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Grants By Residuary Bodies

Volume 82: debated on Monday 8 July 1985

The text on this page has been created from Hansard archive content, it may contain typographical errors.

—(1) The Secretary of State may by order provide for the making of grants to eligible charities out of money received from the disposal of land by the residuary bodies established by Part VII of this Act.

(2) In this section "eligible charity" means, in relation to a residuary body, a body of persons or trust established for charitable purposes only, being purposes which are wholly or primarily for the benefit of the area for which the residuary body is established."

and the amendments thereto:

(a) in line 2, leave out 'may' and insert 'shall'.

(b) in line 3, leave out 'eligible charities" and insert `voluntary organisations'.

(c) in line 6, leave out subsection (2) and add

(2) And order under subsection (1) above shall provide that so far as is practicable the total expenditure of each residuary body under this section shall be no less in real terms than the total expenditure on grants to voluntary organisations of the Greater London Council or a metropolitan county council as the case may be, in the area of that residuary body in the financial year 1985/86.

(3) In this section "voluntary organisation" has the same meaning as in section 47 above.'.

Lords amendment No. 57, in page 67, line 7, at end Insert—

"() consider whether it is desirable that a scheme under section 47 or (Research and Collection of Information) above, or schemes under both those sections, should be made by those councils and, if of that opinion, promote the making of such a scheme or such schemes;"

The provisions in the Bill dealing with support to voluntary bodies have developed and have improved during the Bill's passage. I am grateful to those voluntary organisations that have come to discuss with Ministers in my Department the provisions of the Bill. We are indebted to them for many of the improvements that we have now introduced.

In this House we revised clause 47 extensively to meet the points that had been put to us. In the other place the additional change provided for by amendment No. 43 was a response to further suggestions that were put to us by the voluntary sector. There has been concern that, in the absence of the GLC and, to a lesser extent, the metropolitan counties, grant-giving by the local authorities would operate in what would be seen to be a policy vacuum. The Government did not wholly share that fear. It seemed to us that it would be no more than normal local authority practice to operate arrangements for grant-giving under arrangements that would take account of the priorities and needs of the areas concerned. We had to recognise, however, that the concern of the voluntary sector was acute on this point and thus, when an amendment was put forward on Report in another place seeking to have annual reviews made of the needs of the whole area involved in schemes under clause 47, my noble Friend undertook to consider that point. This he did, and amendment No. 43 was put forward by the Government and agreed to on Third Reading in the other place.

I believe that this change to clause 47 has been warmly welcomed by the voluntary sector because it provides two useful additions to the operations of clause 47. First, it ensures that in all aspects of operating the scheme all the constituent councils have to have regard to the needs of the whole area. That is a strong reinforcement of what we had always intended should happen. Secondly, it requiresd each scheme to contain provisions for those needs to be kept under review. This is not a mechanical annual review, as some have sought, but a continuing obligation to respond to changes and developments. I hope that the House will welcome the amendment in the same way that it was welcomed in another place.

Lords amendment No. 57 meets a concern expressed by the voluntary sector in the metropolitan counties. The London boroughs have been very quick off the mark to start making arrangements for funding the Londonwide organisaions. Richmond council has taken the task of acting as lead borough, and has already been in touch with over 800 such organisations. In the metropolitan counties, the districts have, unfortunately, not been quite so quick to get going.

Specifically at the request of the Manchester council for voluntary organisations we have included a provison that will require the joint organising committees to consider the desirability of setting up collective arrangements. This will give the districts a prompt, if they need one. Assuming that they agree that the scheme is a good idea, they will then be required to promote its setting up. I hope that the House will join me in supporting what is another useful addition to the provisions for the voluntary organisations.

I sent the Secretary of State details of the concern felt by voluntary organisations in Greater Manchester. They are looking for a clear guarantee that they will be protected. The Minister knows that there are daunting difficulties facing voluntary organisations in Greater Manchester not least because the statutory organisations find it increasingly difficult to carry out their legal duties. What guarantee can the hon. Gentleman give voluntary organisations in Greater Manchester tonight?

