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Lords Chamber

Volume 414: debated on Monday 27 October 1980

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House Of Lords

Monday, 27th October, 1980.

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

Prayers—Read by the Lord Bishop of Norwich.

Rpi Increases And The Nationalised Industries

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 what, during the last 12 months, has been the percentage rise in the retail price index in wholesale prices and in nationalised industry prices.

My Lords, in the 12 months to September the retail price index rose by 15·9 per cent. and wholesale prices rose by 14·8 per cent. Nationalised industry prices included in the RPI have risen by 25·1 per cent. over the same period.

My Lords, do not those figures illustrate the fact that the private sector, through better use of manpower and higher productivity, has been substantially more successful in keeping prices down than the public sector?

My Lords, my noble friend draws attention to a point of great importance. Many of the nationalised industries are not subject to the same pressures of the market place as are industries in the private sector, and too often this has meant that their costs have increased and their prices have increased to a far greater extent than has occurred in the private sector.

My Lords, does not this show how very badly indeed the Government have looked after the nationalised industries during the last 12 months?

My Lords, I do not know whether the noble Lord is suggesting that the Government should intervene in the conduct of the nationalised industries. That is not our policy. We believe that the nationalised industries ought to be conducted efficiently and well, and it should be possible—indeed, there is a very heavy duty resting upon them—greatly to moderate the level of their price increases.

My Lords, is it not something of a contradiction in the Government's anti-inflation policy that monopoly industries should be allowed to pass on prices, which accentuate the squeeze on the private sector, where most people would think that they have gone far enough already?

My Lords, there is a great deal in what the noble Lord says. Many of the nationalised industries are in a monopoly position and, as with all monopolies, this enables them to pass on excessive cost increases and excessive price increases. It is the Government's policy to reduce the monopoly of the nationalised industries wherever this can sensibly be done; where the monopoly continues, it has been the Government's policy to refer some of these monopolies to the Monopolies and Mergers Commission for a report.

My Lords, will the noble Lord say that it is because of the Government's policy of non-intervention in nationalised industries that they have lost two highly capable chairmen of nationalised industries in the last few months?

My Lords, the present Question relates to the prices charged by the nationalised industries. I do not know whether the noble Lord is trying to suggest that the high level of these price increases is due to the loss of the two chairmen in question.

My Lords, does my noble friend recall that when the post-war Government nationalised these industries they did so on the grounds that they alleged that they were failing the nation? Do not the figures which my noble friend has just given to the House suggest that, applying that logic, they had better be very speedily de-nationalised?

My Lords, I would not go quite as far as my noble friend suggests, but where they can sensibly be privatised we are following that policy. But there may always be a residual core of industries which remain in the public sector, and we believe that it is in the interests of everybody—not least in the interests of the nationalised industries themselves—that they should be conducted efficiently, that they should restrain their cost increases, and that they should keep their price increases down to more reasonable levels.

My Lords, nevertheless, will the noble Lord accept that, in requiring the British Gas Corporation to bring the level of gas prices up to the price of oil, the Government are interfering in the conduct of a nationalised industry, and would they cease to do so?

My Lords, in regard to gas prices the noble Lord is not entirely on a good point. For the period covered by the Question and the reply, gas prices rose by just over 16 per cent., which is substantially less than the increase in other nationalised industry prices. Therefore, if we excluded gas prices the position would look worse and not better.

My Lords, can the noble Lord say what instructions the Government gave to the Gas Corporation on prices?

My Lords, can my noble friend say by how much the prices of household goods, particularly those of food and clothing, supplied by the private sector have risen?

My Lords, food prices have risen by about 11 per cent. compared with an increase of 15.9 per cent. in the RPI. Clothing and footwear prices have risen by 8 per cent. and household durables have risen by about 9 per cent. The position is that shop prices generally have risen substantially less than the RPI.

My Lords, is the noble Lord aware that some of his replies went very wide of the original Question that was asked? Is he further aware that the main price rises which have already taken place and which are due to come have been due to the results of direct Government intervention?

No, my Lords, that is not true. There are of course some price increases which are due to factors outside the control of the individual nationalised industry. This is particularly true in the case of energy prices. But far too often the excessive rise in nationalised industry prices is due to the fact that their pay settlements have run at a significantly higher level than pay settlements in the private sector.

My Lords, will the Government intensify their references to the Office of Fair Trading to investigate the price of monopolies in general, and also in particular of the nationalised industries?

My Lords, does the Minister agree that the directive that the Government have issued to the water industry to use current cost accounting next year will increase prices to the water user?

My Lords, current cost accounting itself goes somewhat wide of this Question but it represents a sensible advance in accounting methods.

Wind-Assisted Commercial Ships

2.45 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 have any plans regarding the development of sail driven ships for commercial uses.

No, my Lords. Her Majesty's Government have concluded from several reviews that the considerable expenditure involved in the necessary research, development and design of wind-assisted commercial ships is not justified at the present time. Should a commercial organisation decide to undertake the design and construction of a sailing ship of novel design, it could apply to the Department of Industry for support for the research and development aspects of the project.

My Lords, while thanking my noble friend for that reply, may I ask him whether he is aware that our main maritime trading competitors, such as Japan, are giving serious consideration to the development of these ships as an alternative means of saving fuel? Further, as we are an island where large tankers and so forth come into deep water ports such as Milford Haven, could not the Government give serious consideration to the financial feasibility of developing smaller container ships and tankers for transportation of commodities from these large deep water ports to other destinations in the United Kingdom and the Continent of Europe?

My Lords, it is quite true that other countries are examining the question, as we have done, but, apart from a Japanese case, no owner or operator has been prepared to place an order for a wind-assisted ship. In Japan a shipping company has fitted a small tanker of 1,600 tons with unconventional sails controlled by a computer. It is estimated that a 10 per cent. fuel saving will be achieved. This has yet to be proved in practice, as has the efficient and effective operation of the sails. If I may go further, I would add that if there were such a ship then no doubt this method would be a great help in bringing such a ship into port, but as yet there has not been enough experimental work done in this matter.

My Lords, has the noble Viscount seen the papers as issued as pre-prints for the symposium on wind propulsion of commercial sailing ships which is taking place under the auspices of the Royal Institution of Naval Architects next month? Is he aware that on first sight it appears that the conventional sailing ship is never likely to return as a cargo carrier because her manning would be too costly; but that there is a considerable chance that by automation and with the aid of computers a sailing ship without a crew, or with a very small crew, might indeed be viable?

Yes, my Lords, there is to be a three-day symposium on sail and wind-assisted commercial ships to be opened by His Royal Highness the Duke of Edinburgh in the early part of next month. It has been arranged by the Royal Institution of Naval Architects from the 4th to the 6th November and a wide range of papers will be presented. This will no doubt cause a flurry of interest in the press. It represents a serious attempt to examine a wide range of topics relevant to the use of wind assistance in the light of current technology. Your Lordships will see from the programme, however, that most of the papers are academic studies and that they are not presented by owners or operators.

My Lords, is the noble Viscount aware that a sailing ship without a crew is my idea of ideal sailing in the North Sea in rough weather?

Canadian Constitution: Patriation Proposals

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 what proposals were made, or information given, by Mr. Mark McGuigan, Canadian Minister of External Affairs, and Mr. John Roberts, Minister of Science, Technology and the Environment, concerning the patriation of the Canadian constitution during their recent meetings with the Prime Minister and the Secretary of State for Foreign and Commonwealth Affairs.

My Lords, the two Canadian Ministers came as emissaries of the Canadian Prime Minister to tell Her Majesty's Government of the intentions of the Canadian Government on this subject.

My Lords, does the position of Her Majesty's Government remain as stated by the noble Lord, Lord Trefgarne, on 25th July 1979, that if a request to patriate the Canadian Constitution were to be received from the Parliament of Canada it would be in accordance with precedent for the Government to introduce in Parliament, and for Parliament to enact, appropriate legislation complying with that request, as we have done on the 14 occasions since Confederation when the Federal Parliament has made such requests? Has the noble and learned Lord noted that the Canadian House of Commons voted by 156 to 83 in favour of the proposals presented to it by Mr. Trudeau? Would the Government publish a document setting out the basis on which the Canadian Legislature is asking us now to act?

My Lords, no request has been received as yet from the Canadian Legislature and I notice from the public prints that it is still going through that Legislature. So far as I know, there is no change in the constitutional position since 27th July. It so happens that the Parliamentary Answer I have was given in another place by my honourable friend Mr. Luce; it would surprise me if it were different from that which was given by my noble friend Lord Trefgarne.

My Lords, are the Government satisfied that Canadian Ministers are sufficiently alive to the embarrassment which might be caused to this Parliament if proposals which were controversial inside Canada were to be put forward?

"The War Game" And Bbc Television

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, in view of the public interest in civil defence, and in view of the fact that numerous copies of the film "The War Game" have been sold by the British Broadcasting Corporation to private organisations, they will advise the Director General of the BBC that it would be in the national interest that the film should be shown on the corporation's television programmes.

My Lords, the broadcasting authorities are responsible for the content of their programmes. It is for them to decide what programmes to broadcast and it would be contrary to long-established practice, endorsed by successive Governments, for Ministers to seek to influence their decisions. It is therefore for the BBC alone to decide whether to show "The War Game" on their television programmes.

My Lords, while thanking the Minister for that reply, may I ask whether he is aware that 12 years ago, when the BBC first suppressed this film, the director wrote to me saying that the impact would be so terrible that if they showed it, fathers would kill their children and mothers would jump out of windows? However, that did not prevent the BBC from selling the film to private societies for exhibition. Is the noble Lord aware that it has now been seen by perhaps half a million people, and no fathers have killed their children or mothers jumped out of windows? Is he further aware that it has been sold to the German education authorities who have made a German soundtrack, and every school now sees this film every year in Germany? Is it not the right of British citizens to see what a nuclear war would be like, if it is possible for German children to see it?

My Lords, I am aware that the noble Lord wished this film to be shown and I am also aware that the BBC have not shown it. I have not seen copies of correspondence between the corporation and the noble Lord. There are other ways than seeing this particular film that the people of this country can become acquainted with the possible effects of nuclear war.

My Lords, irrespective of the merits or otherwise of showing this film, do the Government realise that no effective civil defence against nuclear bombardment of this country is possible and that it is gravely misleading the public to suggest otherwise?

My Lords, we believe that to be seen to be as much prepared at home as possible, as well as capable of military deterrence and defence, will make war less likely, and that is the policy the Government intend to pursue?

My Lords, may I ask my noble friend to say whether his departmental officials have vetted the film for accuracy about civil defence, bearing in mind the great expertise in his department? Will he bear in mind that the BBC is not always accurate, as it was not on the one o'clock news when it announced that Parliament would reassemble today?

My Lords, I am not aware whether officials of my right honourable friend's department have either seen or vetted this film. I have myself not seen it.

My Lords, following the supplementary question asked by the noble Lord, Lord Gladwyn, may I ask the Minister whether he appreciates the widespread concern about the ineffectiveness of any civil defence against a nuclear attack, as illustrated yesterday by the largest demonstration there has ever been in this country? Is he aware that wherever "The War Game" is shown it is wanted to be seen not merely by crowded audiences but by hundreds who cannot obtain admission? Will the noble Lord at least send to the BBC the Official Report of these discussions so it may be aware of our desire to see that this matter of public interest is shown on the BBC?

