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Lords Chamber

Volume 387: debated on Tuesday 22 November 1977

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House Of Lords

Tuesday, 22nd November, 1977.

The House met at half-past two of the clock: The LORD CHANCELLOR on the Woolsack.

Prayers—Read by the Lord Bishop of Southwell.

Export Of Animal Traps

My Lords, I beg leave to ask the Question which stands in my name on the Order Paper.

The Question was as follows:

To ask Her Majesty's Government whether gintraps and other forms of leg-holding traps are being exported from this country; and, if so, whether regard has been had to the fact that such traps are unlawful in this country.

My Lords, the exportation from the United Kingdom of gintraps and other forms of leg-holding traps is not prohibited, except to Southern Rhodesia. The answer to the second part of my noble friend's Question is, Yes, but I have asked that the matter be looked at again.

My Lords, is my noble friend aware that, had I not received an unsatisfactory reply from the Department, I would not have troubled the House with this Question this afternoon? Is he also aware that there is a matter of principle involved here? The principle which is advanced by the Department of Trade is that they do not require goods which are exported from this country to conform to our own regulations on such matters as health, safety and humanitarianism, and it is the last word which I think is the important one in this question of principle. Is my noble friend further aware that I had put down a Question asking about the export of mantraps, thumb-screws, racks, treadmills and other forms of torture, to try to find out what was the principle of the matter in regard to these exports? I hope that my noble friend will bear these matters in mind when further consideration is given to this subject.

Certainly, my Lords, I am aware, in the way that my noble friend has indicated, of the strong views that he holds on these matters and the cogent arguments that he puts forward. It is for that reason that I asked that the matter be looked at again, and I assure him that all these points will be considered.

Pest Control: Fleas And Warble Fly

2.40 p.m.

My Lords, I beg leave to ask the first Question which stands in my name on the Order Paper.

The Question was as follows:

To ask Her Majesty's Government, in view of the considerable increase in fleas and warble flies, what advice they have given on how those pests can be controlled.

My Lords, the human flea is no longer a significant problem in this country. By contrast, the cat flea appears to be on the increase, due to the increase in the number of domestic animals. Advice on suitable measures for preventing and controlling infestations of fleas in domestic and other premises is available from local health departments. As regards the warble fly, the agriculture departments have maintained regular annual publicity enjoining farmers to treat their cattle. This advice has not been taken by all farmers and the incidence of the fly is increasing. The Government have announced their intention to introduce a compulsory eradication programme in the autumn of 1978, subject to the availability of resources. A Consultation Paper will be issued shortly.

My Lords, may I thank the noble Lord for that very interesting Answer. In view of the fact that the female flea can lay six to 10 eggs per second all through the day, is it not important, when, as the noble Lord has mentioned, they are changing their diet from animals to human beings, that there should be some real forms of control? Also, I should like to thank the noble Lord for the second answer which he gave, because it will be most advantageous if this programme is carried out in 1978.

My Lords, the control of infestation is, of course, the responsibility of local authorities under the Public Health Act 1936 and the similar Act of 1961. Many local authorities also provide both advisory and treatment services, and have contracts with pest control firms.

My Lords, may I ask my noble friend whether the abolition of the human flea is to the credit of the Government, and whether that is to be included in the next Election Manifesto? May I also ask him whether he is aware that the idea did not occur to me?—the suggestion was made to me by my noble friend Lord Sainsbury.

My Lords, I think it is greatly to the credit of the Labour Party, through whose efforts there has been a very great improvement in our living conditions during this century.

My Lords, on the important matter of the warble fly, is my noble friend aware that a compulsory scheme for the eradication of warbles has been in force in the Republic of Ireland for two or three years, that it is proving extremely effective, but that it must be universal and repeated over two or three years if it is to succeed? Will the Government bear that in mind in any scheme which they brine in for this country?

Yes, my Lords, certainly. It is hoped to start the five-year eradication programme in the autumn of 1978, and it will be backed up by a full and intensive publicity campaign.

Nursery Education Cuts

2.43 p.m.

My Lords, I beg leave to ask the second Question which stands in my name on the Order Paper.

The Question was as follows:

To ask Her Majesty's Government why they have cut the sums available to local education authorities to extend the provision of nursery education.

(Lord Donaldson of Kingsbridge)

My Lords, in view of the economic situation, reductions in the levels of all educational building programmes were made, although with the utmost reluctance. However, my right honourable friend the Secretary of State for Education and Science has secured an increased programme for 1978–1979 of £3.4 million initially, and she hopes to be able to make a further small supplement to the programme. Nursery provision may benefit additionally under the next phase of the urban programme and the inner city partnership programme for which funds specifically for provision for under-fives in deprived urban areas will be available.

My Lords, I thank the noble Lord for his reply, but may I ask him when this programme is likely to start and when the schools which are already built will be able to get sufficient teachers so that they can be opened?

My Lords, the noble Baroness will know that it is for local authorities, not my right honourable friend, to take the action required. However, the rate support grant arrangements which have just been announced allow for some easing in the financing of teaching in nursery schools. The provision of £3.4 million is to start in March of next year when the new financial year begins.

My Lords, is the noble Lord aware that, in the recent defence cuts, £50 million was cut off the Armed Forces works programme and that, in his recent budget, the Chancellor added £400 million in order to stimulate the building industry, which is in a very poor condition? May I therefore ask the noble Lord whether a portion of that £400 million will go towards the building of nursery schools?

My Lords, there is provision for something like £0.6 million to be added to the figure which I have quoted. That is as far as I can go.

My Lords, will the noble Lord ensure that no reduction is made in the grant given to the pre-school play groups, which are fulfilling an excellent role during this very difficult period until we have the nursery schools?

My Lords, I am entirely in agreement with the sentiment expressed by my noble friend, but the decision is one for the Department of Health and Social Security and not for my Secretary of State. I am quite sure, however, that this point will be noted.

My Lords, can the noble Lord tell us how many children under five, including the rising fives, there are in school and what percentage that is of the total nursery education population?

My Lords, at January 1976, 56·2 per cent. of the four year-old age group were in schools, and 13·7 per cent. of the three year-old age group. I do not have the figures for children over that age, but that is a good start to answering the noble Lord's question.

My Lords, I am grateful to the noble Lord for his reply, but I wonder whether he would agree that there is still a long way to go and that that is why my noble friend has asked her Question? Is the noble Lord aware that on 18th November the Secretary of State forecast an increase in educational expenditure on a variety of sectors as a result of the rate support grant, including non-teaching crafts, increased teachers, a reduction in the school meal subsidy, as well as the whole of the teaching profession? Are the Government really confident that, within the 10 per cent. forecast rate increase limit for local authorities, nursery education will have its part in this increased programme for the forthcoming year?

My Lords, the answer to the noble Lord's question is, Yes, on the part of the Government, but the Government are only partners. It is not my Secretary of State's business to enforce extra expenditure on the part of local authorities. However, my Secretary of State has made her own view—that this ought to be taken up—very clear indeed.

Guide Dogs In Sleeping Compartments

2.48 p.m.

My Lords, I beg leave to ask the Question which stands in my name on the Order Paper.

The Question was as follows:

To ask Her Majesty's Government whether they will ensure that blind persons are permitted to bring guide dogs into sleeping compartments when they travel by train.

My Lords, this is essentially a matter of day-to-day management which the Government must leave to the Railways Board to decide. Although the Board's view is that dogs present a hygiene risk in the confined space of sleeping compartments, guide dogs may be carried in the guard's van and quickly brought to the blind passenger when required.

My Lords, is the noble Baroness aware that this is a request only for single occupancy sleeping compartments, that a large number of places, which do not normally allow dogs into their premises make an exception for guide dogs—for example, supermarkets and hotels—and that the success of the guide dog movement depends upon an intimate relationship between the highly trained dog and the trained blind person? If this relationship is broken, even for short periods, damage is done to the relationship. Will the noble Baroness make this representation to the chairman of British Rail?

My Lords, I have every sympathy with the view of the noble Earl and with what he has said. British Rail have always taken the view that if we have a separate compartment, or compartments, on our trains purely for the blind passengers with guide dogs it would not be a commercially viable operation and that the sleeping car accommodation is in such great demand that even if two or more blind people were willing to share a compartment it would not solve the difficulty. It is also not possible to provide appropriate facilities within sleeping compartments for the guide dogs, but I will certainly make known the views of the noble Earl to the British Railways Board.

My Lords, if there is a person who objects to a man who is blind sleeping with his guide dog, had not that person far better sleep in the corridor?

Personally I would sympathise with those comments as well, my Lords, but the conditions of carriage laid down by British Rail are that dogs are not allowed to travel in sleeping compartments.

My Lords, the Board take the view that for a dog to travel in such a confined space would constitute a very real hygiene risk, and also that there is a possibility of adverse criticism from subsequent passengers, and that might perhaps reduce the use of sleeping compartments; but I will bring the views of the House to the notice of the Board.

My Lords, none the less will the Government take very seriously what both noble Lords have said; and can the noble Baroness, Lady Stedman, say when we may expect the time to arrive when the Labour Party can, in a future Manifesto, praise the complete eradication of the dog flea?

My Lords, the latter part of that question is rather a different matter. With regard to the other part of the question, we all have sympathy with blind people and we all appreciate the tremendous work and the help given by the guide dogs, but at this time all I can do is to say that I will bring to the notice of the British Railways Board the views of Members of this House.

My Lords, can the noble Baroness not do more than just make known the views of this House? Can the Cabinet not make a recommendation, because there is a new chairman of the British Railways Board and I think he requires a little education?

My Lords, the management of British Rail is under the British Railways Board and the Government have no right to interfere in management problems and the way in which the Board run the railways.

Nevertheless, my Lords, can they be reminded that their local by-laws are not the laws of the Medes and the Persians?

My Lords, may I ask the noble Baroness whether she is aware that for blind persons who cannot travel by car by themselves, for obvious reasons, there is a special need to use the railways if they are travelling alone? May I ask whether the chairman of the Board has ever really had an objection from any members of the public that their sleeping compartment had previously been used by a blind person and his dog? Has any such complaint ever been made, and if so, was it a worthy complaint?

My Lords, from my own knowledge I cannot say whether any specific complaints have been made to the British Railways Board. What I can say is that various associations concerned with the blind and with the guide dogs have made representations to the Board and so far the Board has remained adamant on this matter.

My Lords, will the noble Baroness bear in mind that the only dog allowed in the cabin of a passenger aircraft is a guide dog, I understand, and when that exception is made for travelling by air could not a similar exception be made on the railways? As far as hygiene is concerned, the noble Baroness must be aware that the guide dogs for the blind are in every way the most highly trained to be found in this country.

My Lords, I have said that I accept what noble Lords have been saying this afternoon, but I cannot make the decision for the British Railways Board. All I can do is to bring to the attention of the Board the views of Members of this House in the hope that in their good sense they may be able to act on them.

My Lords, can the noble Baroness say whether guide dogs were allowed to travel in sleeping compartments before the railways were nationalised, or whether this is a new ruling?


My Lords, with the leave of the House, may I say that in view of the number of speakers in tomorrow's debate dinners will be available in the House.

Foreign Boycotts Bill Hl

My Lords, I beg to introduce a Bill to prevent foreign boycotts; and for connected purposes. I beg to move that this Bill be now read a first time.

Moved, That the Bill be now read 1a .—( Lord Byers.)

On Question, Bill read 1a , and to be printed.

Finance (Income Tax Reliefs) Bill

Brought from the Commons, endorsed with the certificate from the Speaker that the Bill is a Money Bill within the meaning of the Parliament Act 1911; read 1a and to be printed.

Pensioners Payments Bill

Brought from the Commons; read 1a , and to be printed.

Business Of The House

My Lords, I beg to move the first Motion standing in my name on the Order Paper.

Moved, That leave be given to the Earl of Cranbrook to advance both the Motions standing in his name from Wednesday the 7th to Tuesday the 6th of December.—(Lord Peart).

On Question, Motion agreed to.

My Lords, I beg to move the second Motion standing in my name on the Order Paper.

Moved, That Standing Order No. 43 ( No two stages of a Bill to be taken on one day) be suspended for the purpose of taking the Bill through all its stages this day.—( Lord Peart.)

On Question, Motion agreed to.

Hybrid Instruments Committee

My Lords, I beg to move the first Motion standing in my name on the Order Paper.

Moved, That as proposed by the Committee of Selection, the Lords following, together with the Chairman of Committees and any one Lord of Appeal, be named of the Select Committee on Hybrid Instruments:

  • Bacon, B.
  • Beaumont of Whitley, L.
  • Cawley, L.
  • Clwyd, L.
  • Collison, L.
  • Cork and Orrery, E.
  • Drumalbyn, L.
  • Fletcher, L.
  • Lee of Newton, L.
  • Reay, L.
  • Stamp, L.
  • Stow Hill, L.
  • Teviot, L.
  • Wise, L.

—( Lord Aberdare.)

On Question, Motion agreed to.

Standing Orders (Private Bills)

My Lords, I beg to move the second Motion standing in my name on the Order Paper.

Moved, That a Select Committee on the Standing Orders be appointed; and that, as proposed by the Committee of Selection, the Lords following, with the

Chairman of Committees, be named of the Committee:

  • Alport, L.
  • Bacon, B.
  • Brentford, V.
  • Derwent, L.
  • Elwyn-Jones, L.(L. Chancellor)
  • Henley, L.
  • Thurlow, L.

—( Lord Aberdare.)

On Question, Motion agreed to.

Aberdeen Shoemakersincorporation Order Confirmation Bill

Considered on Report.

City Of Glasgow District Council Order Confirmation Bill

Moved, That the Bill be now considered on Report.—( Lord Strabolgi.)

My Lords, there is an unusual variety of Scottish subjects before us today, with the Aberdeen shoemakers that we have just dealt with, legal aid and the miscellaneous menu of subjects in the Local Government Bill to come, including the Scottish Ombudsman and the change of the day of the week for local elections. I can assure the House that I personally do not intend to spend more than a short time this afternoon on the total of all these subjects. However, as I am sure your Lordships will agree when you hear what it is about, this Bill should not pass without some assurance from the Government.

The Bill is entitled the City of Glasgow District Council Order Confirmation Bill, and there is no clue in that title as to the subject, but I can tell your Lordships that in fact it is entirely concerned with the capture and killing of dogs and nothing else. I accept the need for control and for a system of rounding up and disposing of stray dogs, which can be a nuisance in a city. Action of a similar kind is being taken in other cities and towns, but that is all the more reason why we should question the Government about how it is being done. I gave notice before today to both the noble Lord, Lord Strabolgi, and to the Scottish Office that I would raise two points.

The first is that it is not clear whether enough is to be done to determine whether a dog is a genuine stray, as distinct from being lost and being sought by its owner, and only a little time is given in which this can be sorted out. Secondly, it is not clear what are to be the conditions in which dogs are to be kept and fed by the police during the period when they are held, which is likely to be at least two weeks although the owners are only given seven days in which to claim them. Both these points may well give rise to resentment and distress among the public if they are not reassured. A lost dog may well be a family pet or a companion to a single person, who may possibly be disabled or partially blind. Under the Bill the responsibility is placed on the police, and under Scottish procedure for this kind of legislation the Government at this stage sponsor this provisional order in a Public Bill—this one.

It is therefore appropriate now to ask the Government whether they are satisfied that there will be little risk of dogs other than genuine strays being killed before their owners can trace and claim them. Have the police instructions and facilities for looking after these animals and feeding them properly during the period when they are holding them before disposal? For example, have the RSPCA been consulted, and are they content? The police are very good at looking after their own dogs, but that is a specialist occupation and they have handlers to do it. Are they ready to take on this new task?

There is a welcome provision that these dogs cannot be used for vivisection; that is written into this order. There is also a sub-paragraph saying that they shall be killed with as little pain as possible. But there is nothing else in these proposals before us about conditions of retention, and we would be reassured if the Government would give us the benefit of their views before this Bill leaves us.

My Lords, may I ask the noble Lord to confirm in his answer that it is compulsory for the dogs to receive humane slaughter?

3.2 p.m.

My Lords, I am grateful to both noble Lords for what they have said and for the interest they have taken in this Bill. Perhaps I may deal first with the points raised by the noble Lord, Lord Campbell. The principal safeguard against genuine pets being destroyed by accident lies in the requirement that all dogs seized must be kept for at least seven days, and if the owner is known or an address is inscribed on the collar the owner must be notified and the dog kept thereafter for at least ten days. The main difficulty at present is caused by the fact that only the police have power to round up stray dogs, and they seldom have time to perform this function effectively. The order empowers the district council to appoint dog wardens, among whose functions would be giving advice to the public about keeping dogs and ensuring as far as possible that dogs are licensed and that the address of the owner is inscribed on the collar. If this is done, and if the owner of a dog notices that it is missing and takes the trouble to inquire from the district council, then the provisions of the Bill will ensure that no dog which is wanted by its owner will inadvertently be destroyed.

With regard to the second question raised by the noble Lord—and I am grateful to him for giving me notice of his questions—100 spare places exist at the RSPCA kennels in Cardonald. This should be sufficient, but overspill places are available also in RSPCA homes at Bothwell, Cumbernauld and Milton.

The noble Lord, Lord Somers, asked me whether it was laid down in the Bill that the dog is to be destroyed painlessly. This is so, and perhaps I may direct the noble Lord's attention to Clause 3 (4), which makes quite plain that the council must cause the dog to be destroyed with as little pain as possible.