I am very grateful to Mr. Henry West, who has visited Ministers in my Department on several occasions to relay exactly the concerns outlined by the right hon. Gentleman. I hope that the district councils will avail themselves of the transitional funds that the Government have made available to help local organisations, which at present receive funding from the Greater Manchester council. It is precisely to meet their needs that we have increased to £20 million the amount of transitional funding. I hope that the district councils in the Greater Manchester area will get together soon to decide their priorities for next year. If they want to bid for the £20 million, they should not lose too much time in so doing. The Government are aware of those concerns. They have been forcefully put to us by Mr. Henry West and others, and the Government have increased the transitional arrangements to safeguard the well-being of the worthwhile organisations in Manchester.

Lords amendment No. 44 is the other provision relating to grants for voluntary bodies. The Opposition have tabled an amendment, but first I wish to explain the intention of their Lordships. The amendment introduces a new clause designed to enable funds to be provided for endowing a new trust for London, but the provision is not limited to London alone; it would allow similar arrangements to be made in the other metropolitan areas if there were sufficient surplus assets arising in those areas. The unallocated assets of the GLC will pass to the London residuary body on 1 April next year. From the proceeds of disposing of those assets the endowments will be made. The Secretary of State will make orders providing for the making of payments by the residuary body to charitable trusts whose purpose is to benefit the area concerned. This endowment for the new trust for London will be new money for the voluntary sector in London. Initially, we estimate that £10 million could be transferred from the GLC's surplus assets, and we intend that this should be added to by corporate and other private contributions.

However, the funds made available to the new trust will build up over time. Depending on the rate and scale at which the London residuary body is able to realise the surplus assets, the clause will enable the Secretary of State to provide by order for payments to be made to the trust. Needless to say, the proposal was welcomed by everybody who has an interest in the future of London's voluntary bodies.

The Opposition have tabled a number of amendments to these proposals, but I must say that I cannot advise the House to accept them, first because they would require the Secretary of State to provide for as much grant-giving as the GLC and the metropolitan counties are providing in 1985–86. That would be on top of the arrangements for collective grant-giving by the boroughs already provided for in the Bill; it would be on top of the Government's special programme of £20 million of grant aid for local groups and it would be on top of whatever else the boroughs individually decided to spend. That is an unrealistic proposal.

Other parts of the Opposition's amendments would require the Secretary of State to order money to be transferred to voluntary organisations. We have already made it clear that we shall do this in London. The metropolitan counties will have to await a proper assessment of the size of surplus of ex-MCC assets. The surplus may be small and it would be wrong to promise what could not be delivered. The authorities have been in existence for only a comparatively short time, but we do not rule out altogether the possibility of a surplus. The clause has been drafted to allow provision to be made in the met areas if it emerges that there is a basis for so doing.

The Opposition seek to change the definition of the groups that are eligible to receive the proceeds of ex-GLC or ex-MCC assets from the residuary bodies. That amendment would make almost any non-profit-making body eligible. It is our intention that large capital sums — I have mentioned £10 million — that have been accumulated at the expense of ratepayers in London or elsewhere should be paid over only to properly established trusts that have been set up to meet the needs of the area concerned. I am sure that we should retain the requirement that their Lordships have proposed.

The trust, when it is set up, will be able to fund voluntary organisations as more broadly defined by the amendment, but in the first instance we think it right that the funds should transfer to a body as we have defined it in the amendment. We shall listen, of course, to what Opposition Members have to say about their ideas but it seems that they want to turn the residuary body into a substitute general purpose grant-giving body under the direction of the Secretary of State. That would be inappropriate.

I think that it is generally acknowledged that when we introduced the Bill many voluntary bodies were disturbed. They saw the councils that funded them being demolished and they were uncertain about who would fund them after 1986. My right hon. Friend the Secretary of State and other Ministers in the Department are aware of the voluntary organisations' fears and uncertainties because we have indulged in lengthy consultations with the NCVO, the LVSC and other voluntary bodies. We have met them on many occasions and from our discussions with them, and our understanding of their fears and anxieties, we have been able substantially to reassure them. We have taken on board many of their suggestions for improving the Bill. We have provided for encouragement and assistance, such as the large increase in transitional support from the £5 million we proposed originally to the £20 million that is now on offer.

Equally importantly, the voluntary sector has been able to learn more about what we, the Government, propose. We have been able to explain to voluntary organisations what we are doing to see through our commitment that good voluntary projects should not lose out as a result of abolition. Two significant proposals will ensure that successor authorities can take over the funding of the voluntary bodies. There will be collective funding by districts and boroughs for county and Londonwide groups with £20 million more of local projects to receive aid via the districts. Over and above that, the trust for London will be endowed with at least £10 million. There are possibilities of others in the mets being so endowed if resources allow.