My Lords, the noble Lord asks me whether I am aware of a variety of things. I am aware that since 1945 the peace of this country has been kept by the contribution which we have made to the North Atlantic Treaty Organisation. Part of that contribution means being prepared, so far as we can be, both at home and abroad. In answer to the second part of the noble Lord's supplementary question, of course I reply, yes; I shall indeed draw the attention of the BBC to the exchanges in your Lordships' House on this issue.

My Lords, if a new information film were to be made on the same lines as "The War Game", in colour and brought up-to-date with the most recent knowledge on the effects of a nuclear bombardment, would the Minister give an undertaking not to interfere with the making of such a film or the showing of it on television?

My Lords, the whole basis of all the answers I have given in the last few minutes is that the Government do not interfere with what is actually broadcast.

My Lords, in view of the Minister's reference to NATO, may I ask him to assure us that it is the Government's policy to continue to fulfil the pledge about the increase of our defences that was made to that organisation?


My Lords, with the leave of the House, at a convenient moment after 3.45 my noble friend Lord Belstead will be repeating a Statement on the prison officers' dispute. That will be followed by a Business Statement by my noble friend the Leader of the House.

It may also be for the convenience of your Lordships to know that dinner will be available this evening. It is expected that the Report stage of the Local Government, Planning and Land (No. 2) Bill will be adjourned at approximately 7 p.m. for approximately 40 minutes.

Local Government, Planning And Land (No 2) Bill

2.58 p.m.

Further considered on Report.

Clause 15 [ Rates of return: powers of Secretary of State]:

The noble Lord said: My Lords, this amendment seeks to delete from Clause 15 the provisions which specify that a rate of return shall be shown in respect of any description of work specified in regulations under the relevant subsection. It will be within your Lordships' recollection that when we were discussing the earlier provisions of this part of the Bill relating to accounting matters I sought to demonstrate that it was quite impracticable to obtain a rate on the capital employed in each of the particular sections which, as the House will recall, relate to work on the highways, contracts above and below £50,000 and maintenance work.

I thought that my arguments at that time found favour with your Lordships, because of course in order to determine a rate of return on capital employed for each description of work, one has to ascertain the capital relating to each particular degree of work. As I explained, where a direct labour organisation has its own warehouses, stores, and plant and machinery of a wide variety, it is common for that organisation to use that equipment generally. It may at very short notice be switched from one description of work to another, and consequently, as we discussed in earlier clauses, it is not possible to prepare a balance sheet in respect of each particular description of work carried out. I believe that when it came to the accounting provisions the noble Lord was constrained to accept that amendment on the grounds that it is not possible to prepare a balance sheet in respect of each particular description of work.

Arising from that point (in which I was sustained by the noble Lord, Lord Avebury, who is not present at the moment) it would follow that it is not possible, with any reasonable degree of accuracy, to determine the amount of capital employed in terms of division of assets, stock in trade, or whatever it may be, spread over the four headings. Of course, I am well aware that by means of very considerable analysis, and a great amount of extra clerical labour, it is possible to ascertain the number of hours that an individual machine, formally belonging to the whole of the direct labour organisation, is used in any particular category of work. Therefore one could arrive at a rough—and it would be very rough asset utilisation factor which would produce a result showing so much capital consumed during the period under review. But that is not the same as a return on capital employed, because as I say even though it is possible to work out in meticulous detail machine usage, there would be very lengthy periods of time when the capital was not in use by any of the five departments at all, and so the result would be completely artificial.

This part of Clause 15 which insists on the calculation of a rate of return for each description of work is completely unrealistic. If there is any endeavour to enforce it, it will involve a number of assessments and approximations and some crystal gazing that would make the result quite meaningless, and indeed it is to be hoped that the Government will take that into account.

There is another reason involved. Your Lordships will recall that under Clause 8 of the Bill the local authority, when determining the cost of the service being provided, actually fixes the price. It must in advance make a written statement of the amount that corresponds to the selling prices, and under the Bill the Minister himself has power—because he can do virtually anything—to vary that. If the Minister does not like the selling price that goes into the accounts for the purpose of determining the rate of return, he can alter it. In short, within the provisions of this part of the Bill, the Minister himself can virtually determine in advance what would be the rate of return on capital employed, always on the assumption that he could go through the contortive calculations, to which I have ventured to draw your Lordships' attention, which would involve a very considerable waste of time and extra expense within the local authority.

On the assumption that it is feasible and indeed desirable for the Secretary of State to fix a rate of return on capital employed—and this is a very large assumption—it is practicable to do so only on the DLO as a whole rather than on the individual descriptions of work, and I should have thought that commonsense would have dictated such a course. It is in order that even at this late hour the Government may quit what I shall call nit-picking at the local authorities, insisting upon some detail of this kind, which as I have said, is entirely worthless, that I hope that the House will support the amendment. I beg to move.

3.6 p.m.

(Lord Bellwin)

My Lords, we discussed most of the arguments involved in this matter when we were considering Amendment No. 41, which the noble Lord, Lord Bruce of Donington, moved to Clause 14. The Government's case is that we must prevent the risk of cross-subsidisation. We must therefore require authorities to calculate separately the rate of return that their DLOs are earning on the separate parts of their business. We must have information available in as clear a form as possible, so that councillors and ratepayers can see just where their operations are succeeding and where they are failing.

We have looked at the arguments so very well put by the noble Lord, Lord Bruce, at this stage, and in Committee, too. We have looked at the arguments and have weighed the objections, and in the end have concluded that notwithstanding the points that he makes—and some of them have some validity in themselves—in the context of the totality of what we are seeking to achieve by these measures, we cannot accept the amendment. Clearly we could debate this question at greater length, but I fear that we should not get very far in so doing. Since the last stage we have discussed this matter with the institutes, the professional bodies, to which the noble Lord, Lord Bruce, referred earlier. While certainly they do not say that what we are requiring is easy, nevertheless, as the noble Lord himself has said, the view is that, yes, it can be done. We recognise the possible difficulties, but on balance we feel that the weight of the argument is such that we cannot accept the amendment.

My Lords, I very much regret that the noble Lord cannot accept the amendment. I feel that I must correct him ever so slightly; I do not think that he in any way sought to mislead the House. He referred to the professional bodies and I think that I ought to speak for my own Institute of Chartered Accountants in this particular respect. The institute said—and I have the correspondence—that segregation in this way, and the requirement of a rate of return on capital employed on each description of work, would produce a very considerable degree of approximation. I think that I ought to make that clear. My Lords, I beg leave to withdraw the amendment.

Amendment, by leave, withdrawn.

My Lords, before I call the next amendment, I should point out that if it is agreed to I cannot call Amendment No. 44.

3.10 p.m.

moved Amendment No. 43A:

Page 15, line 38, leave out ("shall have power at any time, if he thinks fit, to") and insert ("may, if the rate of return on the capital employed is less than the required rate,").

The noble Lord said: My Lords, we were brought to this point in the Bill at the Committee stage by a wide-ranging debate opened by a powerful speech from the noble Lord, Lord Sefton, and then, immediately before this point, a rather more precise amendment was moved by my noble friend Lord Renton—and I am sorry that neither of those noble Lords are present. I am sorry; I am glad to welcome my noble friend Lord Renton to his place at this propitious moment, because he moved an amendment in much the same words as the one I am now moving. Incidentally, I think it would be convenient if at the same time I spoke to Amendment No. 48A. That had the effect of obtaining from my noble friend Lord Bellwin an assurance that he would look at this matter again and see whether the purpose sought by my noble friend Lord Renton and now by myself was in fact achieved by the Bill as drafted, or whether, as I still believe, an amendment of this kind is needed in order to restrict the powers of the Secretary of State to the purposes which he is setting out in the Bill, not only in this clause but in the Explanatory Memorandum to the Bill itself. I beg to move.

My Lords, I wonder whether I may briefly support my noble friend Lord Sandford, and thank him for mentioning that I raised this matter at the Committee stage. I am thankful to say that I arrived here just in the nick of time. A point which I think should be stressed is that the Bill as originally drafted and the Bill as still drafted fails to carry out the intentions of the Government as declared in the Explanatory Memorandum. If noble Lords would turn to col. 251 of the Official Report, or, indeed, to the Explanatory Memorandum attached to the Bill as it came to us, they will find that paragraph 4 of that Explanatory Memorandum said, relation to Part III, that it:

"enables the Secretary of State to deprive authorities of the power to maintain direct labour organisations where a prescribed rate of return on capital has not been achieved …".
I would suggest, bearing in mind that that is clearly the purpose, that the purpose should always be stated where it is clearly the intention of the Government and of Parliament, and that should be done in this particular case; and that therefore this simple amendment—either my noble friend's or mine, which differ only to the extent that he has the word "and" in front—should be accepted. Accordingly, I am thankful to be able to support him.

My Lords, I think your Lordships will recall that at the Committee stage of the Bill the noble Lord, Lord Bellwin, conceded, as reported in cols. 247, 248, 249 and 251 of Volume 413, No. 184, of the Official Report, that there was considerable concern about the Secretary of State's unrestricted and, some people would suggest, unprecedented powers in this clause, first, to call for a special report under subsection (4) and, secondly, to require cessation of operations of a direct labour organisation under subsection (5). As the noble Lord, Lord Renton, has said, it does not even carry out the wishes or the intentions as set out in the Explanatory Memorandum. I had hoped, and I am sure several of your Lordships had hoped after the encouraging words of the noble Lord the Minister, that there would have been some amendments put down to this Bill; but I hope that, in the absence of that, your Lordships will be willing to accept this amendment, which I think goes most of the way to settling the doubts, the problems and the reservations which were expressed at Committee stage.

My Lords, the powers taken by subsection (4) are very wide indeed. They provide:

"The Secretary of State shall have power at any time, if he thinks fit, to direct a local authority or development body to make and submit to him, within such time as he may specify in the direction, a special report …";
and then the remainder of the subsection covers that. These are very wide powers. Indeed, on the receipt of the special report required under this particular subsection he may, under the current drafting of the Bill, order the closure of all or any part of a local authority's direct labour organisations even if there are no irregularities in the accounts which are produced.

These are very wide powers indeed, and, if I may say so, they highlight the whole of the Government's attitude towards local authorities. Their attitude is based on the assumption that local authorities do not know what they are doing, that their electorates are not informed and that they are not subject to any of the ordinary democratic checks. This is a direct taking of power by the central Government on the basis that the central Government know best, and they can exercise it precisely as a matter of caprice or personal whim of the Minister and the local authority has got to come to heel.

I understand that, if Amendment No. 43A is carried, then Amendment No. 44, which is in the names of my noble friends Lady Fisher of Rednal and Lord Sefton of Garston and myself, will not be able to be called. I am bound to say on behalf of myself and my noble friends that we much prefer Amendment No. 44 to Amendment No. 43A, which has been moved by the noble Lord, Lord Sandford. Undoubtedly, however, the amendment moved by the noble Lord, Lord Sandford, is much better than the existing wording of the section, and for my own part I am constrained to support it on those grounds—that it is better, and in politics it is sometimes better to have half a loaf than no loaf at all. So we shall wait to see what happens to the amendment moved by the noble Lord, Lord Sandford, and shall reserve our rights accordingly.

My Lords, when we had quite a lengthy discussion on this in Committee I undertook to have another look at the drafting, but I hope I was careful to say that that re-examination would be limited to the wording and would not extend to the substance, because quite clearly there is a difference between the noble Lord, Lord Bruce, and myself as to the intentions of what we are proposing here; and I am not so sure that the same is the case in relation to the points raised by my noble friends Lord Sandford and Lord Renton.