My Lords, with leave, may I thank the noble Lord for his reply and say that the fact that he has announced that the RSPCA will be making places available for looking after these dogs will be a great reassurance? There is nothing in the Bill to indicate this.

On Question, Bill considered on Report.

Commonwealth Development Corporation Bill Hl

3.5 p.m.

My Lords I beg to move that this Bill be now read a second time. This is purely a consolidation measure and makes no changes in the present law. There are, however, certain corrections and minor improvements which require to be made to the existing legislation, and they are made in this Bill. Accordingly, the Bill comes within the provisions of the Consolidation of Enactments (Procedure) Act 1949, and I have caused a Memorandum to be laid before Parliament in accordance with that Act. I understand that the Joint Committee on Consolidation Bills is to consider this Bill early in December. I beg to move.

Moved, That the Bill be now read 2a .—( The Lord Chancellor.)

On Question, Bill read 2a and referred to the Joint Committee on Consolidation Bills.

Pensioners Payments Bill

3.9 p.m.

My Lords, I beg to move that this Bill be read a second time. This is a short Bill and I shall therefore be brief in describing its provisions. Its purpose is to pay a bonus of £10 to nearly 10 million people, which is a larger number than ever before. Because of this Bill we hope that Christmas will be a pleasanter time for them, and it is, I think, a pleasure to everyone in your Lordships' House to have this Bill before us.

As your Lordships know, the Government did not introduce a bonus in 1975 and 1976 for a whole number of reasons which it is perhaps not necessary for me to go into. The economic circumstances meant that available resources had to be concentrated on improving the general level of benefits, and in 1975, as your Lordships will remember, we did in fact have two upratings in pensions. There are disadvantages to bonus payments; because of administrative difficulties, we acknowledge that many deserving groups have to be excluded. We do not like it, but there are real difficulties.

This year, the Government have decided that there is more room for spending power in the economy. We feel it is only right that the pensioners, the disabled, widows and certain other social security beneficiaries should share in the measures announced by the Chancellor in another place on 26th October last. The bonus will go to about 8½ million retirement pensioners and to over 1 million other people under pension age, including those in Northern Ireland. The Bill is a wholly beneficial one. I am sure that it will receive general support from your Lordships and I trust that it will be afforded a swift passage through your Lordships' House so that the payments can be made promptly.

Clause 1 provides that, to qualify for the bonus, a person must first be living or ordinarily resident in the United Kingdom or a Member State of the EEC at some time in the week beginning 5th December. Secondly, he must be entitled, or treated as entitled, to payment of a qualifying benefit for at least one day in that week. A person who satisfies these conditions can get a further payment of £10—making £20 in all—in respect of his wife, if they are both over pensionable age. Only one payment of £10 can be made in respect of any one person. The bonus will be tax free and will be disregarded when a person's means are assessed for purposes such as supplementary benefit, rent allowance or rent rebate.

Clause 2 provides for payments to be made to people receiving retirement and invalidity pensions; supplementary pensions; all widows benefits under the National Insurance and Industrial Injuries schemes; attendance allowance; unemployability supplement or allowance; war widows' pensions. Payments will also be made to war disablement pensioners provided they have reached pension age and retired or been treated as retired. This year, the payments will also go to those receiving invalid care allowance or a non-contributory invalidity pension—including disabled housewives who became eligible for this particular benefit last week—amounting to about 180,000 persons in all.

Clause 3 deals with administration. The great bulk of payments will be made by post offices. Perhaps your Lordships will allow me to take this opportunity to express the gratitude of your Lordships to the staff of the Post Office and to sub-postmasters who are prepared to perform this task at a time when their period of greatest pressure is approaching. I should also like to thank the members of staff of my own Department—the Department of Health and Social Security—who will arrange for the payments to be made in the other cases. The vast majority of those entitled to it will get the £10 payment during the week beginning 5th December, and nearly all payments should be made by Christmas.

Finally, let me turn to the financial provisions covered by Clause 4 of the Bill. The bonus payments will cost about £100 million and the cost will be met out of monies voted by Parliament or from the Consolidation Fund of Northern Ireland. As I have said, the payments will be tax free and will not affect entitlements to other benefits or allowances.

My Lords, this is a short Bill. I do not think that it is necessary for me to say anything further. I commend the Bill to your Lordships and hope that you will give it a Second Reading. I beg to move.

Moved, That the Bill be now read 2a .—( Lord Wells-Pestell.)

3.12 p.m.

My Lords, the House will be grateful to the noble Lord, Lord Wells-Pestell, for explaining the provisions of the Bill with his usual clarity. We welcome the Bill. It was, after all, the Conservatives who initiated the Christmas bonus in 1972 and repeated it in 1973. That example was followed in 1974 by the present Government, but it was discontinued in 1975 and 1976. Then, on the 29th April this year, the Minister responsible for social security said in reply to a Question in another place that it was not intended to pay the bonus in 1977. Now the Government wish to pay it.

There could be two reasons for the Government's change of mind. First, it could be that they are electioneering. It will not escape notice that 1974 was an election year and that another general election cannot be far distant. A more charitable reason would be that which the noble Lord has suggested: that to have paid it in 1975 and 1976 would hardly have been consistent with the pip-squeezing policies then being pursued and that, now that there is more juice in the national economy, the Government feel able to make this payment. I hope that the noble Lord will convincingly refute any suspicion of electioneering which would be bad not only for the image of the Labour Party—which would not distress me—but for the reputation of Parliament as a whole. Although £10 today is worth less than £5 at 1972 prices, I have no doubt that the recipients will be thankful for small mercies and also for the efforts of the Post Office on their behalf. I repeat that we welcome the Bill.

3.15 p.m.

My Lords, I, too, should like to thank the noble Lord, Lord Wells-Pestell, for his explanation of this short but very welcome Bill. We on these Benches are glad that it has been introduced into the House. In fact, we, with our colleagues in another place, pressed the Government to introduce it. We are pleased that a little cheer at Christmas will be distributed to some 10 million people—a larger number than ever before when similar payments have been made—and I am particularly glad that the benefit will be available to all invalidity pensioners.

I join with the noble Lord, Lord Wells-Pestell, in the thanks which he expressed towards the Post Office and also to those involved in his own Department. However, I should just point out that we on these Benches are quite convinced that, although this payment is welcome, it does not in any way solve the problem of providing an adequate pension for those who have already retired: it is no substitute for an adequate weekly income. Moreover, the problem of those who are already retired and who will receive no benefit under the earnings-related scheme that is due to come into force next year is one to which we shall want to return at a suitable opportunity. However, in the meantime, we welcome the Bill and hope that it will have a speedy passage through your Lordships' House.

3.17 p.m.

My Lords, as a former Minister of Pensions and National Insurance, perhaps I may also be allowed to welcome the Bill. These Christmas bonuses have sometimes been objected to because, in our universal system of National Insurance in this country the beneficiaries include a very limited number of comfortably-off people. I have always thought that that objection was misconceived because we can fully—perhaps excessively—rely on our taxation system to prevent such people getting any undue benefit from a bonus of this kind.

I think that it is right that, if the Government feel that some purchasing power can be released at this time—and this is entirely a matter for their judgment and responsibility—some of it should go to giving a little cheer and comfort to the older section of our population. There are, however, two questions that I should like to put to the noble Lord, Lord Wells-Pestell.

First, I hope that I did not understand the noble Lord aright—although I think I did—when I understood him to mean that war pensioners below retirement age were not to share in this payment. If that be so, then, even at this late hour I ask the Government to reconsider the matter. For many years it was an axiom in our social security system that war pensioners received priority. I should have thought that it would be an unfortunate abandonment of that principle if, when there is a small sum of money available to distribute, this most deserving section of our community—those who have been injured in the service of our country—should be excluded. I hope that I am wrong in reading the Bill in that way and in my understanding of what the noble Lord, Lord Wells-Pestell, said. If I am not wrong, then perhaps he can tell us that the Government will think again about this aspect.

The second matter that I wish to raise is procedural. Clause 3 (4) of the Bill gives the Secretary of State power to order a claim to be made in writing. I assume that that provision is put in as an administrative precaution for dealing with an exceptional and difficult case. However, I think that the House would be grateful if the noble Lord could give an assurance that it is not intended to exercise this power to demand a claim in writing save in the most exceptional and difficult circumstances.

I hope that the noble Lord will be able to deal with those points. However, I repeat that it is a very pleasant experience—and in these days an increasingly rare one—to be able to congratulate the Government on doing something really rather good.

3.19 p.m.

My Lords, this is, of course, a very pleasant Bill to pass in your Lordships' House today. I ought to declare an interest because, in common with other noble Lords, I shall be a beneficiary and so will my wife. Perhaps that alone is a stimulant to getting the Bill on the Statute Book as early as possible. Nevertheless, as one who was in at the beginning of this kind of social benefit, I question strongly whether it is any longer satisfactory or sound social policy.

In 1964, when the Labour Government announced their intention to introduce very substantial increases in social benefits, it was a matter of great regret that time was against getting the benefits converted into payments before Christmas of that year. There was a great deal of discontent in the House of Commons about that and every effort was made to re-examine the method of payment to see whether it could be instituted more quickly. Unfortunately, it was not found possible. Then pressure mounted to do something for the social beneficiaries for Christmas, in view of the fact that it was not possible to introduce the substantial increase in benefits before then.

So the Government, of which I was a member, decided on a lump sum of £10 to be given to all those in receipt of supplementary benefit or chronic sickness benefit. The mass of protest that came from all National Insurance pensioners and others who were not on supplementary benefits was most formidable. Indeed, those of us who looked at all these protests decided that it would never happen again. But it has happened again. Subsequently, it was applied to all National Insurance and social beneficiaries, as is the case at present, with possible minor exceptions upon which there may or may not be a grievance.

We must consider whether this kind of benefit is any longer justified on social grounds and whether, indeed, it is justified on economic grounds. In order to overcome the problem which I have described as relating to 1964–65, the annual review of benefits, which now takes place, is timed to enable an announcement to be made of the uprating in the late summer, and the uprating brought into operation in November. Only last week were the higher benefits for this year paid to National Insurance pensioners and others, which is in time for Christmas. This is what it was hoped to be able to do when the difficulties of 1964 arose.

One of the advantages of being in your Lordships' House is that one can examine some matters more dispassionately on their merits without the pressures of politics and prejudice. As one affected, I believe we must bear in mind that all pensioners will have the advantage of the increase in personal reliefs this year. They will have the advantage of the reduced rate of tax. Age exemption allowances have gone up; age allowances have gone up. All that has brought benefit to those on pensions. Moreover, in order to reduce the burden of work in the Inland Revenue, the Chancellor has decided that the increases in the State benefits which have been introduced midterm shall not be taxable in this tax year. That is another concession which has been given especially to those who receive the increases in State benefits.

The increase in State benefits is higher than the increase involved in Phase 2 to wage earners; it is higher than the guidelines now offered by the Government for the next phase in wage negotiations. We must not overlook the fact that the public service pensioners, of whom there are very large numbers today, are all included in this as well. Therefore, without in any way wishing to dampen the spirits of noble Lords in this matter, I wonder whether we are on the right lines. Bear in mind that this benefit is at the whim of Governments. Nobody knows whether or not it may come. As was mentioned a few moments ago by the noble Lord, Lord Cullen of Ashbourne, earlier this year the Government said, No, and have subsequently said, Yes. Is that the way to run our social benefits? A benefit started in the exceptional circumstances of 1964, which is subsequently justified on other grounds, can now be an instrument not so much of social policy but of political policy as well. It seems to me that it is undesirable to have this as a repeated feature of our social service benefits. I think that this Christmas box mentality in relation to those on pensions—and I say this without wishing to give offence—is undesirable. It is either patronage or generosity, and neither is appropriate in the circumstances.

On economic grounds this £100 million to be spent in this way would not be my priority for public expenditure at present. I believe that it should either be included in the statutory benefits or discontinued. I recall tobacco coupons—what a nuisance they became. These concessions are difficult to get rid of once begun and repeated several times.

My Lords, as the Minister who abolished the tobacco coupon, perhaps I could say that there is, of course, the great difference that tobacco is bad for one and £10 is good for one.

My Lords, I accept that. I thought that the noble Lord was about to draw the distinction between a cash benefit to everybody as of right and a concession for the purchase of certain products. There is also that material difference. I mentioned it simply because, as the noble Lord will remember, it was most difficult to get rid of the tobacco concession without giving some financial compensation overall, which, if I remember rightly, was given.

The point I make is that if we start a concession for one reason and continue it later on for other good reasons, it becomes almost an expected feature of the social benefit. I believe that this cautionary note is justified, because if this kind of benefit is to be continued, we must reconsider the amount—whether it has been eroded by inflation, whether it shall be given a firm place in the expectations of retirement pensioners, or what. On the whole it is a pleasant duty to perform, but I doubt whether it is sound social or economic policy.

3.27 p.m.

My Lords, I welcome the Bill and, in doing so, I suppose I must declare an interest. However, I should like to put a question to my noble friend Lord Wells-Pestell. He will be well aware of the reciprocal arrangements that have been in operation since the inception of the National Insurance Scheme. There are British nationals who are pensioners living abroad and there are pensioners of other countries living in Britain. Can my noble friend tell the House whether this £10 will apply to British nationals living abroad and to other nationals living here? Will they both receive the £10 bonus?

My Lords, along with so many other Members of your Lordships' House, I should like to express appreciation for this measure. However, I should like a little clarification of the Bill. At the top of page 5, Clause 2(7) it says:

"Two persons who are not married to each other and are living together as husband and wife shall be treated as spouses for the purposes of section 1"—
which presumably means that they will receive the pension as though they were husband and wife—in two cases. First, if the man is entitled to a supplementary pension and, secondly, if:
"their requirements and resources fall to be aggregated under the provisions mentioned in subsection (2) (c)",
which is the unemployability allowance. Can my noble friend explain why these two exceptions—and only these two—are made in the case of people who are living together as husband and wife and who are not married?

3.30 p.m.

My Lords, before my noble friend replies to this debate may I ask him one question which arises out of an observation by the noble Lord, Lord Boyd-Carpenter. I gathered that he said something like this: there exists a limited number of beneficiaries who are rather better off and therefore do not really need this £10 bonus. Are there any statistics available of the number of old-age pensioners, those above the age of 65, who are rather better off and really do not require it because they make no claim for supplementary allowances, and therefore there is no reason why they should be in receipt of this aspect of Government charity?

Quite frankly, I dislike the whole thing, first of all because, although some years ago £10 may have meant something, it does not mean very much now. Recently there was some controversy and I believe a suggestion was made in the other place that the bonus should be increased from £10 to £15. I should have said that that would have been very much better. I am all in favour—and therefore I naturally would not desire to prevent the passing of the Bill—of providing for those in need. That is why we have the supplementary schemes. I am bound to say that many of the supplementary allowances in consideration of the situation in which many people find themselves, because of unemployment and not receiving adequate unemployment pay, or a variety of reasons, are much too low.

I should like one of two things done, or two things if it were possible. First, not to tax old-age pensions. It seems to me that when a pension derives from National Insurance contributions—in other words, it is a form of insurance and one expects at some time or other to receive some benefit deriving from the payments that one makes, or that are imposed upon one in the ordinary course of the situation—that that is all right. But may I put it this way—like my noble friend Lord Houghton of Sowerby, I ought to declare an interest. Frankly, I would much rather see the £10 going to somebody who needs it. Of course I could, and no doubt will, as no doubt will the noble Lord, Lord Boyd-Carpenter, use the £10 to give somebody £2 or £3, or perhaps the whole lot, in order to benefit the person concerned. One can do that, but I would much rather have a different scheme altogether. Increase old-age pensions, or do not tax the old-age pensions. Or let us discover, on the basis of statistical evidence—which is apparently not available to Members of your Lordships' House—whether there are a large number of beneficiaries (we cannot say how many, but it might be a fairly high percentage) who do not need it, such as Members of your Lordships' House, who, I assume, really do not need it. Perhaps those who need it might put up their hands, then I would know. If they did so it would be the only kind of statistical evidence available.

I dislike the whole concept; I do not like it a bit. It is a form of charity dispensed by a Government—I hesitate to say what I am now forced to say because it is in my head and I must get it out—for electoral purposes. From the very fact that the noble Lord, Lord Boyd-Carpenter, mentioned that this bonus was first initiated by a Conservative Government, when we are almost on the eve of another General Election, it is obvious that it was dispensed for electoral purposes. I dislike that idea. It is a form of bribery; a form of corruption. Although no doubt there are some people very much in need and who will be delighted to get the £10 or, in the case of two persons, £20, I would much rather we had a better scheme—better pensions; less taxation.

3.34 p.m.

My Lords, may I intervene for a moment to make three points. The first is in relation to the speech of my noble friend Lord Boyd-Carpenter. If my noble friend is right and disabled war pensioners are not included under this Bill, is there any reason why they should not be included under a Royal Warrant? This is what invariably happens when war pensions are increased in line with other benefits. I have a good deal of sympathy with what the noble Lord, Lord Houghton, said. He made a courageous speech and a sensitive one, as one would expect from him with the experience that he has had.

Dealing with what the noble Lord, Lord Shinwell, has just said, I thought that in the course of his speech he slightly changed his stance and came round to acknowledge that for some people at any rate, some old-age pensioners, an extra £10 at Christmas would be very welcome. They have a great inelasticity of budget, and to have a little extra not only to spend on their own jollification but perhaps on presents for grandchildren and that sort of thing, is no doubt extremely welcome to them. However, I sympathised very much with his view about the appropriateness of making it a once only payment. If that is true this year, surely it is true every year. Why are we legislating only for this particular year for this kind of benefit?