Will the Minister explain to the House that £20 million of Government money will not be handed over? That is the impression that he tends to give when speaking on this subject. The Government will be giving permission for the boroughs and districts to spend £20 million of their own money, which they will be hard put to raise anyway because of rate capping.

It is £20 million of projects that are funded by voluntary oranisations that are eligible for transitional funding. Support from the Government will be phased from £75 per cent. tapering over four years. If the hon. Gentleman reads the reports of what I said in Committee and on the Floor of the House, he will see that I have always been open about the degree of assistance and support that the Government will provide.

Our exchanges with the voluntary bodies have been fruitful and it is my distinct impression that the voluntary organisations in London and in the mets are now much more confident about the future. Such uncertainty as still remains stems almost entirely from the attitude that has been taken by the Labour party, which has refused so far to take part in the preparations for the London collective scheme. It is still striving to ensure that information that is needed desperately to allow grants to be made to voluntary organisations next year is not available. Only last month, when asked by Wirral and Sefton to release such information for Merseyside, councillor Keva Coombes got solid Labour support for continued refusal to discuss that issue.

The true friends of the voluntary sector are on the Conservative Benches, and voluntary bodies will not be deceived by the superficial show of concern on the Opposition Benches. I hope that the House will support the Lords amendments and resist the Opposition amendments.

9.30 pm

I should like to discuss our amendment (a) to Lords amendment No. 44, and I hope that we shall be able to vote on it at the end of the debate.

If the Minister believes that the voluntary sector has welcomed what the Government did in the other place, and honestly believes that the voluntary sector has been substantially reassured, I can assure him that he is talking to a different voluntary sector from the one that has talked to me and my right hon. and hon. Friends. People in the voluntary sector are still disturbed and concerned. Indeed, many are till angry about the Government's proposals, despite the amendments in the other place. If the Government claim that there is adequate money in the arrangements that have been made to replace the grant-giving powers of the GLC and metropolitan counties, they are not deceiving Opposition Members, they are not deceiving the general public and they are certainly not deceiving the voluntary sector.

Let us look at exactly what happened in the other place and at what the amendments do. First, there is the trust that the Government are establishing. It will receive money from the residuary bodies, which have been set up to sell off the assets of the metropolitan counties and the GLC. That is the vindictive part of the Lords amendments. The Government are obsessed with getting rid of County hall, and selling off the assets that belong to the GLC and the metropolitan counties. They especially want to get rid of County hall as the London symbol of democracy throughout the capital, a symbol that has existed for many years.

In trying to pretend to the voluntary organisations that the sale of assets will produce a large amount of money that can be handed over to the trust to be used for the voluntary sector, the Government do not say where the 32 of the 42 functions, which will be run on a countywide basis under the legislation, will be run and administered from. If County hall is sold—which I doubt will happen — where will ILEA go? ILEA has done its sums, and has estimated that it would cost at least £100 million for it to move out and find other premises. There will not be the bonanza from asset selling by the residuary bodies because all the joint bodies and other quangos that the Government are establishing will need to be housed in not less but more office space than is used at present by the metropolitan counties and the GLC.

The Government envisage that £10 million will be given to the trust at first. That will be invested, and 10 per cent. interest a year will give £1 million. That is mere chicken feed compared with what the GLC and the metropolitan counties now give to voluntary organisations. It does not allay any of the fears that have been expressed.

Let us look at what the trust is. It will not be democratically accountable. It may not have representatives of the voluntary movement on it. Who will the Minister appoint to the trust? There are rumours that existing foundations such as the City. Parochial Foundation might be given the job; that would reassure the voluntary sector to some extent. Will the trust be established by the Government, and appointed by a body of do-gooders to ensure that no controversial grants are given? That is where the prejudice comes in. I was in the Committee on the Bill, and the only argument from Conservative Members in favour of abolition—because they could not prove their case on the basis of cost—was prejudice, particularly against the controversial grants given by the GLC and the metropolitan counties. Will the trust be an anodyne group of Conservative do-gooders, specially appointed to do the Government's bidding?