The Government have always envisaged that it would be failure to earn the rate of return which would precipitate the call for a special report, and it was on that basis that the clause was drafted and the Explanatory Memorandum was drafted, too. Meanwhile, however, it has been pointed out that there are other circumstances where action might be necessary; for example, in relation to abuses of the tendering procedure. Thus, although the Explanatory Memorandum remains a substantially true description of our purposes, it is not necessarily an exhaustive one. There is, of course, no opportunity to amend the Explanatory Memorandum at this stage; it is not part of the Bill, and has served its purpose of giving a general description of the effects of the Bill. I understand very well the arguments put forward in support of this amendment, and, as I undertook at Committee stage, we have examined the drafting very carefully indeed. At that stage it was obvious on all sides that there was much concern over the words
"the Secretary of State shall have power at any time if he thinks fit".
At first glance, it could look like a very autocratic discretion. Both my noble friends in moving this amendment have done us a service in pointing out how little difference there is between this formula and the familiar phrase, "the Secretary of State may".

My noble friend's amendment as a whole, however, makes a real change in the meaning of the provision. It seeks to restrict the power of the Secretary of State to call on an authority to prepare a special report to those circumstances in which there has been a failure to earn the required rate of return. At earlier stages in the development of our policy I might have found it easy to agree with him. Certainly, a failure to make the return has been the trigger that we have always envisaged as the most important and likely occasion for a request for a report. I have no doubt that, in practice, the Secretary of State will be looking for that very thing.

It has been pointed out with some force that there are, as I have indicated, other circumstances in which it might be useful to be able to ask an authority to justify itself. For example, an authority might be tempted to comply with the letter of the tendering provisions but to avoid its merits. There is no requirement, and we do not seek to impose one, that authorities should always accept the lowest offer received as a result of the invitation issued under Clause 8. It would be open to an authority to continue to give work to its direct labour organisation in the face of the evidence of competition that there were cheaper and more efficient alternatives. It would be easy to fix direct labour organisation prices on this basis to ensure an apparently satisfactory rate of return, but such a case would cry out for investigation.

We have been persuaded that we need the power for this purpose as well as to look at the failures in purely accounting terms. I hope that my noble friend may feel that his amendment goes further than at first sight seems to be a simple and logical attempt to take away an autocratic power such as the words "as he thinks fit" would seem to indicate. If so, no doubt he will not pursue his amendment.

My Lords, it is certainly true that there may be circumstances other than a failure to achieve the rate of return required which may cause the Secretary of State to want to have a report submitted to him or to investigate a matter. If the situation is that with my amendment he could not do that, there may be a case for leaving these very wide powers in the opening sentence of subsection (4). To that extent my amendment goes further than the amendments of my noble friend, Nos. 47 and 48, which only restrain the power of the Secretary of State to the purposes set out in the Explanatory Memorandum and in the first subsection of the clause.

I think that the sweeping powers given to the Secretary of State to cause an investigation to be carried out or to call for a report need to be limited, as I have argued and as my noble friends and others have argued, before he is able to take the action prescribed in subsection (5)(b); namely, that of requiring a local authority to cease to operate a direct labour organisation. Before that happens, I think it is necessary for him to be satisfied that the rate of return has not been achieved.

Unless my noble friend wants to make any further comments, I would now propose to withdraw my amendment but to suggest to my noble friend that his rather more limited amendment should be discussed again when we reach No. 47. If he is disposed to press it, then I would certainly be disposed to follow him. I beg leave to withdraw the amendment.

Amendment, by leave, withdrawn.

3.25 p.m.

moved Amendment No. 44:

Page 15, line 38, leave out ("if he thinks fit") and insert ("where a local authority has failed to conform with the appropriate statutory provisions").

The noble Baroness said: This amendment that I move on behalf of myself and my noble friends follows the discussion that we have been having but perhaps does not require emphasis on just one point; that is, the capital employed. What we say is that, if local authorities fail to conform with any of the statutory provisions, obviously that will be when the Secretary of State could quite likely call for a special report. But, as my noble friend Lord Bruce was saying, the whole clause is drafted in a very wide way; and we have to recognise, in my view and in that of my noble friends, that all the way through the direct labour part of this Bill the drafting shows quite clearly that the dice is loaded against direct labour organisations. If there are no irregularities in the accounts, if there is nothing that a local authority has done wrong, still the Secretary of State can demand a report. It is this that worries me particularly. Here again we have directly elected representatives on local authorities who are having power taken away from them whether they have a direct labour organisation or not.

What is particularly worrying—and I should be glad if the noble Lord when he answers would give some indication of what actually constitutes a direct labour organisation so that all noble Lords will understand what we are talking about—is that I believe that many noble Lords think that a direct labour organisation is some adjunct to a housing department and that during the winter months they sweep the snow from the roads. To cite the example of the authority I know best, it has three large direct labour organisations, but they are not so named. The actual DLO which was set up was completely disbanded when the Conservatives took control of the city. The very large organisation which is called the city engineer's department has a direct labour organisation; the education department of that city, because it has such a lot of schools and colleges to look after, again has a direct labour organisation; and the housing department, which has the largest number of council houses of any city in Great Britain, has a very large direct labour organisation which is called the city maintenance department for housing.

These are not small departments employing 30 or 40 people. These are huge departments in the local authority. What is worrying is that it might be that one of those departments of the direct labour organisations is not showing a true return on capital or it is not fulfilling some obligation and this may mean that the whole DLO of the city would have to be closed down because one of the large component parts of it was not doing everything that was asked for in this particular clause. Therefore, our amendment is clear, and is something which I think will be acceptable to all local authority associations, bearing in mind that they are keeping to the letter of the law. I beg to move.

My Lords, I will do my best to answer the points the noble Baroness made when she referred to the different bodies. So far as I am aware, there is not in the Bill a definition of DLOs as such, but I think that what a DLO is will be obvious to most people. Here I am taking a chance in giving my definition, but it seems to me that it would be a unit of people employed directly by the local authority themselves to carry out certain works. We know that in practice what that usually means is either works of maintenance or, in some cases, of new building, or whatever.

It is quite true, as the noble Baroness said, that some authorities have departments which themselves employ a direct labour organisation. Some housing departments do it. They employ their own staff who do maintenance and so on. Certainly my former authority, which was only marginally smaller in terms of having a housing section, did not have a separate section at all. There was just the one organisation within the city. But there will be various types.

I do not think that what the Bill requires matters so much. Indeed, I think the noble Baroness made my case very well for the need for a separate return in the case of separate sections of a DLO, so that it will be possible to ascertain the facts. If I were a ratepayer in that authority I should very much want to know that one part of the organisation was perhaps doing badly. I might also be happy to know that another part was doing well. But the only way I could know would be if separate returns were required.

This amendment seeks to limit the power of the Secretary of State to call for a special report in those circumstances explicitly set down under the Bill or its orders or directions; but this is too narrow. As I think I indicated when speaking to the last amendment, there could be other circumstances where the spirit if not the letter of the legislation is being broken. I mentioned then the persistent failure to choose the lowest tenderer under Clause 74. To take another example, there could be such a margin of failure by a DLO that a special report became imperative before matters got out of hand. We are living in a world where waste cannot be allowed to go unchecked, and the Secretary of State must be given discretion to step in and at least ask for an explanation. That is the first such step, and I do not think many people quarrel with that as a philosophy on its own.

This is not an unfettered power. There is protection at all times in the courts. If it is found that the Secretary of State has exercised his power for an improper purpose or on legally irrelevant grounds, the courts can order such action to be quashed. I appreciate the concern on this matter, particularly from noble Lords opposite, but at the end of the day it comes back to the whole issue of everybody knowing, and knowing of the success or failure of the component parts, if I may put it that way. I see no harm at all in that; quite the contrary. I think it is long overdue.

My Lords, I should like to make one small observation. I myself was responsible for an organisation which, by comparison to those which have been mentioned was very small; nevertheless from my own point of view it was a very important part of the university of which I was in control at one time. The point which bore itself on me, time after time, was the appalling complexity involved in making realistic comparisons between costs of work done in different ways. If one had a works department one had to carry the overhead costs of it whether it was being employed or not. Very often it is more important, in the interests of the efficiency of the work, that the date at which the work begins should be convenient rather than that the actual total cost of the measured work should be low.

All of these points constantly obtruded on attempts made by accountants to assess the efficiency of our works department, and I came to the general conclusion that acccounting in not the precise, determinate enterprise that people think. It is arbitrary; it involves an enormous number of assumptions and it is very easy grossly to oversimplify the apparent costing concerned and come up with arguments which are most misleading. For that reason I hope that some form of amendment, which does not give the Secretary of State too sweeping powers to intervene in what may be a much more complicated matter than he has any reason to understand, will somehow be in this Bill.

My Lords, your Lordships will be grateful to my noble friend Lady Fisher of Rednal for having elicited from the noble Lord the fact that a direct labour organisation as such has been nowhere defined. My noble friend drew his attention to the fact that the provisions of the Bill might very well apply to the city engineer's department or that part of that department which was concerned with maintenance of schools. In short, it may well be that the application of this Part of the Bill goes far wider than would ordinarily appear from the contents of the Bill itself, together with its explanatory notes. It is all very well for the noble Lord, in the exercise of his usual personal charm, to indicate to the House that of course all these powers will be used very reasonably. In fact, he was talking in such modest terms that one would wonder whether it was likely they would ever be used at all, so amenable was his whole attitude towards this application.

Here we have to be concerned with the text of the Bill. It says quite clearly that
"The Secretary of State shall have power at any time, if he thinks fit …".
These powers cannot be mitigated, and certainly would not be mitigated in law, by any statement of the noble Lord that they will always be exercised reasonably and perhaps very rarely. The words are what they are, and we in this House must be concerned with them; and we must be concerned also with their consequences.

One of the consequences of allowing this phrase to remain in the Bill is that it will also enable the Minister's right honourable friend Mr. Heseltine to order the closing down either of a direct labour organisation as a whole or of that particular section which gives offence. He can do that, if necessary, without giving any reason. It is all very well for the noble Lord to say, "Well, if the local authority is aggrieved it can bring an action in the courts". In these circumstances, is it not better that the other side of the coin should be shown? If the Minister has any reason to believe, or the reports show, that the local authority has broken the law, then of course it is always open to the noble Lord's department to go to the courts and show due cause.

This is a matter of balance: what can be done one way can also be done by the other way. We are dealing with two democratically elected organisations. On the one hand, a Government deriving their responsibility from Parliament democratically elected; and, on the other hand, a local authority which is dependent on its local franchise. In regard to the affairs which it is actually administering under the very noses of its constituents, the local authority is much more closely linked with the people that elected it than Parliament themselves.

Therefore we think that it is very unreasonable that this power should remain. The noble Lord, in the course of replying to my noble friend, threw more interesting light on the operation of the clause as a whole. He mentioned that it would of course be possible to close down one department that was not paying its way in terms of yielding the rate of return, calculated on a current cost accounting basis, determined by his right honourable friend.

May I invite the noble Lord to contemplate the results of that? It would mean that if one type of work was closed down, it would no longer have any share in the assets of the direct labour organisation as a whole. Therefore if one department was closed down, and on the assumption that the direct labour organisation owned all the assets that were used—plant and machinery, cranes, bulldozers, joiners' shops and all the rest of it—then the remaining three descriptions of work would have to be reapportioned out. That would throw up the actual capital employed by the remaining three, so that one or two of the remaining three would then find their rate of return on capital employed diminished by the same proportion as that obtaining in the one that was closed down. In short, the noble Lord has revealed that if he took action in regard to one department, it would have a domino effect and would be very likely to put one, two or the remaining departments into the red so far as the rate of return is concerned.