My Lords, cannot we pass this decent, generous little Bill without any more carping criticism? I am quite sure that 10 million people outside this House will say "Thank you" for this £10 or £20 which is going into those 10 million households this Christmas. We have to bear in mind that it is not merely a £10 gift for the husband and a £10 gift for the wife, but that a married couple, under the increases recently announced by the Government, are to get an extra £3.50 a week from last week, or the week before, onwards; so there is a standing, permanent, shall I use the word, "generosity" as well as this £10 or £20 charitable gift to celebrate the Christmas season.

My noble friend Lord Shinwell rather despised the word "charity". I do not. I remember from my Sunday school days that I was told of faith, hope and charity—and that the greatest of these is charity. I think it is, but I do not look upon this as a charitable gift. I look upon this as a reward to worthy old people who perhaps have seen two World Wars, who perhaps have seen the hungry thirties, who perhaps saw the industrial dislocation of the early twenties. The Government are doing the right thing. Let us say good luck to them, and pass the Bill without any further delay.

My Lords, may I support this Bill, and say that old-age pensioners themselves want to be able to give at Christmas as well as to receive. This £10 buys a chicken, or a small turkey, and a Christmas pudding, and they are therefore able to give where they would not otherwise have been able to do so.

3.39 p.m.

My Lords, I have tried to make a note of all the points raised, and I hope I shall be able to deal with them. Before I do so may I be permitted to congratulate the noble Lord, Lord Cullen, on his first speech as a Member of the Opposition Front Bench. It is particularly agreeable to me that I congratulate him because I remember that when he made his maiden speech in your Lordships' House a good many years ago it fell to me, as the next speaker, to offer him my congratulations and those of your Lordships. I do so again with great sincerity. I am sorry the noble Lord has started his political career, as it were, on the Opposition Front Bench with such a suspicious mind. He really must not allow the suspicious minds of his colleagues to descend upon him to the degree that appears to have occurred already.

This is not an electioneering gesture. The Government have two years more to go and if we were going to have an electioneering stunt it is much more likely to be next year than this. Even assuming that it is an electioneering stunt, we are merely taking a leaf out of the behaviour of the Opposition. I can remember a Conservative Chancellor not many years ago presenting an enormous give-away Budget; then the Conservatives went to the country and the following November the Chancellor took back every penny and more. So I urge noble Lords opposite not to suspect motives on an occasion such as this.

I thank the noble Lord, Lord Banks, for his contribution in support. As for the remarks of the noble Lord, Lord Boyd-Carpenter, there is a great deal of doubt in the minds of a good many of us as to whether this is a desirable thing to do. My Party is on record as saying that the ideal way to deal with these situations is to see that the pension given weekly to retired people is adequate—I was going to say more than adequate—for their needs, and that is something which many noble Lords would like to see. However, this is a particularly special time (not just a particularly special period of the year) when the Chancellor finds that he can put back into the community a very substantial sum of money to improve conditions generally. A Chancellor who is going to do that must of necessity take into account not only the needs of a certain section of the community but certainly the needs of a poorer section of the community, and it would seem—whether it is a once for all thing or not—very desirable that the pensioners themselves should get some part of the money which the Chancellor has found able to put back into the community. I am grateful to my noble friend Lord Houghton of Sowerby for his contribution; there is no part of it with which I would disagree. Lord Boyd-Carpenter asked me about war widows.

I was coming to that, my Lords. It may well be that inadvertently I misled the House—I shall have to read Hansard tomorrow—but certainly most war disablement pensioners, and war widows of all ages, will receive the bonus. If I did not make that clear in my opening remarks I am glad to have this opportunity of doing so.

Another point made by Lord Boyd-Carpenter was about the question of the application. There is no need for anyone to make an application for payment. If people feel they are entitled to the bonus and have not received the payment by the end of December, they should contact their local social security office. We must face the fact that there is a danger that some payments may be delayed in the post, or for one reason or another, and our officers will not be able to cope with a large number of inquiries. Consequently, if people feel they are entitled to this payment and have not received it, we ask them to make an application.

My Lords, I presume that people who receive their pension by quarterly payment by cheque will get it in due course automatically, and I take it that the Minister is not asking them to ask for this bonus if they have not received it by a certain date.

That is right, my Lords. People who are entitled to and receive a pension, whether they get it weekly, monthly or quarterly, will receive it and there is no need for them to make application for it.

I was asked about pensioners abroad. British pensioners normally resident abroad, except in Gibraltar and the EEC, will not receive the bonus unless they are present in the United Kingdom, in the EEC or in Gibraltar in the week in question, which, trusting to memory, is the week beginning 5th December. Foreign nationals will qualify only if they are resident or present in the United Kingdom and are receiving a qualifying benefit.

The noble Baroness, Lady Wootton of Abinger, raised the question of persons living together as husband and wife.

These are relatively unusual cases, where the couple are treated as husband and wife, and in a number of cases payment of supplementary pension is made to the man in respect of the woman with whom he is living. We feel that where a supplementary pension is given to a man in respect of the woman with whom he is living, it would be reasonable to pay the bonus in those particular cases. As the noble Baroness will know, the situation cannot arise with National Insurance benefits, though it arises so far as this matter is concerned.

I was also asked whether pensions should be taxable. To make National Insurance pensions tax free would only benefit the better off pensioners, those with income enough in addition to their pensions to make them liable for tax. The National Insurance retirement pension of itself is not sufficient to bring an individual or married couple into tax liability, since the income tax age allowance is worth more. We feel, therefore, that there is some objection where a situation enables people who are better off to receive it, but this is a matter with which it is very difficult to deal.

My Lords, I think my noble friend is wrong in saying that for those who are regarded as better off and who receive this sum from the Government—£10 or £20 as the case may be—it is taxable; I understand it is not taxable.

No, but that was not the point about which I was asked, my Lords. I was asked whether pensions should be taxable. They are not taxable on their own and I was answering the question whether or not they should be made taxable. That reminds me that my noble friend Lord Shinwell raised the question of whether statistics are available on the better off pensioners who do not need the bonus. I am not aware that there are any reliable statistics to show how many people in receipt of retirement pensions are not in need of it. There is some information which makes it quite clear that there are a number of people who are receiving retirement pensions and whose income is such that they would not need the bonus, and that is why I think there is widespread opinion that we should deal with this matter in the future by seeing that the level of pensions is adequate rather than resorting to bonus payments as a general rule.

On Question, Bill read 2a ; Committee negatived.

Then, Standing Order No. 43 having been suspended (pursuant to Resolution), Bill read 3a , and passed.

Legal Aid (Financial Conditions) Regulations 1977

3.50 p.m.

rose to move, That the Legal Aid (Financial Conditions) Regulations 1977, laid before the House on 26th October, be approved. The noble and learned Lord said: My Lords, these regulations increase the financial limits for legal aid in civil proceedings, and for legal advice and assistance generally. There are corresponding regulations for Scotland, and these stand in the name of my noble and learned friend Lord McCluskey. What I have to say applies to both sets of regulations. The increases follow the principle, which has applied since 1973, that income limits should be revised annually to take account of increases in supplementary benefits. In this way the limits keep pace, at any rate to some extent, with the rate of inflation. There are separate regulations for legal aid and for legal advice and assistance. The former cover those civil proceedings for which legal aid is available. The latter cover advice and assistance in all matters criminal or civil which fall short of actual proceedings.

The Legal Aid (Financial Conditions) Regulations 1977 increase the lower income limit (below which a contribution from the litigant is not payable) from £665 to £760 a year, and the upper income limit (above which legal aid is not available) from £2,085 to £2,400 a year. Both limits relate to a person's "disposable income", not his gross income. His disposable income is arrived at after allowances have been made for dependants, and deductions have been made for items and expenses such as income tax, rates, rent and so on. Once again, the regulations also increase the lower capital limit (below which no contribution is payable) from £300 to £340, and the upper capital limit (above which legal aid is normally not available) from £1,400 to £1,600.

The Legal Advice and Assistance (Financial Conditions) (No. 4) Regulations 1977 make corresponding changes for legal advice and assistance. The upper disposable income limit for legal advice and assistance is increased from £42 to £48 a week, and the disposable capital limit from £300 to £340. These regulations should be read with a third set of regulations, which are not subject to Affirmative Resolution, but which come into force at the same time. They raise the lower disposable income limit for advice and assistance from £20 to £23 a week, and make consequential amendments to the scale of contributions for legal advice and assistance.

I have also made other regulations, which are not subject to Affirmative Resolution, and which will come into force at the same time, making other minor improvements to the scheme—notablyand, I think, most helpfully—removing completely from the assessment of resources for legal aid, advice and assistance the capital value of the applicant's house.

These regulations represent the most that can be done in the present circumstances. Nobody regrets this more than I do, and I greatly wish that I could do more. But, like other Ministers, I must accept the inescapable restrictions which the current financial circumstances impose upon us in the field of public expenditure. Nevertheless, the legal aid scheme is still able to make a substantial contribution to helping many people in need of legal aid, advice and assistance. Last year, over 200,000 legal aid certificates were issued, nearly 300,000 bills for legal advice and assistance were paid under the "green form" scheme, as it is called, and over £44 million was recovered in damages on behalf of legally assisted persons. Your Lordships may therefore think that legal aid, advice and assistance form a very important social service. I commend these regulations to your Lordships' House. I beg to move.

Moved, That the Legal Aid (Financial Conditions) Regulations 1977, laid before the House on 26th October, he approved.—( The Lord Chancellor.)

3.55 p.m.

My Lords, it falls to me, on behalf of my noble and learned friend Lord Hailsham of Saint Marylebone, to speak to the two Motions relating to the English provisions, which are now before your Lordships. My noble friend Lord Campbell of Croy may or may not have something to say about the Scottish regulations, which we shall come to in a few moments. With regard to the two English regulations, I should say that we welcome them and regret only, as does the noble and learned Lord on the Woolsack, that more cannot be done at this time, particularly for the legal advice provisions whereby persons can obtain assistance with the cost of obtaining legal advice, which in our view at least, is as important as obtaining assistance with the costs of legal proceedings themselves. Having said that, we nonetheless approve and welcome these regulations, which we hope your Lordships will see fit to approve.

On Question, Motion agreed to.

Legal Advice And Assistance (Financial Conditions) (No 4) Regulations 1977

My Lords, I have already spoken to these regulations, and I now beg formally to move.

Moved, That the Legal Advice and Assistance (Financial Conditions) (No. 4) Regulations 1977, laid before the House on 26th October, be approved.—( The Lord Chancellor.)

On Question, Motion agreed to.

Legal Aid (Scotland) (Financial Conditions) Regulations 1977

3.57 p.m.

rose to move, That the Legal Aid (Scotland) (Financial Conditions) Regulations 1977, laid before the House on 26th October, be approved. The noble and learned Lord said: My Lords, I beg to move that these regulations be approved. They do for Scotland what the first set of regulations, to which my noble and learned friend the Lord Chancellor has already spoken, do for South of the Border. We in Scotland share the regrets that he expressed that it is not possible to go further than the regulations go.

Moved, That the Legal Aid (Scotland) (Financial Conditions) Regulations 1977, laid before the House on 26th October, be approved.—( Lord McCluskey.)

On Question, Motion agreed to.

Legal Advice And Assistance (Scotland) (Financial Conditions) (No 4) Regulation 1977

My Lords, I beg to move that these regulations be approved. I have nothing to add in this regard.

Moved, That the Legal Advice and Assistance (Scotland) (Financial Conditions) (No. 4) Regulation 1977, laid before the House on 26th October, be app roved.—( Lord McCluskey.]

On Question, Motion agreed to.

Local Government (Scotland) Bill Hl

3.59 p.m.

My Lords, on behalf of my noble friend Lord Kirkhill, I beg to move that this Bill be now read a second time. This small Bill is needed to amend and improve certain provisions in the existing local government legislation for Scotland, and to make good minor deficiencies which have appeared. It is concerned primarily with three quite separate matters. They are: first, the power of the Secretary of State to make provision by order for the valuation by formula of property occupied by certain public utilities and other undertakings; second, the postponement for three years of the repeal of the Burgh Police (Scotland) Acts and corresponding local Acts; and, third, a change in the day prescribed for ordinary local government elections in Scotland.

As to the first matter, contained in Clauses 1 to 3, the existing provisions governing arrangements for valuation by formula of the lands and heritages of public utilities and other undertakings are contained in a number of Acts going back nearly 30 years. The Local Government (Scotland) Act 1975 allowed for their replacement by comprehensive order-making powers for dealing with formula variations. When Section 6 of that Act was enacted, it was intended to make it easier for improved formulae to be introduced when the working parties, which are currently examining formula arrangements for certain industries, reported with their recommendations to the Secretary of State. The 1975 Act provisions apply to 10 different types of undertaking. They are rather different from one another, and in the course of discussion and examination by the working parties it became clear that order-making powers ought to be made more flexible to allow the differing circumstances of each undertaking to be provided for. The amendments for which the Bill provides in Clauses 1 to 3 will allow the necessary flexibility of approach.

As to the second matter, the Bill will also postpone the repeal of the Burgh Police Acts and corresponding local statutory provisions. The Burgh Police Acts of 1892, 1903 and 1911 deal with a multiplicity of matters. In its original form the 1892 Act dealt with burgh boundaries; matters concerning town councils; the police force; the regulation, maintenance and cleansing of the streets of the burghs and the buildings in these streets; and a wide range of public health matters. In addition, the Acts deal with a great selection of miscellaneous matters, from the control of activities on the seashore to the provision of public clocks. Some of these matters—for example, in the safety and building fields—have been superseded by modern legislation. On the other hand, many provisions are still in force but are obsolete and unsuited to present-day circumstances.

In 1972 when legislation to reorganise local government in Scotland was imminent a working party on Civic Government was set up with instructions to examine the powers available to local authorities in Scotland for the administration of civic government and to make recommendations. The recommendations were to cover first the transfer of existing regulatory powers to the new regional and district authorities; and secondly in the longer term for the preparation of a complete new civic government code for Scotland as a whole. This was to include the repeal or modification of obsolete provisions and the standardisation of administrative powers. The Local Government (Scotland) Act 1973 accordingly included a provision for all the old Acts to expire at the end of 1979. The working party produced a very full and detailed report in April 1976 and since then consultations have taken place with the local authorities and other interested bodies. Because of the wide range of matters covered however it has now become clear that it will not be possible to prepare legislation of the necessary nature and scope in the remaining time available and it is therefore proposed to defer the date of expiry to the end of 1982.

I turn then to the third matter in the Bill. With effect from 1979 it is expected that there will be a May Day holiday on the first Monday of May in most if not all districts of Scotland. As the Act of 1973 provides for ordinary local government elections in Scotland to be held on the first Tuesday in May some change is needed in order to avoid possible difficulties over the preparations for the elections. It is therefore proposed to amend the 1973 Act to make the date of elections the first Thursday of the month.

The other amendments in this Bill are either of a purely drafting nature or corrections of minor errors in earlier legislation; but I should deal with Clause 4 particularly. The Local Government (Scotland) Act 1975 did not make proper provision regarding superannuation arrangements for the Commissioner for Local Administration in Scotland and his staff. This Bill provides an opportunity to rectify that deficiency and in Clause 4(2) and (3) to validate determinations by the Secretary of State made before the deficiency in the 1975 Act was noticed. As I have said this is a small and simple Bill. I hope I have explained it sufficiently at this stage and I commend it to the House. I beg to move that this Bill be now read a second time.

Moved, That the Bill be now read 2a . —( Lord McCluskey.)

4.5 p.m.

My Lords, we thank the noble and learned Lord, Lord McCluskey, for his explanation of this Bill, which was clear and brief. He confirms that it is a vehicle for a few miscellaneous changes and provisions which are apparently necessary or desirable during this Session. Various points will no doubt be raised at the Committee stage on the different subjects which are touched on in the Bill. Today, I wish to address myself to only one of the subjects, and that is the one which occupies the first three clauses; namely, the valuation of certain property occupied by public bodies. The valuation for rating purposes of such property belonging to or occupied by public bodies in Scotland has always seemed somewhat arbitrary. It has to be decided by the Government. Where monopolies exist, in the kind of operations which nationalised bodies carry out, there are no close comparisons available; nor are there recognised criteria by which these assessments can be made. In the past there has none the less been an attempt to regulate this situation by formulae, and these formula; were designed to be generally accepted as fair—fair, that is, not only among the public bodies themselves but also in relation to private undertakings, and the valuation of them for rating.

We are considering a wide variety of bodies. It is not only the Coal Board and the Gas Corporation, the very large nationalised bodies which immediately occur to us. This Bill also applies to very small undertakings; for example, a single, small harbour in Scotland which may be separately but publicly owned. So the questions I should like to put to the noble and learned Lord at this stage are these: First, have the changes which are proposed in the first three clauses of this Bill been accepted by the Scottish assessors' organisation? Those assessors are the people who are going to have problems in Scotland, and they have an enormous task in trying to be as fair as they can to both domestic ratepayers and industrial and commercial ratepayers. My second question is: Are the public bodies themselves agreed that these proposals are an improvement on the present situation?

