an arrestable offence under the Police and Criminal Evidence Act.
In fact it is still a preliminary offence in that it will bite at the stage before the further offence of

233
blackmail, fraud or whatever is actually committed. If the person concerned looks into a computer to get information for the purpose of blackmail or fraud, that of itself would be an offence under Clause 2 even before a further offence has been committed.
Clause 3 creates another offence which is equally triable both ways. It deals with the unauthorised modification of data or programs held in computers. The intention here is to remove a current uncertainty which exists under the law concerning damage to intangible property such as data. It is not intended to cover physical damage to the computer or to the software because that would remain within the existing, criminal law of criminal damage. The criminal law has had to be stretched. It is not certain how far it will go. Therefore, it seems better to create a new, specifically designed offence to deal with this matter.
The offence is intended to deal with matters like erasure of information or the putting into circulation of disks which are infected by some malicious code designed to impair the performance of the computer or to make it work so hard that it runs out of room altogether. I said that I would refer to viruses again, but it is not just a question of viruses. Apparently, the technology includes functions like Trojan horses, logic-bombs, viruses themselves, worms, bacteria and rabbits. I know what some of them mean, though not in detail what they all mean.
Nevertheless, they do an enormous amount of damage. I suggest to your Lordships that a deterrent, as set out in Clause 3, is necessary. There are reservations about the necessity for bringing in new criminal offences. There always are reservations. In this case they really concern the duties on the owners of computers themselves. They should take sufficient trouble to protect their machines from interference from outside. They do because they take a great deal of trouble. However, the difficulty is that the ingenuity of those who try to gain access, whether as a matter of hobby or for more malicious purposes, is such that very frequently these protective processes are overcome.
The analogy must be with the household and the burglar. We do not wish to suggest to the householder that he must take precautions to make his house absolutely impregnable to a burglar, because we all know that that is impossible. We also have the crime of burglary and aggravated burglary, which makes criminal the other side of this equation. So, I suggest to your Lordships, should we have in the world of computers, although perhaps my noble friend Lord Trefgarne will comment on the way in which the Government are encouraging computer users to protect their property.
I said that Clauses 4 to 9 cover jurisdiction within the United Kingdom and internationally. That drew on another work by the Law Commission. In April of last year it published a report on Jurisdiction over Offences of Fraud and Dishonesty with a Foreign Element. That is a fascinating document and deals with an extremely abstruse area of criminal law, none of which is the same in England, Wales and Northern Ireland as it is in Scotland. That is the case with a great deal of criminal law.
234
At present the rules provide that English and Welsh courts—perhaps also Northern Irish courts, but I hesitate to speak about Scotland—have jurisdiction only if the offence is regarded as having taken place in the United Kingdom. That implies that the last event necessary to the completion of the offence took place here. The Law Commission looked at the rules and the case law. It came to the conclusion that the rules are unnecessarily restrictive and that they are inadequate to deal with computer misuse across national boundaries. It sets out its reasoning most clearly in its report. As regards the jurisdictional provisions, the intention is to make it possible to prosecute for computer misuse offences if the accused or any affected computer was in the part of the United Kingdom jurisdiction in question at the time that the offence occurred.
Other complicated provisions in this part of the Bill adapt the criminal law on attempt, conspiracy and incitement, which, as I said at the beginning, are complicated concepts in the criminal law. That is achieved by amending the existing legislation in respect of at least two.
The last part of the Bill, Clauses 10 to 18, deal with consequential provisions and some important definitions. That is with the exception of Clause 14. There was a considerable amount of debate about the clause in another place and it was introduced in the Standing Committee. I have looked at the matter carefully because it concerns the Police and Criminal Evidence Act. It adds a new power which is not in existence at present.
I suggest that, although the provision may be controversial, it is probably better that we do not attempt to meddle with it because it was the subject of a great deal of discussion in another place. Eventually a certain degree of unanimity was reached although it was not total. The trouble is that Clause 1 of the Bill introduces a new offence which is summary only. The police powers of entry, search and arrest under the Police and Criminal Evidence Act relate to arrestable offences —those which carry a five-year sentence or more—or to serious arrestable offences, for which there is an even more complicated definition in the Police and Criminal Evidence Act. It was decided—I suggest, rightly —that there should also be a power of entry and search for the police in relation to the summary offence under Clause 1. That provision is contained in Clause 14.
I have talked to members of the police force about the matter and read what they stated in The Times last week. They would like to have more substantial powers to investigate the house or the room where the computer access is being gained to see whether they can discover more about it. They would also like more sophisticated powers to deal with the communications in the course of their transit through the telephone system. There are endless complications in that respect and we enter the realms of other legislation such as that relating to the interception of communications. Unless noble Lords wish me to do so, I shall leave out that matter.
I suggest that we have achieved a balance. We have given a new power of entry and search while at the same time protecting the civil liberties which

235
were so carefully balanced in the Police and Criminal Evidence Act. For that reason I suggest that we now have a provision in the Bill which is properly balanced.
At the end of the Bill's passage through another place my honoruable friend for Romsey and Waterside said that he thought the Bill was well balanced and now well-drafted and defined. I venture to agree with that assessment. The Bill deals with specific mischiefs which have been clearly established and properly investigated by the Law Commissions. It introduces deterrents into the system to try to stop the pre-emotive provisions. They ought to be extremely useful in deterring those who wish to partake in such activities and should do so before the scale of the problem gets out of hand. For that reason I suggest that this is a timely moment to consider the Bill. I commend it to your Lordships and hope that it will have as safe a passage through this House as it had through another place. I commend the Bill to the House.
Moved, That the Bill be now read a second time—(Viscount Colville of Culross.)
7.57 p.m.
Lord Avebury: My Lords, I must preface my remarks by declaring an interest. I am a director of a company which markets computer hardware and software and which is sometimes called on to advise clients about excluding viruses from their systems or improving their existing protection against viruses.
We are extremely grateful to the noble Viscount, Lord Colville, for his lucid explanation of a complex piece of legislation. It was demanded by the computer industry and has been endorsed by all the principal companies in the British Computer Society. However, I find myself being slightly heretical because, for reasons that I shall attempt to explain, I cannot express the same unqualified enthusiasm for the Bill as was displayed by another place. It attempts to deal with two menaces facing computer users and undoubtedly they are serious. The first is the unauthorised accessing of confidential information simply in order to break confidentiality or in order to commit some other more serious offence. The second menace is the unauthorised alteration of programmes or data.
As I see it, the problem is one of the detection and conviction of the criminals rather than the multiplication of offences which may be difficult to prove in the courts. In moving the Second Reading of the Bill, the honourable gentleman the Member for Romsey and Waterside said that he had consulted the police who stated that they had the powers and the expertise to implement it. However, that was without qualification. It was not explained how that was to be done. I am afraid that even though the honourable gentleman pre-empted that remark, users may be lured into a false sense of security and some may not take the greater and more thorough precautions necessary to counter the increasing risks which the noble Viscount mentioned and protect themselves against loss or damage caused by the kinds of misuse dealt with under the Bill.
The noble Viscount, Lord Colville, said that there were no statistics. However, one statistic was
236
mentioned by the honourable gentleman in another place; that is, that over the past five years the Department of Trade and Industry has verified 270 cases of computer misuse within the meaning of this Bill and that only six have been brought to trial and only three were successfully prosecuted for fraud. I should be interested to know from the Minister when he replies how many of those were Clause 3 offences, which are intrinsically far more difficult to nail down, and how many were Clauses 1 and 2 offences. In fact, a more comprehensive analysis of those 270 offences would be extremely useful when we deal with the Bill in Committee.
The noble Viscount mentioned the anecdotal evidence which comes from the police and from some users. He quite rightly pointed out that some are reluctant to expose themselves to ridicule by admitting that offences have been committed against them, and thereby rendering themselves liable to the criticism that they did not take the proper precautions. Perhaps the Minister would ask police forces in all three jurisdictions to report any offences which come to their attention to some central point so that over a period of time there would be better information because I think we are legislating slightly in the dark. Even though that could not be achieved in time for the deliberations this Bill, I imagine that this will not be the last occasion on which Parliament attempts to deal with the growing menace of computer misuse.
I turn to the problem of viruses which can originate from anywhere in the world. They may get into the system without any person having a malicious intent because disks are exchanged routinely between users. Therefore, when a particular user has been infected by a virus, he may pass it on completely unwittingly to an associate or colleague. One virus which has been encountered quite frequently is the so-called Jerusalem virus. It is given that name because it is said to have originated in the Hebrew University of Jerusalem. That is invisible to the user, lurks in the system tracks of the machine and manifests itself by adding a few k to the length of. exe or. com files on the hard disk so as to slow up the operation of the system and make the hard disk completely unusable after a fairly short period of time.
The victim who is infected by the virus which is inadvertently passed on to him by a colleague or friend, has no redress against the author who produced the virus. Even if that person could be identified, he could not be prosecuted in England or Scotland under Clause 3 because he is not within the jurisdiction. Even if identified, he is not himself passing on the virus. It has now reached the 120th or 190th party. The passage of the virus from one user to another is not within the control of the person who originally wrote it in the Hebrew University of Jerusalem.
The honourable Member who promoted the Bill in another place also mentioned the AIDS disk which was sent to many people in Britain apparently from an address in W. 1. The person who mailed the disks was alleged to be a Dr. Lewis Popp. He has now been arrested in Ohio where he is being charged with demanding money with menaces. That is because when the disk is put into the machine it displays a

237
message saying that unless a large sum of money is sent to an address in Panama after so many accesses of the machine the hard disk will be wiped clean.
It is very interesting that no special legislation was needed in the United States because Dr. Popp was charged with demanding money with menaces and not with any specific computer-related offence. Presumably he could have been charged with an offence of that kind in this country had he been in our jursidiction. However, what would have happened had he mailed the disks to people in the United Kingdom from France or the United States? As the noble Viscount, Lord Colville, explained, an offence would have been committed because the effect of mailing the disk is to alter the contents of a computer in this country. But how would it be possible to catch him and try him in our courts?
I wish to ask the Minister three questions. First, will it be possible for us to extradite people who commit these offences? If anyone wishes to charge Dr. Popp with an offence in this country, can he be brought here from Ohio to stand trial?
Secondly, are we certain that a person who maliciously distributes a virus could not be successfully prosecuted under the existing legislation for malicious damage? I shall return to that matter if a few moments because that is something which the noble Viscount, Lord Colville, mentioned. Thirdly, to repeat my earlier question, can we be told how many of the 270 cases known to the DTI concerned viruses?
I fully endorse what the noble Viscount said about taking adequate precautions, although I am not so certain that users already carry out their obligations in that regard although many do. However, there are common sense precautions which can be taken against unauthorised access generally. First, obviously people should not leave machines unattended in a room to which outsiders may have access. Secondly, there should be password protection for sensitive information. Certainly disks should not be used which have been received from unfamiliar sources like the AIDS disk which I have mentioned. Data should be backed up regularly. Finally, virus detection software should be used so that if viruses enter the system they can be detected and eradicated before they do a great deal of damage.
I turn to the unauthorised accessing of computers where the intent is to acquire confidential information either for its own sake as in Clause 1 or with a view to the commission of another offence as in Clause 2. The Law Commission found that hacking, as unauthorised or attempted access is called,
"is sufficiently widespread to be a matter of major and legitimate concern to system users".
Even though sensitive applications like air traffic control are relatively less vulnerable because of the emphasis by its users on security, the Law Commission considered that it would be unwise to wait until somebody succeeded in penetrating those defences before protecting them by law. It pointed out that there was already evidence of interference in more open systems where there are intrinsically greater difficulties in stopping the hacker because
238
the greater the degree of protection, the less convenient the system will be for the ordinary user. Therefore for example the public electronic mail services are relatively vulnerable.
The criminalisation of hacking may not result in many prosecutions; but the Law Commission felt that it would alter the perception of it, and the noble Viscount referred to the climate in which hacking is considered to be harmless amusement. What was an amusing diversion for computer enthusiasts in the past is now considered to be a crime. One hopes that that will be enough to deter the amateur. The journalist, for example, who pried into the electronic mailbox of His Royal Highness the Duke of Edinburgh could find himself becoming the guest of Her Majesty the Queen for six months if he did that again.
The amateur hacker likes to enter computer systems purely as a game, challenging the defences put up by software designers, and he is dealt with under Clause 1. Those who intend to cause damage to the systems, three examples of which are given in paragraph 1. 16 of the Law Commission's report, would be dealt with under Clause 3. I return to the Criminal Damage Act 1971 as being a possible way of dealing with those crimes. Would it have been so difficult to extend the definition of property to cover whatever kinds of storage media are likely to be used on computers? In the leading case of Cox v. Riley, the information was stored on a plastic card, so presumably hard disks, floppy disks, optical disks or tape streamers are covered, by analogy, under existing legislation.
An offence already existed when data attached to tangible property was altered or destroyed, and under this Bill we are reducing the penalties provided for in the 1971 Act as if we saw the damage caused to computers as less important than other kinds of damage. As the noble Viscount is aware, these penalties are less than those provided for under the Criminal Damage Act 1971.
The problem is that the Criminal Damage Act has given rise to a false distinction —if I may say so as a non-lawyer—between modes of trial according to the value of the property damaged. It is the value of the consequential losses that is important. Alteration of drug dosages is given as a hypothetical example by the Law Commission. The program which calculates the drug dosages may be worth only tens or hundreds of pounds, but the consequences of altering the program could be lethal. We have therefore paid too much attention to the value of the property damaged and less to the possible consequences of that damage in making the distinction between the modes of trial.
I turn now to Clause 2 offences, where the unauthorised access is preparatory to the commission of some further offence. Noble Lords will correct me if I am wrong, but I do not think that that includes fraud, where the Law Commission found that theft or attempted theft were the right charges against a person who uses a computer dishonestly to obtain money or other property. But if the person has not yet committed a further offence it may be difficult to sustain a prosecution for attempt. The Law Commission gives the example of the person who obtains access to a banking system

239
and tries out passwords of depositors with a view to committing some financial offence. I agree with the noble Viscount, Lord Colville, that in many respects the Law Commission document is an admirable and lucid one, but in this regard I found it difficult to understand why such a person could not be charged with attempted theft. He would have committed the offence of obtaining unauthorised access to a computer with intent to steal under Clause 2.
The Law Commission goes on to give another example—of a person who intends to use, the information that he gains from unauthorised access to blackmail someone. He would not be guilty of an offence of an attempt to blackmail because his conduct was merely preparatory but he would be guilty of unauthorised access with intent to blackmail. From these examples I conclude that Parliament could have amended the law of attempt to create an additional offence of doing any act preparatory to the commission of an offence with intent to commit that offence. It seems to me to be wrong in principle to single out preparatory acts of one kind and make those into offences, while ignoring all others as the Bill has done.
The noble Viscount mentioned Clause 14 of the Bill, where he said that the police were asking for even more extensive powers of access than have already been granted. In fact there was a tacit agreement that in introducing the Bill the movers would not ask for greater powers of access, and there is no intention of doing so now. However, I would say to the noble Viscount, and through him to the police, that if they seek these powers they must make out a very good case for them and they will have to do that before Parliament would be willing to incorporate those powers in legislation.
The Law Commission's report was published in October 1989 and this legislation follows hard on its heels. The importance of protecting computer users and the public in general from criminal misuse is obvious. As customers of the banking system, as patients of the National Health Service, as airline passengers, shoppers, employees or electors, we all depend on the reliable working of computers, and any interference with them harms us as well as their operators. I hope that this Bill provides an effective deterrent to hackers and the perverted individuals who write and disseminate viruses. I fear that it does nothing of the kind, but merely creates an illusion of security which means that we fail to take every step possible for our own defence.
8.17 p.m.
Lord Milne: My Lords, I agree with the noble Lord, Lord Avebury, that the House should be grateful to the noble Viscount for introducing this Bill, which he ably explained, as he is so well qualified to do.
The influence of Scotland on our law was remarked upon in another place, for the need for such legislation was first recognised there. There must be some concern that a measure so clearly important to the business community and to computer users world wide should owe its origin to pure chance; I refer to the ballot for the Bill in another place. Whether it has suffered thereby is a
240
matter of opinion. Besides the benefit of being taken up by the noble Viscount, it has obviously gained parliamentary time, since as a Public Bill we are led to understand that it would not have seen the light of day until the next Session at the earliest. However, time in this case is important because we are behind many countries in this respect.
Against that, although founded, as we heard, on the recommendations of the Law Commission report, the time factor prevented the addition of the usual model clauses—a matter which this House is probably well qualified to rectify. Whether a Public Bill or a Private Member's Bill, it seems to me that it was bound to be tentative, extending as it does the criminal law and police powers into new areas. It will surely be the forerunner of many such enactments in the future as technology and needs develop.
The need to strike a balance between the liberty of the subject and the rights of computer users was referred to by the noble Viscount. Computer users have the right to some protection. That came out clearly in the Committee discussions and I feel that the resulting Bill has been successful. Noble Lords who read the record of the stages in another place will be aware that the Bill has been extensively and expertly discussed; little has been left unresolved. I mention but two points.
First, I refer to the absence in the Bill of a definition of a computer. The need for that was strongly advanced in Committee but the definitions put forward proved faulty on technical grounds and it was thought better on the whole to leave it to the court. As regards the legal aspect, I cannot comment, but my more literate computer friends tell me that on technical grounds it is probably the right decision.
Finally, the question arose of whether computer users have a duty to protect the security of their equipment. Legally that is to some extent covered elsewhere—by the Data Protection Act for personal information and by the Companies Act for computerised accounts and so on. It is thought that the latter provisions may also cover the former. Certainly an unprotected computer on public lines is a menace both to the user and to others. To determined hackers it is simply an open door.
I agree that by now all users are aware of the risk they run and most act accordingly, as we have heard, but for those with outside connections the risks may be horrific. Absolute security is almost unattainable. Each user must balance the cost and the inconvenience against a realistic evaluation of the information contained therein. Held against that background, some deterrent and the powers of enforcement in this Bill seem not unreasonable even for Clause 1 offences.
With those remarks, I welcome the Bill and congratulate all those associated with it.
8.21 p.m.
Lord Williams of Elvel: My Lords, I do not propose to detain your Lordships for long because we have had some lengthy interventions on the Bill and it has been debated at considerable length in another place. The House is certainly grateful to the noble