I have said on previous occasions—and I will not weary your Lordships—that this part of the Bill is a hodge-podge. It is going to work with a degree of approximation that involves the undue use of astrology and crystal ball gazing. It is going to waste an enormous amount of time of the local authorities. If the various provisions of this clause are going to be checked thoroughly at the Minister's headquarters in Marsham Street, he is going to have to engage many more accountants and staff there. I would have preferred him to abandon this part of the Bill, which is largely irrelevant except that it seeks to protect local private building interests rather more than it does the actual ratepayer. However, he is not prepared to do that and, at this stage, I would not press him to do so. But he would be well advised to accept Amendment No. 44. If he does not, I am afraid that I must ask the House to divide upon it.

3.44 p.m.

My Lords, may I follow one point that the Minister has made which was mentioned by the noble Lord, Lord Bruce of Donington: the right of the local authority to resort to the courts if they think that the Minister has not behaved reasonably. The words used by the Minister of Housing in another place were that the Minister would have to show good cause. The only way a local authority can challenge the Secretary of State in this is that he has acted either in bad faith or fraudulently. As I said in Committee, I do not believe that any Government would be likely to act fraudulently or unreasonably.

Several noble Lords—particularly noble and learned Lords—will tell your Lordships that unreasonableness is something that is very narrowly constructed by the courts. A local authority, in taking proceedings against the Secretary of State, will have to be placed in the position of proving a negative: namely, that the Secretary of State has not acted properly. That is an extremely difficult, onerous and almost impossible basis for a local authority to proceed upon.

What worries me—and I regard it as an unprecedented invasion of the liberty of local authorities—is that the procedure is activated by the Secretary of State calling for a report. All he has to prove is that he has considered that the direct labour organisation needs to be considered in depth. He cannot prove that it has been considered in depth until he has called for the report. Once he has the report, he can close the organisation down. This seems extremely arbitrary.

On those two grounds, I am concerned—as I am sure several other noble Lords are—about the arbitrary powers that this clause in its present form gives. I hope that the Government might be prepared to consider some form of amendment.

3.48 p.m.

My Lords, I wonder whether I might present to the House a somewhat different angle although it leads to the same conclusion. As I understand it, this House has always been keen to prevent the use of dictatorial powers, from whatever source they may come. Therefore, this House—without regard to the political complexion that a Minister might have—is anxious not to give him too many powers over the citizen over which the Government have jurisdiction in so many respects.

Obviously, there is an even greater need to restrict that power when one is dealing with an authority that the citizens have elected regarding the decisions that they have made. Therefore I ask the House to consider carefully the words:
"if he thinks fit".
That is the sole discretion which the Minister has to exercise, if it be a discretion at all.

There is another principle that this House holds dear—indeed, we hold it dear as a nation; that is, no man shall be judge in his own cause. We are so careful in all our legislation, in all our provisions of justice, to see that the person who calls for a report, the person who has the power to decide, shall not always be the judge in his own cause; that there shall always be a right for a third party to look at his judgment and question it.

There is no right of appeal here at all. There are two principles which are very sacred to us which, in my submission, are very relevant to this matter. There is a third point and, having made it, I will sit down. The whole of the atmosphere of this Bill, we were told, was to create a better relationship between central and local government because restrictions on local government were in many cases being decreased. I do not ask the House to go into a dialectical debate at this moment—we have had it before—as to whether that is the effect of the Bill. But I do not have to go that far in suggesting to the House that the words
"if he thinks fit",
which enable him to close the department, are not only worsening the relationship between central and local government, but lead into a situation about which the noble Lord the Minister in this House and indeed the Minister of Housing in another place have said: "The local authority can go to the courts and challenge the decision of the Minister to close it down".

Are we looking at a Bill regarding the relationship of central and local government, and doing it as we should do, when we lead ourselves to the stage that if a Minister's power is to be challenged at all it has to be challenged in a law case where the local authority is the plaintiff and the Minister at the central Government is the defendant? Is that the way we are looking at this Local Government Bill?—because if so, if I may say so, we are looking at it in a myopic condition which is not worthy of us. That is why I ask the noble Minister to look very carefully at these three points and to see whether rather radical principles are not at stake. I hope that he would have valued all those principles, or if not all three at least one of them, and that he would find it possible to soften and therefore yield in some measure to this amendment.

My Lords, I think what we have to do immediately is to get this whole thing into perspective. What are we talking about? So far as this amendment goes, we are talking about calling for a special report. We are talking about the Secretary of State calling for a special report to consider the position in a direct labour organisation where, for the reasons we have talked about before or indeed for any other reason, he feels he ought to look at exactly what is going on in that organisation. With that as the basic fundamental point, everything else falls into place, because not only can I see no harm in that but I think it is eminently desirable and, indeed, long overdue, that there should be such an interest taken, in the interests of those people who are not always able properly to see that their interests in this way are looked after.

I think it is right and proper that there should be such a power to call for a report to highlight the position and see if there have been shortcomings in procedures, performance or anything else on the part either of a direct labour organisation in its entirety or indeed in any separate part of such an organisation.

Therefore, my Lords, although I subscribe to the generality of what the noble Lord, Lord Mishcon, said about principles as a whole, when we apply them to what we are talking about in this amendment, then I think that the case rests, and I think it is important that we should not accept this amendment and that we should not seek to diminish in any way that which the Secretary of State is trying to ensure is done on behalf of


Airedale, L.Gaitskell, B.Mishcon, L.
Amherst, E.Garner, L.Noel-Baker, L.
Amulree, L.Gladwyn, L.Oram, L.
Ardwick, L.Gordon-Walker, L.Pargiter, L.
Bacon, B.Gosford, E.Peart, L.
Balogh, L.Greenwood of Rossendale, L.Ponsonby of Shulbrede, L. [Teller.]
Banks, L.Grey, E.
Beaumont of Whitley, L.Hale, L.Reilly, L.
Beswick, L.Halsbury, E.Ross of Marnock, L.
Birk, B.Hampton, L,Segal, L.
Blyton, L.Hayter, L.Shinwell, L.
Boston of Faversham, L.Henderson, L.Stamp, L.
Bowden, L.Houghton of Sowerby, L.Stedman, B.
Brockway, L.Ilchester, E.Stewart of Alvechurch, B.
Brooks of Tremorfa, L.Jacques, L.Stewart of Fulham, L.
Bruce of Donington, L.Kilbracken, L.Stone, L.
Byers, L.Kilmarnock, L.Strabolgi, L.
Collison, L.Kirkhill, L.Strauss, L.
Cooper of Stockton Heath, L.Leatherland, L.Taylor of Gryfe, L.
Crowther-Hunt, L.Lee of Newton, L.Taylor of Mansfield, L.
David, B. [Teller.]Listowel, E.Underhill, L.
Davies of Leek, L.Llewelyn-Davies of Hastoe, B.Walston, L.
Davies of Penrhys, L.Lloyd of Hampstead, L.Wedderburn of Charlton, L.
Donaldson of Kingsbridge, L.Longford, E.Whaddon, L.
Elwyn-Jones, L.Lovell-Davis, L.Wigoder, L.
Evans of Claughton, L.Maelor, L.Wilson of Radcliffe, L.
Fisher of Rednal, B.


Abercorn, D.Denham, L. [Teller.]Hill of Luton, L.
Abinger, L.Derwent, L.Hylton-Foster, B.
Addison, V.Digby, L.Keyes, L.
Alexander of Tunis, E.Dormer, L.Kinloss, Ly.
Allerton, L.Drumalbyn, L.Kinnaird, L.
Alport, L.Dudley, B.Kinross, L.
Ampthill, L.Ebbisham, L.Lindsey and Abingdon, E.
Auckland, L.Effingham, E.Long, V.
Avon, E.Ellenborough, L.Loudoun, C.
Barnby, L.Elliot of Harwood, B.Lucas of Chilworth, L.
Belhaven and Stenton, L.Evans of Hungershall, L.Luke, L.
Bellwin, L.Exeter, M.Lyell, L.
Belstead, L.Faithfull, B.Mackay of Clashfern, L.
Berkeley, B.Ferrers, E.Macleod of Borve, B.
Bessborough, E.Fraser of Kilmorack, L.Mansfield, E.
Boardman, L.Gage, V.Marley, L.
Boyd-Carpenter, L.Gainford, L.Middleton, L.
Bridgeman, V.Glenkinglas, L.Milverton, L.
Buckinghamshire, E.Gormanston, V.Minto, E.
Caithness, E.Gowrie, E.Monk Bretton, L.
Chelwood, L.Grimston of Westbury, L.Montgomery of Alamein, V.
Clancarty, E.Haig, E.Morris, L.
Clwyd, L.Hailsham of Saint Marylebone, L. (L. Chancellor.)Mottistone, L.
Cockfield, L.Murton of Lindisfarne, L.
Coleridge, L.Harmar-Nicholls, L.Northchurch, B.
Cottesloe, L.Harvington, L.Nugent of Guildford, L.
Cullen of Ashbourne, L.Hatherton, L.Nunburnholme, L.
Davidson, V.Hemphill, L.Orr-Ewing, L.
de Clifford, L.Henley, L.Penrhyn, L.

every body in these whole proposals about direct labour organisations.

3.53 p.m.

On Question, Whether the said amendment (No. 44) shall be agreed to?

Their Lordships divided: Contents, 78; Not-Contents, 111.

Pritchard, L.Skelmersdale, L.Trefgarne, L.
Radnor, E.Soames, L. (L. President.)Trenchard, V.
Redmayne, L.Somers, L.Vaux of Harrowden, L.
Reigate, L.Spens, L.Vickers, B.
Renton, L.Stanley of Alderley, L.Watkinson, V.
Roberthall, L.Strathspey, L.Willoughby de Broke, L.
St. Davids, V.Teviot, L.Wynford, L.
Sandys, L. [Teller.]Torphichen, L.Young, B.
Savile, L.

Resolved in the negative, and amendment disagreed to accordingly.

4.2 p.m.

moved Amendment No: 45:

Page 15, line 43, leave out ("three") and insert ("five").

The noble Baroness said: My Lords, in moving Amendment No. 5, I am asking that we delete three years and insert five years. It is proposed that the special report, for which the Secretary of State can ask, will be based upon the preceding three years' accounts. But I and my noble friends are of the firm opinion that this period is not long enough to judge the performance of a direct labour organisation, bearing in mind the peaks and troughs of the building industry.

I hope that the Minister will take into consideration the fact that, in the private building industry, which he sees as something that is highly competent and something to be copied by direct labour organisations, companies maintain a rolling programme of work. Anybody who knows anything about the building and construction industry knows that private companies are tendering constantly and are being awarded contracts which keep them in operation over a long period of time. This rolling programme, which makes them able to sustain their financial status, is not available in the same way to direct labour organisations, though they have to be comparable with outside builders and contractors. To give them a greater degree of fairness, since they do not have the same rolling programme, we are asking that three years should be replaced by five years. My Lords, I beg to move.

My Lords, we agree that DLO performance must be judged over a reasonable period and we think that three years is a fair minimum. There is, of course, nothing to stop a local authority from preparing a report which covers a period longer than three years. But we must all remember that here we are speaking of ratepayers' money, which is tied up in a DLO—risk capital, one might say, involuntarily collected and applied. The period must be as short as is reasonably practicable. Shareholders in a company would be asking their directors to report if things went wrong over a much shorter time-span than that. In our view, three years is a generous minimum, in that light.