In our amendment we substitute the phrase "eligible charities" for "voluntary organisations". The fears of many voluntary organisations, which receive grants from the GLC and metropolitan counties but which are not charitable bodies, have not been allayed by the Government's proposal. The GLC and metropolitan counties do a great deal of work in unemployment centres, but those centres do not qualify under the Lords amendment because they are not charitable bodies. Many co-operatives and women's organisations will not qualify. The Minister referred to the Richmond scheme. Its proposals have already been published in draft form and exclude grants to women's groups. That sort of thing is already beginning to happen.

With the amendment the Government vindictively seek to force the sale of assets. It is clever conservatism to be vindictive towards metropolitan authorities, and to take their assets and show care by giving those assets to the voluntary sector. In that way the Government are trying to get the voluntary sector to go along with them, and to see some advantage in being vindictive towards the metropolitan authorities. However, people in the voluntary sector know that those authorities are their genuine friends because those authorities have given them cash, money and support, and the Government have given them nothing but false promises.

I should be grateful if the hon. Gentleman would tell me what he considers a voluntary body to be. Is it a body which receives money from the Government to do the Government's bidding, or one which is doing work for the community, and which, in my view, should not be paid anything by the Government?

My definition of a voluntary body is a non-statutory, non-profit making body which contributes to the welfare of the community, such as many non-charitable women's groups, black groups and groups that work with the unemployed. This includes many groups against which Conservative Members are prejudiced. They are voluntary groups, but not necessarily of charitable status, just as some voluntary housing associations are of charitable status and some are not.

Will my hon. Friend comment on what the Minister said about the Tories being the friends of the voluntary sector, when in 1984–85 the GLC is providing grants totalling about £60 million to voluntary organisations? How does that compare with the sum that the Government are prepared to provide?

The Government are providing chicken feed compared with the GLC, and the same story is true throughout the metropolitan counties.

The Minister made great play of the increase in the transitional money, as though the Government were providing a great deal of money for that four-year period. When the Bill was first published the Government were to provide £10 million or, to be exact, £7·5 million, and the remainder was to come from local authorities. Then, because of the pressure of the voluntary sector, the figure was increased to £20 million. We can draw a picture of the municipal bill run up by the Conservatives— from £10 million, to £20 million, and closing at £40 million. That is their last offer. What does that mean? In the first year the Government will provide £15 million for the GLC and the metropolitan counties, and the local authorities must find £5 million. In the second and third years both the Government and local authorities must provide £10 million. In the fourth year both the Government and the local authorities must provide £5 million. That is not exactly a windfall for local authorities, nor is it a great deal of money for the many voluntary organisations operating in those areas.

My hon. Friend put an important point in making it clear that our concern is not only with voluntary organisations—properly so-called. The Royal Exchange theatre company in Manchester has made clear to hon. Members from the Greater Manchester area that, without the £548,000 which it receives this year from the Greater Manchester council, the theatre will have to close. What kind of guarantee can we give the company about its future?

Of course, the Government cannot provide guarantees. They have studiously avoided providing guarantees while mouthing platitudes about how they are trying to assist voluntary organisations.

The district councils and London boroughs are already rate capped, and will have to take over many functions after abolition, for which the Government will not provide extra rate support grants, yet they must find part of the transitional £40 million. They will be unable to meet all the needs, and will certainly be unable to meet the many requirements of the voluntary sector unless the Government undertake to provide the necessary money.

Another minor amendment tabled by the Government —many of them were probably drafted by the Minister —related to the concession that, in the first year of the collective scheme—the Minister praised the Richmond initiative—if two-thirds of the boroughs agreed to grant money to a countywide voluntary organisation, all the boroughs must contribute to it. However, the Government placed a ceiling on the amount that could be given, although for the first year they said that they would not use their powers to impose such a ceiling. That is not reassuring, because the Government are retaining their draconian, ministerial powers, as they have done throughout the Bill, to set ceilings and to control the amount of money that even the so-called democratically liberated London boroughs and metropolitan county councils will be able to give to voluntary organisations.