There is one other point to which I should like to draw your Lordships' attention, and I am very glad that the noble Lord, Lord Shepherd, is in the House because this arises very much as a result of a matter with which he was concerned nearly three years ago. It is that, in the first place, there is, I am glad to say (because I welcome it), provision for Affirmative Resolutions of both Houses of Parliament when, on this question of valuation, draft orders under subsection (7) of Clause 1 are brought forward by the Secretary of State for Scotland. If private interests are affected by such a draft order, or appear to be affected, then this would make the order hybrid; and there is in this Bill, again, the special accelerated procedure which was devised for the first time in this House nearly three years ago. That procedure gives 28 days only between laying of the draft order and proceeding with it in your Lordships' House. Within that period a Committee relating to private Bills can consider the order, but all that has to be done quickly.

This is of particular interest to us in this House because that procedure was worked out and established early in 1975, when the noble Lord, Lord Shepherd, was Leader of the House, in the context of the then Offshore Petroleum Development (Scotland) Bill. I should mention that the noble and learned Viscount, Lord Dilhorne, played a prominent part in ensuring that at least this period of 28 days was allowed in order to enable private interests who felt that they were being discriminated against in a draft order of a hybrid nature to exercise their traditional right to petition and be heard in Parliament.

This procedure, it seems, is now becoming a stock formula, at least for this House. It was employed in at least one other Bill which has now been enacted, the Industry Act 1975. I am sure that your Lordships would wish to be aware that the solicitude and industrious application of this House nearly three years ago in safeguarding the traditional rights of the individual devised a procedure which, whether one always considers it appropriate in a certain Bill or not, whether the accelerated procedure is necessary or not, none the less is now being accepted and reproduced in subsequent measures. I would draw your Lordships' attention to the fact that that procedure in which some of us were involved early in 1975 is being used yet again in this Bill.

4.13 p.m.

My Lords, I must say that when I first read this Bill I wondered whether it was necessary, but after listening to the noble and learned Lord, Lord McCluskey, I can see that it has administrative advantages. There is no principle in this Bill. Perhaps I might be permitted to deal with one or two points which are basically Committee points but none the less it may possibly help us at that stage if I draw attention to them at the present time.

In Clause 1, I wonder whether in the new Section 6 of the 1975 Act the word "prescribe" is necessary. I say this because it reads as follows:
"The Secretary of State may by order … prescribe … the rateable value …".
I doubt very much whether the Government mean that. What they mean is that he "may prescribe provisions for determining the rateable value". I should have thought it would be much better to state that frankly and to leave out the word "prescribe". I am fairly certain that the Secretary of State does not himself prescribe what the rateable value should be but only the provisions by which it should be determined.

In subsection (5), on page 2, we find pretty wide powers given which are new. Under its provisions, the Secretary of State may
"repeal or amend any enactment so far as that enactment relates to … the valuation of … liability to be rated … of lands and heritages to which the order relates".
I should like to ask the Government to tell us, now or later, how wide that is; because if you can, by order, change any enactment on valuation that is a pretty wide power. I can understand that in certain matters it is desirable, but, as it stands, it looks to me as if it goes much further than is actually required for the purposes of administration. I should be grateful if the noble and learned Lord could look at that and make clear how far this power extends. Going on to subsection (6) in this clause, one finds that an order may be made at the end of the year when it applies from the beginning of the year. That is a form of retroactive legislation. Is that necessary? Is it proper to receive notice of what you are liable for in January at the end of the year, in December?

So far as Clause 2 is concerned, I take it that the subjects covered here are virtually the same as those covered originally by the 1975 Act. There is, as far as I know, nothing else brought in. In page 5, line 21, we read:
"'office premises' has the same meaning as in paragraph 2(1) of this Schedule".
I have been unable to ascertain which Schedule this is. It is not the Schedule to this Bill and it is not the Schedule to the 1975 Bill. In my ignorance, I was unable to find to which Schedule it applied and under which Act. It is important in matters of reference (which are always complicated) to seek to make it as clear as possible.

I think that the only other point I should like to draw to your Lordships' attention is in the Schedule, paragraph 1. I think the figures "201" and "202" should be "301" and "302". I think I am right in that. If that is the case, do we want to leave out that subsection which deals with the making of by-laws? —because that is what it does: it takes out that sub-section which deals with the making of by-laws. Are there any other provisions in which by-laws are made in subsequent enactments; and, if so, where can I find them? I think it is important to make it as clear as possible just how these things operate. I know that these are Committee points; but it might save time to ask the Government these questions now, and if they cannot be answered now, they can be dealt with at Committee stage.

4.17 p.m.

My Lords, I was astonished on reading this Bill to discover that so many amendments were evidently required to Acts passed so recently. It rather shook my belief in the high efficiency of the Scottish Office. Perhaps there is an explanation for it. There is one thing I should like the noble and learned Lord to tell us more about. That is the provisions in regard to the Commissioner for Local Government. Why does he, particularly, come in for a reward on this occasion? Is he not someone appointed for only a short period of time, or is he a regular official or civil servant or what? Could the noble and learned Lord expand a little on the reason and purpose and what precedents there are for such payments?

4.18 p.m.

My Lords, may I ask one question? I should like to reinforce one remark that my noble friend Lord Campbell of Croy made. In the first three clauses of this Bill we are talking about an imposition of rateable value and rates to be levied on public authorities. He emphasised that this has to be fair not only as between the public authorities but as between the public authorities and the ratepayers at large. I have always found it very difficult to satisfy myself that that is so. I think that this would be an opportunity when we get to the Committee stage for the noble and learned Lord—or the noble Lord, Lord Kirkhill, if he is going to be here on this occasion—to show how this has developed, what the relationship has been over the years, between the rates paid by the public authorities and the business community as a whole, with which they are comparable.

It seems to me that it is very important to bear in mind that the amount of property held by public authorities must have increased quite considerably over the years, and probably more in relation to the totality than that of business premises. One would expect, therefore, that the rates chargeable would have reflected this proportion. It is a matter of great importance. One does recognise that the more public authorities are charged the higher the prices will be. On the other hand, if they are undercharged, then a greater burden will fall on the private sector, and that will not be in such a good position to invest and develop as it would have been had the rates been really proportionate. I know that this is a very difficult matter indeed; but I ask the noble and learned Lord to take this on board and to do his best to satisfy the Committee when we come to the Committee stage.

4.20 p.m.

My Lords, a number of different points have been raised. I am particularly indebted to the noble Lord, Lord Campbell of Croy, and the noble Earl, Lord Selkirk, for having given me notice of the points which they wish to be answered this afternoon. I will also try to deal with the other points. Regarding the views of the assessors and, in particular, Lord Campbell of Croy's question: Have the changes been accepted by the Scottish assessors' organisation?—I have to say that they have neither been accepted nor rejected. These clauses deal only with matters which in the first place are the concern of the Assessor of Public Undertakings, and not of the local assessors. The Assessor of Public Undertakings is content with what is proposed. It may well be that the local assessor's interests could be affected at a stage when the order itself comes to be prepared or to be made. At that stage noble Lords will see the new Section 6(4) has some relevance, because that requires the Secretary of State to consult with certain associations of local authorities, and he may consult with others. He may therefore consult with the assessors. Obviously, one would think he would be wise to do that; but even if he chose not to do so, they can make their views known through the Convention of Scottish Local Authorities with whom he is obliged to consult. Your Lordships may feel that deals sufficiently with that point at this stage.

So far as public undertakings or utilities are concerned, they are in the same position; they have not commented on the Bill's new provisions relating to formula valuation. These provisions are of a technical character. They are designed to ensure that when the working parties make recommendations, these can be implemented. The working parties include representatives of the nationalised industries as well as others; the measure of liability itself is not affected by this Bill. No doubt the working parties will now take note of the published Bill, and the nationalised industries, if they want, may make such representations as are appropriate. We would not expect them to do so on this particular point in the Bill.

In regard to hybridity, your Lordships may be interested to see that the procedure to which the noble Lord, Lord Campbell of Croy, drew attention is referred to on page 151 of the red Companion. It is fully explained there. He mentioned the Offshore Petroleum Development (Scotland) Act 1975 and the Industry Act. The same procedure was adopted in this very field in the Valuation and Rating (Exempted Classes) (Scotland) Act 1976. He has sufficiently explained the matter and I hope that ultimately it will meet with your Lordships' approval in this particular Bill.

The noble Earl, Lord Selkirk, said that there was no principle to the Bill. I hope that he is not suggesting it is an unprincipled Bill. It may well be that there is no theme—a word I prefer to use in the circumstances—to the Bill. On the first matter he raised, his fears are well-founded. The word "prescribe" is intended to have the weight that he feared it might have. Perhaps that matter may be gone into in Committee. I do not want to suggest to the noble Earl that he is misreading the Bill; he certainly is not. Regarding Section 6(5), which is contained in Clause 1 of this Bill, the intention is that the order may repeal or amend enactments that have been passed. There is this limitation: it may do that only in relation to heritages to which the clause applies. The clause applies to heritages specified in Schedule 1 to the 1975 Act, as amended by this Bill.

I offer one example to the House: if a new formula for Post Office telecommunications were agreed, it might be convenient to repeal Section 53 of the Post Office Act 1969, which provides the present formula. That would be done by the repealing order amending it rather than by coming back to the House. As the noble Lord, Lord Campbell of Croy, pointed out, the House always has the safeguard contained in the new Section 6(7) which appears at page 2 of this Bill:
"(7) An order under this section shall not be made unless a draft of the order has been laid before and approved by a resolution of each House of Parliament".

My Lords, may I ask a question? That means that almost anything in the new Section 6 can be amended or repealed by order. The noble and learned Lord will agree that this is a very wide power.

My Lords, I agree it is a very wide power. Provided it relates to the subject-matter contained in the amended Schedule, Schedule 1 to the 1975 Act, then the order may provide for the repeal or amendment of previous enactments.

On the third point, retrospection, the noble Earl will find that that is dealt with in the new Section 6(6). This appears at page 2 of the Bill, at line 37:
"(6) An order under this section may provide that the order shall have effect as from the beginning of the year in which the order is made".
This is corresponding to the ordinary rule now to be found in Section 2(2) of the 1975 Act in relation to ordinary, orthodox valuations by local assessors where they can be back-dated to the beginning of the year. The advantage here is it allows full consultation with local authorities and the undertakings or bodies to proceed in the light of the most up-to-date information.

The next point which was raised was in relation to Clause 2. The subjects which are set out here and fully described are the same as are contained in the first four paragraphs of Schedule 1 to the 1975 Act. The noble Earl referred to a difficulty which I think I can settle for him. He referred to page 5, line 21, of the Bill:
"'office premises' has the same meaning as in paragraph 2(1) of this Schedule".
Your Lordships have to bear in mind that "this Schedule" in effect has become Schedule 1 to the 1975 Act. That is only half the answer. The other half is this: if you refer to page 4, line 3, of the Bill "office premises" are referred to therefore in paragraph 2(1) of what is really a Schedule, and then the definition is contained on line 20:
"'Office premises' means lands and heritages used wholly or mainly as an office or for office purposes".
It is not beautiful, but I think it is accurate.

The other matter to which the noble Earl referred is what at first sight I thought, with him, was an error. In the Schedule at page 8 there is a reference to:
"for the words '201' there shall be substituted the words '202'".
This is a complication that defies description; I can only suggest that, rather than detain the House with it, your Lordships will find that the Countryside (Scotland) Act 1967 was amended by paragraph 171 of Schedule 27 to the Local Government (Scotland) Act 1973, and that amendment, in 1973, contained an error. It is that error which has been put right. The noble Earl did what I did and looked up the 1967 Act and found that a mistake appeared to have been made. A mistake was made; but it was in 1973. It has now been put right.

The noble Lord, Lord Strathclyde, referred to so many amendments. With respect, I do not think that there are so many; but I am happy to say that they are distributed between different tenures of office in the Scottish Office, some in 1973 and some in 1975. Although we may take no comfort from that, at least we need take no especial shame. With regard to the local Commissioner, he is a part-time officer. He was given certain benefits under the 1975 Act, as was appropriate, but unfortunately the wording of that Act did not make proper provision for superannuation and for payments in respect of him. Accordingly, that is what we have sought to put right.

I will not attempt to deal with the points raised by the noble Lord, Lord Drumalbyn. Plainly, he would prefer them investigated at the Committee stage, and they are too detailed to be dealt with at this stage. We look forward to the return of the noble Lord, Lord Kirkhill, in order to handle these matters.

On Question, Bill read 2a , and Committed to a Committee of the Whole House.

Ecc: Forty-First Report— Contracts

4.31 p.m.

rose to move, That this House takes note of the Report of the European Communities Committee on Contracts negotiated away from Business Premises (R/113/77) (Forty-first Report of last session) (HL 227). The noble Lord said: My Lords, I beg to move the Motion standing in my name on the Order Paper. Anyone looking at the title of this report might be forgiven for thinking that it is a fairly dull subject, and I confess I shall find it difficult to make my speech an exciting one. But even if it is not exciting, I found the subject extremely interesting: it is a matter which affects millions of people and also the employment and way of life of many thousands. It therefore merits care and attention. This, I think, the Committee have given to it, and I want to thank our legal department for the very thorough way in which they have examined the ramifications of this draft Directive and prepared the substance of the report. I also thank the members of the Sub-Committee for finding their way through a lot of written and oral evidence to reach a number of conclusions. We do not claim to have explored every avenue, but we think we have done our job thoroughly enough to expose a number of fundamental flaws in the Directive.

In this country many transactions of this kind are already covered by law, principally by the Consumer Credit Act 1974; but some kinds of transaction covered by the Directive are not covered in our law at all. I think I should say here that at present the protection of consumers with respect to doorstep sales varies considerably throughout the Community. For example, Denmark and Luxembourg have banned doorstep sales entirely, while in Ireland and Italy there is virtually no controlling legislation. In Belgium, France, Germany and the Netherlands, there is a right of cancellation by the consumer within varying periods after the conclusion of a contract. That is called "a cooling-off period". The United Kingdom also gives this cooling-off period to consumers who enter into contracts negotiated away from the business premises of the trader when there is some element of credit involved in the transaction, as in hire-purchase agreements.

The Directive requires that the contract be made in writing; that it should state the parties to the transaction; that it should give a description of the goods and services involved, their price and the terms of payment; and it requires that it shall contain a note of the cancellation rights of the consumer—that is, a right to cancel within seven days after signing the contract. United Kingdom law at present provides for five working days in which the consumer may cancel the contract. During this cooling-off period, no payment is to be demanded by the trader and, if the consumer cancels during the period, the recovery of the goods becomes the responsibility of the trader. Any payments which have been made by the consumer must be returned to him.

I have already mentioned the Consumer Credit Act 1974, which is the principal Statute which would be affected by this Directive. This Act comprehensively regulates all contracts in which any element of credit is involved, from hire-purchase to bank loans. The Act already provides for the cancellation of any agreement where the amount of credit to be provided does not exceed £5,000, or where such an agreement was signed away from the business premises either of the dealer or the parties supplying the credit—of course, they are not always the same person—and where there were prior negotiations in which oral representations were made to the consumer. Therefore certain amendments to the Consumer Credit Act would be required if the Directive were to be adopted in its present form. Perhaps the most important amendment concerns the definition of "business premises". We thought the Directive got itself into rather a knot in attempting to define what are and what are not "business premises".

The Directive attempts to give a much wider protection to the consumer than does the Consumer Credit Act, since it would permit a consumer to cancel an agreement if it were negotiated anywhere other than at the trader's permanent place of business, even at a temporary place of business. On the other hand, the Consumer Credit Act deems that "business premises" includes temporary business premises. So far as other United Kingdom law is concerned, the Sale of Goods Act 1893 and the Insurance Companies Act 1974 would be affected, together with the common law rules governing contracts or services. I am advised that all these would require amendment or even, in the case of cash sales at the door, new legislation.

The Committee wish to emphasise their considerable misgivings over this proposal. Those misgivings were shared, wholly or in part, by the majority of those bodies which gave evidence to the Committee. I think I can summarise our main criticisms as follows. First, we question whether at the moment this rather special area of commercial life is a proper one for Community legislation. We think that, because there is such a wide disparity in the law in this regard between Member States, the Member States themselves should continue to legislate according to their experience of the extent of abuse which occurs and of the particular patterns of trading which obtain in their countries.

We think that the scope of the Directive is far too wide. As drafted, it would cover an enormous range of transactions, many of which were probably never envisaged when the Directive was being drafted. It covers the cash sale of goods and services, all forms of credit and hire transactions and purely monetary transactions, such as bank loans and insurance contracts. In addition, it covers certain specialised forms of dealing between a professional man and his client, as I have already mentioned. We feel that the Directive does not come to terms with the complexity inherent in each of these different forms of contractual arrangement. We take the view that the Directive was originally and primarily intended to cover—and it should be confined to covering—only the cash sale of goods and services. We are reinforced in this view by the fact that, very soon, the proposed Directive on consumer credit will be sent to the Council, and that should be the proper instrument for controlling credit transactions.

Next, we thought that the drafting was very unsatisfactory. Indeed, we say in paragraph 13,

"Almost every Article of the Directive is defective as a legislative means of fulfilling its own avowed intentions".

It does not give clear definitions of "business premises", "unilateral engagements", "contracts negotiated exclusively at the initiative of the consumer", "price payable", and so on. In addition, the Committee took the view that the basic definition of "doorstep contract" was misconceived, since it ought to be concerned not with where negotiations leading to the contract were initiated, but with where the contract was actually signed.

Because of the very wide net cast by the Directive, many long-standing and legitimate transactions carried out daily in this country would become subject to what we thought were wholly unnecessary formalities. The Committee gives a list of recommendations for exemption, but we do not claim that it is exhaustive. We suggest that exempted should be credit transactions, insurance contracts, the sale of perishable goods such as food—one cannot imagine a food salesman accepting a seven-day cooling-off period—and mobile shops, which would be caught under this Directive and which are too much of a convenience to very many people to be included. We also thought that agency mail order trading should probably be excluded, as should professional transactions.