I recall discussing this point at some length in Committee and, if I said anything more now, I should have to go over those arguments once again. I understand exactly what the noble Baroness seeks to achieve by this amendment, but we feel that three years is a fair minimum.

My Lords, I think it ought to be on the record that I think three years is too long. If you want to remedy something that is going wrong, the sooner you know about it and can apply a remedy the better. The indication that something is going wrong is generally within two years and, in order to support my noble friend's reply to the noble Baroness, I would say that, if anything, he is being generous in the direction for which she argues.

On Question, amendment negatived.

Prison Officers' Dispute

4.6 p.m.

My Lords, with the leave of the House, I shall now repeat a Statement which is being made in another place by my right honourable friend the Home Secretary. The Statement is as follows:

"With permission, Mr. Speaker, I shall make a statement about the current dispute in prisons in England and Wales.

"I should like to emphasise that this is not a dispute about pay. It arises from a claim by the Prison Officers' Association for two allowances for meal breaks. The May Committee was set up by the right honourable Member for Leeds South to consider, amongst other things, the whole question of allowances for meal breaks. Its recommendations on pay and allowances were immediately accepted and implemented by the Government. This was, by any standards, fair and generous treatment for the prison service. A number of claims, including this present one, were examined but not supported by the May Committee. Having found the money to pay for what May did recommend, the Government cannot now accept and finance further and consequential claims built on the foundation of what was recommended and accepted.

"The Prison Officers' Association have asked for arbitration. As the Prison Officers' Association themselves recognise, the matter lies outside the terms of the Civil Service Arbitration Agreement. Nor could the Government agree to put to arbitration an issue which was considered by the May Committee last year.

"As I said in my statement to the House on 31st October last year, this country has been fortunate in the men and women it has secured to run its prison system. Their duty is to protect the public, to serve the courts and to care for the inmates in their charge. This duty is arduous, difficult and sometimes dangerous. I therefore regret all the more the action which the Prison Officers' Association have chosen to take in pursuit of their claim. This has included a refusal not only to allow contractors to work in prisons, but also to undertake certain other duties which are necessary to maintain conditions for prisoners, and to provide the facilities to which they are entitled.

"Even more seriously, prison officers at many establishments have refused to receive prisoners remanded or sentenced by the courts. This action amounts to a deliberate and unacceptable disruption of the criminal justice system. As a result, this morning about 3,500 prisoners who would otherwise be in prisons are now being held in police cells, many of which are unsuitable for this purpose. The police have coped magnificently with the additional demands which have been made on them, but the number of people in their custody is approaching the limit of the available accommodation. The police are also being diverted from their primary tasks. The inevitable result of this is to place the public at risk.

"The Government must do all they can to fulfil their responsibility to protect the public and ensure the functioning of the criminal justice system. The House will be aware that, following consultation with my noble and learned friend the Lord Chancellor and the Lord Chief Justice, I arranged for a circular to be issued to magistrates' courts last Tuesday seeking their understanding of the problems we face.

"We need to do more than that, however. Measures will be taken to provide additional accommodation with the help of the Army. I am now arranging for the new high security prison which is nearing completion at Frankland near Durham to be brought immediately into use to provide emergency accommodation to relieve the pressure on police cells. It will have a governor, assistant governors and administrative and specialist staff from the prison service and a police presence to assist with security; but otherwise it will be manned by servicemen. We may also need to use military camps.

"For these and other purposes I shall need to ask the House to agree to immediate emergency measures to relieve the criminal justice system of some of the burdens placed on it by the prison officers' actions. I intend to present a Bill tomorrow. For the convenience of honourable Members I shall be arranging for typescript copies of the draft Bill to be made available later this evening.

"The measures I seek will include provisions to cover the approval of places other than prisons for the detention of prisoners. I shall seek provisions to cover the position of those who care for prisoners in these circumstances. Other provisions will be designed to provide relief for the police in the very difficult circumstances they face. In particular, I shall propose that the requirement that remand prisoners be produced regularly before the courts shall temporarily be suspended. I do not, however, propose to alter the normal requirement for the courts periodically to review remands in custody. I shall seek powers to order the temporary release on my authority, if it is absolutely necessary to do so, of selected prisoners who have been remanded in custody or committed in custody for trial or sentence. This is a power I would use, with every feasible safeguard, only to ensure that custodial places were available, in police cells and elsewhere, for dangerous offenders. I shall also need power, for the time being, to order the early release of sentenced prisoners nearing the end of their sentences. I shall ask for a power to restrict magistrates' courts, if necessary, in committing people to prison for such matters as non-payment of fines or rates.

"All these provisions will be temporary and will be allowed to lapse when the present dispute is resolved. In addition, the measures will include a permanent provision putting it beyond doubt that it is lawful for the police temporarily to hold people committed to prison custody, when it is for any reason not practicable to secure their admission to prison.

"I am satisfied that these powers, regrettable as they are, are necessary in the situation which has been caused by the prison officers' industrial action, which goes well beyond the limits of what is acceptable. But there is an alternative. I cannot look back; I want to make it very clear that I am determined to look forward. That is why discussions are far advanced between the Home Office and the Prison Officers' Association on a new duty system which would eliminate the anomalies which gave rise to this dispute. The early introduction of such a system would far better serve the interests of prison officers than the dangerous course on which they are now embarked.

"This industrial action by prison officers is all the more regrettable because it comes at a time when, following the May Committee, so much constructive work is going on to improve the prison service for the future.

"In view of all this, I invited the Prison Officers' Association, when I met them last week, to reconsider their action. I still hope that they will not persist in it while these negotiations continue. Of course, I remain ready to see the Prison Officers' Association at any time".

That, my Lords, is the Statement.

4.16 p.m.

My Lords, I should like to thank the Minister, the noble Lord, Lord Belstead, for repeating the Statement. It is a sombre statement and a very serious one indeed. I would say, first, that it is absolutely right for the Government to give priority to safety and to preserving and protecting the criminal justice system and, indeed, to give priority to the care for inmates. But it is of vital importance, first of all, to regard public safety as of paramount importance.

May I also ask the Minister to find some means of conveying thanks to the police for the way in which they are coping with their extra tasks in this very difficult situation? The Statement itself reflects the deteriorating situation in our prisons: people are not being allowed in on remand and police cells, as the Minister has indicated this afternoon, are being filled up.

So far as this particular dispute is concerned, as I think has been clearly indicated in the Statement, it is one which began concerning continuous duty credits—a matter which was fully and thoroughly considered by the May Committee of Inquiry, a most authoritative body, widely representative, and presided over by a most distinguished judge. There have been indicated in the Statement observations with which I can only fully agree as to the thoroughness with which this particular matter was considered, by the May Committee among others.

So far as the future is concerned, your Lordships will have noted the discussions which have been referred to in the Statement about a new system of allowances to replace the continuous duty credits system and other allowances. What I would ask the Minister to consider is this: why should those details not now be published? It would, I suggest, be of great public interest and, indeed, it would be appropriate to do so.

So far as the powers envisaged are concerned, and in particular the role of the Army, I would ask the Minister to accept, if not now then in the very near future indeed, that we would need to know precisely how they are going to be used, though clearly within the obvious limits of the need for security. What is their role going to be? And are any special instructions, particularly about training, to be issued to the Army, bearing in mind that they are hardly experienced, most of them, in dealing with a role of this particular kind?

Finally, I would ask the Minister to accept that I should certainly join in calling upon the Prison Officers' Association, who have over the years undertaken arduous tasks in the public interest and have, most of the time, received precious little thanks for the difficult duties that they perform—duties which I am sure we should not be very happy to have to deal with—to consider again very seriously indeed, in the public interest, their actions, and the course of those actions, and to decide where it is that their duty lies and where it is that the public interest itself lies.

My Lords, everyone in your Lordships' House must deplore the prospects of a confrontation between the Government and the Prison Officers' Association, a body of men and women who not only carry out a difficult, important and dangerous task but very often have to carry it out in wholly intolerable working conditions. Therefore I think it is for all of us to see whether it is not possible to suggest some way out of the present difficulties.

As I understand it, the prison officers' claims were examined by the May Committee. There were in fact 16 claims in all which related to meal breaks, continuous duty credits in one form or another, and it appears from the report that the May Committee came down against nine of those. In relation to three they found in favour of the Prison Officers' Association and the Government have implemented the findings on those three, but, as I understand it—and I may be wrong about this—the present dispute arises largely out of a disputed interpretation of one of the three in which the May Committee found in favour of the Prison Officers' Association.

There were a further four findings on which the May Committee clearly sympathised very strongly with the case put forward by the Prison Officers' Association and suggested that equity was on their side. I would respectfully agree that where the May Committee has considered these claims in such detail it would now be quite wrong to refer them to some other arbitrator. But there is (is there not?) something to be said for the suggestion that the May Committee might be asked to reconvene to clear up the matter of the interpretation of the one finding which at the moment is in issue and to make specific recommendations about the four claims where they clearly sympathised strongly with the case made by the Prison Officers' Association.

I suspect that if that course were taken it could be taken without any loss of face by the Government in the present situation and it would be sufficient to enable the Prison Officers' Association to abandon their present action while the negotiations for new terms of service were brought to a satisfactory conclusion.

I should like to make two other brief observations. First, the Statement refers to the circular sent round to magistrates by the Lord Chancellor and the Lord Chief Justice, which has met with some criticism. May I venture to say that such criticism appears to me to be entirely ill-conceived and that the Government would be failing in their duty if they did not bring to the attention of the judiciary at all levels the purely practical difficulties which face everybody at the present time.

Secondly, there is a series of courses proposed towards the end of the Statement which might lead to some diminution of the prison population. In many ways this is the crux of the problem, because the conditions in which prison officers have to work are bound to encourage intransigence in claims of this sort rather than sensible, moderate, levelheaded negotiations. May I urgently ask that the Government should look again at the proposal which many of us have made on many occasions that the remission rate should be fixed at a half rather than at a third? This would immediately lead to a substantial reduction in the number of people in our prisons and would therefore make their working conditions far more tolerable for the Prison Officers' Association. The noble Lord will no doubt be aware of the recent research into these issues, which suggests that if that course were taken it could be done without any danger being created for the public.

My Lords, perhaps I may just reply to the two Front Bench spokesmen. The noble Lord, Lord Boston asked me if I would draw to the attention of my right honourable friend the desirability of thanking the police for the work that they are doing. My right honourable friend did indeed see the Association of Chief Police Officers in this regard last week and the Superintendents' Association and the Federation representatives this morning. I am grateful to the noble Lord, though, for what he said in that regard.

I am also grateful to the noble Lord for his confirmation from his Front Bench that meal break payments were thoroughly investigated by the Committee which his right honourable friend the former Home Secretary set up in difficult circumstances in 1978. I agree with the noble Lord, Lord Boston, that the report of the May Committee is the final word on meal break payments, and of course the Government accepted immediately all the recommendations for improvements in pay and allowances which were made by the May Committee.

The noble Lord asked me whether details of the new duty system should not now be published. The discussions have been going on at official level between the Prison Officers' Association and the Home Office and, as I understand it, until now there has been agreement that the details should be published as soon as both sides feel that they are ready. My understanding is that that will be very soon.

The noble Lord asked me a specific question about the use of the Army, saying to your Lordships that of course soldiers are not trained for working with prisoners. So far as any of the plans for the use of Frankland Prison are concerned, at the moment the prison service will provide governors, assistant governors, administrative and specialist staff. I think that at the moment I should leave it at that, and no doubt I shall be reporting again to your Lordships about how that particular project is going to work out in practice.

