I beg to move, That the Clause be read a Second time.

This is one of several new Clauses and Amendments which we are proposing following the helpful suggestions made by hon. Members opposite in Committee. The Clause deals with an important matter which was raised by the right hon. Member for Kilmarnock (Mr. Ross). In Committee—it is columns 207–8 of the OFFICIAL REPORT—I promised to look again at the provisions in paragraph 3 of the Schedule relating to the appointment of agents to advise the Trust on investments. We thought that it might be desirable to be a little more specific, and I have, on reflection, come to the conclusion that the best way to proceed would be to insert this new Clause and delete the corresponding paragraph in the Schedule.

The Clause makes it obligatory for the Trust to obtain advice on investment from an expert in these matters. It leaves it open to the Trust to decide whether this person should be employed as an officer or servant of the Trust—who, in practice, would be the secretary—or be an adviser who would be specially appointed on terms to be agreed. If he is an officer of the Trust, his terms of appointment will be covered by regulations made under Clause 7(2)(c).

The arrangements we now propose are consistent with the recommendation of the Working Party that the Trust should be required to employ as investment manager and secretary an individual or firm skilled in the management of investment money. The only difference is that we are allowing the Trust to employ the expert without necessarily making him its secretary. We think that the Trust, which will comprise members with financial skills, should be allowed to judge which of these alternatives will suit its arrangements better.

I thank the Under-Secretary of State for taking note of the points which we raised in Committee. I am sure that he will agree that it is evident from the Amendments and new Clauses which he has put down that, although our proceedings went on longer than he might have wished, our labours in Standing Committee were not in vain.

The new Clause is the tidiest and best way of meeting the point which we raised in this connection, and I should advise my right hon. and hon. Friends to accept it.

I beg to move, That the Clause be read a Second time.

Since the Committee stage, we have been asked by the bodies mentioned in the new Clause, through their Parliamentary agents, to insert this provision in the Bill, following a number of precedents, including, in particular, an amendment made to Section 124 of the Education (Scotland) Act 1962 by Section 27(1) and paragraph 35 of Schedule 2 to the Education (Scotland) Act, 1969.

We believe that it is inconceivable that the Trust would appoint an auditor who was not qualified in these terms, but, in view of those recent precedents and the amount of funds involved, we think it desirable to put the matter beyond doubt.

The Secretary of State exercising the function of recognition of auditors under Section 161(1)(a) of the Companies Act, 1948 will, in practice, be the Secretary of State for Trade and Industry. In the circumstances, we have thought it best to include all the references to audit in a new Clause. As a consequence of subsection (1), the reference to audit presently contained in Clause 1(4) will be deleted by the next Amendment.

Again, I must thank the hon. Gentleman for taking up some of the points that were raised during the Committee stage. However, there are two points on this Clause about which I am a little concerned. The first concerns the last two lines which read:

"but a Scottish firm may be so appointed if each of the partners therein is qualified to be so appointed."

I understand that these words are necessary because there is a difference in the law relating to accountants in Scotland as against those in England, but I should be grateful if the hon. Gentleman could confirm that. Secondly, if this Amendment is thought to be necessary, may I ask whether it will be possible at some stage to make a similar Amendment to the 1953 Act which is considerably amended by this Bill?

I am most grateful to the hon. Gentleman for his very interesting questions on this new clause. On the fist point, I can assure him that the word- ing of the Clause is the standard form, which has been introduced in recent Scottish legislation because of our special Scottish situation. On the second and, perhaps, more important point of whether we should amend the 1953 Act, the position is that we have been inserting Clauses like this in recent legislation at the request of the professional organisations. Of course, in all such matters it has been the normal practice for qualified persons from these organisations to be so appointed.

I can certainly give the hon. Gentleman an assurance that, if we received an approach from the professional organisations, proposing that such a provision should be inserted in previous legislation such as the 1953 Act, then we should certainly give it sympathetic consideration when a suitable opportunity arose. I hope that with those explanations the hon. Gentleman and the House will be able to accept the new Clause.

Since this is being done not at the desire of the Government, but in order to placate the professional organisations, and since the Bill includes Amendments to the 1953 Act, I should have thought it was only right to make a similar Amendment there. Otherwise, it would appear that the Amendment to this Bill is not really necessary. I do not have the slightest doubt that even without this Amendment we should still get qualified auditors. It is interesting that the Government found it necessary to introduce this Amendment, bearing in mind that under the first new Clause the Trust has

"to obtain advice on the investment of any property held by them … from a person whom the Trust reasonably believe to be qualified".