241
Viscount, Lord Colville, for sponsoring the Bill which started as a Private Member's Bill in another place, introduced by Mr. Michael Colvin.
I echo the views of the noble Lord, Lord Milne, that anyone who has read the debates in another place will recognise that the Bill was scrutinised with great care and expertise by a number of Members on all sides. Therefore, it is a rare pleasure from this Dispatch Box to welcome the Bill. I speak in my personal capacity because this is a Private Member's Bill and, as is the custom, I do not speak for my party. It is rare for me to be able to welcome a Bill that is so well drafted and, though complex, seems to put in place all the necessary measures that the authors of the Bill desired.
Looking through the Bill —1 have considered many Bills which have come before this House—I find that I cannot fault the drafting, and I congratulate the noble Viscount, Lord Colville, on that. I am not sure who his advisers were but I am sure that they should also be congratulated. As the noble Viscount said, there are problems which have grown up as a result of the use or misuse of computers. I echo the view expressed by the noble Lords, Lord Avebury and Lord Milne, that we need legislation on this subject.
Three doubts were expressed in another place which I echo rather than put forward as serious reservations. The first was addressed by the noble Lord, Lord Milne; it concerns the definition of a computer It is always difficult to decide whether to try to define in legislation the nature of the object about which we are legislating or whether to allow the courts to make that definition for Parliament. I believe that the Bill has probably got it right. I agree with the noble Lord, Lord Milne, that it is better to leave the definition to the courts. They can widen definitions that are left vague whereas Parliament, if it makes precise definitions, has enormous difficulty widening them because that requires amending legislation.
The second doubt aired in another place, which I must repeat, is the balance between civil liberties and proper regard to legality in the use or misuse of computers. I believe that, again, the Bill has got it about right. I have no serious complaints about the balance that has been struck.
The third doubt, to take up a remark of the noble Viscount, Lord Colville, in his introduction, is about enforcement. The noble Viscount rightly said that the Clause 14 arrangements introduce the notion of a circuit judge giving powers to search—not a justice of the peace as advocated in another place. I believe that that is about right. However one must recognise if one is to be fair that the whole question of enforcement has given rise to many comments and problems. No doubt in Committee in this place there will be further comment.
I do not wish to hold up the Scottish business which is to follow, but I have two problems, rather than doubts, in regard to the Bill. First, why was this not a government Bill? I join with the noble Lord, Lord Milne, in finding it odd that a matter studied at length by the Law Commission and which has
242
been the subject of considerable consultation was not adopted by the Government and put forward as government business. My only consolation is that if it had been a government Bill it would have been introduced by the noble Lord, Lord Tregarne, and, on the evidence of the Landlord and Tenant (Licensed Premises) Bill, he is given to making commitments to this House which he is unable to fulfil. We might have had an endless series of discussions on why government commitments had not been fulfilled. Perhaps it is much better that the noble Viscount has introduced this as a Private Member's Bill because that denies the noble Lord, Lord Trefgarne, the opportunity of introducing all sorts of extraneous red herrings into the debates.
My second doubt on which I join with the noble Lord, Lord Avebury, is that technology is fast-moving. We are, so to speak, taking a photograph of this point in time and legislating now. I suspect that in one or two years' time there will be quite different developments of existing technologies which will require legislation to do what the noble Viscount proposes in the Bill. Although it is much against my normal judgment in these matters—if this were a government Bill I would certainly not accede to such a request —I wonder whether there is not sense in writing into the Bill a provision that under some secondary legislation, on some procedure which the House would determine, certain amendments might be made to the Bill without primary legislation having to come before the House. I believe that this is a case where technology is so fast moving that to bring forward primary legislation in the parliamentary time available might be extremely difficult. I take the point made by the noble Lord, Lord Avebury. There are many aspects which, in the light of experience, might well be reflected in the Bill but which at the moment we cannot foresee.
I put forward that proposal very tentatively to the noble Viscount. Normally I am a great defender—as I am bound to be from this Dispatch Box—of the rights of your Lordships' House to determine what legislation Parliament should or should not pass. However, here we have a example of a Bill which is fine at the moment but which may well need adjustment before future primary legislation can be brought forward.
Having said all that, I congratulate the noble Viscount for bringing forward the Bill and faithfully representing the opinions of his honourable friend Mr. Colvin who, in another place, performed with great expertise. I am sure the House is grateful to him. From this Dispatch Box I echo the words of my honourable friend Dr. Lewis Moonie in another place. It is time for legislation and we are glad to recommend it.
8.30 p.m.
Lord Trefgarne: My Lords, It may be helpful to your Lordships if I now briefly outline the government position on the Bill. The Government welcome and support this measure. I confirm the assessment of my noble friend Lord Colville of the serious threat represented by computer misuse. It is indeed a growing problem. The Government

243
recognise that a legal framework must be put in place to deter such misuse sooner rather than later. We are pleased that an opportunity has arisen which allows for such a Bill to come before Parliament.
Perhaps at this point I may answer one of the questions raised by the noble Lord, Lord Williams, as to why it is not a government Bill. The fact is that the Law Commission reported only in October last year. As the noble Lord will know, it would not have been possible at that moment to have a Bill drafted and ready to be announced at the time of the opening of the new parliamentary session. That is why we were very happy that it was possible to bring this Bill forward.
Lord Williams of Elvel: My Lords, I am sorry to intervene. Not all Bills produced by the Government in this Session were adumbrated in the gracious Speech. It is perfectly possible for the Government to bring forward Bills that were not adumbrated in the gracious Speech.
Lord Trefgarne: My Lords, I was not claiming that it was necessary to bring it forward in the gracious Speech. However, given the timetable to which I have referred, it would have been difficult to have it properly drafted and into the government programme.
I am pleased to note that the Bill is based upon the recommendations of the Law Commission in its report published in October of last year. These recommendations received widespread support. They were also welcomed by the Secretary of State for Trade when in October last year he said that legislation should be brought forward when a suitable opportunity arose. That clearly was not going to be immediately. That is why this Bill is such a welcome opportunity.
I should like to pay tribute to the work of the Scottish Law Commission, which two years earlier than its English colleagues conducted a study into the need to introduce computer misuse legislation for Scotland. Its work has played a valuable part in the consideration of the relevant issues, and the greater part of this Bill applies to Scotland.
There are some examples of computer misuse which can be prosecuted under the existing law. The AIDS diskette which was circulated recently and referred to by the noble Lord, Lord Avebury, and my noble friend appears to be a case of blackmail. I understand that the police have charged someone in connection with this. However, the simple circulation of the infected disk would probably not have been prosecutable under any UK law had there not been an attempt to extort money. In other cases we have seen attempts to stretch the existing criminal law to cover mischiefs that it was never intended to address. That process is undesirable in principle and often unsuccessful in practice. The Bill will remove the necessity for it.
We agree with the Law Commission that there are three key areas where the criminal law is deficient or could usefully be strengthened. They have been ably described by my noble friend. We also agree with the Law Commission's conclusion that the
244
inadequacies in the scope of the criminal and civil law require new legislation in the form proposed in this Bill. We therefore fully support its objectives.
The Bill also seeks to introduce new rules governing the jurisdiction of the United Kingdom courts. I should like to explain the Government's view on this.
We naturally look very carefully at any proposals to change the rules governing the authority of the courts. However, we consider that due to the particular nature of computer misuse, the Bill could not function effectively without this. Computer misuse knows no national boundaries. As my noble friend Lord Colville has explained, it can be carried out via the international communications network right across the world. These clauses are therefore an essential ingredient in the Bill and we support them too.
Laws against computer misuse are not sufficient on their own to deter this menace, in the same way as laws against burglary do not obviate the need for the wise householder to buy strong locks to protect his home. The Government recognise this and have developed a policy on other fronts which will complement this proposed law. That was a point raised by the noble Lord, Lord Avebury.
First, there is a responsibility on users to protect their systems adequately against intrusions. There is no doubt that users are now more aware of the threat of unauthorised access. Look at the support for this Bill. But this is not enough.
To raise awareness of the importance of computer security my department has launched a three-year awareness programme which is managed by the National Computing Centre. Aimed primarily at small and medium sized companies, the programme will highlight practical ways to protect the storage, transmission and display of information and will also emphasise the importance of technical standards. We would expect these measures to complement the introduction of this Bill and we will of course aim to explain the implications of the legislation.
Secondly, my department is active in the development of common technical standards for both products and systems. We have sponsored the development of criteria for the security evaluation of IT products. Together with other departments and partners in other counries we have also produced a set of European harmonised criteria which will be published for consultation shortly. We hope eventually to have full international harmonisation, supported by evaluation and certification. This will help users to meet their security needs with reliably tested products. We are also supporting a large amount of other standards work with broadly similar aims.
On the question of jurisdiction and extradition raised by the noble Lord, Lord Avebury, the jurisdiction provisions of the Bill would enable the gentleman who is alleged to have circulated the AIDS diskette to be tried in the United Kingdom for unauthorised modification. Clause 15 of the Bill makes the Clauses 2 and 3 offences extraditable, permitting extradition where appropriate treaties exist.

245
The noble Lord also asked for an analysis of the computer misuse cases that have been referred to by the DTI. Of the six cases brought to prosecution all were within the realms of the Clause 3 offence; that is to say they were associated to some extent with criminal damage. However, the survey carried out by the DTI is not a statistically representative sample and we make no claim of that kind in respect of it.
As for asking police forces to report cases of computer misuse, I fear that this would likewise not produce valid figures. Where misuse is not a crime many cases will not be reported.
I believe that I have answered the first point raised by the noble Lord, Lord Williams, about why the Bill is not a government Bill. On his second point about the possibility of providing for changes of the Bill to cover future changes in technology by, for example, secondary legislation, I find it strange to hear such a proposition coming from the noble Lord. As he said, he did not think that he would make such a proposition with regard to any government legislation. I am not certain why he proposes such a course in connection with this Bill. He apparently wanted it to be a government Bill, I understand from an earlier intervention that he made. I dare say that he will wish to explore that point further at a subsequent stage.
Lord Williams of Elvel: My Lords, will the noble Lord recognise that there is a serious point here, frivolity apart? Technology advances. This industry and primary legislation passed through this House become out of date very quickly. I am trying to offer what I regard as an unsatisfactory formula. But it is a serious point.
Lord Trefgarne: My Lords, I recognise the point that the noble Lord makes. Of course technology advances in this area by leaps and bounds. But I am not sure that I favour the solution to the problem that he proposes.
The problem of computer misuse will not go away. This Bill's enactment, together with the efforts of computer users and continuing work on computer security awareness and standards, will provide a positive contribution to deterring computer misuse.
The Bill has successfully completed its passage in another place and received all-party support there. It has been debated and considered by right honourable and honourable Members in great depth and detail. The Government are content both with the objectives of the Bill and the way that they are achieved. I hope that noble Lords appreciate the need for such legislation and will facilitate its passage through this House.
8.38 p.m.
Viscount Colville of Culross: My Lords, we must not hold up the Scottish business very much longer. I do not very much mind whether it is a government Bill or a Private Member's Bill in view of the welcome that it has received from your Lordships this evening. That is the most important matter. I agree with the noble Lord, Lord Milne, that time was important in relation to the Law Commission's reports and we are seizing the opportunity to put the Bill on the statute book.
246
The noble Lord, Lord Avebury, asked a number of very technical questions, in particular in relation to computer viruses originating from overseas. We are doing our best within the powers that we possess in the jurisdiction of all three parts of the United Kingdom. My noble friend Lord Trefgarne has already explained that Clause 15 deals with extradition. Of course extradition has recently been greatly brought up to date by the extradition legislation last year. The noble Lord may care to look at the double criminality test in Clause 8, which is also relevant in this respect.
We would be able to deal with these offences if they had advanced far enough to become, for instance, demanding money with menaces. The gap that the Bill is filling is the stage immediately before that. The noble Lord suggested that we might have another look at the possibility of dealing with the matter under the Criminal Damage Act. I looked at Cox V. Riley. It seemed to me that the courts were straining to bring what had happened there within the realm of that legislation. Once the courts start to strain, particularly if technology improves, we shall find very rapidly that prosecutions fail.
Lord Avebury: My Lords, does the noble Viscount happen to know whether other cases following Cox V. Riley have dealt with media more commonly in use such as floppy or hard disks? The case of Cox v. Riley was in 1986. One would have thought that, on the basis of damage having been caused to a plastic card, most of the more commonly used media might have been covered by existing legislation.
Viscount Colville of Culross: My Lords, I do not know offhand. I shall certainly find out and tell the noble Lord the result of my researches. That appears to be the limit reached by the courts under the Criminal Damage Act.
As for the Criminal Attempts Act and the possibility of making this a much broader issue in criminal law whereby preparatory acts in themselves would become attempts, the noble Lord is leading us into dangerous paths. It was precisely because they are only preparatory acts and not attempts that the Bill takes the form that it does. If we departed from long-standing arrangements and definitions of attempts so as for the first time to include preparatory acts, we should be bringing into the criminal law a large range of activities which at the moment stand outside it. Considering that the penalties for an attempt are the same as for the substantive offence, that is a major step to take and certainly not one that I would wish to embark upon simply in relation to computers and without a great deal more thought. The noble Lord may find that in the end it is better to deal with this in the specific way set out in Clause 2.
The noble Lord may also like to look, in terms of the way in which we are dealing with the introduction of overseas viruses, at the definition in Clause 17 (7) of causing a modification. He will see that we have arranged to take the exercise quite a long way down the stream of successive introductions of viruses. The noble Lord may care to study that.

247
The noble Lords, Lord Milne and Lord Williams of Elvel, referred to technology and in particular to the definition of a computer. It is precisely because technology marches on so fast that it has been thought better not to include a definition of computer. That being the case, one needs to turn to the second point of the noble Lord, Lord Williams, which was dealt with to some extent by my noble friend Lord Trefgarne. The noble Lord asked whether we ought to take powers to keep ourselves up to date. I suggest that the drafting of this Bill and the formulation of these new criminal offences have been done broadly in a way which ought to take account of the technology as it progresses. I agree with my noble friend Lord Trefgarne that if one is dealing with serious criminal offences —the offences in Clauses 2 and 3 carry maximum sentences of five years in prison and an unlimited fine—it would be doubtful whether the wisdom of Parliament would allow this to be done by way of extending these criminal offences through secondary legislation Parliament likes to look at criminal offences of that seriousness before they go on to the statute book as primary legislation.
Lord Williams of Elvel: My Lords, I agree with the noble Viscount on that point. My problem is related to the definition. There are times when Parliament can rely on secondary legislation to extend definitions although the criminal procedure is enshrined in primary legislation.
Viscount Colville of Culross: My Lords, we can return to that in Committee. The provision in Clause 17 is a pretty cunning piece of work. I suspect that it will stand the test of time for a while at least. Of course if there are any further suggestions to improve it I shall be delighted to hear of them and to consider them most seriously.
It looks as though we shall have something to discuss in Committee. However, for the moment I am grateful for the welcome the Bill has received today. I commend it to the House.
On Question, Bill read a second time, and committed to a Committee of the Whole House.