The noble Lord, Lord Wigoder, asked me in essence about reconvening the May Committee in order to look at this aspect of Claim 16, and I hope the noble Lord will not think that I am being deliberately unhelpful if I say that I feel that I have answered that question in one of my replies to the noble Lord, Lord Boston. The claim which the dispute is about was put in as a claim to the May Committee. The May Committee considered it and did not recommend that meal break payments should be made for this particular aspect of what is known as Claim 16. As I have already reminded your Lordships, as soon as the May Committee reported, my right honourable friend accepted absolutely and in full the recommendations for the improvements in conditions and pay which the May Committee made.

I am grateful to the noble Lord for what he said about the circular which was sent out by the Home Office last week, and I should like to meet the point which the noble Lord made to me. Of course at the Home Office we shall be only too ready to look at the noble Lord's recommendations about remission, but I know that my right honourable friend always beats in mind the dangers of the executive action which he is now being forced, most regretfully, to take so far as the judiciary are concerned.

I shall end my first answer by repeating what my right honourable friend has said in another place. We believe that this can be solved by the new duty system and by looking forwards and not backwards, and we think that this is the way in which a resolution can be reached.

My Lords, the Minister has made a serious statement about a very serious position. Is it not the case that the tension in the prisons today is much deeper than this conflict with the Prison Officers' Association? Is not the tension also among the prisoners themselves and have they not suffered most from this conflict in being confined to their cells for 23 hours out of 24 in the prisons and by the intolerable conditions which there have been in many of the police cells? Therefore, in looking at this problem, will the Minister look at it rather more comprehensively than concentrating on this immediate conflict?

If I may ask the Minister first about this conflict, as the spokesman from the Liberal Benches said, have not the Prison Officers' Association doubted the interpretation of the May Report? I have listened to what the Minister has said about it, but surely, if the sensible men and women who are in charge of the Prison Officers' Association come to that conclusion, it would be reasonable for the Government to seek the view of the May Committee upon that problem.

May I also ask the Minister whether the Bill that is to be introduced tomorrow will give authority for troops to be used in prisons other than the new prison which is now to be opened? If so, would he consider that very carefully indeed? Has he seen the governor's report, which actually used these words: that with the use of troops there would be "the probability of both staff and prisoners being killed"? I hope that is an exaggeration, but it does indicate the situation.

My Lords, I wonder whether the noble Lord will forgive me, but I think questions and answers after a Statement should not go too far into the subject matter. I hope noble Lords will keep their questjons as brief as possible. A very good example was set by the noble Lord, Lord Boston.

My Lords, I take heed of what the noble Lord the Leader of the House has said. I put my last question very briefly indeed. In view of the necessity for shorter sentences—I welcome what the Minister has said—would he not, very generously indeed, seek to end the long sentences, in view of the fact that the Home Office inquiry has said that short sentences do not increase crime in the country?

My Lords, I agree with a great deal of what the noble Lord has said about prison conditions which have built up over the years. It is for this reason that we now have a realistic prison building programme, and this is another reason why it is most regrettable that this dispute is occurring at the present time. With regard to the noble Lord's point about the May Committee's reconvening, I have nothing to add to what I have already said. The noble Lord asked me one specific question about using places in other prisons. This was not exactly the form of words I used in the Statement. I suggest that the noble Lord, and I think all of us, would do well to wait for a short time until copies of the draft are available, and then I know it will be possible for this point to be debated in your Lordships' House

My Lords, is the noble Lord aware that we on this side of the House certainly give priority to the protection of the public and to ensuring the function of criminal justice in this very grave crisis in prison administration? The proposals mentioned in the Statement for the new powers to be given to the Home Secretary are unprecedented, and noble Lords will not be surprised if I indicate that we shall, of course, examine them in detail when the Bill is presented to the House on Wednesday. But may I make one general comment? Would this not be a good moment to examine the whole question of the fact that in this country there are more people per head of the population in prison than in any country in western Europe? Is there not now an urgent need to examine how many of the people in prison need to be there and to consider once again proposals of the kind the noble Lord, Lord Wigoder, has mentioned about remission of sentences?

Of course, we must ensure that violent prisoners who have committed offences of violence must be kept in gaol and must be seriously punished. But now would be an excellent moment to examine the intolerable situation that has grown in the prisons. We may perhaps have been a little remiss in the last Administration, and so far in this one, in not looking at some of the deeper issues that underlie the present crisis in prison affairs.

My Lords, the noble and learned Lord has said that the proposals for powers to be taken in emergency legislation would be unprecedented. I do not differ from the noble and learned Lord's use of wording. But the proposal is that those powers shall be temporary and they are being taken for the public safety, and that intention is also being written into the draft legislation. The noble and learned Lord has made the point that now would be the moment to look also with the greatest seriousness at reduction of the prison population. I should like to put on record that my right honourable friend the Home Secretary has, since he came to office, consistently sought ways of increasing the alternatives to imprisonment available to the courts and has not lost any opportunity to show his support for the use of shorter sentences for non-violent offenders.

My Lords, is my noble friend aware that all who have been involved in the prison administration in the past and have admired the prison service will greatly regret the nature of this dispute and the fact that such a narrow dispute should have such wide implications. Is he also aware that the Government will have as they have had in this House today, the full support, of people throughout this country when they find themselves forced, because there is no alternative, to seek the approval of Parliament for such wide powers as are now proposed? Can my noble friend say how soon he hopes to get the Bill on to the statute book?

My Lords, my noble friend, with his experience of these matters at the Home Office in previous years, has referred to a narrow dispute with wide implications. I have to say, with regret, that I regard the action which has been taken by the prison officers as going indeed far beyond the limits of what is permissible in the cause of an industrial dispute, let alone an industrial dispute on this particular subject, and wholly disproportionate to what is in issue. My noble friend asks when the Government would hope to get these proposals, if Parliament agrees, on to the statute book. I think this is the moment when my noble friend the Leader of the House would like to make a Business Statement.


4.24 p.m.

My Lords, in the light of the Statement which my noble friend Lord Belstead has just repeated, it might be for the convenience of the House if I make a statement of the Government's intentions on the proposed Bill on imprisonment to which my noble friend referred in his Statement. Copies of the typescript of the Bill should be available in another place later today. I have arranged that further copies should be available in the Printed Paper Office tonight, I hope, from 7 p.m. onwards. It is expected that another place will complete their consideration of the Bill tomorrow. Depending on what time the Bill is brought from another place, it will receive a First Reading in your Lordships' House either tomorrow night or at the beginning of business on Wednesday. We would then intend to take the Bill through Second Reading and remaining stages in this House as first business on Wednesday.

The fourth day on Report of the Local Government, Planning, and Land (No. 2) Bill will, therefore, be taken on Thursday of this week and not on Wednesday as previously planned. The Report stage of the Broadcasting Bill, at present on the order paper for Thursday of this week, will now take place on Monday, 3rd November.

Any further changes to next week's business resulting from this alteration of business will be reflected on tomorrow's Order Paper. I would add that, in these exceptional circumstances, the Public Bill Office will accept amendments with reference to the Bill as printed in the Commons in the course of tomorrow, Tuesday. I regret very much any inconvenience which this alteration in business will cause Members of this House. I hope that the House will appreciate from my noble friend's Statement the urgency, as has indeed been reflected from the Opposition Front Bench, of the legislation which the Government propose.

My Lords, may I thank the noble Lord for explaining to the House how the business will be altered. Of course, this means a great upheaval, but we understand the emergency under the present circumstances. I believe that the House will accept the necessity for the change. I do not think I need go beyond that.

My Lords, we entirely accept the need for urgency in this matter, although clearly the Bill will need to be scrutinised with care. Can the noble Lord say when he anticipates the Royal Assent will be given?

My Lords, I think it is a little early for me to say that, but obviously from the Government's point of view it will be the sooner the better after the Bill has passed through both Houses.

Local Government, Planning And Land (No 2) Bill

4.40 p.m.

Consideration oil Report resumed: Clause 15.

The noble Lord said: My Lords, I beg to move Amendment No. 47. This is principally a drafting amendment and I suggest that the words which I propose to leave out are not necessary. It is certainly not intended as a paving amendment for Amendment No. 48: the two matters are quite separate. I should like your Lordships to turn to page 16 of the Bill, subsection (5)( b) where your Lordships will see that the Secretary of State, if he has given a direction under Subsection (4) and:

  • (i) he has received a special report within the time specified in the direction; or
  • (ii) he has not received a report within that time",
  • may give certain directions. We could quite easily paraphrase those words, which seem to me to cancel each other out, by saying that he may give a direction whether he has received a special report in the time specified or not. In other words, in law, those words all taken together are a nullity, they are of no legal effect at all. I suggest that we should not enact words which are of no legal effect, certainly not unless there is a very good reason for doing so.

    In Committee my noble friend Lord Bellwin said of this amendment—and I moved it then as well—that it would remove the requirement that the Secretary of State should give an authority the chance to explain itself and would allow him to close down a direct labour organisation on the sole grounds that the target rate of return had not been met. With great respect to my noble friend, I do not think that that was an accurate statement.

    If we read the Bill, we see that the truth is that the local authorities are given the chance, anyway, of making a special report—they are given the chance by subsection (4) of this clause and, indeed, it could be said that that is confirmed by subsection (5) (a). Therefore, it seems to me that subsection (5) (b) is quite unnecessary. If anything, the inclusion of those words would seem to nullify the chance, but I do not wish to push my case as far as that. I merely say that these words are of no legal effect and are better left out. I beg to move.

    My Lords, of course, following the discussions in Committee we have examined very closely the drafting of this clause to which my noble friend spoke in Committee. We agree with him that these two paragraphs look odd—they certainly do to me, as a layman. Nevertheless, having looked at it carefully, it seems that they do serve a useful purpose.

    The Secretary of State, in directing an authority to prepare a special report, is obliged to set them a time limit within which to prepare that report. Subsection (4) does that. But, having set that time limit, must not both he and the authority be bound by it? In other words, the Secretary of State must be prevented from taking any further steps before that time has elapsed, or at least until the authority have effectively signalled their readiness by submitting their report. On the other hand, the authority must not be allowed to thwart the Secretary of State by more inaction. If they refuse to prepare the report in the time required, the Secretary of State must be allowed to proceed and that is what these two paragraphs do—they interpose a further step in the process to close down or limit. After the call for the special report, there must follow either the report, or the deadline for its completion, before the Secretary of State can consider exercising his powers to limit an authority's direct labour activity. This seems to us to be a sensible and, indeed, welcome safeguard. In those circumstances, I wonder whether as regards this at least, my noble friend may feel able to accept my explanation.

    My Lords, I am grateful to my noble friend. His fuller explanation on this occasion was less unconvincing than the previous one. In the circumstances, I would not divide the House, but would beg leave to withdraw the amendment.

    Amendment, by leave, withdrawn.

    moved Amendment No. 48:

    Page 16, line 11, at end insert—
    (" ( ) the rate of return on the capital employed is less than the required rate.").

    The noble Lord said: My Lords, I beg to move Amendment No. 48. This is an amendment of substance. Quite frankly, I should tell your Lordships that I do not mind whether direct labour organisations are discontinued either generally or in particular cases. But I do mind when a matter is left vague or uncertain in an Act of Parliament, as seems to me to be the case here—as I shall explain in a moment—and I do mind when what appears to be the intention of Parliament, as requested by the Government, is not made clear, especially when it affects the exercise of ministerial powers, and affects them in this case in relation to the activities of local authorities—sometimes very important activities.