There is no guidance given as to what should be the qualification in respect of the professional adviser. It is difficult to understand why it is necessary to insert this provision here, but not to apply it to the 1953 Act which set up the Hospital Research Trust unless somebody asks for it. It would be as well to show initiative and to make the Amendment in the earlier Act, if it is considered necessary here. But I raise no objection to the new Clause.

I beg to move Amendment No. 1, in page 2, line 1, leave out from 'cause' to 'an' in line 2. The Amendment is consequential on new Clause 2, which provides that the accounts of the Trust shall be audited annually.

I beg to move Amendment No. 2, in page 2, line 3, at end insert:

Provided that the Trust shall give reasonable access to the accounts to Boards of Management and Regional Hospital Boards.

The Amendment results from a very important point raised in Committee by the right hon. Member for Kilmarnock (Mr. Ross). We were impressed by his argument, and have accordingly tabled the Amendment, which will enable Boards to have access to the Trust accounts so that they may obtain information about items in which they have an interest.

I undertook in Committee, as reported at columns 11–13 of the OFFICIAL REPORT of the Committee proceedings, that we would examine the matter and make whatever arrangements were appropriate. We had thought that if specific provision was required it could be made in regulations under Clause 7(2). But in view of what the right hon. Gentleman said we felt on reflection that it would be better that the right of access should be provided once and for all in the Bill.

I hope that with that explanation the House will be prepared to accept the Amendment.

I thank the hon. Gentleman for the Amendment, and commend to him further the process of consideration and reflection that has produced this worthy improvement.

I beg to move Amendment No. 3, in page 3, line 26, leave out 'and administer' and insert:

'administer and dispose of'.

The Amendment results from a point raised in Committee by the hon. Member for Glasgow, Woodside (Mr. Carmichael). It specifically enables the Trust to dispose of any property it may receive in the future. It was pointed out in Committee that legacies and donations to the Trust might include heritable property. The working party had expressed the view that this type of property was not in general a very suitable type of investment for the Trust to hold, and Clause 2(4) provides for heritable property in the relevant endowments to be dealt with as may be determined in any particular case.

I undertook in Committee, as reported at column 122 of the OFFICIAL REPORT of the Committee proceedings, to consider whether, as the Bill stood, the Trust had the appropriate powers in relation to heritable property received under paragraph (f). I now think, in view of what was said by the hon. Gentleman then, that for the avoidance of any doubt disposal should be expressly provided for. The Amendment will also extend to any other type of property received by the Trust under this paragraph.

This is another example where, after further reflection on what was said in Committee, we have introduced an Amendment to cater for the point raised.

There was confusion about heritable and other property, and I think that the Amendment clears it up. There should be a very clear distinction, and the Trust should have the power to dispose of property, since we do not want it to become involved in large-scale landowning. I am very pleased that the Minister has moved the Amendment.

I beg to move Amendment No. 4, in page 3, line 30, at end insert:

(g) to give advice to a Board of Management or a Regional Hospital Board relating to the investment or management of any such endowment or income as is referred to in paragraph (e) of this section and which is not transferred to the Trust under section 4(1) of this Act, and to recover any expenses reasonably incurred by them in giving such advice from the Board concerned.

In Committee, the hon. Member for Aberdeen, North (Mr. Robert Hughes) raised the very interesting suggestion that it might be right to enable the Trust to give advice on the management of endowments still retained by boards after the new legislation took effect. This was a new point which did not arise directly from the Bill. We promised to look into it, and we now accept that it is very valid. The Amendment simply makes it clear that the powers of the Trust include the giving of advice on this matter.

I think that the hon. Gentleman will accept that it is necessary and reasonable that where the Trust is to provide such a service it should not be out of pocket in so doing. That would in effect penalise all the boards from which funds are transferred to the Trust. Provision for recovery of expenses is, therefore, included.

This is also consistent with the provisions in Clause 6(1) that the expenses of the Trust should be deducted from the total income of relevant endowments before this is distributed in accordance with schemes to be made and, putting in that one proviso, we accept that this is an interesting and valid addition to the Bill. In those circumstances, I hope the House will accept the Amendment.