Law Reform (Miscellaneous Provisions) (Scotland) Bill [H.L.]
8.45 p.m.
Consideration of amendments on Report resumed.
Lord Renton: My Lords, on a point of order, have we completed our consideration of Clause 21, as amended?
Noble Lords: Yes.
Clause 22 [Rights to conduct litigation and rights of audience]:
Lord McCluskey Lord McCluskey moved Amendment No. 133:
Page 28, line 41, at beginning insert ("Notwithstanding the terms of the Act of Union or of Article XIX of the Treaty of Union set forth therein").
The noble and learned Lord said: My Lords, those who attended the Committee proceedings or have read the report of them will be aware that I moved an amendment at that stage in the same terms as the amendment before us. However, it prefaced a clause which no longer exists. It was the old Clause 21, which has been replaced by what is now Clause 22. That was done at col. 1115 of the Official Report of 2nd April 1990. At that stage I quoted the most pertinent parts of Article XIX of the Treaty of Union. I did so at col. 1077 of the Committee stage proceedings on 29th March 1990. In short my submission to the House is that this Parliament has no power to alter the constitution or privileges of the Court of Session unless in the judgment of Parliament the proposed alteration would lead to the better administration of justice. I also make the point which I made in Committee that the Court of Session and the College of Justice appear to be the same thing.
In reply to certain points put forward on that occasion the noble and learned Lord the Lord Advocate said:
"Article XIX preserves the constitution, authority and privileges of the Court of Session following the Union. The clause, however, in providing for persons other than lawyers to obtain rights to conduct litigation and rights of audience in relation to court proceedings does not affect the constitution, authority or privileges as such of the Court of Session itself. —[Official Report, 29/3/90; col. 1078.]
In reply to a further question he said that the noble and learned Lord—referring to me—
"asked me one question which I do not think I have answered; namely, that about the members of the College of Justice. Yes, if they have rights of audience in the Court of Session, it would follow that they become members of the College of Justice". — [Official Report. 29/3/90; col. 1080.]
Following upon that, however, the noble and learned Lord wrote a letter on 11th May both to me and to the noble and learned Lord, Lord Emslie, in which he said:
"I have looked into this question by reference to the statutory authorities for the College of Justice and the Court of Session and have concluded that, while neither solicitors (except Writers to the Signet and Solicitors to the Supreme Courts) nor members of other professional bodies, would be members of the College of Justice this would not affect their right to exercise an acquired entitlement to appear in the Court of Session. I have found nothing in my researches which suggests that rights of audience flow from membership or that a right of audience may not be exercised without membership of the College [of Justice]."
Your Lordships will see that in the letter he contradicted what he informed the Committee on the occasion when, to be fair, he was asked the question and was perhaps not fully prepared to consider it.
The article to which I referred on that occasion was written by Professor Oswald Dykes just before the Second World War. It said:
"The College of Justice is the collective name given to those persons who take part in the administration of justice in the Court of Session."
It appears to me that what I said op that occasion about the College of Justice and the Court of Session was correct, and it appears to be clear that the Government are extremely confused about the position. It is obvious to me, and I hope now to your Lordships from the conflicting advice given to the Committee by the Lord Advocate and the conflict

249
between that and what he said in the letter, that the Government had not thought deeply about this matter before it was raised in Committee.
Let me turn to the substance of the matter, which is that this Parliament is not entitled to alter the provisions in relation to the Court of Session or the College of Justice unless this Parliament considers that to do so will lead to the better administration of justice:. In that context, I have to ask a question that I have asked more than once before; namely, who asked for such rights, and, particularly in the criminal courts, who has sought such rights?
The Lord Advocate, replying to that on the previous occasion, said that the only group which had made a kind of tentative approach was a group of people concerned with adoption. That certainly indicates to me that no one has expressed any interest whatsoever in going into the criminal courts under the provisions of Clause 22. So how can it be said, when no one has asked for it and there has been no thought given as to who might take advantage of Clause 22, that it will be for the better administration of justice that laymen should be given these potential, unlimited rights of audience, especially in the High Court of Justiciary?
This Parliament must judge what is for the better administration of justice, because that is what Article XIX provides. It must not do so lightly. The Government must give reasons for changing the membership of the College of Justice, or the practice of the Court of Session and its privileges after some four and a half centuries. When we broke for dinner, I was reminded that 17th May will be the 458th anniversary of the foundation of the Court of Session. It appears to me chat it would be wise for the Government to take some time to think about what they are doing. It would be more honest for the Government simply to accept my amendment and acknowledge that they may well be in breach of the Act of Union and the Treaty of Union but say, "We don't care". The honest thing then would be to accept the amendment.
It could also avoid the difficulty that, when the first para-legal person is instructed to appear in the High Court, someone may argue before the Court of Session that what is now Clause 22, and will then be Section 22, is ultra vires because of the provision of the Act of Union. Then there would be what the Americans call a judicial review; namely, a court being asked to declare whether an Act of Parliament is ultra vires to the constitutional settlement.
I want to conclude by simply repeating the question that I have asked before in order to see whether there has been any progress in this matter. Are the Government now prepared to tell us which bodies the Government have in mind whose members can come to the court and plead in the criminal courts, and thus lead to the better administration of justice in Scotland? I have asked that question a number of times. I have others that relate to other parts of this clause; but, in the meantime, I am content with the questions that I have asked and hope that this time I shall get a satisfactory answer. I beg to move.
Lord Fraser of Carmylle: My Lords, I begin by attempting to clarify the relationship between the College of Justice and rights of audience in the Court of Session, as this matter has been raised on a number of occasions, particularly in Committee and again this evening. As the noble and learned Lord has been kind enough to say, I wrote to him to express what I now consider to be the best view that I can take of it.
I have concluded that while non-lawyers would not be excluded from membership of the college, they would not automatically become members by virtue of their acquisition of rights of audience to appear in the Supreme Courts. If I got it slightly wrong last time, I regret that. However, looking at it again—and looking to the case of Bruce v. Clyne—I am not entirely surprised that it has caused difficulty for some people to determine whether or not such groups as the solicitors of the Supreme Courts have, since the early part of the 19th century, been members of the College of Justice. It is far from clear from that case what the situation is.
However, those non-lawyers would not be barred from membership of the College of Justice so far as I can ascertain. Indeed that membership of the college might be acquired either by act of sederunt or indeed, from the Clyne case, by usage. I think solicitors to the Supreme Courts come into the second category, although I think that may be underlined by the fact that they are also members of the College of Justice, and by what I have been advised by the previous Lord President, the noble and learned Lord, Lord Emslie, that they are members of the College of Justice by virtue of an act of sederunt.
The principal point that I want to make to the noble and learned Lord, given his concern about the membership of the college, is that it does not appear to me that there is a direct link between such membership and the acquisition of rights of audience under statute. For example, all solicitors—not just those who might be granted extended rights of audience under the provisions of Clause 21 —have a limited right of audience before the vacation judge (and I accept that it is limited) in the Court of Session in terms of Section 48 of the Court of Session Act 1988. I would have to say that I have not heard it suggested that because they are mere solicitors rather than members of the College of Justice they should not have those limited rights of audience. Only certain solicitors—namely. Writers to the Signet and Solicitors of the Supreme Courts—are members of the College of Justice. I do not think that there can be any doubt about that.
It would confuse the issue to equate the college with rights of audience in the Court of Session. That being so, in my view it does not help a consideration of the issue to try to draw the two together. In promoting what the Government are now promoting, I have to say to the noble and learned Lord that I do not consider that there is a question of any conflict with the provisions of Article XIX of the Treaty of Union. If there is at some point in the future any attack or challenge on that, so be it. We shall have to live with it. However, from the researches that I have undertaken, I do not think that there is a direct relationship; and the position

251
about the colleges is nothing like as crystal clear as is sometimes suggested.
The other matter that he raised was: who has asked for rights of audience, particularly in relation to criminal matters in the High Court of Justiciary in Scotland? I have said it to him before, and he has repeated it in the course of what he said, that such application has not been made, and it may well be that no application is made. But I am sure that during his time as a law officer of the Crown there were occasions on which he introduced provisions that were essentially enabling. That is all that is being provided for here.
The Government are not compelling non-laywers to come forward and put together a scheme to give them rights of audience in criminal matters. The enabling provision will be there. I emphasise this, as I have emphasised it on a number of occasions previously. Although the noble and learned Lord has used the crisp terms, the barefoot lawyers, (which articulates his thoughts on the matter) with respect, that is not wholly apposite, because if any group comes forward, the provision will be put tightly within the control of the senior judge in Scotland and the senior member of the Government in Scotland; namely, the Secretary of State.
There is a world of difference between the early American experience of the barefoot lawyer and what we propose. The provision is an enabling one. The noble and learned Lord may well challenge the Government and ask who is coming forward at the moment. There is no immediate group, but we wish the provision to be on the statute book, subject to the sternest of arrangements as to education and so forth; and in those circumstances, I invite the noble and learned Lord to withdraw the amendment.
9 p.m.
Lord McCluskey: My Lords, the noble and learned Lord the Lord Advocate has said that the questions raised in connection with the amendment are difficult, and that it is far from surprising that they have caused difficulties. They might have caused difficulties to the rest of us, but they should not have caused difficulties to the Government because the Government should have reflected upon the impact of the Bill upon Article XIX before the Committee discussed the matter and I tabled the amendment referring to it.
The noble and learned Lord the Lord Advocate has also said that all solicitors have a limited right of audience before the vacation judge. That is true. One can understand that it may well be for the better administration of justice that during the vacation a solicitor who knows the case should be entitled to deal with the essentially interlocutory matters which are dealt with there. I do not criticise solicitors. I make that plain. I have a high regard for the advocacy skills of a great many solicitors of my acquaintance. One can easily understand the judgment that there was no problem about the better administration of justice when all solicitors were given the right to appear in the vacation court.
On the final point, the noble and learned Lord the Lord Advocate has said that this is merely an
252
enabling provision which will enable something to happen which may never happen. We have no idea who wants it to happen. We do not want it to happen. No one wants it to happen. If in the future someone wants it to happen, the provision will exist to enable it to happen. One could understand that in some looking-glass world; but how can it be said to be for the better administration of justice in the Court of Session to put into the Bill such a provision when the Government cannot point to anyone who has asked for it or who should have it? One cannot persuade Parliament that that provision is for the better administration of justice when the Government's reply is, "It is just there so that in some future that we cannot comprehend someone might, in circumstances that we do not understand, ask for something that no one wants". In substance, that is what the Government's reply comes to.
I hope that between now and a later stage in the Bill—this is going to another place where I have no doubt it will be examined critically—the Government will have reconsidered their position. The Government have already made it plain that the clause is not to be brought into force immediately. One hopes that it may not be brought into force for a long time, if ever. The honest thing to do—I am sure that the Government will make many friends and make much more sense of the Bill—would be for the Government to abandon Clause 22 unless they have some scheme in mind, in which event they should come forward with a clause that enables that scheme to be put in force.
I remind your Lordships of what I informed the Committee. When the present Lord Chancellor was Dean of Faculty he thought that lay representation, even in the lowest courts, could be a threat to the better administration of justice. That was a judgment which was carefully considered. It was put into the written documents that went to the Royal Commission and it was repeated at the Royal Commission's oral hearings. In those circumstances, the Government would be wise not to press ahead with the matter. However, in the circumstances, and so as not to delay matters tonight, I beg leave to withdraw the amendment.
Amendment, by leave, withdrawn.
Lord McCluskey Lord McCluskey moved Amendment No. 134:
Page 28, line 41, leave out ("or other").
The noble and learned Lord said: My Lords, Amendment No. 134 is again an echo of something that happened in Committee. Your Lordships will see that it seeks to leave out the words "or other" on page 28 at line 41. The provision contained at the beginning of Clause 22 is that,
"Any professional or other body may, for the purpose of enabling any of their members … to acquire —

(a) rights to conduct litigation … and

(b) rights of audience,

make application in that regard".
No one knows what bodies, apart from professional bodies, the Government have in mind in relation to this matter. I can understand, although I do not agree, the thinking behind the proposal that patent agents, accountants, architects, surveyors or other such bodies might wish in certain circumstances to

253
exercise a right of audience. But which bodies other than professional bodies do the Government have in mind?
There is another point which is a technical one. I am sorry that the noble Earl, Lord Balfour, is not here to congratulate me on pointing it out. If "other" means "any other", as it appears to do, then why does not the Bill just say "any body may apply"? The words:
"Any professional or other body",
mean any body at all. The noble Lord, Lord Grimond, made that point in Committee.
The amendment is a small one, but it takes a tiny step towards sanity by providing the potential to apply, a: least initially, to professional bodies. If it is a howling success to the astonishment of all and sundry, including myself, then one could in another Law Reform (Miscellaneous Provisions) Bill—they come along every year or so—extend the right to bodies other than professional bodies. However, in moving the amendment I ask the noble and learned Lord the Lord Advocate on behalf of the Government to give me a clear reply to the question: which body other than professional bodies do the Government have in mind? In particular, which body other than any professional body do the Government have in mind to which they will accord rights of audience in the criminal courts? I beg to move.
Lord Macaulay of Bragar: My Lords, will the noble and learned Lord the Lord Advocate, in reply, give an indication as to whether any further thought has been given to the definition of "professional"? In times past the professions were easily recognised as being the ministry, medicine, law and so on. However all kinds of people—and I say that in no disrespectful sense—various categories of workmen, call themselves professionals. A plumber is quite entitled to call himself a professional plumber, and he is indeed a professional when one is in trouble, if one's house is flooded. There are publicans in the licensed trade, which is called a profession.
Would not the absence of a definition in the clause of "professional" give considerable force to the argument advanced by the noble and learned Lord, Lord McCluskey? It might be better to have an open house rather than a half-closed one as with the present working of the laws.
Lord Cameron of Lochbroom: My Lords, I take a somewhat different view about the clause from that which was adumbrated by the noble and learned Lord, Lard McCluskey. We tend to forget that in many legal proceedings within our jurisdiction lay persons represent other lay persons successfully. They make use of their own training, which includes law. It might be said that there is a case for allowing representation, for instance, within the lowest courts—the courts, as opposed to tribunals. I instance the district courts. It may well be said that if in a court martial a defendant can be represented by his divisional commanding officer, there is no reason why, within a limited tier of courts, the same principle should not apply.
The noble and learned Lord will be well aware of what happens in industrial tribunals where it is
254
not members of a body who necessarily represent individuals. Nevertheless, trade union officials would certainly be members of a body and they have been very successful in that regard. In social security tribunals I can think of officers employed by the administrations of local authorities who have been successful in representing cases on behalf of individual litigants.
It might be said that the clause does not go far enough. It provides that it must be a body that makes applications. In addition, the restrictions are then further and, I am bound to say, properly restricted by the terms of subsection (2). It provides for restrictions as to the nature of the courts, the nature of the proceedings and of the business and so on which the members of that body—be it professional or otherwise —can attend. Paragraph (b) of the clause provides for the necessary training requirements and paragraph (c) for indemnification. What indemnification is there, for instance, for the litigant who goes before a social security tribunal or, in one sense, a trade union member who goes before an industrial tribunal and is represented by his official?
It is proper that we should take a much broader view of the clause and what it seeks to do in a restricted way. In the law of Scotland that is the way we ought to go. I have a great deal of time for lawyers, as noble Lords will understand. I have spent over 30 years among them and recognise the expertise on both sides of the profession. However, sometimes within a profession we tend to forget that similar legal expertise is available to those who practise their jobs in ways which from time to time touch the law.
It is for the good of the courts that we should have this provision which may in time to come assist ordinary litigants in a way which at present we are in danger of losing. Therefore, for the moment, I am not persuaded by the arguments which my noble and learned friend has put forward.
Lord Morton of Shuna: My Lords, my noble and learned friend Lord Cameron of Lochbroom has expressed his views about rights of audience. I did not mean to speak on this issue; but, having been a member of various tribunals, on the whole, I disagree with him. Courts are totally different from tribunals, which tend to be very specialised. I have been involved in industrial tribunals and in the Criminal Injuries Compensation Board. Various disasters have been averted only through the expertise of the members of the tribunal rather than that of the person who is appearing. We must be very careful that in widening the rights of audience we do not water down the quality of the advice that is available to a person who is appearing in a court which is, after all, by its definition, intended to be more serious than a tribunal. The latter concerns a specialised area.
9.15 p.m.
Lord Fraser of Carmyllie: My Lords, in my view this amendment is unnecessarily restrictive. If the noble and learned Lord, Lord McCluskey, wished to open an attack upon the first line of Clause 22 he might reasonably have done so by saying that the words "professional or other" should be deleted so that the clause simply stated, "Any body may, for