We felt that other aspects of the Directive were needlessly inflexible or restrictive; for example the 25 EUA price exemption level should be left to the discretion of the Member States. In this connection, we had a lot of interesting evidence on the question of what should be the lower limit of transactions which would be exempt from legal formalities. Our Consumer Credit Act puts the figure at £30, and we heard from the Department of Prices and Consumer Protection that there is a strong move that exemption should go up to £50. But the National Consumer Council thinks that it should be only £5, and we heard from the Office of Fair Trading that by far the greatest number of abuses in true doorstep sales were related to sums of as low as £5 or £10. An example given was old ladies being sold subscriptions to magazines for which they really had no use. There is a very strong case here for lowering the limit to £5 for doorstep transactions and, in that case, the draft Directive's £16 is too high. We suggest, also, that if the written formalities were not strictly adhered to, the contract should not automatically be void, especially if the consumer wished it to go on.

In general, we think that the Directive is far too biased against the trader. For example, the trader is to carry all responsibility for recovery of cancelled goods, with little corresponding duty on the customer to take care of them during the cooling-off period. Again, the trader is precluded from requiring any surety in order to protect himself against default before the expiration of the cooling-off period. So the Committee also viewed the Directive as a step in the direction of a, complete ban on all doorstep selling and much as we support consumer protection and fair dealing, we should deplore the banning of doorstep selling in view of the history and the popularity of such selling in this country.

The Committee believes that the Directive was badly prepared, poorly drafted and far too restrictive in its terms. We feel that it does not begin in its 15 Articles adequately to regulate all those aspects of the subject with which it purports to deal. Moreover, it encroaches upon areas of commercial life in this country which have not, to our knowledge, been the subject of serious, if any, abuse. Even if the present United Kingdom legislation has some deficiencies, it strikes a fairer, more flexible and more realistic balance between consumer protection and the needs of trading. Se we come to the conclusion that this draft Directive should be strongly opposed in its present form. My Lords, I beg to move.

Moved, That this House takes note of the Report of the European Communities Committee on Contracts negotiated away from Business Premises (R/113/77) (Forty-first Report of last session (HL 227)).—( Lord Raglan.)

4.47 p.m.

My Lords, once again, the whole House is grateful to the noble Lord, Lord Raglan, and indeed to his Sub-Committee, for producing this fascinating and very important report. The House may recall that when the noble Lord, Lord Raglan, was introducing a previous report, by his Sub-Committee, he was heard to comment that Sub-Committees such as the one on which he serves, and which he chairs, beaver away upstairs. I have heard how impressed are many of the expert witnesses who come regularly to give evidence to these Sub-Committees, and for this reason the beaverings of these Sub-Committees are not in vain.

The report which we are debating this afternoon may seem to have a very long and complicated title, but, as we have heard from the noble Lord, it covers some of the activities which are commonplace, widespread and praiseworthy. The Directive seeks to correct abuses which can, and indeed do, occur when undue pressure is applied by salesmen and agents who call on housewives and other persons in the home. On these occasions, escape from a practised expert is often difficult, and the prospective buyer is put in what may be the embarrassing position of refusing goods or services that are offered. Such abuses are listed in the report but, as we have heard, the Consumer Credit Act 1974 covers many of the abuses which it is the object of this Directive to cover. Thus I find it utterly incredible that the Commission thinks fit to issue such a Directive.

We have heard of the general criticism admirably detailed in paragraph 13 of the Committee's report, but this Directive is incredibly far-reaching and, indeed, damaging to many services which are taken for granted in the United Kingdom and have given rise to ridiculously few complaints. It is for this reason, and for others which I hope will become clear later in my remarks, that I and all of my colleagues want to thank the noble Lord, Lord Raglan, and his Sub-Committee for this devastating report—and I do not believe that that is too strong language to use. It may seem out of place when reading the carefully modulated phrases in the report, together with the emphasis laid upon some of the more fanciful ideas contained in the Directive. However, because of their zeal to prevent abuses in doorstep sales, the Commission would gravely harm the sale of milk and newspapers and the sales from mobile shops, all of which are an essential part of our life in the United Kingdom, particularly in our towns and cities.

In country districts, especially in my own home county of Angus in Scotland, mobile shops are vital to many communities and are part of the way of life. I hope noble Lords will not laugh too much when I tell them that one of the most popular forms of mobile shop in my area is the lemonade lorry. That is in Scotland which is the home of other more famous liquids. However I can assure noble Lords that the lemonade lorries provide a very useful service to the communities which I visit regularly. The lemonade is provided in returnable glass bottles so that the countryside is not littered with plastic or polyurethane containers. To people who live in isolated areas mobile shops are vital when they cannot get to towns or to the general store for their groceries.

If such a Commission Directive impinges upon the effectiveness of mobile shops, I believe that we must see what we can do to alter the thinking of the Commission and support the Forty-first Report. I am not going to apologise for introducing such a quaint or rural note into our important debate today. The point I have raised is one of many covered by the comments in paragraph 10, such as the indiscriminate application of the Directive to many different forms of commercial activity. The report recommends certain specific exclusions, including mobile shops.

Another exclusion which has been touched on by the noble Lord, Lord Raglan, is mail order trading. Many noble Lords may not be aware of what this is and what it involves. Those of my colleagues who are reasonably fleet of foot and who possess adequate physical strength and stamina may be happy to join the large crowds in Oxford Street or in the other retail centres of our cities and towns. If they do this they make their purchases at their leisure and, all being well, return home satisfied, and possibly weary. Frequently, however, when I return from such excursions I pick up a newspaper and read that I could have purchased what I have bought in these retail stores more cheaply, and possibly would have been offered a wider choice by a mail order firm, had I taken the time to read through their catalogue before I set out on my excursion. It seems that I am not alone in this observation. I understand that over 14 million people in the United Kingdom take time to consider what they would like to purchase, to a major or even to a minor extent, from mail order firms. I am referring to all those customers who buy goods through mail order firms.

Noble Lords who have read the report will have noted that the Sub-Committee received evidence from representatives of this branch of the retail trade. The more that we examine the report the more we find that such trading is part of the life of a very large proportion of the people of the United Kingdom. This business grew extensively after the 1920s, and it has grown immensely since 1945. This is no small wonder, since families can apply for a catalogue from one of a number of firms and, without any pressure or sales talk, can read it in the peace and quiet of their own homes. They can discuss with their friends and neighbours which article is the best or will provide the best value for their money, and then those families, or individuals, can make their choice. The family aspect of mail order trading is very valuable, and certainly is much cherished by both the customers and the suppliers, the mail order traders themselves. Most of these firms are still family businesses.

The Association of Mail Order Traders covers 85 per cent. of all the purchases and turnover involved in mail order trading. At all times we should remember that the main link with the consumer is a vast group of agents who act as focal points for the purchases. There are approximately 4 million of these agents. Doubtless, the Commission envisage these people rushing eagerly from door to door inveigling innocent citizens and housewives into contracts which it would be hard for them to fulfil. Such a scenario may be accurate in some countries of the Community, but most certainly it is not true of the United Kingdom—nor, indeed, of any aspect of mail order trading which is almost unique to the United Kingdom, although similar trading is taking place increasingly in Germany and is in its infancy in France. The 4 million agents in the United Kingdom are all members of the public. They are consumers, the very object of the protection which is sought by the Directive and which is discussed in the report. These agents are not highly trained to push any particular line of goods; they are not working on a commission basis; they act merely as a focal point for their families, friends and neighbours who may wish to buy particular goods or articles in their homes. Furthermore, the goods are delivered to the agent, or to the consumer, without any further charge.

Noble Lords may ask why these 14 million customers cannot do as any of us do and go out to the shops to buy what they want. Beyond making one or two mild suggestions, I am not going to try to give a conclusive or definite answer. May we look first at the case of many mothers with young families. They are both unwilling and, indeed, unable to drag their young children several miles from an outlying housing estate in one of our great cities to the city centre and then to coerce and shepherd their young children, who may become recalcitrant and somewhat uncontrollable, through a large store while they look around and attempt to make purchases of bedding or household equipment which may involve quite a financial outlay and for which peace and quiet of mind is desirable. For such families there may be transport problems; the husband may be working or otherwise occupied at the weekend. In these cases, mail order trading means that the goods can be chosen in peace and quiet and that, when they are chosen, the goods will arrive at the door.

Secondly, this is a popular form of trading and it is becoming increasingly popular. I understand that in 1976 the turnover of goods by this method amounted to over £1,200 million, which I expect the noble Lord, Lord Sainsbury, will agree is a very reasonable sum in the non-food sector. Thirdly, it should be noted that it is part of the sale agreement that the goods can be returned to the supplier within 14 days, at the supplier's expense. Of the goods that are sold, around 25 per cent. are so returned. The only point which has to be noted by the consumer is that he has to do whatever he can to facilitate the return to the supplier and that he must take reasonable care of the goods while they are in his possession. I was glad that the noble Lord, Lord Raglan, pointed that out when he was going through the report.

It is the ease of deciding what can be bought, the ordering of the goods and examining them at leisure in the home and their return without any further charge or complication which makes this form of trading so much a part of the life of millions of families. That is not to say that these families and the public do not flock to our retail stores and make major purchases in the traditional way. No, my Lords, mail ordering provides a convenient way of buying, and it is much more than this in many of the cases that I have mentioned. I was at a concert this weekend and mentioned the effect of the Directive on mail order business. I see that the noble Baroness, Lady Stedman, agrees with me. I can assure noble Lords that real passion was engendered in the hearts of several sensible Scottish housewives when I pointed out the effect of the additional burdens upon mail order trading that the implementation of this Directive would have.

I was indeed quite apprehensive and I was pleased to get down here in order to put my case before your Lordships. Some of the housewives I met stressed that fleetness of foot (as I pointed out earlier) is not present in all of us and that delivery to the door at no extra charge is a valuable bonus in trading, especially when the 14-day return clause is considered. I believe that this aspect of convenience is foremost in our minds.

The House will be aware that feelings about this subject are running high in other Legislatures, such as the European Parliament. There was a lengthy debate in September of this year in the European Parliament—I think it was in Luxembourg. Mr. Spicer, who is a Member of another place, is also the Rapporteur of the Committee which deals with consumer protection and he made the strongest possible plea for mail order trading to be exempted from the provisions of this Directive. He received wide support from members of the Committee from all the nations of the EEC. He received wide support from Mr. Noè of Italy and Mr. Nyborg from Denmark. I was also delighted to note that our colleague the noble Baroness, Lady Fisher of Rednal, spoke out but her complaint was that the Directive would harm mobile shops. It seems that rural areas are not forgotten either in the EEC or in this House.

We await the reply from the Government and particularly from the noble Lord, Lord Oram. Certainly at all times he has much charm, but I could not necessarily use the same words to describe the stone-faced attitude of the Commissioner when he was replying to the debate in the European Parliament. Indeed, Commissioner Burke showed to me a frightening lack of appreciation of what mail order trading does for the consumer. He commenced by commenting that any concessions to mail order business would be a distortion of competition. I suppose that is a useful opening salvo, spraying the shot everywhere. He then went on to suggest that when any concession was to be granted every other business or branch of trade or commerce would require the same concession. I grant him credit. At least he is a realist and he can see what goes on, probably in his own Parliament. I know what would go on in this House. But, most amazing of all, he declared that the Economic and Social Committee of the Commission had been unable to note any significant difference between the canvassing of an ordinary trader or his agent and the canvassing of a mail order trader or his agent.

My Lords, I am grateful to the noble Lord, Lord Lyell, for giving way because I came in specially to hear this debate. He has just said that they see no difference at all between the mail order system and negotiation over the counter. Is the noble Lord aware that a poor humble fellow like myself has been told about 57 times by a magazine that I have won £10,000 and that if I buy x,y and z I shall have one of my numbers in a pool? One of the biggest rackets in mail order business all over Europe is communicating with humble people and making them think they are going to win prizes by buying certain items.

My Lords, I believe the noble Lord, Lord Davies of Leek, is guilty of repeating what the Commissioner, Mr. Burke, has done. He has taken a large blunderbuss and sprayed me with shot. The point I would make, and with which I think noble and learned Lords would agree—and I see that the noble and learned Lord, Lord Diplock, is present—is that great care should be taken before firing such a blunderbuss. I have already mentioned, and indeed I quoted from the report, that the point was not that the Commission was unable to see the difference but that it was unable to see the difference in canvassing. That word "canvassing" was the crucial point. It may well be that the noble Lord, Lord Davies of Leek, receives stuff through the letterbox and I suppose he does what I do with it. I throw most of it away. Goodness knows how many prizes I have thrown away! But mail order trading has nothing to do with telling people that they are going to win prizes.

I have not myself perused too many of these catalogues because, as I pointed out earlier, being reasonably young and reasonably fleet of foot and having adequate physical strength I am more than pleased to take my chance among our great retail centres—I hesitate to say "bazaars". But for those who like to take advantage of mail order trading as an expedient—and I gave as an example families living some way away from the major centres, although they probably receive misleading correspondence—I am advised that certainly the Association of Mail Order Traders takes a very responsible line, particularly in regard to canvassing. I think the aspect of doorstep selling and the abuses which can arise from this particular form of canvassing is what this Directive seeks to stop. I do not think the Directive seeks to reward the noble Lord, Lord Davies of Leek, or to suggest that he might gain great betting winnings. Probably that might fall into the lap of the noble Lord, Lord Wigg!

To complete the point on canvassing, I believe the Commssioner and his Committee were unable to note any difference between the canvassing of an ordinary trader and a mail order trader, and in my view that qualifies him for an award which we tend to give to tennis umpires, cricket umpires and football referees—something we call "the white stick award" for those who tend to be a little short of sight. I do not think it is out of place to refer to that. I, too, suffer on occasions so the remark could easily apply to me, but to find in the European Parliament an admission of this type is utterly breathtaking. In my view it is extraordinary that the members of the Committee cannot make this distinction.

Mr. Spicer, the Rapporteur of the Committee looking into this matter, warned the Commission of two things. First, he said he stood firmly by his report, seeking to exempt mail order traders and indeed most of the other exceptions, I think in paragraph 10 of the report, to which the noble Lord, Lord Raglan, referred—and I will certainly discuss it with the noble Lord, Lord Davies of Leek, later. Mr. Spicer believed that the Commission should exempt these particular aspects of trade from the provisions of the Directive. Secondly, he warned the Commission that such a blanket provision would do great harm to commercial institutions which are much appreciated and would bring the European Parliament and other institutions into great disrepute among the Community.

The main misapprehension which affected the Commissioner and the Committee was that the consumer receives unwanted visits from mail order agents. I do not necessarily regard something being put through a letterbox as an unwanted visit. I think the noble Lord, Lord Davies of Leek, will accept that point. But that aspect was stressed. Thankfully the Sub-Committee under the noble Lord, Lord Raglan, was not so muddled. The evidence submitted to the Sub-Committee showed that mail order business specifically discourages canvassing and, in spite of that, the business turnover of this aspect is growing by some 12 per cent. per annum in the United Kingdom, and it is I think growing by a lot more in France, and certainly in Germany it is around that level.

How can such trade be seen as a distortion of competition? Certainly in this country there is a proven need for it, yet the Commission's proposal would add 2 per cent. to prices in that area. It would cost a minimum of £20 million per annum and would require 280 million additional forms. What is the reason for all of this? It is surely not to remove a distortion in competition. Has the consumer been harmed? Apparently not, since the Office of Fair Trading, which we should all regard as being a fair referee in such matters, could discover only 41—about as many as there are noble Lords in this Chamber at the moment—41 complaints in two years within the United Kingdom so far as mail order trading is concerned. That is an incredibly small number, yet the figure appears to be quite realistic.

I should like to make a point on another subject. It has been explained to me that one aspect of doorstep sales, which are covered by the Consumer Credit Act 1974, could be affected by the provisions of the Directive. Some sales are indeed conducted as a result of advertisements in newspapers or on television and I take the caveat of the noble Lord, Lord Davies of Leek. It appears that the Directive would require a sales person to call seven days after the first call merely to collect cash as a deposit. The Act allows a customer to pay his deposit and, having had second thoughts, to reclaim that cash within the cooling-off period, whereas the proposals in the Directive would require the salesman to call at the end of the cooling-off period to collect the deposit.

I am given to understand that two things would happen: first, needless expense would be incurred through duplicating visits, and, secondly, the consumer would lose, since experience in this particular field has shown that he or she tends to make up his or her mind about the wisdom of the sale after the deposit has been paid. In this case, the Directive would clash with our 1974 Act in that, once the cooling-off process has elapsed, the customer cannot reclaim the deposit. I wonder whether the Government would look at this point. I am sorry that I did not give the noble Lord notice, but perhaps he could give some attention to that point at some stage.

My Lords, I have taken too long. I hope I have not appeared to be aggressive, hard or far from my usual fresh, innocent self this afternoon. I do not make any apology, since this Directive seeks to improve the lot of the consumer and to protect the housewife from abuses on the part of doorstep sales persons, but, alas! the objectives are very wide of the mark as far as the United Kingdom is concerned. The exceptions which are sought by the Sub-Committee in paragraph 10 of the report are the result of practical experience and realistic appraisal. Our colleagues in Europe and elsewhere support the view of the Sub-Committee. It is a real pleasure for the whole House, and, certainly, these Benches, to congratulate the noble Lord, Lord Raglan, and his Sub-Committee on their report, since the good sense which is contained in it will do much to make the workings of the Commission realistic. Certainly, I should like to commend the report to the close scrutiny and approval of your Lordships' House.