The Minister made much of Lords amendment No. 43, but it is extremely vague. It asks the boroughs to set up a review of social needs with due regard for the entire metropolitan county and GLC areas. What will be the result of such a review? The Minister rightly referred to the criticism from voluntary organisations they they will be unable to operate within comprehensive political or strategic frameworks. At present, the GLC and the metropolitan counties meet representatives of the voluntary movement and thrash out a set of policies, in relation to funding the voluntary sector, which operate within the terms of reference of each local authority's strategy. The trust cannot do that, because it has no other functions or powers. Many local authorities will come together to review social needs, but they all have differing views. I assure the House that Sefton council has a different view of the social needs of Merseyside from the views of Liverpool city council and Knowsley council. The trust will be no substitute for the present system.

We said in Committee that their Lordships said that the Government have failed to prove that administrative savings can be made in services by getting id of bureaucracy. We were told that many services, including waste disposal, firemen and file police, would cost more. However, we now know that the cuts will be made in the voluntary sector. The Government were motivated to attack the GLC and the metropolitan counties because they wanted to cut the amount of money given to voluntary organisations. They did not like the way in which local government was setting new trends in encouraging community activity, bringing people closer together, working closely' with the Labour local authorities to improve conditions in their communities and pioneering in the traditional local government way. They knew that the spin-off would be support for the Labour party, and that is why they are so vindictive against the GLC and the metropolitan counties. That is why they are attacking the voluntary sector.

These Lords amendments are prejudiced and spiteful. The Government's abolition proposals are based on prejudice and spite, and this attack on the voluntary sector is a prime example of it. Although Ministers try to put on a pleasant face, Conservative Back-Bench Members show their prejudice every time we mention the GLC, the metropolitan counties, or the giving of grants to the voluntary sector. I urge the House to reject the Lords amendments, which will not provide adequate support for the voluntary sector, and to accept the Opposition amendments.

9.45 pm

We debate the amendment against the background of an extraordinary expansion in Exchequer and other public support for the voluntary sector. Gradually the partnership between the voluntary sector and the Government is becoming a genuine third force. Many of us who have worked in the voluntary sector have hoped for that for many years.

Such a partnership involves enormous difficulties. The whole point of the voluntary sector—whether charitable or non-charitable — is that it should be free to move where it will and to do those things which it sees are needed, particularly if the statutory sector does not recognise a paramount need. Too much of the voluntary sector is being sucked into the statutory sector simply because the money is made available to it and it therefore follows the money.

That is not necessarily bad, but I hope the Minister can reassure us that, after the long, constructive and hard-working sessions with the voluntary sector, he will ensure that we have a much clearer idea of those activities which the Government of the day believe appropriate to be done by the voluntary sector. Let us make no mistake. The voluntary and charitable sectors can take on able staff to operate under a Government grant which is often taken away after only a short time because of changes in political control or in the ability of the statutory sector to meet the need. I hope that as a result of the current painful discussions a more coherent strategy for the future will emerge.

If that third force does not receive funds from the public sector, where will the funds come from?

An enormous amount of public money is spent in that direction through tax concessions and other means. Increasingly, money is provided through a wide range of other sources, including the private sector, which in many ways is a healthier source of support than the state. What is more, the changes in the law governing covenants by the present Government have resulted in an increase in the amount of individual contributions, which I welcome.

The Opposition spokesman, the hon. Member for Bootle (Mr. Roberts), gave the show away because, although much of the money spent by the metropolitan authorities and the GLC has been spent in a pioneering way, too often it has been spent in such a way that pioneering has taken precedence over responsibility. Some pioneering groups have been incompetently managed and have been unable to perform the tasks which they were paid to perform.

Local authorities have always spent money on publicising their policies and ideas. The Government object, not to that, but to the fact that the metropolitan counties and the GLC are publicising their ideas successfully. That is why they object to their grants policy. The objection is not that they have failed, but that they have been successful.

That is not why I object. I do not object to some of the experiments that have been carried out, but I do object to frantically increasing expenditure for no purpose other than to bind groups of diverse kinds and activities to the Labour party. That is the nub of the question. Many of the groups that have been funded had worthy aspirations and may derive from areas in which, because there are difficulties, they may have been able to appeal to sympathy or shame to get funding. When they have failed to deliver the goods, the result has too often been a desire to give them more money because the poor things failed to deliver the goods last time as they did not have sufficient money. In the budget for 1984–85 the GLC in particular delivered a cynical exercise in trying to bind to the Labour party the support of a wide variety of groups, some of which were undoubtedly worthy of support but many of which were not.