255
the purpose of enabling any of their members who is a natural person to acquire".
I should understand that argument. Nevertheless, I think it is desirable that we should give some signal that we are not talking about individuals coming forward, but rather about bodies which have members who are natural persons coming forward. The noble and learned Lord, Lord Cameron, referred to that matter.
However, as I understand it, that point did not amount to the substance of the complaint of the noble and learned Lord. He believes that, if there is to be a broadening of those who have rights of audience, the extension should be to those who are in what might be described as a profession. The noble Lord, Lord Macaulay, is quite right to say that the term "profession" is capable of the widest use. Those who patrol the streets late at night could sometimes describe themselves as being in a profession. That term is clearly difficult when it comes to giving it any precise legal containment.
However, there may well be groups of persons who are not professionals in a generally accepted sense but who may be able to offer a useful service of a requisite quality to clients with particular needs. I am thinking here in particular of persons who work in the advisory field—for example, on welfare or benefit matters. I was surprised that the noble and learned Lord, Lord Morton, was so disparaging of some representatives of trade unions who have appeared against me in industrial tribunals. Given the antecedents of the noble and learned Lord and given mine, it is surprising that I am the one who is defending those members of trade unions who have on occasions done a quite outstanding job and who have displayed a great expertise not only in practical matters coming before the tribunal but also in an enormously detailed knowledge of the law in a particular area.
I have already indicated that there has been no direct notification that there are specific groups who are straining at the leash to acquire rights of audience. However, I have mentioned in the past that such groups as those who are involved in adoption matters could offer the most invaluable rights of audience in a specialist area. Adoption should, I believe, come before the courts but I doubt whether the people who deal with adoption matters would necessarily be described as professionals although they may have great expertise in that area. However, the point ultimately is—I have made this point before—that it will be for the Lord President and the Secretary of State to judge on its own merits each application for rights to conduct litigation or rights of audience under this clause. The noble and learned Lord, Lord Cameron, referred to that matter. The provisions which enable the Secretary of State and the Lord President to do so are detailed and extensive. Indeed, if the noble and learned Lord, Lord McCluskey, were to make the criticism that they are too detailed and too extensive, I should be inclined to accept that criticism in some circumstances.
Lord McCluskey: My Lords, the noble and learned Lord the Lord Advocate, with the assistance of my
256
noble and learned friend Lord Cameron of Lochbroom, has repeated the point which had been made before —that is, that there is a case to be made for the opening up of the lowest district courts such as the courts martial and the tribunals that were mentioned by the noble and learned Lord, Lord Cameron, and possibly the summary civil courts that deal with matters of adoption, to persons who have expertise in those matters. I can understand that proposal although, as I have already said, it goes in the teeth of what the noble and learned Lord the Lord Chancellor said when he was the Dean of the Faculty of Advocates. However, that point does not justify this clause. The noble and learned Lord the Lord Advocate obviously did not hear me suggest that the logic of the wording of Clause 22 was to delete the words "professional or other" to make it refer to any body.
I have not yet heard an answer to the deep question to which I am seeking an answer—namely, under what circumstances would some body other than a professional body have any reasonable expectation of making a successful application to the Lord President and the Secretary of State for the right to represent people in murder cases, rape cases and the like in the High Court of Justiciary before a jury? In the hope of receiving an answer to that question when I come to a later amendment, I beg leave to withdraw the amendment.
Amendment, by leave, withdrawn.
Lord McCluskey Lord McCluskey moved Amendment No. 135:
Page 28, line 43, leave out ("members of the public") and insert ("other members of that body").
The noble and learned Lord said: My Lords, I do not want to take a great deal of time over this amendment. It is a damage limitation exercise. It may be that members of whatever body we have in mind can properly assess the competence of the authorised pleaders who are authorised by that body in terms of a scheme. The public may see a surveyor as a good surveyor, an architect as a good architect, a plumber as a good plumber or a boy scout as a good boy scout, but they cannot judge which of them will be good at advocacy in the courts.
Again I ask in this connection whether any member of the public has ever, before or since the Bill was published, asked the Government to ask Parliament to confer rights of this kind upon non-lawyers. I should like to hear from the noble and learned Lord the Lord Advocate more explicitly what it is that some persons concerned with adoption have said. I should like to know whether representations have been made to the Government on behalf of some body which properly represents those concerned with adoption law that they should be given a right of audience. I do not know the answer to that question yet. In the hope that I shall receive one, I beg to move the amendment.
Lord Fraser of Carmyllie: My Lords, the noble and learned Lord has an optimism which at this time of night surprises me. He has asked me that question repeatedly. I can do no better than repeat again that, while I instanced an adoption matter and he has instanced patent agents, I did not suggest at Committee stage, and I do not suggest at this stage,

257
that there is a list of professional or other bodies which are straining at the leash to acquire these rights of audience. The provisions are essentially enabling They cover all courts. It might be that only the most restricted rights of audience in the most restricted matters would be requested. I do not believe that I can expand on that point.
If the amendment were to be carried it would be very restrictive. It would allow persons acquiring rights of audience the right to conduct litigation only for other members of the same body. That would defeat the purpose of the clause, which is to enable persons of requisite qualifications, experience and competence to offer litigation and representative services to the public.
Lord McCluskey: My Lords, I have nothing to add. I beg leave to withdraw the amendment.
Amendment, by leave, withdrawn.
[Amendments Nos. 136 and 137 not moved.]
Lord McCluskey Lord McCluskey moved Amendment No. 138:
Page 29, line 8, at end insert:
("(v) what is to happen if in the course of the proceedings there are raised matters of law in relation to which neither membership of such a body nor the training referred to in paragaph (b) hereof confers any knowledge or expertise,").
The noble and learned Lord said: My Lords, noble Lords wi11 recognise the amendment. When the noble and learned Lord the Lord Advocate saw it at Committee he thought that it was defective because it did net have a question mark at the end. I trust that he has had time to reflect upon that and realise that it would have been quite improper to put a question mark at the end. Perhaps he simply misread the amendment at that time.
In Scotland, advocates who appear in any court and solicitors who appear in any court in which they currently enjoy a right of audience profess a knowledge of the whole law that might bear upon the case in which they are involved. More particularly, they profess a knowledge of all the procedure and practice in that court and a knowledge of the law of evidence as it might bear upon the case in which they are involved, in addition to surrounding areas of the law. I do not pretend that every lawyer, be he advocate or solicitor, knows everything, but all profess a knowledge of the law and are trained in the whole law in the course of their years at university and of their apprenticeship and devilling.
The lay pleader makes no such general profession of knowledge. The scheme should therefore contain provisions which the Lord President can consider about:
"what is to happen if in the course of the proceedings there are raised matters of law in relation to which neither membership of such a body nor the training referred to in paragraph (b) hereof confers any knowledge or expertise".
If you empower a patent agent, an insolvency practitioner or an architect to appear in a case, and another party—whether it be the other side or a third party who has come into the case or someone else—raises a question which is not within his expertise, what on earth is to happen?
More particularly, in a criminal case, if one of those lay pleaders—the barefoot pleaders as I previously referred to them—is defending a person on a charge and the case expands in some way to embrace matters on which he is not expert affecting another person who is charged, who is to protect the interests of that other person against the incompetence of the lay pleader who has been taken outwith the field in which he has expertise?
I suspect that the Government have not thought deeply about those matters. I have tabled the amendment because it appears to me that someone should think about what happens when the lay pleader is suddenly found to be out of his depth because of a twist or turn in the case which he did not foresee. I beg to move.
Lord Morton of Shuna: My Lords, I support the amendment. The scheme should specify the category of proceedings and the nature of the business. That is all very well. You categorise that person so that he is allowed to deal with, for example, certain types of patent applications. However, as my noble and learned friend said, what happens if the case jumps from that to a matter concerning something different? At various times in practice we have all found that a totally different branch of law has suddenly appeared in the case that we are conducting. We have to deal with it. What is to happen to the person who suddenly finds that the case has moved out of the category in which he has a right of audience? The Bill is completely blank in that respect. Is he to say to his client, "I am sorry. At the moment I have to stay silent and there is nothing you can do"? That matter must be considered.
Lord Fraser of Carmyllie: My Lords, when this self-same amendment came before the House last time and I indicated that it might end with a question mark, I was as appreciative as the noble and learned Lord is of the fact that question marks do not appear on the face of a statute.
The reality of the law—not just in Scotland, but throughout the developed world—is that it has become increasingly specialised. Although particularly in Scotland we rightly lay claim to the advantage of a common core of education, few of us would claim to be truly expert or specialist in all the areas of the law that now come before the courts in our complicated society.
I understand and appreciate that, as the noble and learned Lord, Lord Morton, said, there may well be occasions on which the pleader would not claim to have any particular expertise or knowledge. That happens now and it may well happen in the future. I should have thought that in such circumstances, if there is a specialist Clause 22 pleader, he would take the steps that I envisage a junior member of the Bar would take at present. He would seek an adjournment or make some proposal for securing the services of someone who was a specialist in the field in which he would not claim to have expertise. It is a problem but it is one which arises in the medical world and with all kinds of other professions. It is not exclusively a legal problem. In such circumstances the proper response, whether

259
one is already enjoying rights of audience of not, is to appreciate the limitations of one's expertise and take steps to secure the expertise of someone who will be able to give the advice that the client requires.
9.30 p.m.
Lord McCluskey: My Lords, I shall not dwell any longer on this matter. The position in Scotland is different from that in England. In Scotland we profess the whole law. We do not divide ourselves into chancery lawyers, common pleas lawyers and so on. Nowadays there is a tendency for some people to specialise in the criminal law and others to stay out of it. Certainly any advocate of my acquaintance would be able to profess the law in any field in which he was likely to be instructed. In one sense he would not be taken by surprise by developments in a case.
However, I do not propose to push this matter. In my experience of over 30 years I have never known counsel to ask for an adjournment of a case in order to bring in an expert to tell him what is the law. It is so laughable that it would never happen. I am surprised to hear the noble and learned Lord the Lord Advocate espousing such a curious notion. He must have found it in his notes and they must have been written by someone who has perhaps never appeared in a court of law. However, at this late hour I do not propose to press the matter. I beg leave to withdraw the amendment.
Amendment, by leave, withdrawn.
Lord McCluskey Lord McCluskey moved Amendment No. 139:
Page 29, line 17, leave out ("application") and insert ("application's").
The noble and learned Lord said: My Lords, I suspect that some noble Lords may imagine that I am guilty of pedantry here. However, as a matter of syntax, the words "being granted" constitute a verbal noun, the gerund. Therefore, line 17 could read,
"in the event of the granting of the application".
A "granting" would then be a verbal noun and the word "application" would be in the possessive form. The Bill does not put the word "application" in the possessive and it makes "being" into a gerundive.
Having said that, and at the risk of being accused of pedantry, perhaps I may explain. In a recent case involving Section 4 of the Misuse of Drugs Act the court has interpreted the section in a certain sense. It has made the mistake, in my opinion, of not distinguishing between the gerund and the gerundive. That has led to a wrong view of what the section contains. It is not a point of pure pedantry. It is desirable that when the statute is being drafted by highly expert draftsmen they should stick with the syntax with which we are all familiar. Accordingly, at the risk of being accused of pedantry, I beg to move the amendment.
Lord Fraser of Carmyllie: My Lords, in view of the nice compliment that the noble and learned Lord paid to me as regards an earlier amendment for the way in which it was constructed, with some regret I say that I cannot see what this amendment will add to the sense of the clause. The clause seems to make perfectly good sense as it is. It has been drafted with the standard practice in such matters very much in
260
mind. I should be very reluctant to depart from that without some clear advantage. In view of the other matters that we have to consider, I invite the noble and learned Lord to withdraw the amendment.
Lord McCluskey: My Lords, I certainly shall. I beg leave to withdraw the amendment.
Amendment, by leave, withdrawn.
Lord McCluskey Lord McCluskey moved Amendment No. 140:
Page 29, line 26, at end insert:
("(d) prescribing that no person shall be given a right of audience in terms of this section in any Court unless the Lord President is satisfied that he is a fit and proper person to have such a right of audience.").
The noble and learned Lord said: My Lords, Amendment No. 140 covers some of the ground covered in Amendment No. 154 standing in the name of the noble and learned Lord the Lord Advocate. Amendment No. 140 requires that certain rules referred to in the clause should prescribe that:
"no person shall be given the right of audience in terms of this section in any Court unless the Lord President is satisfied that he is a fit and proper person to have such a right of audience".
Therefore, it is proposed that the Lord President should determine who passes the fit and proper person test. Amendment No. 154 would place that responsibility not upon the Lord President but upon the body of which the person is a member. It is obvious that the person to decide the matter is the Lord President or, wearing his criminal hat, the Lord Justice General.
It can be done. I may be told that if the Lord President must look at each individual case that is a huge responsibility. However, I read a recent lecture given by the Lord Chancellor in the SSC Library in Edinburgh. Among his many duties and responsibilities he listed that of studying personally each year the applications of several hundred people to be elevated to the rank of Queen's Counsel and become Silks in England. He said that he read each of them and made sure that each passed the fit and proper person test.
I believe that the job should be that of the Lord President. It should not be put upon the body. I take the opportunity of saying that for that reason I am opposed to Amendment No 154 and believe that the better course is Amendment No. 140. I beg to move.
Lord Fraser of Carmyllie: My Lords, while I understand the thinking behind the amendment, the noble and learned Lord will appreciate the fact that, given my amendment to which he has referred, I cannot accept it. The Lord President will under the terms of Clause 22 consider and approve a draft scheme submitted by a professional or other body wishing to accord rights to conduct litigation or rights of audience to its members. Notwithstanding what the noble and learned Lord has said, it would be inappropriate and impractical to expect him to consider whether each individual is a fit and proper person to undertake the work involved. In my view, that task is best undertaken by the body concerned and my Amendment No. 154 seeks to achieve that.
At the risk of repeating myself, I must point out that the body may wish to deal with a restricted area of work in one of the inferior courts. In such

261
circumstances it would be a startling proposition if the Lord. President of the Court of Session, who has a heavy enough workload, had to scrutinise each application. However, it would be important for him to set up the scheme. In doing so, as we have already discussed, there are codes of practice, training requirements and so forth. I accept the fact that it is entirely appropriate for the Lord President to exercise that broader control. It appears to be sufficient without requiring of him a direct involvement with the individuals who are members of the body seeking rights of audience.
Lord McCluskey: My Lords, I had anticipated the noble and learned Lord's remarks by saying that the Lord Chancellor undertook a task not dissimilar. If it is practicable for him to do that—and he has other enormous responsibilities in relation to the appointment of judges and so forth—it must be practicable for the Lord President to scrutinise these cases. If people are to appear in the Court of Session and in the High Court of Justiciary, as the clause permits, the Lord President should determine whether they pass the test.
I do not propose to divide the House. I know that all our proceedings will be studied with care by those in another place. I hope that the Government will give further thought to the matter and change their mind, as they have been good enough to do on a number of other points. I beg leave to withdraw the amendment.
Amendment, by leave, withdrawn.
Lord Fraser of Carmyllie Lord Fraser of Carmyllie moved Amendment No. 141:
Page 29, line 31, at end insert ("; and shall in particular include provision enabling the body to comply with the provisions of subsection (13A) below.").
The noble and learned Lord said: My Lords, I shall speak also to Amendments Nos. 147, 154 and 157. I believe these amendments will be welcome to the House. They reproduce for non-lawyers seeking to acquire practising rights under Clause 22 certain important obligations and duties which attach to solicitors. It is not my intention, however, simply to force any person who acquires practising rights under this clause to become, to all intents and purposes, a solicitor, an intention which would in any event be practically unachievable. As I explained in Committee, I would expect those who avail themselves of such practising rights to be very much niche practitioners. Nevertheless, it is important that the fundamental principles which ensure that standards of conduct and practice are maintained before the Scottish courts are common to all those who seek to appear before them.
The third of these amendments requires the body in question to apply a fit and proper test, which we have just discussed. The last amendment provides the body with a power of suspension in the last resort, parallelling the power available to the Council of the Law Society of Scotland in connection with solicitors with supreme court rights of audience against whom a complaint of professional misconduct is made in the supreme courts, but enables the body to exercise it in all courts and
262
circumstances. I think this is necessary since it is impossible to foresee the circumstances which may arise in which the body sees the need to act quickly. Moreover, the body is required to exercise this power on the request of the Lord President who must remain the supreme arbiter in these matters.
With an eye to the future, the amendment also requires the code of practice to establish an order of precedence between different courts comparable to that which binds solicitors with supreme court rights of audience. This will ensure, in particular, that the legendary level playing field obtains between non-lawyer practitioners and solicitors and advocates. The level playing field is one aspect. The other is, of course, the more important; namely, ensuring that the client is, as far as possible, able to secure representation by the type of practitioner he needs and wants. I believe these amendments provide for a necessary coherence between the different categories of practitioner envisaged, in due course, by the Bill. I beg to move.
Lord McCluskey: My Lords, as the noble and learned Lord the Lord Advocate pointed out, the amendment introduces subsection (13A) which is to be found set out in Amendment No. 157.
I draw attention to certain aspects of the matter. First, in subsection (13B) the provision is to the effect that the code of practice shall include rules:
"stating general criteria to which members of the body should have regard in determining whether to accept instructions in particular circumstances".
Again, I raise the point which did not find favour earlier with some noble Lords. I am not sure what it means to accept instructions in these circumstances and I am not sure how it is to be determined that instructions have been given.
Secondly, in relation to the rule referred to in paragraph (a) the body is to establish the order of precedence of courts for the purposes of this subsection. As my noble and learned friend Lord Morton of Shuna argued, if it is inappropriate for the Council of the Law Society to establish the order of precedence of courts, surely it is even more inappropriate for the fire brigade union or whichever body the Government have in mind to do so. Why should such a body establish the order of precedence?
Paragraph (c) states that the rules shall secure:
"through such of their officers as they think appropriate, that, where possible, any person wishing to be represented before any court by one of their members holding an appropriate right of audience is so represented".
That is a nonsensical provision. It is there to mirror the provision which applies to solicitors in the preceding clause. However, it is absolutely absurd that a patent agent must have a rule to the effect that if somebody requires the services of a patent agent, he must have a patent agent wherever he may come from, if that is possible. That is absurd; yet it is entirely logical. Therefore, if by applying remorseless logic one ends up with a silly conclusion, you are driven to the opinion that the premises must themselves be silly. Of course, that was where we came in. The premises are silly. By their fruits ye shall know them. That is one of the fruits of this