5.12 p.m.

My Lords, I think everyone agrees that the practice of doorstep selling is wide open to abuse. The householder is caught unawares by a ring of the doorbell. Because she is in her own home she literally has no means of escape from what is usually a well rehearsed and convincing-sounding patter of sales talk, and, perhaps most important of all, she has no means of assessing whether the goods she is offered represent value for money; she cannot look at other makes, as she can in the shop, or go to another store down the road.

It is because of this concern, which many involved in consumer affairs have shared for a long time, that I had hoped to be able to give an unreserved welcome to this Directive. As it is, I find myself taking up what has become my usual position in our debates on draft European legislation. I can welcome the intention that lies behind parts of the Directive. Other sections, however, seem to me to be quite irrelevant to the real problem.

Once again, the Commission is swinging a sledgehammer in the wildest of ways when all it needs is a pair of nutcrackers.

Since my noble friend Lord Raglan has already explained in some detail the scope of the Directive and the Committee's conclusions, I shall do no more than concentrate on a few of the most important points. The Directive at least lays down the basic rights of consumers. They must receive and retain a written contract which clearly states the basic information about the transaction. They are also permitted a cooling-off period in which they can think again. This is vital, since we all know how often second thoughts are better and wiser than first reactions. These are important provisions which protect the consumer against abuse, and no honest trader will object to them.

Yet the trader himself receives no comparable protection against the small minority of unscrupulous consumers. For this reason, I strongly support the Committee's recommendation that the consumer should be put under a positive obligation to take all reasonable care of the goods during the cooling-off period and when they are returned on cancellation. They do, after all, remain the trader's property during all that time.

I think it must now be obvious to all your Lordships that a horse and cart can be driven through all the provisions referring to credit transactions. In this country, these transactons are controlled by the Consumer Credit Act. In addition, I understand that a Commission Directive on consumer credit is in the course of preparation at Brussels, though it has not yet been published. Surely it would have been more sensible to confine this Directive solely to cash transactions and to consolidate the legislation about credit in another Directive.

I fully support the Committee's recommendation that price exemption levels should be left to individual Member States to decide. This is just the kind of important decision that is best taken by national governments who understand local needs and practices. The Commission should not feel itself obliged to cross every "t" and dot every "i". The National Consumer Council evidence that many of the complaints they receive concern sums between £5 and £10, already referred to by my noble friend Lord Raglan, was certainly impressive: in my opinion, a low figure must be set if the objective of protecting the consumer is to be achieved.

Not surprisingly, my final points concern the sale of foodstuffs away from business premises. This is almost always done on a regular basis and the element of surprise that normally comes in a doorstep transaction is in no way present here. Indeed, in two very different ways the milkman is an especially valuable member of the community, not only because he contributes to the high consumption of fresh milk in this country, in contrast with many other Member States, but also as a contact with the outside world for the old and immobile. It is the height of absurdity that a family's weekly or fortnightly bill for milk and dairy produce should be subject to any complicated procedure. Even more important, for the old, the infirm or the car-less in remote rural areas, mobile shops stocking a very wide range of goods are the only alternative to the village shop, which may be a long way away from an isolated cluster of cottages. These travelling stores provide an essential service. Therefore, I want to add my voice to the Committee's recommendation that mobile shops and perishable foodstuffs should be exempted from the provisions of the Directive.

My conclusion has now become a traditional one. Consumer protection is vital. It has been increased in the post-War period almost entirely because of the work of bodies such as the Consumers' Association and the National Consumer Council which has roused Governments to action. Had we relied on manufacturers and retailers, very slow progress would have been made. However, the important proviso in that consumer protection, is that it must work effectively. It must isolate areas of abuse and devise practical, and not over-expensive, ways of dealing with them. Even though parts of it are certainly useful, overall, the Directive does none of those things, so I must join with my colleagues in condemning it as unacceptable and unworkable.

5.22 p.m.

My Lords, in following with great pleasure the speech of the noble Lord, Lord Sainsbury, I should like in particular to echo his closing remarks. I do not propose to deal with the detail of the report because that has been ably done by other noble Lords, especially the noble Lord, Lord Raglan, who introduced the Motion. I should like to concentrate on what I believe to be a very serious difficulty in the development of the Community spirit, because an increasing number of Directives try to pick out a target and then, for some reason or other, aim their shots in a variety of directions, many of which are the wrong ones.

We have debated many of these Directives during the past year or two since I have had the privilege of being a Member of Sub-Committee D. Almost successively, these Directives have become worse and worse, or, to put it another way, less and less in touch with reality. Certainly, that is so in this country and, from what one can gather from the speech of my noble friend Lord Lyell, they have become out of touch with reality in other States too, as reported in the European Parliament. It seems to me that the Commission must have a long hard think about its procedure and method of approaching these matters.

When considering what I should say to your Lordships, I thought about suggesting that the Commission should do its homework properly. That is what occurred to me when I read our report and after I had heard the evidence that was so ably given to us. However, that would be too easy, because the Commission does a sort of homework but it is obviously not the right sort. There are many absolutely classic potential errors within this particular Directive. For example, in paragraph 5, it questions the very legality of the Directive being based on Article 100 of the Treaty. If it is not based on Article 100 of the Treaty, perhaps the Commission would have to find another one. One would have thought that it would get that right before it started to put anything in the text.

As regards our Sub-Committee, I should like to say, as a humble member of it, that it falls over backwards to pay great respect to what the Commission tries to say. In some respects, I believe that we perhaps support the consumer, where he comes up in our Directive, rather more fully than I personally should like. That may be, but noble Lords heard what the noble Lords, Lord Sainsbury and Lord Raglan, said. Both noble Lords put forward a point of view which is fundamental to the approach of this Sub-Committee and which I thoroughly endorse.

Of course, the consumer must be protected, but he must be protected sensibly, and perhaps more importantly, in a way that can be practically applied. That being the case, in my view, the Commission must examine these problems in a different way. At present, it goes straight into a draft Directive which is, in the eyes of most of us—I have talked to some of our friends in the other Community countries and it is so in their eyes, too—like a Bill being presented to Parliament, even if it is called a Directive. I think the Commission thinks that it is more like a White Paper. It contains an enormous amount of detail. One then finds the Commission becoming wedded to its detail in the same way as Governments become wedded to their Bills—a way that we on this side of the House sometimes think absurd when the Bills come from the other side! The comments of my noble friend Lord Lyell about Commissioner Burke's reaction to the European Parliament was a typical example of this sort of affection for a Bill. I should have thought that the Commission should go back not only to a White Paper stage but to a Green Paper stage and should produce a consultative document.

This Directive will clearly be controversial not because people will disagree with its basic principles but because the detailed application must be so different for every country within the Community. At present, all the countries have different legislation as well as different attitudes. In this country, door-to-door selling, although obviously having its imperfections and, indeed, its dangers, is a well-established process. In other countries of the Community, it is, perhaps, nothing like so well established. Therefore, that will mean that each country must approach the problem in a different way.

Personally, I believe that we want to have the minimum amount of derogation for national legislation, because, so far as I can see, where we have those derogations we run the risk of building up barriers to trade rather than removing them. Therefore, I am not keen on derogations. However, I am keen on exploration by the Commission on a consultative document basis, perhaps followed by another stage which would, in effect, be a draft Directive, though it could have another name so that it would not look so final. In that way, the Commission and the Commissioners would not be so wedded to it. It would be similar to the way White Papers are sometimes treated by the Governments which launch them—that is, not so seriously as perhaps they might be.

Through that approach, we should achieve a process whereby we might get a cleaner document to discuss when we reach the Directive stage. That would have another great advantage. At present, a Directive is in a rather messy form when it comes to us, but it contains a lot of detail. It is presented to the European Parliament and to the Economic and Social Committee. It is considered by Governments and all sorts of people, as well as in a whole series of council-of-minister stages, by expert advisers and goodness knows how many people—I do not suppose the Commission knows. All that might be reduced in time if the final document were cleaner when it came to that stage.

It may be that that is too hopeful. It may be that one is crying for the moon. However, I certainly think that the present system is creating for us Directives which we find increasingly distasteful, irrelevant, and which seem positively to be working against the whole principle of the Community and working, in many cases, to create barriers to trade rather than to remove them. Above all they seem to be working to make people disillusioned with the principle of the great idea of a European Community. I think that that is tragic and we must change the rules to prevent it taking place.

5.30 p.m.

My Lords, I should like to join with Members on both sides of the House and say that I cannot welcome this Directive. I would agree with the noble Lord, Lord Mottistone, that it is tragic that the Commission should be spending its time on this kind of Directive, because it is this kind of Directive that does the Commission more harm than good, especially in this country. Doorstep selling is not something that in any way interferes with or frustrates trade between the States of the Community. Consequently, it is not a matter of urgency. I doubt whether, under the Treaty of Rome, it is a matter for the Commission at all, but it is certainly not a matter of urgency because it has a negligible, almost a nil, effect on inter-State trade.

The conditions in each of the countries which make up the Community are entirely different as regards doorstep selling. Therefore, it is a difficult subject with which to deal and obtain harmony to the satisfaction of all the States. For example, I understand that there are States where no doorstep selling at all is allowed and that there are others where it is wholly allowed, as in this country. That is obviously an area into which the Commission should not step unless it is absolutely essential for the purposes of inter-State trade—and clearly it is not.

Finally, in this country doorstep selling can be divided into two categories: the cash trade and the credit trade. The cash trade is not wholly, but almost wholly, in perishable goods such as milk, bread and groceries, and that is particularly the case in rural areas. Once we start legislating for that category of trade, we create more problems than we resolve.

The other category—credit trading—is better covered by specialist legislation such as the Consumer Credit Act 1974. As conditions in each State differ, it is better that each State should have its own legislation in relation to that sector of the trade. Therefore, I hope that, like the Committee and this House, the Government will say that they do not like this Directive and will not lend their support to it.

5.33 p.m.

My Lords, I should like to begin as others have done by complimenting my noble friend Lord Raglan and his Committee on providing us with this most useful and unpopular report. My noble friend Lord Raglan said that he did not expect to make an exciting speech and no one was expecting him to do so, but I am sure that we all found it most interesting and lucid, and it gave the debate an excellent start. Some excellent speeches followed.

I listened with particular interest to what the noble Lord, Lord Mottistone, said about the way in which these Directives, and therefore the Committee's reports, reach us. He will not expect me to comment formally on what he said, but I am sure that it will be read and pondered upon in Brussels and elsewhere, which I believe will be for the good. But, given the present procedures, there is no doubt that we are, indeed, as a House well served by the Committee that examines these Directives and brings recommendations to us.

From listening to the debate there was, perhaps, only one specific point directed to me and that was in the closing remarks of the noble Lord, Lord Lyell. If I remember correctly, he asked about payment of a deposit. I understand the position to be that Article 9 of the Directive only forbids the seller to require payment of a deposit; it does not prevent the consumer from offering a deposit if he wants to. I think that that is the position and I hope it answers the noble Lord's point.

I do not need to emphasise that the report itself and every speech to which we have listened have focused attention on many objections—many defects—in the Directive. Behind these objections there lie, I think, two fundamental questions: Is there a need for further controls to be imposed on door-to-door selling and, if so, is the EEC Directive on Contracts negotiated away from business premises the proper mechanism to provide those controls?

If we look back a little in history we shall recall that in 1962 the Moloney Committee on Consumer Protection was already concerned about the activities of some door-to-door salesmen. I remember criticisms of a number of high-pressure sales techniques—notably, "switch-selling" and "bait advertising"—and that these gave rise to frequent complaints by consumers. The Moloney Committee concluded that there was no easy answer to the problem of door-to-door selling, but it made a number of recommendations.

It proposed that more stringent "switch-selling" provisions be incorporated in the new advertising code and it also recommended provision for a cooling-off period of 72 hours in the case of hire-purchase agreements. Both these recommendations have now been implemented; indeed, when the Consumer Credit Act 1974 is fully implemented it will go further than that Committee recommended, by extending the cooling-off period to five days and widening the scope of the controls to include all credit transactions over £30 but not exceeding £5,000. There is now little evidence that doorstep selling poses social problems of any significance in this country.

Now, however, we have been presented with the prospect of yet further controls on doorstep selling, in the form of this EEC Directive. As the Directive is at present drafted it permits Member States to prohibit doorstep selling entirely or in relation to certain goods. I must hasten to reassure your Lordships that Her Majesty's Government have no intention of allowing what has proved to be a valuable service to consumers to be curtailed. Nor, indeed, would we go so far as to impose a registration system for contracts negotiated away from business premises, as is proposed by another of the provisions of the Directive. We must be on our guard against measures which purport to protect the consumer but, in fact, merely restrict competition.

It is also argued that Directives such as these pose a fundamental threat to the consistency and simplicity of our contract law. What starts as a harmonisation exercise in one relatively small area of commercial law, may have a much larger impact on the common law than any harmonisation would merit. I share the view that it is not really desirable to regulate matters such as doorstep selling on an EEC basis. None the less, I recognise that for some Member States of the EEC, whose measures for the protection of the consumer are less advanced than ours, a Directive such as this may provide a much-needed stimulus to consumer protection.

However, is there any reason why we in this country should support the Directive? Despite overwhelming condemnation from your Lordships, I believe that there is at least one area in which the Directive offers us a useful opportunity to promote the very qualities of our legislation which it might seem to threaten. For is it not in the interests of the consistency and simplicity of our contract law that the same rules should apply to cash and credit sales? Is it fair that the consumer who buys goods at the door for cash should enjoy less protection than the consumer who buys on credit or hire purchase? One of the merits of this Directive—and I concede that they are all too few—is that it gives us the chance to fill up this potential loophole in our system of control.

This is not to say that we find the Directive as it is at present drafted an acceptable basis for legislation; and I propose to deal with some amendments that we should wish to see if we are to accept this Directive. Many of our objections to the present draft of the Directive stem, as noble Lords on all sides have said, from its excessively wide scope. It would seem that the real intention of the Commission is principally to deal with true doorstep sales where the consumer is taken by surprise and has no opportunity to check or to compare the goods and services being offered to him or her; but the Directive extends to a far wider range of contracts, many of which we feel it would not be appropriate for this Directive to control. The term "contracts negotiated away from business premises" is not synonymous with doorstep sales as we understand them, and we should try to ensure that a good intention to check potential abuse in one small area of trading does not have the result of restricting a far wider range of business activity.

A number of problems arise, for example, from the definition of "business premises" adopted by the Directive. They are taken to comprise,
"the permanent place of business at which a trader exercises his commercial or professional activity as well as stalls at fairs and markets".
This definition is so wide that sales in church halls, auctions at country houses and exhibitions such as those at the Boat Show and the Motor Show will not be excluded from the controls of the Directive.

The imprecise way in which this definition has been drafted would have other serious consequences. For example, the Directive will not cover contracts concluded at the trader's permanent place of business. Yet what is the position with regard to so-called tripartite contracts—for example, a contract for the hire purchase of a television set? Such a contract will normally be negotiated on the business premises of the retailer but, since it is concluded away from the business premises of the finance company involved, it too will be subject to the control of the Directive. Such a contract will be subject to control, whereas a contract concluded in the customer's home after he has initiated negotiations at a shop will not be. The Directive will not control "contracts negotiated exclusively at the consumer's initiative", yet, if the consumer orders a catalogue, requests a visit or demonstration, or participates in an event organised by the trader, this is not to be considered as initiating negotiations. I add those examples to what noble Lords have said about the inadequacy of the drafting, quite apart from the scope and intention of the Directive.

Another consequence of the narrow definition of "negotiated exclusively at the consumer's initiative" is that mail order trading of the kind involving personal contact between the customer and an agent of the mail order firm will be subject to control. The noble Lord, Lord Lyell, dealt with this aspect of the problem. It has been said that there are very few complaints about this type of trading as opposed to that of mail order traders who advertise in the Press, and that the voluntary code of practice drawn up by the Mail Order Traders' Association, to which mail order catalogue traders in this country already subscribe, offers greater protection to the consumer than would the controls of this Directive. It provides, for example, that goods can be returned within 14 days and without cost to the consumer. These arguments, as the noble Lord, Lord Lyell, pointed out, have impressed the European Parliament sufficiently for it to propose that such trading be specifically exempted from control.

I recognise the force of these arguments, but, if I do not feel able to go quite so far as the noble Lord in agreeing wholly with the European Parliament, it is because of the point I have already made about our concern for the simplicity and consistency of our legislation. Both under the proposed Directive on consumer credit and under the Consumer Credit Act 1974, those who buy goods by mail order on credit will be entitled to a cooling-off period, and we see no reason why they should not enjoy similar protection in the case of cash sales. We believe that mail order traders would not be inconvenienced by the imposition of a minimum standard of protection which most of them already exceed in any case. So long as this Directive imposes the same rules on cash sales as the consumer credit Directive imposes on credit sales at the door, we see no reason why it should not apply to mail order. Both the consumer and the mail order companies should benefit if the rules for cash and credit mail order sales are the same.

May I now turn to the type of goods and services whose sale away from business premises would be subject to control. A figure for an exemption level is still under discussion but, subject to that, the sale of all kinds of goods and services away from business premises will be controlled by the Directive. Ordinary domestic transactions such as the regular doorstep sale of milk, food or fuel may well exceed the exemption level if paid for weekly or monthly, and would then presumably be subject to all the provisions of the Directive as it is at present drafted.