I support the Government amendments, but I urge the Government to take pains to build on the hard work that they have done so far to ensure a much more predictable pattern of partnership between the Government and the voluntary sector.

Because time is short I shall concentrate on the amendments proposed to Lords amendment No. 44. In the prevailing atmosphere of impending doom, I welcome the Richmond initiative to get the two thirds rule. My experience of district co-ordination in the voluntary sector is not encouraging. The two thirds rule will not breed harmony and light among the districts because those who are not party to the two thirds but are part of the one third or some smaller proportion, will not contribute willingly or with a warm heart.

The crux of the matter is the definition. If one restricts the definition to charitable organisations, one excludes a whole area of the voluntary sector which in some respects has been the most innovative, experimental and beneficial in recent years. To restrict matters entirely to those who fulfil the definition of "charitable" will exclude new groups which cannot, at the beginning of their lives, achieve charitable status. It will not be easy for the Government to discover a means of determining whether a group is charitable or not, in law short of registration with the Charity Commissioners. Those who have been involved in this area for many years will know that it is a legal minefield. It is not easy to determine whether a group is charitable or not, and the Charity Commissioners have great difficulty in doing so. There are many organisations which I believe are charitable but which do not have charitable definition and registration with the Charity Commissioners. In the past I have managed to get tax relief for many bodies which are not registered with the Charity Commissioners but which the Inland Revenue regards as charitable.

Another area which will be deprived is that of co-ordination of voluntary work. The councils of voluntary service which facilitate collaboration between voluntary and statutory bodies often find it difficult to achieve charitable status because the Charity Commissioners are loth to give that status to bodies that simply co-ordinate the activities of other voluntary organisations. A whole area with which many Conservative-controlled authorities are happy to work will be cut out from this definition and they will find their work extremely constricted.

Any attempt at such restriction runs counter not only to local government tradition and to the work that the local authorities have done for many years in endeavouring to pump-prime and to assist experimentation and innovation by not confining themselves to the use of charitable bodies. It also runs counter to central Government intentions and central Government tradition. An examination of grant-giving patterns under clause 64 from the DHSS or from the voluntary service unit of the Home Office and the urban programme and the partnership authorities, shows that most of those grants which are beneficial and accepted as such by Conservative Members do not go to those bodies which are deemed in law to be charitable. I cannot understand why the Government wish to cut off from grant aid under this heading those bodies to which they had willingly and voluntarily given support for many years.

The sums of money involved that have been quoted sound large but, for many reasons, the sums of money going through this third arm is extremely large. The sums being quoted are nowhere near enough to accommodate what is happening. For example, there is a housing project in Bradford with which I was associated when I was involved in the voluntary sector there which is costing £2 million. The turnover of some large city bodies is beyond the sums being quoted.

My experience suggests that the Government's policy will seriously harm the voluntary sector. Innovations and experiments will inevitably be deprived. It is not so much whether Conservative or Labour Members are the friends of the voluntary sector—from what I have heard today, the Government want to constrict local authorities and Labour wants to control them. Neither is the right approach. The proposals of the Government and the other place are defective and I urge the House to accept the amendments to the Lords amendment.

Through rate-capping and penalties, the Government have hit local authorities hard, and feeding cash into voluntary organisations will be ever more difficult. Local people are proud of Tyne and Wear metropolitan county council because it has helped and funded voluntary organisations. However, it now seems that there will be a distinction between Conservative-controlled shire counties and Labour-controlled metropolitan authorities.

Under section 137 of the Local Government Act 1972, district and county councils can each raise 2p with which to fund organisations and projects. Metropolitan counties are also able to raise a 2p rate for the dame purpose, so in an area covered by a metropolitan county council 4p is raised under section 137. If Tyne and Wear county council is abolished, however, only 2p will be raised for that purpose. Because the shire counties, which are predominantly Conservative controlled, will continue to exist, areas covered by them will continue to exist, areas covered by them will continue to levy 4p under section 137. In other words, Conservative-controlled areas will have much more money with which to fund voluntary organisations. If that is not political vindictiveness, I do not know what is. The Minister and the Secretary of State should reconsider and let boroughs in metropolitan county areas raise a 4p rate under section 137.

Question put and agreed to.

Lords amendment: No. 44, after clause 47, insert the following new clause—