263
clause which is absurd. The Government should think again about that.
On Question, amendment agreed to.
9.45 p.m.
The Deputy Speaker (Lord Airedale): My Lords, in calling Amendment No. 142 I have to say that if it were agreed to I could not call Amendment No. 143.
Lord McCluskey Lord McCluskey moved Amendment No. 142:
Page 29, line 32, leave out subsection (4).
The noble and learned Lord said: My Lords, Amendment No. 142 seeks to leave out subsection (4), which is to be found on page 29 of the Bill. It is the subsection which provides that:
"A draft scheme submitted under this section shall also include the proposals of the body in relation to such other matters as may be prescribed by the Secretary of State in regulations made under this section".
That is all it says. That is a pure Henry VIII clause. I have no idea what the Secretary of State has in mind to put into such regulations. Perhaps the noble and learned Lord the Lord Advocate can enlighten us. Can he say whether such rules and regulations exist in draft and, if so, what they contain? When in any event are they to be published? Is anyone to be consulted before this rule and regulation is brought before this House, if it is brought before the House, under the negative procedure?
As the Deputy Speaker pointed out, Amendment No. 143 cannot be taken if Amendment No. 142 is agreed to. Amendment No. 143 provides for a weaker position; if fresh regulations have to be made about vague other matters, I should have thought it appropriate that they should be made by the court, not by the Secretary of State. That is the thinking behind that amendment and I shall not speak to it separately. I beg to move Amendment No. 142.
Lord Fraser of Carmyllie: My Lords, the list of matters to be included in a draft scheme is not exhaustive. It is important that the Secretary of State should have a long stop power to add further requirements should circumstances develop which demand that. I cannot accept that the Lord President would be an appropriate person to exercise that task since the breadth of his responsibilities cannot be compared with those of the Secretary of State. I doubt whether his perspective would fully qualify him to deal with all the matters which a draft scheme will be required to cover. I am thinking specifically of the requirements which relate to client protection and complaints. I emphasise that it is as a long stop provision that this power is sought to be given to the Secretary of State.
The noble and learned Lord made reference to a Henry VIII type of clause. However, he will appreciate that if the Secretary of State is to make further regulations, it will be in precisely the direction that he would want the Secretary of State to go; namely, that there should be a greater restriction on those persons who might seek to acquire rights of audience under Clause 22 rather than providing for a greater enabling opportunity.
Lord McCluskey: I have nothing further to say. I beg leave to withdraw the amendment.
Amendment, by leave, withdrawn.
[Amendment No. 143 not moved.]
Lord Macaulay of Bragar Lord Macaulay of Bragar moved Amendment No. 144:
Page 29, line 35, at end insert:
("(4A) The Secretary of State shall by regulations made under this section make provision —

(a) requiring applications under subsection (1) above to be advertised;

(b) for draft schemes to be published or otherwise made available for inspection by members of the public; and

(c) for the making and consideration of objections or representations by members of the public or interested bodies.").

The noble Lord said: My Lords, this amendment requires the Secretary of State, by regulation, to make provision requiring applications for this type of pleading to be advertised and a draft scheme to be published or otherwise made available for inspection by members of the public. It also provides for the making and consideration of objections and representations by members of the public or interested bodies. Amendment No. 148 is an associated amendment and will follow if Amendment No. 144 is accepted and included in the Bill.
The purpose of the amendment is self-evident and I do not need to go into it in any detail. It is basically to provide publicity of any draft scheme. It will give the public, who, after all, will be affected by the implementation of the scheme in the courts where successful applications are made, an opportunity to see who is getting, or may be likely to get, approval to practise in whatever court and to make objections to or indeed to approve of, as the case may be, the objects of the particular scheme.
It is clear that this provision covers an entirely new area of legal practice, involving public rights in this new field, and it is essential that in the public interest the public should know what is being done on their behalf in the courts. I beg to move.
Lord McCluskey: My Lords, I support this amendment. There should be some room for input by the public. For example, the police might wish to input some information about specific bodies and schemes. Members of the public who have had unsatisfactory dealings with the body or the members that it is proposed to enfranchise in this way might well have something to say. Indeed, advocates, solicitors and Members of Parliament might want to make representations on a particular scheme. Therefore, I urge the Government to consider this amendment positively.
Lord Fraser of Carmyllie: My Lords, I am grateful to noble and learned Lords for raising this matter again. As I indicated in Committee, I am sympathetic to the thinking behind this amendment. I have to say, however, that I do not think a further regulation-making power for the Secretary of State is either necessary or appropriate to achieve what is needed here. Given the recent criticism that some have made of this Bill, that it gives too many powers

265
in secondary legislation to the Secretary of State, I am sure that that sentiment will be welcomed by some noble Lords at least.
I am conscious of the fact that I undertook to give consideration to this topic at Committee stage, but it has proved to be a less simple task than I imagined at the time. While I apologise, therefore, for not having a finished amendment to put before the House, it may be helpful if I outline the Government's intention in this area. I envisage that an amendment will be brought forward in another place to require applicant bodies to make copies of their application for practising rights under Clause 22 pubicly available and to require the Lord President and the Secretary of State to give consideration to objections for representations of the kind mentioned by the noble and learned Lord, Lord McCluskey, which are received within a specified statutory period. The amendment will meet the intentions of the noble and learned Lords but will circumvent the requirement for regulations.
I think the amendment will be valuable, particularly in enabling those bodies which already enjoy practising rights and which therefore perhaps know most about the issues involved, to contribute to the consideration and approval of an application. On that understanding, I hope that the noble and learned Lord will feel able to withdraw the amendment.
Lord Macaulay of Bragar: My Lords, I am grateful to the noble and learned Lord for that explanation and for the care and consideration he has given to what is an important aspect of the Bill. We shall await the terms put forward in another place, but in the meantime in the light of the undertaking given, I beg leave to withdraw the amendment.
Amendment, by leave, withdrawn.
Lord McCluskey Lord McCluskey moved Amendment No. 145:
Page 29, line 37, leave out ("subject to annulment in pursuance of a resolution of either House of Parliament") and insert ("No instrument shall be made under this section unless a draft of the instrument has been approved by both Houses of Parliament").
The noble and learned Lord said: My Lords, this amendment is a repeat of the same kind of provision contained in other parts of the Bill. I hope to hear the same positive response from the noble and learned Lord the Lord Advocate. In asking for that same response perhaps I may say that the proposals which are enshrined in Clause 22 are entirely novel. As I said earlier, the Court of Session has existed for 458 years without having lay pleaders conducting cases. Until this Bill was published no one would have dreamt of putting lay pleaders into the High Court of Justiciary. Therefore, the least we can expect is that this amendment is given proper consideration. I beg to move.
Lord Fraser of Carmyllie: My Lords, although at earlier points during Report stage I indicated a willingness to consider reversing matters to require affirmative resolution rather than negative resolution, in this area I do not experience the same concern As I remarked in answering earlier amendments, I do not envisage that regulations
266
made under this subsection would be contentious. Indeed, I should expect them to cover additional areas of consumer protection or the prevention of a malpractice. In such circumstances it appears to me that they are not in the same category as those codes of conduct that we have previously considered. I have to indicate on this matter that I do not consider that an affirmative resolution would be an effective use of parliamentary time.
Lord McCluskey: My Lords, it is to be hoped that when the Bill finally receives Royal Assent, it will be coherent. I am sure that when the noble and learned Lord the Lord Advocate and the Secretary of State reflect on the matter they will see the wisdom of the proposal.
As I have said, it is an entirely novel matter. Parliament has a great interest in ensuring that the matter is properly regulated. Parliament should not approve such a course unless it is plainly seen to be in the interests of the better administration of justice.
I believe that, if the amendment or a proposal in its terms were accepted into the Bill, such a result would follow. I ask the Government to consider the matter again. I do not propose to pursue the matter further tonight. I beg leave to withdraw the amendment.
Amendment, by leave, withdrawn.
Lord McCluskey Lord McCluskey moved Amendment No. 146:
Page 29, line 41, leave out ("(a) and (b)").
The noble and learned Lord said: My Lords, Amendment No. 146 is a small but not unimportant amendment. The amendment states:
"Page 29, line 41, leave out ('(a) and (b)') ".
Subsection (6) provides that the Lord President has concern in relation to matters in subsection (2) (a) and (b), and the Secretary of State in relation to matters in subsection 2 (b) and (c). It is logical that the Lord President should have concern in all the matters. I believe that I am receiving positive and affirmative signals from the Government Front Bench. I shall not take up your Lordships' time by developing the argument. I beg to move.
Lord Fraser of Carmyllie: My Lords, the noble and learned Lord interpreted the signals correctly. I propose to accept his amendment. I do not even propose to take it away. It strikes me as eminently reasonable that the Lord President, who is responsible for considering the rules of the Law Society of Scotland in relation to the treatment of complaints and indemnity against client loss, should have a comparable role for these new providers of legal services. Moreover, it will give the Lord President an opportunity to consider the application in its entirety and to assess the implications of one aspect of a scheme for the application as a whole. I am grateful to the noble and learned Lord for bringing the amendment.
Lord McCluskey: My Lords, I am almost overcome by emotion. I can only sit down.
On Question, amendment agreed to.
Lord Fraser of Carmyllie Lord Fraser of Carmyllie moved Amendment No. 147:
Page 29, line 44, at end insert:
("() In considering the code of practice included in the draft scheme by virtue of subsection (2) (b) (ii) above, the Lord President shall have regard to the desirability of there being common principles applying in relation to the exercising of rights to conduct litigation and rights of audience by all practitioners in relation to the court or, as the case may be, the courts, mentioned in the application.").
The noble and learned Lord said: My Lords, I have already spoken to the amendment in speaking to Amendment No. 141. I beg to move.
On Question, amendment agreed to.
[Amendment No. 148 not moved.]
Lord Fraser of Carmyllie Lord Fraser of Carmyllie moved Amendment No. 149:
Page 30, line 3, at end insert:
("() In considering a draft scheme under subsection (6) or (7) above, the Lord President and the Secretary of State shall have regard to whether the provisions of the draft scheme are such as—

(a) to achieve; and

(b) to ensure the maintenance of,

appropriate standards of conduct and practice by persons who may acquire rights to conduct litigation or rights of audience in the event of the draft scheme being approved.").
The noble and learned Lord said: My Lords, the amendment is, I trust, the fruit of the consideration that I have been giving to what was said in Committee by the noble and learned Lord, Lord McCluskey, in moving his Amendment No. 239.
That amendment raised the question of what the Lord President and the Secretary of State should consider when required to decide whether or not to grant an application for rights of audience or rights to conduct litigation under this clause. Again, I am grateful to the noble and learned Lord for raising this important matter. I bring the amendment before the House in an attempt to meet the concern that he expressed.
The amendment focuses on the maintenance of standards of conduct and practice before the courts and in the conduct of litigations. The amendment does not confine the consideration of the Lord President and the Secretary of State to those matters alone, but it does provide some guidance for them in doing so. It is clearly of primary importance that any scheme under which non-lawyers are to be accorded rights to conduct litigation and rights of audience makes proper provision to secure and maintain the standards of conduct and practice which the court rightly demands. As I mentioned in Committee, I have no doubt that the Lord President will also have regard to the furtherance of the administration of justice when considering a draft scheme which is put to him under this clause, but the purpose of the amendment is to provide a focus for his consideration; namely, on the necessary standards of conduct and practice. I beg to move.
Lord McCluskey: My Lords, I am grateful to the noble and learned Lord for what he has said. There is nothing I can add to assist the House. I am happy to support the amendment.
On Question, amendment agreed to.
10 p.m.
Lord McCluskey Lord McCluskey moved Amendment No. 150:
Page 30, line 18, leave out ("giving written reasons for the refusal").
The noble and learned Lord said: My Lords, this amendment is linked with Amendment No. 151. In my mind anyway, the two are linked. The matter with which I am concerned here is judicial review.
Amendment No. 150 deletes the words,
"giving written reasons for the refusal".
Amendment No. 151 inserts the specific provision that the decision is to be beyond review in any court of law or otherwise, a provision which is to be found when one seeks to exclude judicial review, although it is not necessarily always successful. I should like to hear from the Lord Advocate whether or not the Government intend that there should be judicial review, and, if they intend that there should be judicial review by the current wording, whether or not they think that their intention has been realised.
There is another smaller point which is not unimportant for the Lord President in the exercise of his duties. Noble Lords will see from the construction of subsection (9) that, if both officers of state are satisfied, the Lord President shall grant the application. But under paragraph (b), if they are not satisfied, the Lord President shall refuse it. It seems that, if either of them is not satisfied, the Lord President shall refuse the application. If therefore the Lord President is satisfied with the scheme but the Secretary of State is not, it is the duty of the Lord President, who disagrees with the Secretary of State, to give the Secretary of State reasons in writing for the refusal. If I am right, that seems a slightly odd position.
My main reason for putting down the amendments is to seek clarification in relation to the general matter of judicial review. In the hope that I get it tonight, I beg to move.
Lord Macaulay of Bragar: My Lords, I have some reservations about the amendments. Taking this step takes away a right that is given to people under the clause. To remove that right in the way that is being done might smack of elitism and some kind of secret court procedure. I am not happy with the amendment as it stands. I agree that the interpretation of Clause 22 (9)(b) leads to a rather absurd situation. But that is a matter for the Government to take into account when considering the amendment.
Lord Fraser of Carmyllie: My Lords, I do not think that the anxiety expressed is correct, but I shall check that. Turning to Amendments Nos. 150 and 151, I do not see what can be gained if they were to be accepted. It is only fair and reasonable that where a body has an application for rights of audience, or rights 10 conduct litigation, refused, the Lord President should give his reasons for so refusing. It is in the best interests of openness and accountability, and most particularly to allow the applicant body to reconsider its position in the light
270
of the Lord President's reasoned refusal of an application, that he should disclose his reasons to the body in question for so refusing.
Turning to Amendment No. 151, if written grounds of refusal were there, I suppose it makes it easier for the Lord President to be subject to judicial review. But I should emphasise that the purpose of this part of the clause is not to get the Lord President of the Court of Session in the sights of his colleagues in the court and subject him to that judicial scrutiny. It is the rather more obvious point that I have already made. If we have an applicant body, and if it knows—and has those reasons set out in writing—where it has fallen short of securing the Lord President's approval, it will at least know how it might contemplate amending its draft scheme, improving its education arrangements, and improving the code of practice that it has sought to put forward. I would far rather look at this in that rather more constructive atmosphere than suggest that what we are after here is in some way to embarrass or cause difficulties for the Lord President.
Lord McCluskey: My Lords, it is rather strange that the Bill should deliberately contain a provision the purpose of which includes that the decision of the Lord President on a matter of this kind, or at least the decision of the Secretary of State on a matter of this kind, should be subject to judicial review. If the decision is that of the Lord President, then it means that someone can raise proceedings for judicial review and the matter will be redetermined by a Lord Ordinary and ultimately by a division of the Inner House. That is unprecedented so far as I am aware.
In England one had the same kind of thing in relation to decisions by the Lord Chancellor; but then the Lord Chancellor was deciding in his capacity as a Minister and not in his capacity as a judge when his decision was brought under review in the High Court. However, I do not want to take the matter any further, and I beg leave to withdraw the amendment.
Amendment, by leave, withdrawn.
[Amendment No. 151 not moved.]
Lord McCluskey Lord McCluskey moved Amendment No. 152:
Page 30, line 19, at end insert:
(". In determining whether or not he is satisfied with any such scheme the paramount consideration to which the Lord President shall have regard is whether or not the acquisition and exercise by such persons of such rights under the scheme would, in his opinion, be likely to further the administration of justice").
The noble and learned Lord said: My Lords, Amendment No. 152 is again a repeat of something moved at Committee, but I am astonished that the Lord Advocate has not adopted the words contained in this amendment. Your Lordships will recall that on 2nd April, at cols. 1104 to 1107 of Hansard, and especially near the top of col. 1106, there was considerable support for the notion that the Lord President should have regard most particularly to