There are several other areas in which the imposition of a cooling-off period would, we feel, work against the consumer. The first of these involves goods and services supplied to meet an emergency, and this was one category to which the Committee drew attention. I think for a moment of the motorist whose car breaks down on the motorway. If he rings up a breakdown firm and asks them to tow it away he will not be considered as having "initiated negotiations", and he will therefore be entitled to a cooling-off period during which no payment can be demanded. How is the breakdown firm to react if, after seven days, the consumer decides that he did not really want the service after all? Are they to tow his car back on to the motorway? More seriously, I suggest it is more likely that they will refuse to perform the service until the seven-day period has expired.

It is difficult to see how a cooling-off period can be practicable for any service contract because a service, unlike goods, can hardly be returned. Even where a contract involves the provision of goods as well as a service—where, for example, goods are incorporated into other goods—it may not be practicable to return the goods. Consider, for example, the trader who completes or partially completes a double glazing installation within the seven day period. If the consumer then cancels the contract it will be very difficult for the trader to remove the installation and leave all as found; in all probability he will wait until the seven day period has expired before starting work. I do not think the British consumer will wish to wait seven days for his car to be towed away when it breaks down, or for a service engineer to repair his television set when it goes wrong, or for a double-glazing firm to start work on his house, although I must say there have been occasions when I have had to wait longer than that. It is clear that further thought needs to be given to the practical consequences of these proposals.

All the examples I have given come from areas which we would wish to see specifically excluded from control or for which, at the very least, special provision should be made. There is however one area which we feel is too complicated to be the subject of a horizontal Directive such as this. I refer to insurance. When buying insurance, consumers usually want immediate cover—when I am travelling abroad I usually remember on the eve of my departure that I must get myself insured—and it is difficult to see how this could be provided if there were allowed a cooling-off period in which to change their minds. We must also remember that a great deal of ordinary life assurance and all industrial life assurance is sold in the home. Any disturbance of the law and of present practice in this difficult and already well-regulated area would require most careful and thorough consideration. The doorstep selling of insurance should be excluded from the scope of this Directive and dealt with as necessary in a directive specific to insurance.

There has been much discussion, and several references in this debate, about the exemption level provided for by the Directive because it is difficult to set a level high enough to exclude the majority of ordinary domestic transactions at the door while not so high as to exclude doorstep sales of the type which the Commission is attempting to control. The exemption level proposed in the Directive is 25 European units of account, which is about £17, while ECOSOC and the European Parliament propose that this should be reduced to 15 units of account. On the other hand, the exemption level for credit sales set in the Consumer Credit Act 1974 is £30, and there have been suggestions, as my noble friend Lord Raglan said, that this figure should be increased because of inflationary effects since the original sum was fixed in the Hire Purchase Act 1965. The National Consumer Council propose that the exemption level should be as low as £5, so that "true" doorstep sales are controlled.

We would much prefer that the level of exemption in this Directive should be left to Member States to provide by national law. First, it would clearly be preferable if the minimum figure could be fixed in national currency rather than be subject to wide yearly variations in exchange rates of Member States. Secondly, this approach is adopted in the proposed Directive on Consumer Credit, and it is essential that the level above which controls apply should be the same in both Directives, at least so far as credit sales are concerned. If different exemption levels were set in the two Directives, credit sales might be subject to different regulations according to the sum of money involved, and the degree of confusion that would result to consumers and traders alike would be completely unacceptable. The controls proposed in the Directive are essentially a requirement that certain information be given to the consumer in the contract and provision for a cooling-off period, and these are similar to those of the Consumer Credit Act 1974 but differ in points of detail As far as the information to be contained in the contract is concerned, while we have no quarrel with the principle involved, we do not agree that a failure to provide this information should render the contract automatically void. Some flexibility ought to be built in, so that where a defect has not prejudiced the consumer, or where he wishes to proceed despite the defect, the contract should stand.

There is also a difference between the cooling-off period provided in the Directive and that provided for by the Consumer Credit Act 1974. The Directive provides for a cooling-off period of seven days after signature of the contract by the consumer. The Consumer Credit Act 1974, on the other hand, provides for a cooling-off period of five days from the time the consumer receives back the second copy of the contract through the post. In practice, this amounts to seven days since it normally takes two days, made up of the day of signing and posting of the agreement and the day following when it arrives with the consumer—despite questions about the services of the Post Office which noble Lords have raised in this House—and there therefore seems little point in altering our existing provisions, and it would be necessary to alter them if the Directive went forward in its present form.

The obvious deficiencies of the Directive, to which other noble Lords and I have pointed, should not be allowed to obscure the merits of some of the principles behind it, and I noted particularly what my noble friend Lord Sainsbury said about the general principles. Like the Commission, Her Majesty's Government have for some time been aware of the need for safeguards when consumers are persuaded, away from business premises, to enter into contracts involving substantial sums of money. We have already gone a long way to provide such safeguards in the case of credit and hire-purchase sales, and this Directive offers an opportunity to extend those safegaurds to cash sales as well. This chance to promote the coherence and simplicity of our legislation would be thrown away if we allowed different controls to apply to cash and credit sales, and it is therefore essential that this Directive should proceed in line with the proposed Directive on Consumer Credit.

I would reiterate my sympathy with those who feel that an Article 100 Directive, at any rate from this country's point of view, is hardly the most appropriate method for dealing with a subject such as doorstep selling. I recognise, however, that other Member States of the Community, which do not all enjoy the degree of consumer protection provided in this country, may welcome an EEC Directive to promote the interests of consumers in their countries. I think it essential above all, that the scope of this Directive should be clearly defined and its many deficiencies be ironed out, so that what is a praise- worthy intention to extend the protection of the consumer does not have the effect of curtailing or restricting a kind of service which, I suggest, has proved to be extremely valuable to old people, the infirm, and those living in rural areas, which apparently includes the noble Lord, Lord Lyell.

I thank all those who have contributed, and I welcome the fact that the general tenor of all the speeches has been in line with the Sub-Committee's report. Once again, I wish to thank your Lordships and the Sub-Committee for the help given in this respect.

6.1 p.m.

My Lords, first, I should like to thank the noble Lord, Lord Lyell, and all other noble Lords who have said very nice things about the Sub-Committee. We appreciate that very much. There are two or three short points that I think I ought to make. My noble friend Lord Sainsbury raised the question of whether the accumulated milk bill might be caught under this Directive. We were not clear about whether it would be caught. This was a matter on which we hoped the Government would seek clarification. Anyway, it is a case for derogation. If the lower limit comes down to £5, I think that the Dairy Trade Federation, among others, would have something to say about such items as Christmas hampers in the sum of £20 to £25 which are a regular part of their business.

I think it is quite clear why the Directive will not do as it is, but I shall follow its progress with interest, and I hope that some day it returns in a greatly modified form, perhaps split into several different Directives. Here I agree with the noble Lord, Lord Mottistone. I think that some of these Directives go off in too many directions. They try to embrace too much at once. My noble friend Lord Oram, in his very useful and wide-ranging reply, pointed out that the Directive has some good points in that it showed that the customer has not the same protection as between cash and credit sales. Perhaps we have been knocking it a little too hard.

There is only one other point with which I want to deal. The Sub-Committee tried to find out whether this matter was put forward under Article 100. If I read out Article 100, which is very short, your Lordships will see why practically anything can be got in under it. The Article reads:
"The Council shall, acting unanimously on a proposal from the Commission, issue directives for the approximation of such provisions laid down by law, regulation or administrative action in Member States as directly affect the establishment or functioning of the Common Market."
We took advice on this matter. Our informant could not see why this Directive should come under Article 100, but, on the contrary, he could not see why it should not come under Article 100. We considered this question in the Sub-Committee, and we came to the conclusion that the European Court would be unlikely to sustain an objection to it being brought forward under Article 100.

On Question, Motion agreed to.

Ecc: Fifty-First Report —Commercial Agents

6.5 p.m.

rose to move, That this House takes note of the Report of the European Communities Committee on (Self-Employed) Commercial Agents (R/3/77). The noble and learned Lord said: My Lords, in moving that this House takes note of the Report on the Directive to co-ordinate the laws of Member States relating to (self-employed) commercial agents, I think it is appropriate that I should confine myself to the question of principle, as to whether it is a proper use of the power to harmonise laws of Member States—a question which was raised, I think with some justification, by the noble Lords, Lord Mottistone and Lord Jacques, in relation to the proposed Directive just debated.

The general power to harmonise the laws of Member States exercisable by Directives is contained in Article 100 of the Treaty of Rome, and the noble Lord, Lord Raglan, has just read out to you what it is. It is to harmonise those laws of Member States which "directly" affect the establishment or functioning of the Common Market. There is, however, a more specific power in Article 57 which enables Directives to be made for co-ordinating

"… provisions laid down in Member States concerning the taking up and pursuit of activities as self-employed persons."

But such Directives can be made only for the purpose of making it easier for them to do this. I shall revert to that a little later. These powers of harmonisation are valuable powers. We have had a whole series of proposed Directives for harmonising company law, for example; for imposing uniform safety standards; for the mutual recognition of qualifications for professions. These are powers which are useful, indeed essential, for the proper development of the Common Market.

But sometimes one has the impression that there are Directives which deal with harmonisation for harmonisation's sake alone. It seems as if some conscientious civil servant in Brussels, not having enough to do, takes it into his head, or is perhaps persuaded by some lobby (for there are lobbies in Brussels) that there is some branch of the law which it would be fun to alter; and having started on that course it is difficult getting him to turn back. I must confess that I have a strong impression that such is the origin of this Directive of which we are, I hope, to take note.

The Directive is concerned with commercial agents, which is a rather vague term, but which is defined as self-employed persons or companies with a capital of under £67,000, who negotiate contracts to supply goods or services on behalf of a named principal. The definition is very vague. It would cover those who are known in this country as manufacturer's agents; probably, I think, travel agents; maybe stockbrokers; maybe those who act as agents for football pools. Who knows! At any rate, in Germany from where the definition originally came, it has been held to be wide enough to extend to an agent who canvasses for pupils for a dancing school.

My Lords, manufacturers' agents provide one method of distribution. There are others. More common are commercial travellers, factors or own subsidiary companies. Whichever of these methods of distribution is used, it forms part of the cost paid by the consumer of the goods. Where people choose to use commercial agents for this purpose, the United Kingdom law enables agent and principal to make what contract they think is most suitable for the particular circumstances of each of them. This Directive will very largely rob them of that freedom. It lays down very detailed standard provisions, many of which are mandatory and must be put into the contract, so that anything which is in conflict with them is void. They must be put in every contract with a commercial agent, and they descend to such details as dates by which commission is to be paid, and the like.

Furthermore—and this is a vital consideration to remember—this Directive is not limited to commercial agents employed in trade and commerce between Member States: it is intended to apply compulsorily to all purely domestic sales. What is the justification for that? For this extension to domestic sales which have nothing to do with trade between Member States, the Commission relies on the proposition that

"trade in goods and the provision of services should always be effected under conditions which are similar to those of a single market".

Some of the Member States have codes dealing with contracts with commercial agents. These vary from country to country according to local conditions. None of them, I am informed, is so detailed or so rigid as those proposed in the Directive. Let me just mention (because I do not propose to go into the details of the Directive) one particular provision on which a lot of emphasis is laid in the Directive and in the Explanatory Memorandum which the Commission has provided. The provision deals with the right to what is called a goodwill indemnity. It is mandatory. It arises when the contract comes to an end, whether it be by notice from the agent or whether it be by notice from the principal; and it is to be paid at a rate of 10 per cent. of the annual remuneration for each year of service up to a maximum of 20 years.

Now, there is nothing in the law of the United Kingdom which prevents the parties making an agreement containing that term if they please and if they think that it is most suitable to their circumstances. But an agent may prefer a higher remuneration when the contract is going on to the possibility of "pie in the sky" a little later. It is, I venture to think, ironical that, in purported

exercise of a power to make it easier to take up and pursue activities as self-employed persons, this Directive says, "Yes, you can, but only upon terms that we think good for you, not those which you yourself may prefer". What is the justification for this, my Lords? It is, I think, summed up in a sentence in the Explanatory Memorandum, which says:

"Basically, the proposal has two objectives. The first is to remove the differences in law which are detrimental to the proper functioning of the Common Market. They affect the conditions of competition and create considerable legal uncertainty. This applies, for example, in relation to the good will indemnity, which is known in some Member States but not in others. It is more expensive for the principal to have an agent in those countries in which the good will indemnity is already compulsory by law, and this operates very much to the economic advantage of principals who are not under an obligation to pay any indemnity after the contract has terminated."

Before I come on to the second objective, I would venture to make some comments, not wholly uncritical, upon that justification for the Directive. True, it is intended to affect the conditions of competition, but by restricting it, which is exactly what is prohibited by Article 85 when it comes to undertakings. The object appears to be to make this method of distribution more expensive—as I say, inevitably at the consumer's expense. But it is doubtful, anyway, whether that object can be achieved by the Directive as a matter of arithmetic. All one has to do to create the goodwill indemnity is to reduce the commission by 10 per cent. The arithmetic is easy in this particular case. Secondly, there are competing ways of distribution and, if we add to the cost of this particular way, there is a danger that we shall force the principal into some other method of distribution. Thirdly, it does not create uniformity, which is apparently what is desired, because, first of all, the Directive sets out only the minimum requirements in favour of the agent. National laws may give them greater benefits than the Directive requires, as, indeed, does the law of France. Finally, it does not apply to the bigger companies, which, since they are not compelled to demand these terms, will be in a better competitive position than the smaller firms which it is desired to protect.

I come, then, to the second objective which is to safeguard or improve the

protection that already exists for commercial agents. Although they are self-employed, most commercial agents are economically in a weak position vis-à-vis their principals. That may be true in Germany, which is the origin of this particular kind of regulatory law, but there is very little evidence that this is true in this country and, in particular, those manufacturers in this country who are seeking outlets in the Common Market are likely to be the comparatively small manufacturers who are by no means certain or sure that they will be in a better economic position than their agents

Finally, may I say a word about the legal uncertainty which it is intended to remove? The Law Commission was invited by the Lord Chancellor to express its views upon this draft Directive from the point of view of principle and from the point of view of drafting. Its report was published after the report of the Select Committee and it is a devastating criticism of the contents and of the draftsmanship of the Directive. As I say, it is adopted from the German code. It does not fit in generally with our legal system—for example, it seeks to put in different periods of limitation, different concepts and measures of damages—nor does it fit into our general law of contract or of agency. I perhaps may echo the noble Lord, Lord Oram, when I say how essential it is that one should keep a consistent and coherent system of law, particularly in these wide fields of contract and of agency.

May I finish by reading a sentence out of the report of the Committee. It comes just at the end:

"The general law of a nation is not something that has come into existence by accident. It arises from the local circumstances, habits and sentiments of the people. Changes in it must be effected only with care and where real need can be demonstrated".

My Lords, in the opinion of the Committee, this Directive has not demonstrated a real need and I regret to say that it has not, in our view, shown that proper care has been taken in drafting it.

Moved, That this House takes note of the Report of the European Communities Committee on (Self-Employed) Commercial Agents (R/3/77) (Fifty-first Report of the last session (HL 267)).— (Lord Diplock.)

6.24 p.m.

My Lords, noble Lords will be grateful for the excellent report of the Select Committee under the chairmanship of the noble and learned Lord, Lord Diplock. I confess that when I settled down to read this report and the Minutes of Evidence I did so without any feelings of pleasurable anticipation; but, in actual fact, I found it extraordinarily interesting and absorbing. In my opinion—and since this is the first day on which I have addressed your Lordships from such an exposed position, it is, indeed, a humble opinion—the report describes the purposes of this proposed Directive in a most lucid manner, justifiably criticises the drafting, rightly questions a number of assertions which seem to lack the support of investigation, and comes to the conclusion that flexibility is preferable to the imposition of rigid standards. The recommendation of the Committee is that this draft Directive raises important questions of policy and principle and should be debated in the House.

I do not propose to concern myself with matters of drafting other than to emphasise the necessity of ensuring that any confusion over the definition of the expression "commercial agents" is thoroughly eliminated in any future Directives on this subject. There is no doubt that the harmonisation of law throughout the Member States must be undertaken where it is demonstrated to be necessary. I quote from the Commission's Explanatory Memorandum:
"To remove the differences in law which are detrimental to the proper functioning of the Common Market…".
Personally I am not persuaded that this has been demonstrated in the matter of commercial agents.

It is interesting to look at the background. The idea of protecting commercial agents originated, as the noble and learned Lord told us, in Germany where it was considered that agents were in a weak position vis-à-vis their principals. Therefore, in 1953, they enacted legislation to help the agents. But Dr. Haumann, secretary of the German Agents Association, said in evidence before the Select Committee:
"We are not in favour of compulsory provisions overall in Germany. We are in favour of freedom of contract. There must be some compulsory provisions in Agency Law but in my opinion there is a little too much in this respect in the EEC draft Directive".
He went on to say:
"In France at one stage there was a situation where principals were not interested in entering into contracts with French Agents, but the protection of French Agents goes much further than the Directive lays down at the moment, so perhaps they are over-protected".
Since harmonisation is being sought by the Commission, it would be reasonable to presume that, if the proposed Directive came into force, French agents would lose some of the protection they now enjoy, German agents would receive more protection, and a completely new approach to agency practice would need to take place in this country. However, I understand that it would not be required that the French should reduce the level of protection. This surely illustrates the Commission's thinking and strongly suggests that the present proposals are only a first step to be followed by the imposition of more rigid rules in the future.