    The whole tenor of Part III of the Bill is that works contracts may be carried out by direct labour organisations in a general way, but that where the Secretary of State directs otherwise they shall be discontinued. It was made clear in the Explanatory Memorandum—and I suggest that it is clear from the whole of the preceding part of Part III of the Bill—that the intention was that the power of the Secretary of State to suspend direct labour organisations should be used only when the required rate of return on capital has not been achieved.

    Quite frankly, it would not worry me very much if directions could be given on other grounds. But if it is intended that they should be or could be given on other grounds, then I suggest that it should be stated. If it is not stated, and

    if subsection (6) of Clause 15—which is the most operative part of Part III of the Bill—is left as it is, it seems to me that there is a very serious risk that if the Secretary of State gave a direction on a ground other than the ground that the required return on capital had not been achieved, then a local authority could dispute his direction and take him to court for a declaration. There would be a wrangle as to the vires of the matter and, of course, the public would pay for a dispute between the Secretary of State and local authorities—the public would inevitably pay the whole of the expenses of both parties. There might be several million pounds involved. I would not like to anticipate such wrangles.

    That is why I think that I should again ask my noble friend if, having had a chance to consider the matter, he has any clear statement to give to your Lordships' House of the Government's intention as to the exercise of this power, if it be the Government's intention only to use the power where the required rate of return on capital has not been achieved, then let that be clearly said. However, if it is the Government's intention that the power may be used in other circumstances, then I suggest that those circumstances should be specified. Frankly, speaking for myself, I do not mind which way it is decided, so long as it is made clear.

    I move this amendment in the hope of enabling your Lordships to carry out what seems to be the intention. Of course, if the intention was mistakenly put in the Explanatory Memorandum, if it was too narrowly expressed, or if a reading of the earlier clauses of Part III gives rise to a false assumption as to the interpretation of Clause 15(6), that is another matter, and a further amendment would be required. My amendment has been tabled in almost exactly the same form by my noble friend Lord Sandford, perhaps for a different reason. His amendment is No. 48A, the next one to be dealt with. If neither his amendment nor my amendment is accepted, then the matter will be left vague and open, and that does not seem to me to be a satisfactory situation.

    My Lords, I rise to support my noble friend—which will not surprise the House—because, as he said, I have tabled an amendment in almost similar terms. Like my noble friend—although my interest in them is perhaps greater—I do not rise to defend direct labour organisations. In fact, I should like to preface my remarks by saying that I agree with the Secretary of State in the purposes which he seeks to achieve in this part of the Bill; because I think that there are direct labour organisations which need to be improved, controlled, curbed and made subject to the requirements imposed on them in the Bill.

    However, my reason for supporting this amendment is not precisely the same as that of my noble friend. I think that he made a cogent legal point that this Bill is defective if an amendment to this effect is not moved into it. I moved an earlier amendment, Amendment No. 43A, which went rather further than these amendments because it fettered the otherwise unfettered power of the Secretary of State to interfere in the affairs of local authorities and their direct labour organisations in particular, to the extent of requiring him to investigate matters or call for reports only when it was clear that the prescribed rate of return on the capital employed was not being achieved.

    But in this part of the Bill—over the page as it were—we come to the Secretary of State's "ultimate sanction", to use the phrase employed in the Notes on Clauses. He seeks the power to use the "ultimate sanction" of requiring local authorities to close down and cease operations with their direct labour organisations. I rise to defend local authorities, and in particular district councils, against the use of this undifferentiated and unlimited power of the Secretary of State to interfere in their affairs.

    If we have, established by statute, local authorities with particular functions, duties and powers to perform, so far as possible they must be left free to exercise those powers in accordance with their discretion. If Parliament decides that there are circumstances in which the Secretary of State has a right—indeed, a duty or a power—to interfere, those must be carefully prescribed. At the present moment the point at which he exercises his ultimate sanction of closing down an organisation within a local authority is not so prescribed. It is for that reason—in order to defend local authorities from an unfettered power by the Secretary of State—that I join my noble friend in supporting this amendment.

    If by any chance my noble friend cannot accept this amendment as it stands, I have to say that for my part he will have to give us a very firm assurance that this time, when he takes the matter away, he will return with some further amendment or have something to say to us which will go a good deal further than he was able to go in Committee, when he raised our hopes, and further than he has so far gone today.

    My Lords, on this side of the House we support the amendment so ably moved by the noble Lord, Lord Renton, in a very concise and cogent manner. It qualifies an arbitrary power given under this subsection to the Secretary of State. It lays down an essential qualification before the Secretary of State acts to direct a local authority that it shall cease work with its direct labour organisation. Your Lordships will see that we have tabled Amendment No. 49A, which argues the whole case. It is not my intention at this stage to argue the case for that amendment. However, the amendment in the name of the noble Lord, Lord Renton, will well fit in with our amendment, Amendment No. 49A. Therefore, for the reason that it limits the arbitrary power of the Secretary of State, we will support Amendment No. 48.

    My Lords, I fully support my noble friend Lord Renton in this part of his tireless crusade for the better drafting of legislation. I yield to no one in my admiration for him over that. But certainly I could not support this amendment as it stands, as, although he indicated that he did not care one way or the other whether its effect would be to restrict the powers of the Secretary of State to cases in which the return on capital was below the prescribed rate, I am bound to confess that I do. I should be very disappointed if at this stage we sought to limit the Secretary of State solely to acting on that consideration. There may well be other cases in which it would be right for the Secretary of State so to act. One obviously would be if a direct labour organisation was riddled with corruption. Another, and perhaps more likely, case is where the tendering policies of the local authority concerned, by way of favouring the direct labour organisation, were such that there was a perfectly adequate return on capital, but very gross unfairness to the private sector of the building industry with which it competed. I do not believe that cases of that kind would be at all frequent. However, I think it would be valuable for local authorities, which might be tempted so to act in respect of their direct labour organisations, to know that this ultimate sanction lay in the hands of the Secretary of State.

    I should be very interested—as I think will be my noble friend—to hear from my noble friend the Minister what is the intention. It certainly appears that the wider interpretation, which I hope is right, seems to be inconsistent with the Explanatory Memorandum attached to the Bill as originally presented to us. But that obviously is not conclusive. Indeed, we had a case earlier this afternoon in which that situation had arisen. Therefore, I rise particularly to ask my noble friend whether it is the Government's intention to exclude all possibility of action, save where the prescribed rate of return on capital is not achieved, and—if that really is their intention—to argue why this power, which is being taken, should be so restricted. Until I hear some argument that convinces me, I shall be very much against my noble friend's amendment if it has the effect of that exclusion.

    5 p.m.

    My Lords, as my noble friend Lord Boyd-Carpenter said, whenever my noble friend Lord Renton speaks on these matters one has to listen particularly carefully because of his obviously great expertise and, indeed, interest and background in all such matters. Because of that, I say that not only have I listened carefully to what he has said now, but I also listened carefully in Committee the other week, as indeed I did when my noble friend Lord Sandford was moving his amendments both on this and on past occasions. In other words, this was the amendment to impose the same restriction on the Secretary of State's power to call for a special report.

    I have looked again at ways of reducing the Secretary of State's discretion in these matters while at the same time preserving his right to intervene in the public interest if things are going sadly wrong and public resources are being wasted and misapplied. I have had to conclude that the public interest cannot be measured merely in accounting terms, which is the point to which my noble friend Lord Boyd-Carpenter referred, and that therefore the discretion cannot be fettered strictly to a failure to earn a specified rate of return. There are wider considerations. I mentioned earlier possible tendering abuses. There are others. The key to this is that this must all be seen in the context of the legislation as a whole. These intentions in this clause as regards direct labour organisations must also relate to such matters as efficiency, fairness or competition—and tendering policies I have mentioned. There may indeed be other things of which I do not know readily.

    I take the point that my noble friend Lord Renton makes as to the unsatisfactory nature of the vagueness, if you like. Is it too wide a power. I am asking him to consider it within the context of what the legislation seeks to achieve, with what the intentions are. It may be that that is not enough in strict terms. It may be that that is too wide, and he will have to decide if that is so.

    My noble friend Lord Sandford asked whether I would give a firm assurance more clearly than I had done before that we will come up with something more specific, narrower, perhaps better, to meet the points raised. I cannot say that I am able to do this. The only thing I can say, because I have such respect for the great knowledge of my noble friend Lord Renton and for the views of my noble friend Lord Sandford, is that I cannot accept this amendment, and indeed we must stand on it, for the reasons I have given.

    I do not want to make another speech about the principles underlying what we are seeking to do with this section of the Bill as regards direct labour organisations, or why we consider it is so very necessary that there should be material changes. If we divide on the issue, well then, so be it, and I can do no more. If we do not divide, all I can do is to say that of course we will look carefully at everything my noble friends have said, and not least on the point of vires, which I think must be always something which should concern us carefully. That of course I will do. But I should also not want to mislead. After all, we are coming now to the last stages of this Bill and I do not want to give any wrong, impression that I am going to go away and come back at Third Reading with something else. I cannot promise that. I undertake, because I consider it so important, that we will look closely at the wording, and I will discuss it again and do all that I can to take advice, but, as it stands at the moment, I would have to say that I could not accept the amendment.

    My Lords, before seeking leave to withdraw the amendment, may I thank my noble friend for his offer of further consideration? As I said, when I moved the amendment, I do not mind very much what the powers are so long as they are clearly stated. I entirely take the point made by my noble friend Lord Boyd-Carpenter that there might well be other circumstances justifying the exercise of the power, but the whole tenor of Part III is such as to lead at the moment to a wrong climax in subsection (6). If we could have the climax more clearly stated, then I should be happier. In these circumstances, I think the right thing for me to do is to withdraw my amendment, by leave.

    Amendment, by leave, withdrawn.

    [ Amendment No. 48A not moved.]

    5.5 p.m.

    moved Amendment No. 49A:

    Page 16, line 12, leave out from ("that") to end of line 17 and insert ("the local authority or development body shall conduct a comprehensive review of the Direct Labour Organisation and publish the report of such review").

    The noble Lord said: My Lords, this continues in a different form the discussion the House has just been having on subsection (5). As has been made clear, this gives authority to the Secretary of State to direct that a local authority shall cease in effect all work by its direct labour organisation. It is one thing to encourage efficiency; it is one thing to demand accountability; but surely it is another thing to give this arbitrary power to the Secretary of State, as has been made clear on the previous discussions, with no qualifications and no criteria laid down at all before the Secretary of State so acts. It is far more serious than a question of, "If he thinks fit, he shall ask for a report". It enables him, either having had or not having had a report, to tell a local authority to cease work with its direct labour organisation.

    The noble Lord, Lord Bellwin, said at the Committee stage that this was not an unfettered power. He said:

    "There is protection at all times in the courts".

    The noble Lord has reiterated that statement this afternoon. I am sure there will be a general feeling, as my noble friend Lord Mishcon said, that this was surely a sorry way to treat local authorities; that the only recourse was to the courts, which of course local authorities generally would not wish to make use of.

    This provision is an interference with the right of a local authority to determine whether it is in the interests of its own people that it should continue with its direct labour organisation. The local authority is accountable to its local community, but this subsection removes all the authority of the local authority. We have often heard talk in this House about manifesto commitments. Some of these local authorities have given a manifesto commitment with regard to their direct labour organisation. There is no consideration being given to any dislocation of the work of a local authority that this arbitrary provision may cause. I have already mentioned that there are no criteria laid down. There is no provision made even for consultation with the local authority before the Secretary of State takes this arbitrary power. There is no provision for the local authority to make representations before this arbitrary power is carried out. There is no right of appeal whatever, and no report to Parliament before the Secretary of State takes this very unusual arbitrary power upon himself.