271
the question as to whether or not the acquisition, and exercise, by persons of enfranchisement under Clause 22 would be likely to further the administration of justice.
Once again it echoes the point that the responsibility of this Parliament is to ensure that it does not enact a provision of this kind unless it leads to the better administration of justice. That had powerful support from the noble and learned Lord, Lord Simon of Glaisdale, and others, and I am surprised that the Government have not simply adopted it for themselves. In the hope that they will now do so and support the amendment, I beg to move.
Lord Fraser of Carmyllie: My Lords, perhaps I may deal with the matter briefly, because while it is not precisely the same point, the amendment essentially traverses ground that I thought we had covered when I moved Amendment No. 149 which ensures that standards of conduct and practice among non-lawyer practitioners are maintained. As I said then, the Lord President will undoubtedly pay due regard to the interests of justice.
It is not because I disagree with the noble and learned Lord that I invite him to withdraw the amendment, but because it seems to me that the matter is fully covered. I want to avoid elevating the convenience and efficiency of the courts to the status of the supreme goal—the client's right to choose any competent representative who observes the appropriate duties to the court and conforms to appropriate rules of conduct which are also of fundamental importance. It is necessary to achieve a balance. I take the view that given the amendment that I moved, that balance has now been struck.
Lord McCluskey: My Lords, I am not content that the balance has been properly struck, but I recognise and acknowledge that the noble and learned Lord the Lord Advocate has moved some way in the direction of what is proposed. At this time of night, I merely content myself by asking leave to withdraw the amendment.
Amendment, by leave, withdrawn.
Lord McCluskey Lord McCluskey moved Amendment No. 153:
Page 30, leave out lines 23 to 25.
The noble and learned Lord said: My Lords, this is a short amendment which raises a point with which I have dealt a number of times, and which is a most important point: that the clause as presently drafted envisages that the Lord Justice General will make acts of adjournal regulating the conduct in the High Court of Justiciary of persons who are what I have been calling barefoot pleaders engaged in criminal proceedings.
Your Lordships will be aware that in the High Court we deal with cases of murder, rape, arson, culpable homicide, fraud, uttering, counterfeiting, the misuse of drugs and other similar matters. Nothing that the noble and learned Lord the Lord Advocate has said in the course of these protracted
272
proceedings has indicated that there is any support anywhere in the country—there is none in the House—for allowing laymen to appear in criminal proceedings. I urge the Government to follow the logic of that and say to themselves, "We now realise that we cannot seek sensibly to persuade Parliament that it will be for the better administration of criminal justice that laymen should be accorded this right", accept the amendment and remove criminal proceedings from the Bill.
I am aware that technically the amendment is not correct and that other amendments will be required; but the amendment is sufficient to raise sharply that one point. I ask the Government to acknowledge that fact, accept the thinking behind the amendment and in due course introduce amendments which will put the proposal into the Bill. I beg to move.
Lord Carmichael of Keivingrove: My Lords, perhaps I may intervene in this high level discussion. Will the noble and learned Lord the Lord Advocate say whether there is equivalent legislation in England to allow Scottish barristers to practise here? Is the measure reciprocal?
Lord Fraser of Carmyllie: My Lords, on the matter of reciprocity of rights as between Scottish advocates and English barristers, we shall deal with that point more precisely under Clause 23. Provisions comparable to Clause 22 are in the process of being introduced for England and Wales.
We are dealing in the High Court of Justiciary in Scotland, as the noble and learned Lord said, with the most serious crimes in our calendar. I have no doubt that before anyone is afforded rights of audience in that court, there would be required to be not just a scheme but training and a code of practice, and it will be difficult to achieve success without a deep knowledge of the law.
It is not the barefoot pleader who will acquire these rights, as might be envisaged, but someone who, if the noble and learned Lord likes, will look to all intents and purposes like a lawyer but may not formally be so. I appreciate the anxieties of the noble and learned Lord. However, I still have difficulty in understanding this when I consider the way in which the scheme is set up, the role of the Secretary of State for Scotland and the involvement of the senior judge for Scotland in all this. I have none of the qualms or anxieties that the noble and learned Lord has that these people might be permitted to appear in our most important criminal courts, nor that they might not have the qualifications, the integrity or the expertise to discharge the duties, which are undoubtedly difficult to discharge.
10.15 p.m.
Lord McCluskey: My Lords, once again I have failed to persuade the noble and learned Lord. I shall simply leave the matter in the hope that on further reflection between now and the passage of the Bill through another place and its return here, possibly in the autumn, the noble and learned Lord the Lord Advocate and his colleague the Secretary of State will think again. I beg leave to withdraw the amendment.
Amendment, by leave, withdrawn.
Lord Fraser of Carmyllie Lord Fraser of Carmyllie moved Amendment No. 154:
Page 30, line 30, after ("above") insert (", and who appears to the body to be a fit and proper person,").
The noble and learned Lord said: My Lords, in moving Amendment No. 141 I also spoke to this amendment. I beg to move Amendment No. 154.
On Question, amendment agreed to.
Lord McCluskey Lord McCluskey moved Amendment No. 155:
Page 30, line 32, at end insert:
("(11A) Any right conferred by subsection (11) above has effect subject to any condition attached to its exercise in pursuance of the scheme in question and shall cease to have effect if the Secretary of State brings the scheme to an end in pursuance of subsection (11B) below.
(11B) In any case where the Secretary of State is satisfied that a scheme which has been approved under this section ought no longer to have effect on the grounds that members of the body who have exercised rights of audience in any court in pursuance of the scheme have been the subject of complaints of such a nature that he considers that the scheme should be brought to an end, the Secretary of State shall by order made by statutory instrument provide for the termination of the scheme; and a statutory instrument under this subsection shall be subject to annulment in pursuance of a resolution of either House of Parliament.").
The noble and learned Lord said: My Lords, this was Amendment No. 244A at the Committee stage. The noble and learned Lord the Lord Advocate said on that occasion that he would reconsider the point. He also said in reply to matters that I raised that he would consider whether the Lord President or the Lord Justice General should have a role in relation to this provision.
The amendment proposes a means for terminating the scheme if it has proved unsuccessful. The Bill permits that, if persons who have been brought in to plead in terms of a scheme should prove to be unsuitable in some way, they can be removed or have their rights of audience taken from them. However, it must be possible also to terminate the whole scheme if it has proved unsuccessful. That power ought to be put into the legislation. Despite what the noble and learned Lord the Lord Advocate said at the Committee stage, I do not believe that he has brought in any provision at all that reflects the fruits of his consideration. I therefore wish to hear from the Government why their consideration did not lead them to propose such a change in the provision. I beg to move.
Lord Fraser of Carmyllie: My Lords, as I indicated during the Committee's discussion of an identical amendment tabled in the names of the noble Lords, Lord Macaulay and Lord Carmichael, I am sympathetic to the idea of a review power for rules which have received the approval of the Secretary of State. I accept that I undertook to consider the matter further. I regret that it has taken me longer to do so than I had envisaged since I now wish to intertwine the aim of this amendment with a more general provision to enable the Secretary of State for Scotland and the Lord President to instigate a review of certain rules where they consider that to be appropriate.
The noble and learned Lord, Lord McCluskey, will note that this amendment makes no reference
274
to the Lord President. As he pointed out during our discussion in Committee, there is undoubtedly a role here for the Lord President and the amendment to be brought forward in another place will establish a locus for the Lord President both in instigating a review of a particular rule and in judging the outcome of that review. Both the Lord President and the Secretary of State will be able to initiate a review though a rule will be changed only where both agree with the change proposed. Neither will therefore be able to change a rule without the agreement of the other.
I believe this is an important counterbalance which will ensure that the interests of justice and the interests of promoting and maintaining client choice are fully taken into account. However, where both the Lord President and the Secretary of State agree that a rule needs to be changed there has to be some means of enforcing such a change. The Secretary of State therefore proposes to include in that amendment a power for the Secretary of State, with the agreement of the Lord President, to revoke a body's practising rights broadly along the lines proposed in this amendment.
However, I could not accept this amendment in isolation as I believe other matters need to be dealt with at the same time. It is unfortunate that I have not been able to do so, as we could possibly have avoided this brief debate. However, on the understanding that the purpose of this amendment will be met by a Government amendment in another place I hope that the noble and learned Lord will be prepared to withdraw his amendment.
Lord McCluskey: My Lords, again I am happy to accept what the noble and learned Lord the Lord Advocate has said. In the light of what he has said, I beg leave to withdraw the amendment.
Amendment, by leave, withdrawn.
Lord McCluskey Lord McCluskey moved Amendment No. 156:
Page 30, line 33, leave out subsection (12).
The noble and learned Lord said: My Lords, I spoke to this same point in relation to a different clause. Once again we have a subsection which imposes upon the Lord Advocate and the Secretary of State a duty to exercise their respective functions,
"as soon as is reasonably practicable".
The subsection imposes that duty upon no other person that I can discover in this clause. I am not sure whether that was the Government's intention or whether they planned that the provision should bite not only upon the two officers of state but also upon the various bodies which are mentioned. In my view that is not the case. I beg to move.
Lord Fraser of Carmyllie: My Lords, when I spoke to Amendment No. 132 before dinner I indicated that I thought Amendment No. 156 would be coupled with it. However, I appreciate that it is not. I have already had my tail twisted about this provision, not once, twice or three times, but now for the fourth time. I doubt whether there is any way that I can elaborate on the provision that will satisfy the noble and learned Lord. I shall have to leave my arguments where they rest.
Lord McCluskey: My Lords, if the noble and learned Lord the Lord Advocate will tell me how many times I have to twist his tail before it comes off I should be grateful. I beg leave to withdraw the amendment.
Amendment, by leave, withdrawn.
Lord Fraser of Carmyllie Lord Fraser of Carmyllie moved Amendment No. 157:
Page 30, line 43, at end insert:

("(13A) Where a complaint has been made that a person has been guilty of professional misconduct in the exercise of any right to conduct litigation or right of audience held by him by virtue of this section, the body of which he is a member may, or if so requested by the Lord President shall, suspend that person from exercising that right pending determination of that complaint by the body.

(13B) Where a person holding a right of audience in any court by virtue of this section is instructed to appear in that court, those instructions shall take precedence before any of his other professional or business obligations, and the code of practice mentioned in subsection (2) (b) (ii) above shall include rules —

(a) establishing the order of precedence of courts for the purposes of this subsection;

(b) stating general criteria to which members of the body should have regard in determining whether to accept instructions in particular circumstances; and

(c) securing, through such of their officers as they think appropriate, that, where possible, any person wishing to be represented before any court by one of their members holding an appropriate right of audience is so represented, and, for the purposes of such rules, the Inner and Outer Houses of the Court of Session, and the High Court of Justiciary exercising its appellate jurisdiction, may be treated as separate courts.").