I beg to move Amendment No. 5, in Clause 4, page 3, line 32, after 'may', insert 'by agreement'.

If it is agreeable to the House, I wonder if it would be possible to consider this with Amendment No. 6, in page 3, line 34, after 'behalf', insert:

'subject to any terms or conditions set out in the agreement'.

If that is convenient.

In Committee it was pointed out by the hon. Member for Aberdeen, North (Mr. Robert Hughes) that it might be desirable to spell out the right of boards to withdraw from the Trust endowments which they had transferred to it voluntarily under Clause 3(e).

We agreed to ensure that the Bill left no room for doubt on this point and the Amendment has this purpose. Rather than make a statutory rule which would have to apply to every case, we thought we should try to adopt the more flexible arrangements of leaving it to the Trust and the Board concerned to agree the terms and conditions under which these voluntary arrangements are made.

I understood there was a little doubt about the point and I hope that the words proposed will clear up the matter and that the hon. Member for Aberdeen, North will feel that we have introduced suitable Amendments to deal with the point he made.

I thank the Minister for bringing forward these Amendments to cover the points we raised in Committee. It makes the effort we all put in that Committee very much worth while.

I beg to move Amendment No. 7, in page 4, line 39, leave out subsection (4) and insert:

(4) No scheme shall be made under this section unless a draft has been laid before Parliament and has been approved by a resolution of each House of Parliament.

Would it be possible to consider this with Amendment No. 9, in page 5, Clause 9, leave out lines 38 and 39 and insert:

(2) No regulations shall be made under section 2(2)(c), 2(3), 4(2), or 5(2) of this Act unless a draft has been laid before Parliament and has been approved by a resolution of each House of Parliament.

(3) A statutory instrument whereby the power conferred by section 7(2) of this Act is exercised shall be subject to annulment in pursuance of a resolution of either House of Parliament.

If that would be agreeable to the House.

This Amendment follows the undertaking which I gave after a great deal of discussion in Committee to the right hon. Member for Kilmarnock, (Mr. Ross) that the affirmative Resolution procedure would be adopted for the schemes of distribution of endowment income made under Clause 6 and for most of the Regulations made under the Bill. Negative Resolution procedure is being retained only in respect to administrative Regulations made under Clause 7(2).

On Amendment No. 9, the undertaking which provides for affirmative Resolution procedure for the main Regulations was given at column 162 of the OFFICIAL REPORT of the Standing Committee on 26th November, 1970, when the right hon. Member pointed out fairly that the reasons for making the procedure negative or affirmative were those of Parliamentary time. He suggested that these matters should be subject to affirmative procedure and on reflection we feel that the right hon. Gentleman was correct, so the House will have an opportunity of considering the Regulations when they are introduced.

This is an important Amendment and I am grateful to the Government. Involved here is the distribution to every single regional hospital board area in respect of the hospitals of Scotland. If anything merited affirmative Resolution procedure it was this. I have argued both for and against affirmative Resolution procedure in the past, and when I was Secretary of State I usually said "No, we cannot have that", but in this case I am glad that we have got a measure of agreement. I am sure this will equally please the hon. Member for Edinburgh, South (Mr. Clark Hutchison), because he has a personal interest, which I share as a Member of Parliament, about what happens to well-endowed boards of management under the new scheme.

Equally, of course, I have considerable interests in those hospitals which are not at all well endowed but which merit a greater share in the past generosity of people who left money to various hospitals. I do not except that there will be a great deal of trouble but this procedure will give us further opportunities to see what is happening and what still needs to be done. It will also give us the opportunity, which we will be glad to take, to remind people that there is still a place for private generosity towards our hospitals, and for that alone, it will be worth while.

I want to pay tribute to my hon. Friend the Member for Aberdeen, North (Mr. Robert Hughes) for the amount of work he put into the Bill, having been a member of a regional hospital board. The Bill has benefited from his attentions.

I agree with the right hon. Member for Kilmarnock (Mr. Ross) and I am glad that the Government have introduced the Amendment. In agreeing the schemes and drawing them up, will my hon. Friend be sure to contact the hospital authorities in each case and to listen to their views with great care? Is he seeing now or in the near future the authorities who run the Infirmary in Edinburgh, because I think that they have some doubts about the Bill? I should be grateful if he would listen to their advice.