This thinking seems to me to be dangerous. There are several alternative ways of selling goods, and if agency agreements are required by law to be heavily in favour of the agent the principals will tend to employ commercial travellers or to set up a subsidiary company or to use some other means. I wonder whether the members of the Manufacturers' Agents Association in the United Kingdom are wise to be so enthusiastic about the proposals, which could turn out to be against their interests.

There are certainly divergent opinions from those held by the Manufacturers Agents' Association of the United Kingdom. Mr. Michael Meacher, Parliamentary Under-Secretary of State at the Department of Trade, submitted an Explanatory Memorandum to the Select Committee which stated that there was opposition from certain groups who would be affected and a concern about the legislative approach chosen by the Commission which is regarded as removing the flexibility which presently exists. Similar views were expressed in a Memorandum by the Association of British Chambers of Commerce, which concluded that the proposals must retain a greater measure of flexibility in the interests of the commercial community. It went on to say:
"The Commission should be warned against under-estimating the capabilities of agents in the protection of their own interests and should not discourage firms from establishing agencies by reason of the strict rules imposed".
The CBI goes even further in suggesting that the proposed Directive has been prepared without sufficient investigation into the facts, and without sufficient consideration as to whether there is a need for action and, if so, what form of action. It suggests that adoption of the proposals might well be harmful in the United Kingdom. So the guiding principle behind the proposals—that the agent is in a weaker negotiating position than his principals—is strongly questioned. So also is the Commission's justification of the proposals in that they would
"remove a continuing and quite definite inequality of the conditions of competition".
The arguments for disagreeing with these two assertions are cogently set out in the report of the Select Committee. I shall not weary your Lordships by spelling out those arguments, but I should like to touch on the proposal for goodwill indemnity as the noble and learned Lord did just now.

There seems to me to be no reason to quarrel with the idea that an appropriate payment should be made by a principal to an agent who has built up a substantial volume of business which, after the expiration of his agency agreement, will benefit the principal. But the Select Committee takes strong exception to the proposition that it is more expensive for the principal to have an agent in those countries in which the goodwill indemnity is already compulsory by law, and that this operates very much to the economic advantage of principals who are not under such an obligation. As the report points out:
"Obviously, the question whether one principal has a competitive advantage over another depends as much, if not more, on the rates of remuneration which they each pay during the period of the contract, to say nothing of the other terms of the contract".
It is not hard to imagine a particular agent who, having heavy school bills to pay, prefers to receive high remuneration and no goodwill indemnity. If such an arrangement is suitable to both parties, what need is there for legislation to be directed against it? To stipulate that a goodwill indemnity is an essential feature of an agency agreement militates against the flexibility favoured by the Select Committee. There is, after all, no reason why an agent should not negotiate terms which include a goodwill indemnity if he so wishes.

Finally, I trust that, if a Directive on this subject eventuates, it will only apply to future agency agreements and not to those already in existence. To conform with such a Directive would be simpler for most other EEC countries, where agency law is defined by Statute, than for this country, where the legal aspects of the agency relationship are governed by common law. It would need much legislation to adapt our agency practice for future agreements; but I suggest that it would be impossibly disruptive in the case of existing ones.

My Lords, I find myself thoroughly in agreement with the views expressed in the report of the Select Committee, and I am thankful to the Committee members for the clarity of the report. We are all aware of the tremendous amount of work carried out by the Select Committees on the continuous flow of paper from the Commission. I wonder how many people in the country realise how essential this work is, or how many impractical proposals would slip through in the absence of the fine toothcombs which are painstakingly used. I should like to congratulate the noble and learned Lord, Lord Diplock, and his colleagues on producing a report of such high quality—a quality to which we are accustomed from all the EEC Select Committees.

6.35 p.m.

My Lords, Sub-Committee B of your Lordships' Select Committee has co-operated as a junior partner with Sub-Committee E under the chairmanship of the noble and learned Lord, Lord Diplock, in considering the draft Directive of the Council of the European Community purporting to coordinate the laws of Member States relating to self-employed commercial agencies. It is my duty as chairman of Sub-Committee B to support in general terms, and briefly, the Select Committee's report under debate. I have no hesitation at all in doing so and, in particular, in stating my full concurrence with what Lord Diplock has said to your Lordships this afternoon—especially, among many other relevant points, what he has said about the extension of the Directive to domestic transactions.

I do not contest the general proposition that the laws of the Member States of the Community should be harmonised for the better functioning of the Common Market, provided that caution is used and that such harmonisation is based on a correct assessment of the facts and will be beneficial to the conduct of trade within the Market. That the draft Directive is not correctly based on the facts and is not likely to have a beneficial effect is amply shown by the report.

In order to detect the weakness of this Directive, we need not read further than the first paragraph of the report. It is maintained by the Directive that the existing differences in the relevant commercial practice are detrimental to the functioning of the Common Market; but no evidence is adduced to support this view. The Directive makes it clear that its purpose is not only to harmonise the laws of the Member States but to strengthen the position of the commercial agent vis-à-vis his principal by requiring that all Member States should adopt rules which favour the agents. It is in effect a false harmonisation and is more likely to distort the pattern of trade. Moreover, if the second objective is pursued, the first cannot be fairly achieved.

The question then arises as to whether it is desirable to level up the status of the commercial agents. A presumption behind the Commission's proposals is that commercial agents are invariably in a weaker negotiating position than their principals and thus need protection. The Association of British Chambers of Commerce challenges this assertion. The real position appears to be that there is variegated pattern of agencies—in some the negotiating position of the agents is the stronger, in some the weaker—on which the imposition of one body of inflexible legal rules cannot be justified. The report is surely right in asserting that what is needed is a flexibility which will enable the parties to the agency contract to arrange terms which suit their respective needs. There is no doubt that the imposition of inflexible rules will lead to distortions of business.

I was going to quote the last sentence of the report, but Lord Diplock has been before me in doing so. I trust that the legal advisers of the Council will not overlook the principles set out in the sentence which the noble and learned Lord quoted in their otherwise laudable desire to achieve harmonisation of the laws of the Member States. We may share their desire to harmonise but in this instance we can hardly applaud the choice of subject or the methods adopted.

6.38 p.m.

My Lords, for the second time today it falls to me to thank the Chairman of a Sub-Committee of your Lordships' House—in this case it is two Chairmen of two Sub-Committees—for giving the House a careful and helpful lead in examining an EEC Directive. We are all grateful to the noble and learned Lord, Lord Diplock, and the noble Lord, Lord Trevelyan, for what they have had to say this evening, and for the report that they have presented to us. This is my first opportunity to welcome the noble Lord, Lord Cullen of Ashbourne, to the Despatch Box. I warmly do so. During the past two years the noble Lord and I have had one or two constructive exchanges on subjects on which he is an expert more than I, and I am very glad now to have the prospect of continuing exchanges in closer proximity across the Chamber.

I have listened carefully to the points which have been made by the noble and learned Lord, Lord Diplock, and other noble Lords who have spoken. Before I comment on them, it may help if I sketch briefly the history of this proposed Directive. It has quite a long history. The idea of a Directive on this subject goes back to the early years of the Community, and the first draft of the Directive emerged from discussions among the six founder Members before our country became a Member in 1973. After the three new Members had joined they were shown the first draft and invited to discuss it informally with officials of the European Commission. United Kingdom officials, after consulting interested bodies in the country, made those bodies' views (some of which were favourable and others unfavourable) known to the Commission, at a Conference in June 1973. We were subsequently invited about two years later to discuss informally some revisions which the Commission had made to try to take account of our earlier comments. The Commission then proposed to the Council of Ministers the text we have before us today. In accordance with the normal procedure, copies were sent to the European Parliament and the Economic and Social Committee, who are now considering it. There has not yet been any opportunity for discussion of the text by the Nine Member States.

In the absence of such an opportunity, it has been difficult for the Government to form a firm view on the Directive. They have received numerous representations from interested bodies. These have ranged, on the commercial front, from an enthusiastic welcome from associations who have a large number of self-employed manufacturers' selling agents among their membership, to highly critical comment from bodies representing the interests of principals. On the legal front we have received strong, reasoned objections from the Law Commission and the Scottish Law Commission, the Senate and the Faculty of Advocates.

At the same time, we have to recognise that several of our EEC partners have considered it necessary to incorporate within their law some specific provisions about the relationship between commercial agents and their principals. The Law Commission, in their report on the draft Directive, helpfully reproduced the relevant clauses of the German Commercial Code. They appear to cover a good deal of the same ground as the Commission's text, although in some respects in less specific terms. I am told that Belgium, France and Italy have provisions of a similar kind.

The Sub-Committee in the closing sentence of their report—this was quoted earlier—observed that the general law of a nation does not come about by accident, but arises from the local circumstances, habits and sentiments of the people. No doubt those countries who have already legislated about commercial agents had good domestic reasons for doing so. What we have not yet had a chance to explore in a Community forum is how far these domestic reasons are mirrored in other Member countries, to what extent they need to be harmonised, and what benefits it is believed such harmonisation would introduce for intra-Community trade. Until we have done so, I suggest it is right for the Government to keep an open mind on the Directive, but that is not to say that we are indifferent about it.

I recognise that some of the criticisms which have been made in the report and again today have a great deal of force. The Commission's Explanatory Memorandum does not elaborate its assertions that the absence of harmonisation is detrimental to the functions of the Common Market. The problem of assimilating to our system of common law specific provisions based on those in codified systems of law is a general one, not limited to this particular Directive, as the Sub-Committee underline. Legislation based on the Directive would fit rather awkwardly into our existing law of agency. We also need to have regard to its consequences for other parts of our law. The preferential status as creditors which the draft Directive would confer on agents when their principal became bankrupt is one case in point. But I do not think your Lordships would argue that it should be rejected on such grounds alone. The test should be whether there is a need for changes in the balance of advantage and rights within the trading community which such legislation would involve, and its workability in practice.

In this spirit, a number of specific criticisms have been made of the Directive. One of the most important of them concerns the definition of those agencies to which a Directive would apply. The term "commercial agency" is not defined in our law. The Sub-Committee believed that the true intended effect of the Directive was to protect independent commercial agents who are engaged to canvass for orders for the principal's goods or services. That may be so: but the present text certainly does not make that clear. It would seem to apply to many types of agency relationship conditions which would often be inappropriate or unduly cumbersome. Therefore, we shall need to explore with our Community partners over what range of activities we need to be thinking about harmonising.

Certainly the Manufacturers' Agents' Association, and the United Commercial Travellers' Association, which is a section of the Association of Scientific, Technical and Managerial Staffs, have argued strongly that the Directive would benefit independent commercial travellers. They assert that at present principals frequently oblige agents to accept oral undertakings which the latter have difficulty in enforcing, if the principal does not honour them or if, for example, he disputes the commission payable. They would therefore welcome a requirement that such contracts should be in writing. The Associations would also wish to see agents protected against arbitrary termination by the principal without compensation, and assured that principals would provide them with adequate sales support. These objectives are closely akin to some of the provisions of the proposed Directive.

If we are persuaded that the reasons which have led other Member States to legislate domestically on this subject do have repercussions elsewhere which call for some concerted action by the Member countries, then we shall, of course, want to look very closely at how extensive that harmonisation needs to be. Is it necessary to insist, as the present text does, that in all countries there must be separate provision for goodwill indemnity, and compensation for particular responsibilities and restrictions imposed on the agent? In some they have clearly been found to be desirable. In this country, so far, they have not.

I have referred to some of the problems which the Government will need to clarify in discussion with other Member States before reaching a view on them. Many of them have been referred to today by noble Lords in their speeches, and this debate has been useful in focusing our thoughts on the important issues. When discussion of the draft among the Nine will begin, I cannot yet say. The European Parliament and the Economic and Social Committee have first to submit their opinions for consideration by the Council of Ministers. The usual procedure would then, I think, be that the Council would remit the draft to a Working Party of officials from the Member States, which would provide the opportunity to discuss the matters that I have mentioned, and, of course, the detailed wording of the text. At that stage, it will be particularly valuable to have behind us, and with us, the observations which we have heard today from your Lordships, as well as the valuable report to which our attention has been directed.

6.52 p.m.

My Lords, the posture that the Government are taking on the tactical side is rather interesting, as this short debate has brought out. How long is it good tactics if, in the end, this Government would want to impress their view upon their partners in the Community, to have an open mind? The problem is not new. As the noble Lord has said, it was in draft before we joined and, indeed, a draft had been submitted and to some extent revised. I do not know how much it had been revised from the first draft which the then Government saw. The noble Lord gave his explanation and, to begin with, I was a little disturbed, because he gave me the impression that he felt he had to take the views of the Members of the Community, rather than be the advocate of the point of view being expressed in this country. I feel that on purely tactical grounds it would be a very good thing, at the earliest possible moment, to form a view based upon the opinion of the agencies and principals in this country, quite apart from whether or not the same argument would be upheld in connection with Germany where we are told that things are rather different.

Then, at the end, the noble Lord suggested that it was not only the views of the Member States that he wanted to take into account before deciding what line the Government would take, but that two organisations in this country had expressed themselves in agreement with the Directive and felt that the safeguards included in it were things that they wanted. I do not think that uncertainty, if I have judged it even almost aright, ought to be allowed to exist for very long, because, unless there is enough substance in the points we have heard from the noble and learned Lord and from my noble friend to form a view which gives an indication as to how we are likely to react, I feel that uncertainty will affect the effectiveness of our reaction when we come to it. So that what I am urging upon the noble Lord and his colleagues is to consider whether it is a strength or a weakness to maintain for much longer what he called an open mind. It is not new; it has been around for some time. I should have felt that the sooner they decide as to their line when this goes in front of the Ministers, the more effective it will be when it is presented.

It is not a question, my Lords; I am contributing to the debate. I do not know why there is this disturbance when I get to my feet. This is something which ought to be examined. It has been very carefully examined by the noble and learned Lord, and I have formed a view as to the noble Lord's reply. It is very important. The noble Lord may know that I resigned as a Minister on the issue of whether or not we ought to be under the surveillance of a Common Market community of this kind. These are the kind of points that worried me from the first and one anticipated how one's own business would be affected. Now we are there, we have to make the best of it and make it succeed. Despite the noble Lord's impatience with me, I say that in looking after my interests, and those of my colleagues who are likely to be affected by this, the sooner the Government can give the impression that they have made up their mind, the more effective they will be when they want to get it put into operation by getting the Directive altered or amended in some way.

My Lords, if I may, with the leave of the House, respond to the noble Lord, Lord Harmar-Nicholls, I think he will agree that I was not displaying any great agitation at his intervention. But I should have thought that a great deal of what I said in my remarks was an explanation of the tactical position as Her Majesty's Government best see it; that is, that circumstances in this country are different from those in other Member States and we are anxious to have an opportunity, which we have not yet had, to hear the situation as they see it, in order then to be able to decide to what degree harmonisation is required as between our situation and theirs. If it is a question of tactics, then I should have thought that that required at least keeping an open mind until that forum has been assembled in which we can listen and speak, but particularly listen to what they have to say.

6.56 p.m.

My Lords, I should like to express my thanks to noble Lords for the reception which they have given to this report and, indeed, to all noble Lords who have taken the trouble to remain in the Chamber for this debate. May I just make three short comments? The first is that this is a joint report of Sub-Committees B and D, and that my noble friend Lord Trevelyan shares the responsibility for anything that is good in it. I have two more comments. I recognise that there may be some need in some of the EEC countries for a codification of protection for commercial agents. If that is so, it is due to local circumstances, habits and sentiments, to quote the report, and who am I, or who are any of us, to say that they are wrong to seek it; and who are they to say that we are wrong not to do so?

My last comment is this. I have not suggested that there may not be room, because of local circumstances, habits and sentiments, for some alteration in the law about particular kinds of commercial agent in this country. For instance, if there be a need for a written contract, so be it. Let us deal with our problem. But I venture to think that, because there may be some improvements which one requires in this country, that is no reason for a compulsory harmonisation of the law throughout all Member States on a

United Kingdom78·4 (72·6)70·2 (67·1)60·6 (58·5)52·6 (51·1)46·4 (45·1)
USA (Federal tax only)96·9 (91·1)88·7 (83·3)83·5 (79·9)78·8 (76·1)74·6 (72·5)
USA (Federal and state tax)96·9 (91·1)86·5 (81·1)79·7 (76·1)73·5 (70·8)68·1 (66·0)
France97·5 (90·5)91·8 (87·3)87·2 (83·5)83·3 (80·2)81·0 (78·2)
West Germany90·1 (73·9)84·0 (73·5)77·1 (70·1)72·0 (66·7)68·2 (64·0)
Italy88·7 (81·3)81·4 (73·9)77·3 (69·9)74·8 (67·3)72·7 (65·2)
Canada (Federal tax only)95·3 (92·6)87·4 (85·9)82·4 (81·5)78·8 (78·1)75·8 (75·3)
Canada (Federal and Provincial tax)92·6 (90·0)81·1 (79·7)74·0 (73·0)68·9 (68·0)64·8 (64·0)

1. All figures relate to income for the 1977 tax year, except: United Kingdom (1977–78), and France (1976—French tax rates are set in arrears).

2. Figures in brackets include the social security contributions payable by employees.

3. The figures take account of personal allowances and reliefs, minimum expense

subject where local circumstances, habits and sentiments vary and which can have but a minimal effect upon trade and commerce between the Member States.

On Question, Motion agreed to.