The noble and learned Lord said: My Lords, in moving Amendment No. 141 I spoke to Amendment No. 157. I beg to move.
On Question, amendment agreed to.
Lord Macaulay of Bragar Lord Macaulay of Bragar moved Amendment No. 158:
Page 31, line 17, at end insert:
("() The provisions of this section and section 21 of this Act shall not affect the right of a person receiving legal aid in the High Court under Part IV of the Legal Aid (Scotland) Act 1986 to select his solicitor (or other authorised litigator) and counsel (or other authorised advocate) to act for him, and regulations made under that Act shall not provide that representation in the High Court shall be by solicitor only").
The noble Lord said: My Lords, I can fairly say that this is one of the most important amendments we shall consider today. It goes to the very heart of representation under the new scheme. There was an equivalent provision in the Courts and Legal Services Bill which was approved by your Lordships' House. As I understand it, the provision was taken out of the Bill in another place.
The reasoning for the amendment in its present form is that with the new form of solicitor-advocate pleader getting rights of audience in the higher court, and in particular the High Court, where different cases require different degrees of expertise and experience, it would be regrettable to say the least if the Legal Aid Board in approving or disapproving an application for legal aid in a serious case were to make it compulsory, so to speak, that because the advocate-solicitor had gained the right of representation he could not instruct a senior counsel in the appropriate case.
We do not know how the scheme will work. However, it is certain that anyone appearing in superior courts in Scotland, whether he is fee paying or under the legal aid scheme, is entitled to the best representation available. The implementtion of the Bill and the granting of these rights of audience must not be allowed to turn representation in serious criminal cases, and particularly those on legal aid, into a second-rate representation scheme in which the people who should handle a particular case are turned down.
We do not know what motivates the Legal Aid Board. We sometimes wonder. Perhaps I may refer to a recent case, but since it is continuing I shall not mention it by name. The noble and learned Lord the Lord Advocate will be familiar with it. It is a case of the rape of a four year-old child. An application was made for legal aid for representation, and the man concerned ended up with a very junior counsel who, although he did not say that he could not do the job, instantly recognised that to cross-examine a child of that age required far more expertise than he possessed. We hope that appropriate representation has now been gained for that individual.
The amendment is intended to achieve a fair system of representation and avoid a restrictive one resulting from the existence of the new pleaders. I beg to move.
Lord Fraser of Carmyllie: My Lords, this is an important opportunity to explain an important matter. I appreciate that the noble Lord wishes to ensure that the right of a person to receive legal aid in respect of proceedings in the High Court should be protected. I can assure noble Lords that there is no intention that the provisions of Clauses 21 and 22 should act in a restrictive way. Indeed, the purpose of the provisions is to extend choice. I can see, however, that there is a case for considering statutory provision to ensure that legally-aided persons will not be confined to using representatives from one professional group rather than another for what might be seen as improper reasons. We shall of course need to retain control in the area of legal aid over the sanctioning of counsel in the lower courts which has existed for a very long time or the use of silks (whether advocates or in future solicitors). By contrast, however, I do not see that the issue is confined to criminal matters. I shall take this away to reflect on what might best be done, and I hope that the noble Lord will withdraw the amendment in the light of that assurance.
Lord Macaulay of Bragar: My Lords, I am very grateful to the noble and learned Lord the Lord Advocate for his consideration of the amendment. I appreciate that it was tabled at a very late stage and understand that time will be required to consider the implications. In the meantime no doubt his words will be noted in another quarter dealing with legal aid. I beg leave to withdraw the amendment.
Amendment, by leave, withdrawn.
The Deputy Speaker: My Lords, in calling Amendment No. 159 I have to say that, were it agreed to, I could not call the next amendment.
Lord Morton of Shuna Lord Morton of Shuna: moved Amendment No. 159:
Page 31, line 18, leave out subsection (1).
The noble and learned Lord said: My Lords, in moving the amendment I realise that I shall be repeating very much what I said in Committee. Subsection (2) of this clause provides for English, Welsh and Northern Irish practitioners to qualify to practise in Scotland on terms similar to those on which practitioners from other member states may qualify to practise in Scotland. That being so, and there being no possible objection to it, subsection
(1) appears totally unnecessary. That subsection allows an apparently different approach and allows different people to practise. In subsection (1) the English, Welsh and Northern Irish are given rights which will not be given to the French, Germans, Belgians and the others. There seems no possible reason for that.
There is also a danger because the English provision which is going through Parliament contains the equivalent of Clause 22. Therefore, people having special rights in English, Northern Irish or Welsh courts may now be allowed by the Secretary of State, after consultation with the Lord President—even if the Lord President disagrees—to practise in a totally different legal system. Subsection (2) covers everything that is necessary and proper. There is no reason for subsection (1). I beg to move.
10.30 p.m.
Lord McCluskey: My Lords, I put my name to the amendment because, despite my best endeavours and having read what the Lord Advocate said at cols. 1149 to 1151 of Hansard of 2nd April, I am at a loss to understand why subsection (1) is included. I do not want to repeat what my noble and learned friend Lord Morton of Shuna said, but I ask the Lord Advocate to explain as succinctly and clearly as he can what subsection (1) seeks to give that is not given in subsection (2). We understand that subsection (2) is necessary for purposes connected with the European Community.
In my mind, Amendment No. 159 is linked with Amendment No. 161, which seeks to remove lines 10 and 11 on the next page; in other words, to remove: from the definition of "practitioner" the words,
"any person falling within such category as may be prescribed in regulations made by the Secretary of State".
Under Clause 23 (1) given the terms of that definition, it appears that the Secretary of State, after merely consulting the Lord President, can take a step by regulation which enables him to bypass Clause 22. Under Clause 22, patent agents or the like can apply and, if a scheme is approved by the Lord President and the Secretary of State, they can gain certain rights in Scotland. However, under Clause 23, if they choose not to bother with Clause 22 procedures, they can get in by the back door if the Secretary of State prescribes circumstances such as the subsection allows.
That proposal is entirely obnoxious. The Secretary of Stats has a duty to consult the Lord President, but then goes on to make the regulations himself.
278
He can designate anyone to be a practitioner. The noble and learned Lord the Lord Advocate tried to assure me that the reason for doing that was that the Courts and Legal Services Bill contains a provision which allows Scots to plead in England. I do not know of any Scot who asked for that provision. No one asked me whether I was in favour of it. It did not appear in the Green Paper or in the White Paper for Scotland. The mere fact that this House has apparently accepted that proposal for England does not appear to me to take one step towards proving that it is right for Scotland.
The most obnoxious and intolerable thing is that under the clause the Secretary of State can enable practitioners as defined—that includes barefoot pleaders from England—to practise in Scotland without having to pass the tests that we have so carefully formulated in Clause 22. I should like to hear the Government's answer to that point, which I have made before.
Lord Fraser of Carmyllie: My Lords, the noble and learned Lord has made that point before.
The first point that I wish to make about the amendment is that it is incomplete as it does not make consequential provisions to subsection (3) of Clause 23, which refers to regulations made under subsection (1). In any case, it is not possible for me to accept the amendment, which would have the effect of perpetuating the illogical situation whereby lawyers from other member states in the European Community can provide certain services in Scotland which may not be so provided by lawyers from other jurisdictions in the United Kingdom.
When we dealt with the clause in Committee there was some misunderstanding about the respective purposes of subsections (1) and (2). I hope that at the second time of trying I can clarify the situation. Put simply, subsection (1) corresponds to the 1977 EC services directive and concerns the provision of services by lawyers from other UK jurisdictions. By contrast subsection (2) mirrors the provisions of the 1988 diplomas directive which is due to come into effect in 1990 or 1991. That measure will provide for lawyers from other jurisdictions to be recognised as such in the United Kingdom and will provide all the services, given that they conform with regulations shortly to be made to implement the directive, that the host state equivalent may provide.
Therefore, in this clause we are dealing with two quite different situations. It is for that reason that separate provision is necessary in discharge of the obligations that we have taken on within the European Community.
Lord McCluskey: My Lords, before the noble and learned resumes his seat I ask him to address himself to the point that I have asked. It is not fair to the House that he should not answer the point that has been put. He talked about the EC directive in relation to lawyers. I am concerned about the definition of "practitioner" including any person falling within such category as may be prescribed which means non-lawyers. Does the EC directive cover that person? That is the question I asked, and I repeat it.
Lord Fraser of Carmyllie: My Lords, I had already sat down. I really cannot go over the matter again. As I have indicated, we are acting in discharge of directive matters. I hope that the noble and learned Lord will appreciate what obligations are incumbent on us and will consider these matters.
Lord Morton of Shuna: My Lords, when one looks at Clause 23 (2) one sees no reference to any directive. The clause gives a power to the Secretary of State, after consulting the Lord President, to make provision for enabling practitioners from parts of the United Kingdom other than Scotland to practise in Scotland on terms similar to those given to other member states. It does not matter whether there is a 1990 directive, a 1970 directive or any other directive. That is what the clause enables the Secretary of State to do.
From everything that the noble and learned Lord has said it is unclear to me—no doubt it is my fault —why it is necessary to say the same thing twice and why, in subsection (1), it is necessary to bring in the non-lawyer practitioner. Nothing that the noble and learned Lord said has made matters clear. I regret the position. There is nothing I can do beyond asking the leave of the House to withdraw the amendment. I do so with regret because the noble and learned Lord has not made the matter in any sense clear. I beg leave to withdraw the amendment.
Amendment, by leave, withdrawn.
Lord Fraser of Carmyllie Lord Fraser of Carmyllie moved Amendment No. 160:
Page 31, line 20, leave out ("a practitioner who is") and insert ("practitioners who are").
The noble and learned Lord said: My Lords, this is a drafting amendment, the need for which was noticed in Committee by the noble Lord, Lord Grimond, to whom I am grateful. I beg to move.
On Question, amendment agreed to.
Lord McCluskey Lord McCluskey moved Amendment No. 161:
Page 32, leave out lines 10 and 11.
The noble and learned Lord said: My Lords, the amendment seeks to take out that part of the definition of "practitioner" that refers to persons who are not lawyers. The purpose of having proceedings of this character in this House is to enable the Government to explain their position to Members of your Lordships' House. The purpose of our being here at this late hour of the night is to enable us to ask such questions as we think should be answered.
I ask the noble and learned Lord the Lord Advocate this question: are the Government saying that the EC directive—and, if so, which one—requires the Government to include in a Bill such as this a provision conferring on persons who are not lawyers a right of audience in our courts? I beg to move.
Lord Cameron of Lochbroom: My Lords, I wish to add to what my noble and learned friend has said. Is it necessary to define "practitioner" in subsection (6) having regard to the definition which appears in
280
each of subsections (1) and (2); namely, practitioners who are qualified to practise in England and Wales or Northern Ireland? The definition is the same in each subsection.
It appears to be otiose to further define, but perhaps I have missed a point. There appears to be a clear definition of a practitioner in the qualifying clause in subsections (1) and (2).
Lord Fraser of Carmyllie: My Lords, the first of these amendments seeks to delete from the Bill a provision for which there is an equivalent in the Courts and Legal Services Bill to permit those who have been accorded rights of audience in England and Wales and Northern Ireland, but who are not barristers or solicitors, to acquire rights to practise in Scotland. Although I have already indicated that these provisions are intended essentially to cover what are covered in two separate EC directives, the provision about defining a practitioner goes beyond what is required under those directives. The purpose is to acknowledge that rights gained in other jurisdictions within the United Kingdom by non-lawyers might be extended in such a way as to allow them to appear in Scotland. I should be most reluctant to delete the Scottish part of what is, in effect, a reciprocal provision.
It is not necessary for us again to traverse the ground of the likelihood of there being any extended group which might, under the equivalent of Clause 22, acquire such rights of audience. If there is to be such a provision in England, Wales and Scotland it would seem only right that there should be at least the opportunity or possibility of reciprocity.
I believe however that the amendment standing in my name, which provides a role for the Secretary of State in the making of any regulations to define a practitioner for purposes of this clause, should be sufficient to satisfy the concerns which were expressed about the provision at Committee stage. I fully appreciate that it would not be appropriate for there to be a route by which non-lawyers could acquire rights of audience in Scotland which did not involve the Lord President. That is not what the clause now provides for of course with the reference in subsections (1) and (2) to the Secretary of State consulting the Lord President about regulations relating to conditions for practising.
A further safeguard is provided for by my Amendment No. 162 which will ensure that the Lord President is consulted before the Secretary of State makes regulations prescribing what "practitioner" means; namely, who in addition to lawyers could be covered. In answer to the noble and learned Lord, Lord Cameron, that is the reason why there appears to be a duplication of the definition. It is to allow the Secretary of State the opportunity to make the regulation covering that.
There are professions whose law and practice is essentially the same throughout the UK. For such professions the provision could be potentially valuable. Scottish clients should be able to choose to avail themselves of the services of such practitioners without unnecessary difficulty. The role of the Secretary of State and the Lord President will ensure

281
that that facility is not extended in such a way as to prejudice necessary safeguards for clients. With that fuller explanation, I hope that the amendment will be withdrawn.
Lord McCluskey: My Lords, with the leave of the House, the amendment will certainly be withdrawn. However, I am happy that at last the noble and learned Lord has acknowledged in plain terms that the provisions of the clause go beyond the requirements of the EC directives. The only justification for the provision—and it is shabby and unworthy—is that there should be reciprocity. Reciprocity with what? It is with provisions contained in the Courts and Legal Services Bill which nobody on either side of the Border wanted and about which so far as I can tell nobody was asked. I know of no one who supported it, and the Government have failed to tell us of anyone who did so.
Lastly, although the clause will be better if the Lord President has to be consulted, consultation is not enough. It is all very well for the noble and learned Lord the Lord Advocate to assure us that the Secretary of State will do this or will not do that. Once the Bill has been passed and the Secretary of State is given power, it is not within the power of this Lord Advocate or the present Secretary of State to control those who exercise the powers in the future. The noble and learned Lord's guarantees are not worth very much. Disappointed though I am, I beg leave to withdraw the amendment.
Amendment, by leave, withdrawn.
10.45 p.m.
Lord Eraser of Carmyllie Lord Eraser of Carmyllie moved Amendment No. 162:
Page 32, line 11, at end insert ("after consultation with the Lord President.").
The noble and learned Lord said: My Lords, this amendment is intended to meet the anxieties expressed during the Committee's consideration of Amendment No. 255ZA tabled by the noble and learned Lord, Lord McCluskey. In particular, it reflects a suggestion made by the noble Lord, Lord Mackie, whose patience seems to have worn out, who suggested that the Lord President should be consulted by the Secretary of State in making regulations under Clause 23 (6) (b). As I indicated at the time that suggestion struck me as reasonable and I therefore bring this amendment before the House to implement it. I am indeed grateful to the noble Lord for making the original suggestion and I acknowledge the Government's indebtedness to him for doing so. I beg to move.
On Question, amendment agreed to.
Lord McCluskey Lord McCluskey had given notice of his intention to move Amendment No. 163:
Page 32, line 11, at end insert ("and such regulations shall include a requirement that such person shall satisfy the Lord President that he is a fit and proper person to have such a right of audience.").
The noble and learned Lord said: My Lords, in view of the previous observations by the noble and learned Lord the Lord Advocate, I have no
282
confidence that he will accept this amendment. At this hour I do not propose to repeat the argument. Accordingly I do not move it.
[Amendment No. 163 not moved.]
Clause 24 [Rules of Conduct etc.]:
[Amendments Nos. 164 and 165 not moved.]
Lord McCluskey Lord McCluskey moved Amendment No. 166:
After Clause 24, insert the following new clause:
("Duty to act for any client

—(1) Except in circumstances in which it would be unreasonable to require him to do so any advocate and any solicitor or other person who has a right of audience in any Court whatsoever shall be under a duty to act for any client or person who wishes to be his client (whether legally aided or not) in any Court in relation to which he exercises a right of audience provided only that such a client offers to pay him such fee as is reasonable or, if he is legally aided, such fee as is allowed by the Scottish Legal Aid Board.

(2) In the event of any disagreement as to whether or not any non legal aid fee tendered is reasonable, the Auditor of the Court of Session shall determine whether or not any fee offered is reasonable in all the circumstances.").

The noble and learned Lord said: My Lords, your Lordships will recognise that this is a reformulation with additions of a matter which was discussed fully in Committee. If the Government are still opposed to this general proposal, I do not intend to divide the House. However, your Lordships will see that this amendment extends to any court whatever the rule which the original amendment sought to enshrine. It contains particular provisions as to how the reasonableness of the fee is to be assessed. Therefore it is a different amendment to that put forward on the previous occasion. The main purpose in my putting it forward with my noble and learned friend Lord Morton of Shuna is to enable the Government to tell us what their thinking is on this matter.
We hear that in another place in connection with the Courts and Legal Services Bill a version of the so-called cab rank rule is or may be acceptable to Her Majesty's Government. We also hear it said, although I do not know the truth of the matter, that in relation to the Scottish Bill the Government are thinking of advancing a suitable provision. Indeed, they may already have done so, but it has escaped my notice. In the hope that the noble and learned Lord will answer my points, I beg to move.
Lord Macaulay of Bragar: My Lords, the amendment states:
"such fee as is allowed by the Scottish Legal Aid Board".
The problem is that when legal aid is granted, the nature of the fee is not known for a considerable time except perhaps in a very complicated fraud case where a fee may be agreed in advance for preparatory work. However, under the present scheme it is impossible to say whether the fee is reasonable because that will not be known until the case has finished. I see that as a difficulty in the implementation of the clause were it to be accepted by the Government.
The second matter is that I should put on record—not advancing it on my own behalf—that I have been asked by the Law Society of Scotland to indicate that they are satisfied with the provisions

283
of the new Section 25A of the Solicitors (Scotland) Act 1980 contained in Clause 21 of this Bill, and they are therefore not in favour of this amendment. I merely put that on record.
Lord Coleraine: My Lords, I am sorry that the noble and learned Lord should once again move this tired old cab rank—or cab horse—rule in a more grievous form than it was moved in Committee, on which occasion the Committee rejected it resoundingly. On that occasion, as your Lordships will recall, I did speculate as to what were the views of the Law Society of Scotland on the amendment then moved.
The noble Lord, Lord Macaulay of Bragar, indicated that his information was that the Law Society approved the amendment in the form then before the Committee. However, I think possibly the noble Lord was confusing the brief he may have had from the Labour Party with the advice he received from the Law Society, because so far as I am aware the Law Society of Scotland did not approve the amendment which was debated and voted on a few weeks ago and does not support this amendment.
I should refer to the position in the English courts Bill as I understand it. An amendment is to be moved in another place to preserve some of the effects of the cab rank rule, but in a form which is likely to be acceptable to the Law Society of England. The general effect will be that it will move away from any duty to represent all and sundry towards a prohibition against not acting in two specific circumstances. One of those is where the client or the case is objectionable to the solicitors or the public; the other is where there might be objection on the grounds of the manner of funding of the advocacy.
We therefore have a situation where in England we are moving away from the rigours of the cab rank rule towards something which will be acceptable. Certainly at no time when the Courts and Legal Services Bill has been before the House or the Committee has there been any suggestion that the cab rank rule should apply to all the courts and not just to courts where extended rights of audience are given.
In those circumstances I hope the noble and learned Lord will not press the amendment.
Lord Fraser of Carmyllie: My Lords, we have yet another version of the cab rank rule and it looks very different to the one that I understand is proposed for the Courts and Legal Services Bill. From the brief interventions there were from members of the legal profession on this side of the Border when we considered this matter at Committee stage, one point came through very clearly. Although it is sometimes described as a single rule of the cab rank, we are often speaking of very different matters, certainly from the point the noble and learned, Lord, Lord McCluskey, made earlier that practitioners of the Scottish Bar are expected to be generalists. From what I understood of what was said on the English Bill, that provision is nothing like so extensive.
284
The real point is the point raised by the noble Lord, Lord Macaulay. If we look to the provisions of Clause 21 or new Section 25A, we have been seeking to construct within that clause arrangements whereby the new breed of solicitor advocates will to all intents and purposes be bound by something that approximates very closely to the cab rank rule to which members of the faculty are subjected. What we have dealt with in terms of the order of precedence, the criteria and the requirements in Amendment No. 131—that the Lord President shall have regard to the desirability of there being common principles—seems to me to cover just the point at issue.
What I find difficult about this version of the rule is that on the one hand it seems to be remarkably onerous in its terms. It might, as I read it, impose on a solicitor who had never, from the time he qualified, stepped outwith his conveyancing chambers a requirement to appear in a district court in a distant and remote part of the country. It is in many respects, at first blush, an extremely wide requirement. On the other hand, it would appear that the let-out provision is very wide indeed and that all those anxieties might fall away.
From the way in which this part of the Bill has been approached there is no need or, indeed, desirability to try to set out the duty in these broad general terms. We know what is imposed on the Faculty of Advocates. There seems to be little dispute about that. I hope that with what we have in Clause 21, which introduces the new Clause 25A, solicitor advocates will be under no misapprehension about the duty imposed upon them.
Lord McCluskey: My Lord, I have no doubt that Members of another place will in due course consider what has been said by the Lord Advocate and the noble Lord, Lord Coleraine, tonight and compare that with what is said in relation to the so-called cab rank rule in the Courts and Legal Services Bill.
As I have already indicated, I do not propose to take the matter further and I beg leave to withdraw the amendment.
Amendment, by leave, withdrawn.
Clause 25 [Complaints in relation to legal services]:
[Amendment No. 167 not moved.]
Lord Fraser of Carmyllie Lord Fraser of Carmyllie moved Amendment No. 168:
Page 33, line 33, leave out ("Confirmation Practitioners") and insert ("Executry Services").
The noble and learned Lord said: My Lords, in speaking to Amendment No. 54 I spoke also to this amendment. I beg to move.
On Question, amendment agreed to.
Lord McCluskey Lord McCluskey moved Amendment No. 169:
Page 33, line 39, leave out ("an") and insert ("a practising").
The noble and learned Lord said: My Lords, the House will recall that in connection with a different matter a distinction was drawn between an advocate and a practising advocate. It appeared logical to me to refer in this definition of a practitioner to a