Indeed I do accept the great importance of consultation on such matters. This was one of the main reasons why it was thought in the Committee generally appropriate that we should have the affirmative Resolution procedure in this way. It means that, in the absence of what was regarded as full consultation, a full opportunity would be available in the House for full discussion of such matters.

My hon. Friend the Member for Edinburgh, South (Mr. Clark Hutchison) rightly drew my attention to some of the fears of another hospital board. I have had the opportunity to meet the board following an approach he made, and I hope that the explanations I gave at that time were satisfactory. I attach great importance to consultation and I feel that the Amendments introduce a further safeguard in this connection.

I beg to move Amendment No. 8, in page 5, line 8, leave out from 'payments' to 'they' in line 11 and insert:

'not exceeding limits to be determined from time to time by the Secretary of State from the funds of the Trusts to the members thereof in respect of any loss of earnings'.

Once again I am in the position of paying tribute to the Opposition for the penetrating way in which they pursued our deliberations in Committee. This Amendment again follows a point raised by the right hon. Member for Kilmarnock (Mr. Ross). He raised an important point about the limitation of earnings in respect of loss of earnings. I told the Committee that while we would accept the Amendment proposed at that time for drafting purposes, we might wish to alter it.

As it stands, the Clause is somewhat awkwardly worded. The word "prescribed" could give rise to doubt because it usually, although not necessarily, refers to prescription by means of Regulations. The appropriate method of fixing such mandatory limits from time to time is by way of administrative determination by the Secretary of State as, for example, in Section 37 of the Health Services and Public Health Act, 1968, under which rates are determined for members of health service bodies.

The Amendment gives practical effect to the intention of the previous Amendment and goes a little further by extending the Secretary of State's powers of limitation to travelling and subsistence expenses as well as loss of earnings payments. I hope the Committee will accept the revised wording of the Amendment which was introduced in Committee by the Opposition.

This Amendment is an improvement to the Bill and we feel that in all such legislation, when public money is involved, it is right that the wording should be properly tightened up so that nobody is in doubt as to how payments will be decided. This is particularly important when considering funds to be administered in the hospital services. It is important that such funds should be guarded very closely. After all, people who do voluntary work in our society are given little in the way of allowances, and so on, and it as well that it is made clear that the provisions in regard to loss of earnings should be decided by the Secretary of State.

The Under-Secretary of State has provided exactly the right words to tighten up the payments, and in so doing has met the sentiments and intentions of the Opposition who moved such an Amendment in Committee.

I beg to move Amendment No. 11, in line 4, leave out from 'and' to end of line 5 and insert

'not more than seven and not less than five other members so appointed'.

The right hon. Member for Kilmarnock (Mr. Ross) has been liberal in his praise, for which I am grateful. I hope that he and his colleagues feel that their labours have been well rewarded. In regard to his comments, I feel that perhaps we shall have to be more conservative in the number of Amendments we accept from the Opposition or perhaps must look more carefully at them. However, I am sure our reason for accepting them has been because of the weight of arguments in Committee.

Once again I am glad to put forward an Amendment dealing directly with a point raised by the hon. Member for Glasgow, Woodside (Mr. Carmichael). He suggested in Committee that it would be sensible to prescribe both a maximum and a minimum number of members, other than the Chairman to be appointed by the Trust.

We have thought about this matter a great deal and we now agree that it would be appropriate, because it would make for a sensible size of the Trust. The Amendment will give effect to the proposals advanced in Committee by the hon. Member for Woodside. We agree that if the Trust is to be a success it should be capably managed by not too large and not too small a number of gentlemen. We fully accept the hon. Gentleman's argument. That is why we have introduced the Amendment.

I beg to move Amendment No. 10, in page 7, line 7, leave out paragraph 3.

This Amendment is consequential on new Clause I which was introduced following points raised by the right hon. Member for Kilmarnock (Mr. Ross). The new Clause makes the more specific provision relating to the appointment of an investment expert which in Committee it was agreed seemed desirable. It is now thought better to provide this by a new Clause, and this paragraph of the Schedule is no longer necessary.

I am glad that the hon. Gentleman has met our wishes in this respect and has made the consequential change to deal with the earlier point. I am beginning to think he should go away on honeymoon a little more often! It has been wonderful to see his agreeable reaction to suggestions which we have put forward in respect of Bills. We will encourage him in this direction. In fact we can probably provide him with a "pair".