285
practising advocate rather than an advocate; the distinction being that any person who is a member of the Faculty of Advocates can, with the permission of the dean, cease to practise almost at once provided he has no outstanding obligation which the ethics of the profession will require him to complete. Accordingly, I beg to move this amendment in the hope that the Government will either accept it or provide a reasonable explanation as to why it is not acceptable.
Lord Fraser of Carmyllie: My Lords, in my view this amendment is unnecessary as there is a definition of an advocate to be found in Clause 35 which slates that an advocate is,
"a member of the Faculty of Advocates practicising as such".
The noble and learned Lord will appreciate that with that definition in the Bill his amendment is unnecessary.
Lord Macaulay of Bragar: My Lords —
Lord McCluskey: My Lords, I do not think that it is in the rules of the House for anyone other than the mover of the amendment to speak after the Minister has spoken.
In order to find out the answer to the question one must therefore study the definition in Clause 25 (5) and bear in mind the further definition in Clause 35. That seems to be an awfully convoluted way to do it. However, I accept that it works and accordingly I beg leave to withdraw the amendment.
Amendment, by leave, withdrawn.
[Amendment No. 170 not moved.]
Lord Fraser of Carmyllie Lord Fraser of Carmyllie moved Amendment No. 171:
Page 33, line 41, leave out ("Confirmation Practitioners") and insert ("Executry Services").
On Question, amendment agreed to.
11 p. m.
Clause 26 [Scottish legal services ombudsman]:
Lord Fraser of Carmyllie Lord Fraser of Carmyllie moved Amendment No. 172:
Page 34, line 31, at end insert:
("(5A) The Secretary of State may by regulations extend the jurisdiction of the ombudsman by providing for this section to apply, with such modifications (if any) as he thinks fit, in relation to the investigation by the ombudsman of such categories of handling complaints as may be specified in the regulations with respect to the provision of executry services by persons other than executry practitioners within the meaning of section 20 of this Act.
(5B) Without prejudice to the generality of subsection (5A) above, regulations under that subsection may make provision for the investigation of handling complaints with respect to particular persons or categories of person.
(5C) Regulations under subsection (5A) above shall be made by statutory instrument subject to annulment in pursuance of a resolution of either House of Parliament.").
The noble and learned Lord said: My Lords, I have spoken to this amendment in relation to Amendment No. 54. I beg to move.
On Question, amendment agreed to.
Lord McCluskey Lord McCluskey moved Amendment No. 173:
Page 34, line 37, leave out ("or").
The noble and learned Lord said: My Lords, noble Lords will see that under subsection (6) of Clause 26 certain persons are disqualified from being appointed as ombudsman. We have already dealt on a previous occasion with advocates, solicitors and qualified conveyancers. However, the last group are people mentioned under paragraph (d):
"any member or employee of a professional or other body any of whose members has acquired any right to conduct litigation or right of audience by virtue of section 22".
As I understand it, it means this. If a body—it might be a very substantial body—decides to apply for these rights, all its employees and other members, whether they want the rights or not, are to be disqualified.
I believe that the noble and learned Lord the Lord Advocate might be persuaded to accept my amendment. I do not propose therefore to labour the point. I beg to move.
Lord Fraser of Carmyllie: My Lords, I am not prepared to accept the amendment as it stands. I agree in principle with the noble and learned Lord in the greater part of the amendment except as it relates to employees of conveyancing and executry practitioners. I believe it is right that members and officers of the board together with principals, partners and directors or senior staff of conveyancing and executry practitioners should not be eligible for appointment as the Scottish Legal Services Ombudsman. However, I do not think it is necessary to extend the restriction to all employees of practitioners. This approach would be consistent with existing requirements with respect to the lay observer. Solicitors and advocates may not be appointed as lay observers, but the restriction does not extend to the employees of a solicitor, however unlikely it might be that such an employee might be appointed to that post.
With that undertaking, I hope that the noble and learned Lord will withdraw his amendment. There will be a government amendment.
Lord McCluskey: My Lords, I am certainly happy to hear what the noble and learned Lord the Lord Advocate said. Nonetheless, I did not quite understand it. My amendment relates to page 34, line 37. I leave out the word "or". As the noble and learned Lord the Lord Advocate has rightly divined, the amendment is not very good. However, I am happy to accept what he says. I have no doubt that the Government will consider it in the light of what is obviously common sense, as the noble and learned Lord the Lord Advocate accepts. I beg leave to withdraw the amendment.
Amendment, by leave, withdrawn.
[Amendment No. 174 not moved.]
Clause 27 [Judicial appointments]:
Lord McCluskey Lord McCluskey moved Amendment No. 175:
Page 34, line 45, after second ("sheriffs") insert (", advocates").
The noble and learned Lord said: My Lords, the amendment to Clause 27 relates to the period to be

287
served by persons before they become eligible to be appointed as judges of the Court of Session and the High Court of Justiciary. It is a paving amendment. A later amendment provides that the period of qualification should be 15 years in the case of advocates and solicitors who are otherwise qualified to be appointed to the High Court. It is a paving amendment to allow that provision.
We are conscious that that involves a change from the provision of the Act of Union. However, everyone is agreed that one would not wish to appoint a person as a judge of the High Court or of the Court of Session, even from the ranks of the most distinguished advocates or solicitors, unless he had undertaken this period of service. It is our tradition that one undertakes a period of service as a practitioner. The measure enables one to become qualified to serve as a judge of the higher courts. It is in effect a paving amendment for what is to come later. I beg to move.
Lord Fraser of Carmyllie: My Lords, I have listened to the noble and learned Lord on this occasion as I listened to him when we dealt with precisely the same matter on an earlier occasion. I recognise that, at least in recent years, those advocates nominated for appointment as Court of Session judges have practised for 20 years or more at the Bar. In view of that, it might appear that the present statutory provision for a period of five years, is indeed unrealistically low. Given what I acknowledge is the practice, I can see the logic of the argument.
However, there are other considerations. It is the Government's policy that in respect of each judicial vacancy the best fitted candidate should be appointed. If, as has happened in the past, the only real candidates for appointment to the Court of Session Bench have been men—regrettably, not as yet men and women—who have spent their entire career at the Bar, then no harm would result if the minimum eligibility period was to be increased to 10, 15 or even 20 years. While no doubt that path to the Court of Session Bench will continue to be the main one for many years to come, I do not think it would be in any way correct to make provision such as it must in effect be the only one. To do so would be inconsistent with the policy that on each occasion the best fitted candidate should be appointed.
It is not difficult to construct an elaborate curriculum vitae of someone who might be appointed to the Court of Session Bench. It might be someone who has spent time in the academic world in Edinburgh and has also spent some time to develop his experience and abilities in a European context. I conclude that, as it has worked satisfactorily in the past, I do not see that there would be any point in altering it now.
Lord McCluskey: My Lords, we shall no doubt return to the matter if so advised when we come to deal with the schedule and the connected amendments. In the meantime, I beg leave to withdraw the amendment.
Amendment, by leave, withdrawn.
Lord McCluskey Lord McCluskey had given notice of his intention to move Amendment No. 176:
Page 35, line 1, leave out subsection (2).
The noble and learned Lord said: My Lords, this is an important amendment which has a constitutional dimension. It is almost 11.10 p.m. For important reasons I do not intend to develop my argument tonight. Fortunately, the argument and submission can also be raised in relation to Amendment No. 244. I propose not to develop the matter tonight for that reason. It is a matter of some importance and one on which I have consulted all the judges of the Outer House of the Court of Session. It is a matter with which I shall deal with some sadness when we come to Amendment No. 244. In the meantime, in the absence of my noble and learned friends Lord Morton of Shuna and Lord Cameron of Lochbroom, who have departed, I do not intend to raise the matter at this late hour. I shall raise it again when we reach Amendment No. 244.
[Amendment No. 176 not moved.]
Lord McCluskey Lord McCluskey moved Amendment No. 177:
Page 35, line 1, leave out ("the appointment of").
The noble and learned Lord said: My Lords, this is a highly technical amendment. Paragraph 4 of Schedule 3 relates among other things to the fact that the senior judge is no longer to preside as a matter of right. The person to preside in the Inner House or in an extra Division shall be the person who is directed by the Lord President to preside. From my reading of the statute that has nothing to do with the appointment of members of the Inner House or the appointment of a Lord Ordinary to be the Lord Ordinary in exchequer causes. Accordingly, it appears to me that the words "the appointment of" do not embrace that provision in the schedule. Therefore, for technical reasons they ought to be deleted from the statute. I beg to move.
Lord Fraser of Carmyllie: My Lords, we have had the opportunity in our debate to discuss an amendment to leave out subsection (2) of Clause 27 and to consider the appointment of Outer House judges to the Inner House. It may be of assistance for me to explain the reasoning with regard to Clause 27(2)(b), to which the present amendment would refer.
Section 3 of the 1988 Act provides that one of the judges of the court who usually sits as a Lord Ordinary shall be appointed by the court, by Act of Sederunt, to act as Lord Ordinary in exchequer causes. Appointment by the court by Act of Sederunt is a cumbersome way to make such an appointment. Paragraph 4 (3) of Schedule 3 therefore amends Section 3 of the 1988 Act to provide that instead of appointment being by way of the court by Act of Sederunt the appointment of the Lord Ordinary in exchequer causes will be made by the Lord President. As such, it is a minor but useful change to the existing procedures, and it is essentially procedural. With that slightly complicated explanation, I hope that the noble and learned Lord will be able to withdraw his amendment.
Lord McCluskey: My Lords, I think that the Lord Advocate perhaps had his mind and indeed his head elsewhere when I addressed myself to this amendment and missed the point I was making. However, I am sure that he will read it, and if it is technically sound he will consider introducing an appropriate amendment. I do not propose to repeat it because it is rather technical, and it has nothing to do with the exchequer causes at all. I beg leave to withdraw the amendment.
Amendment, by leave, withdrawn.
Lord McCluskey Lord McCluskey had given notice of his intention to move Amendment No. 178:
Page 35, line 6, leave out subsection (3).
The noble and learned Lord said: My Lords, I put down this amendment because I needed to consult the noble and learned Lord, Lord Emslie, about it. Your Lordships may recall that at Committee stage it was argued that the appointment should be made by the Lord President, and the Lord Advocate said that there was a constitutional reason for the provision as it is. I do not propose to differ from the Lord Advocate on that, and accordingly I do not propose to move this amendment.
[Amendment No. 178 not moved.]
The Deputy Speaker (Lord Cocks of Hartcliffe): My Lords, before Clause 29, and not numbered on the Marshalled List, Amendment No. 178A.
Lord Macaulay of Bragar Lord Macaulay of Bragar moved Amendment No. 178A:
Before Clause 29, insert the following new clause:
("Review of legal services
The Secretary of State shall keep under review the extent, if any, to which needs for legal services are not being met and where any such deficiencies are found shall make appropriate provision.")
The noble Lord said: My Lords, this is a fairly short amendment but an important one. It reads:
The Secretary of State shall keep under review the extent, if any, to which needs for legal services are not being met and where any such deficiencies are found shall make appropriate provision. "
The purpose of the amendment is to place a duty on the Secretary of State to act where citizens have inadequate access to legal services. The citizen can only get access to the courts through representation and advice, and it is important that that should be kept under review.
There are important areas of legal advice and activities that are not covered by legal aid. Industrial tribunals are a classic example. Employees often go unrepresented while employers can engage expert solicitors. The provisions of Part V of the Legal Aid (Scotland) Act in relation to the power of the Scottish Legal Aid Board to employ solicitors to advise agencies in their work, and give other advice to clients of those agencies and promote contacts between advice agencies and local solicitors in private practice, and other provisions in that section, have not been implemented. It would be of great assistance to the voluntary organisations if such power could be brought into play.
The objective behind the amendment is to have a review, and a regular review, and not simply to sit back once the Bill becomes an Act and say, "Let us see how it works out in years to come. " This is really meant to imply a constant review to see that citizens get proper access to the courts through the present legislation. I beg to move.
Lord Fraser of Carmyllie: My Lords, I must ask the House to resist this amendment, which would put my right honourable friend the Secretary of State under a statutory duty which, on one interpretation, appears very onerous and yet on closer inspection might appear to be so general as to be meaningless. My right honourable friend is already very active in securing the broad availability of legal services in Scotland.
Legal aid annual expenditure in Scotland is over £60 million, which is 100 per cent. more than 10 years ago. Almost 300,000 accounts for legal aid and legal aid advice and assistance were paid in the last year. There is also in hand a review of eligibility for legal aid which will, it is hoped, lead to better targeting of the scheme on those who need help or advice when involved in legal proceedings. That comprehensive review of the way that legal services are provided which was conducted between 1987 and 1989 and of which this part of the Bill is the outcome is further demonstration of his responsibilities. I have already indicated to the House the steps that we propose to take to monitor the impact of the legislation on the availability and accessibility of legal services, especially in rural areas. Those are specific and practical steps which we have taken or will take. The amendment is, however, asking the impossible.
I do not know what is meant by "needs for legal services". I am sure that the noble Lord appreciates that it is an imprecise term which has a strong subjective slant. As there is no possibility of making a precise assessment of the need in that context, it would be inappropriate to put the Secretary of State under the type of statutory duty described in the amendment. There are many better ways of furthering the administration of justice. The Bill takes many positive steps in that direction.
Lord Macaulay of Bragar: My Lords, I am grateful to the Minister for that reasoned reply. I am pleased to hear—I am sure that it will be noted in the quarters affected by those activities—that the eligibility review will be of assistance. We look forward to hearing in due course the outcome of the inquiries. In the meantime, I beg leave to withdraw the amendment.
Amendment, by leave, withdrawn.
Clause 30 [Availability of legal aid in relation to services provided under this Act]:
Lord Fraser of Carmyllie Lord Fraser of Carmyllie moved Amendment No. 179:
Page 37, line 9, leave out from ("of") to ("conveyancing") in line 10 and insert ("executry services by executry practitioners and recognised financial institutions and convevancing services by").
The noble and learned Lord said: My Lords, I spoke to this amendment when speaking to Amendment No. 54. I beg to move.
On Question, amendment agreed to.
Lord Fraser of Carmyllie Lord Fraser of Carmyllie moved Amendment No. 180:
Page 37, line 12, leave out ("18") and insert ("19").
The noble and learned Lord said: My Lords, I spoke to this amendment when speaking to Amendment No. 117. I beg to move.
On Question, amendment agreed to.
Clause 32 [Advisory and supervisory functions of the Director]:
Lord Fraser of Carmyllie Lord Fraser of Carmyllie moved Amendments Nos. 181 and 182:
Page 37, line 38, after ("(11)") insert ("or 17 (10)")
Page 37, line 40, leave out ("or 17 (10)")
The noble and learned Lord said: My Lords, I spoke to Amendments Nos. 181 and 182 with Amendment No. 54. I beg to move.
On Question, amendments agreed to.
Lord Fraser of Carmyllie Lord Fraser of Carmyllie moved Amendment No. 183:
Page 37, line 41, leave out ("or (2)")
The noble and learned Lord said: My Lords, this is a minor consequential amendment. I beg to move.
On Question, amendment agreed to.
The Earl of Strathmore and Kinghorne: My Lords, I beg to move that further consideration on Report be now adjourned.
Moved accordingly, and, on Question, Motion agreed to.

Penzance South Pier Extension Bill
Brought from the Commons; read a first time, and referred to the Examiners.
House adjourned at nineteen minutes past eleven o'clock.

  COMPANIES ACT 1985: SECTION 245(4) REGULATIONS
  COMPANIES ACT 1985: SECTION 245(4) REGULATIONS