    The amendment gives the local authority opportunity, the Secretary of State having considered any report or not considered a report, to conduct a thorough review of its direct labour organisation. But it is not to leave it there; it must actually publish details of the report. In other words, it has to let its own community know; to let everybody know precisely what it proposes to do. The point of the amendment is to prevent the authority being given to a Secretary of State—any Secretary of State, not just this one Secretary of State—to take this arbitrary power. I believe that all the local authority associations have expressed concern about this particular feature. I hope that your Lordships may feel disposed to accept this amendment. I beg to move.

    My Lords, the ultimate sanction against an authority which fails to get its DLO operations under firm continuing control will be an intervention by the Secretary of State to remove or restrict its powers to use direct labour. Such action can come only after the submission of a special report required under subsection (4) and cannot therefore happen until the authority has had an opportunity to explain itself. Closure or restriction will not follow automatically. There may be special circumstances which explain an unsatisfactory performance, or there may be a need to retain a small direct labour force to deal with certain sorts of work—for example, winter highway maintenance in remote areas—for which no contractors can be found, and the decision of the Secretary of State will be able to take account of those factors. Furthermore, the close-down or restriction will not necessarily take even immediate effect. The subsection allows the Secretary of State to set the effective date so that authorities would have time to make the necessary alternative arrangements to enable them to fulfil their statutory duties by means other than through their own directly employed labour force.

    But at the end of the day the Secretary of State must have power to act, to end the wasteful use of ratepayers' money and the nation's resources if failure persists. We expect public opinion to play its part. Local democracy is important in this respect and Clause 15 provides for information to be publicly available. Without an ultimate sanction, and when all else has failed, an awkward DLO might still


    Airedale, L.Banks, L.Blyton, L.
    Amherst, E.Beaumont of Whitley, L.Boston of Faversham, L.
    Bacon, B.Beswick, L.Bowden, L.
    Balogh, L.Birk, B.Brockway, L.

    just cock a snook and carry on in its unreformed way. It is surely not unreasonable, albeit in these unlikely and extreme circumstances, to have in effect a weapon of last resort.

    I note what the noble Lord, Lord Underhill, says, but this must be put into the context of all we are seeking to do in the Bill. The time really has come for there to be accountability and a greater emphasis on efficiency and achievement than ever before. That is all we are seeking to do throughout the Bill, and, while I understand the concern the noble Lord has expressed, we cannot accept the amendment.

    My Lords, I am sorry the Minister cannot accept the amendment because we want to give an opportunity for local public opinion to play its part. The Minister says this will happen when all else has failed, but there will have been no opportunity for all else to fail; no consultation, no opportunity for representation, only the demand for a report, and on that report the Secretary of State will take this arbitrary power. It is not a weapon of last resort but of second resort, the first being to demand a report and the second to act—without any conditions, not even an attempt to state in the clause that there must be opportunity for consultation and representation by the local authority.

    A similar amendment was tabled in Committee, and withdrawn because the Minister said he wished to reconsider the wording of subsections (4) and (5) and we have heard the Minister's argument today. But this matter has never been tested in your Lordships' House. In our view, this arbitrary power should not be given to any Secretary of State of any Government, and for that reason we must press the amendment.

    5.14 p.m.

    On Question, Whether the said amendment (No. 49A) shall be agreed to?

    Their Lordships divided: Contents, 73; Not-Contents, 118.

    Brooks of Tremorfa, L.Kirkhill, L.Ross of Marnock, L.
    Chitnis, L.Leatherland, L.Segal, L.
    Collison, L.Lee of Newton, L.Shinwell, L.
    Cooper of Stockton Heath, L.Llewelyn-Davies of Hastoe, B.Stamp, L.
    David, B. [Teller.]Lloyd of Kilgerran, L.Stedman, B.
    Davies of Leek, L.Longford, E.Stewart of Alvechurch, B.
    Davies of Penrhys, L.Lovell-Davis, L.Stewart of Fulham, L.
    Donaldson of Kingsbridge, L.McCarthy, L.Stone, L.
    Elwyn-Jones, L.Maelor, L.Strabolgi, L.
    Evans of Claughton, L.Meston, L.Taylor of Gryfe, L.
    Evans of Hungershall, L.Mishcon, L.Taylor of Mansfield, L.
    Fisher of Rednal, B.Noel-Baker, L.Underhill, L.
    Gaitskell, B.Ogmore, L.Wade, L.
    Gladwyn, L.Oram, L.Walston, L.
    Gosford, E.Paget of Northampton, L.Wedderburn of Charlton, L.
    Greenwood of Rossendale, L.Pargiter, L.Wells-Pestell, L.
    Hale, L.Peart, L.Whaddon, L.
    Hampton, L.Phillips, B.Wigoder, L.
    Houghton of Sowerby, L.Ponsonby of Shulbrede, L. [Teller.]Wilson of Radcliffe, L.
    Howie of Troon, L.Wynne-Jones, L.
    Jacques, L.Rhodes, L.


    Abercorn, D.Gainsborough, E.Montgomery of Alamein, V.
    Abinger, L.Garner, L.Morris, L.
    Addison, V.Glenkinglas, L.Mottistone, L.
    Ailesbury, M.Gormanston, V.Murton of Lindisfarne, L.
    Airey of Abingdon, B.Gowrie, E.Newall, L.
    Allerton, L.Grimston of Westbury, L.Northchurch, B.
    Alport, L.Haig, E.Nugent of Guildford, L.
    Ampthill, L.Hailsham of Saint Marylebone, L. (L. Chancellor.)Orkney, E.
    Atholl, D.Orr-Ewing, L.
    Auckland, L.Halsbury, E.Penrhyn, L.
    Avon, E.Harmar-Nicholls, L.Radnor, E.
    Barnby, L.Hatherton, L.Rawlinson of Ewell, L.
    Bellwin, L.Hemphill, L.Redmayne, L.
    Belstead, L.Henley, L.Reigate, L.
    Berkeley, B.Hill of Luton, L.Renton, L.
    Bessborough, E.Holderness, L.St. Davids, V.
    Boyd-Carpenter, L.Hornsby-Smith, B.Sandford, L.
    Bridgeman, V.Ilchester, E.Sandys, L. [Teller.]
    Brookes, L.Kemsley, V.Savile, L.
    Cathcart, E.Keyes, L.Seafield, E.
    Cockfield, L.Killearn, L.Shannon, E.
    Colville of Culross, V.Kinloss, Ly.Skelmersdale, L.
    Cottesloe, L.Kinnaird, L.Soames, L. (L. President.)
    Craigavon, V.Kinross, L.Spens, L.
    Croft, L.Lindsey and Abingdon, E.Strathcona and Mount Royal, L.
    Cullen of Ashbourne, L.Long, V.Strathspey, L.
    Davidson, V.Loudoun, C.Swinfen, L.
    de Clifford, L.Lucas of Chilworth, L.Torphichen, L.
    De Freyne, L.Luke, L.Tranmire, L.
    Denham, B. [Teller.]Lyell, L.Trefgarne, L.
    Digby, L.Mackay of Clashfern, L.Trenchard, V.
    Dormer, L.Macleod of Borve, B.Vaux of Harrowden, L.
    Drumalbyn, L.Mancroft, L.Vernon, L.
    Ebbisham, L.Mansfield, E.Vickers, B.
    Ellenborough, L.Marley, L.Watkinson, V.
    Elliot of Harwood, B.Middleton, L.Willoughby de Broke L.
    Exeter, M.Milverton, L.Wise, L.
    Ferrers, E.Minto, E.Wynford, L.
    Freyberg, L.Monk Bretton, L.Young, B.
    Gage, V.Monson, L.

    Resolved in the negative, and amend-ment disagreed to accordingly.

    Clause 18 [ Interpretation of Part III]:

    5.22 p.m.

    The noble Lord said; My Lords, this is a very simple amendment. By deleting the line referred to in the amendment we leave out of the definition of development body the Scottish Special Housing Association. There has been controversy over direct labour organisations but, as I mentioned on Committee, I have heard little, if any, controversy over the activities of the Scottish Special Housing Association, and your Lordships will recall that the noble Earl, Lord Perth, the noble Baroness, Lady Elliot of Harwood, and other noble Lords from Scotland paid tribute to the work of the Scottish Special Housing Association.

    In fact the association has one job, and that is to build houses. It was given that job by Parliament. The association was created by a Conservative Government. I hear Ministers speaking about waste of public money, and saying that the Secretary of State must act. Parliament has created the Scottish Special Housing Association, but it is the Secretary of State for Scotland who appoints all the members and the chairman. They must report to him every year. He can see them at any time he wishes, and he agrees their programme with them annually. The association's finance is controlled by Parliament and by the Secretary of State for Scotland.

    So whatever may be said about the direct labour organisations and local authorities cannot be said about the Scottish Special Housing Association. One reads of the powers that the Secretary of State takes. He already has all these powers with regard to the Scottish Special Housing Association. The only thing that he cannot do without parliamentary approval or new legislation is wipe out the association, but with the powers that he has here he virtually could stop the association from functioning. I am perfectly sure that that is not the Government's intention; the Government would be much more honest and would come forward with a clause in this Bill or in some other Bill simply to wipe out the association. On Committee I could not obtain any justification of the reason why the Scottish Special Housing Association is included in this way. I suggest that it would be sensible to omit the association from the definition of development body. That is the effect and the purpose of the amendment. I beg to move.

    My Lords, as the noble Lord, Lord Ross of Marnock, has said, there was a short but comprehensive debate on this matter in Committee. Your Lordships will recall the interesting exposition given by the noble Lord, Lord Ross, during that stage, and you might also well recollect the perfectly adequate explanation given by my noble friend Lord Bellwin. The point is that this provision does not in any way reflect adversely upon the SSHA, nor is there any criticism of the SSHA. As the noble Lord, Lord Ross, said in effect in Committee, the Secretary of State can obtain information on the SSHA's DLO activities by means of the existing arrangements under the terms of its formal agreement with the Secretary of State for Scotland.

    However, that is not the point of this provision, and it is not the reason why the clause is to extend to the SSHA. The main purpose of this part of the Bill is to improve the efficiency and accountability of all public sector direct labour organisations. The SSHA is part of the public sector, and in the interests of equity I could not agree with the noble Lord that it should be excluded from this part of the Bill. In other words, we want to make it plain that the same tests of efficiency and the requirements of responsibility shall apply to the SSHA as apply, for instance, to the Scottish local authorities. So there it is. It is a matter of policy and equity as to why the SSHA is treated in the way that it is under the Bill.

    My Lords, that reply was very disappointing indeed. There is no equity or equality involved in respect of the treatment of local authorities and the Scottish Special Housing Association. As I pointed out, the association is the creature of the Secretary of State. He appoints the members, he can sack them, he can direct them. He sits down with them every year and decides which programmes should go on. If he is not satisfied with their efficiency, he just says, "You will not build this, you will not build that".

    With regard to the point about cornpetitiveness—and this is part of the so-called efficiency test—one reason for the association being set up was so that it could build in places where there were no other builders. That was the job that it was given, to build in the Highlands and in other areas. In those days when there were local authority areas which formed small borough a penny rate would produce perhaps £500, and in many cases less than that. Those boroughs had housing powers, but they could not possibly build, and so the association was created by a Tory Government to do that, and to introduce an clement of competition in some areas.

    The association was told to go in and build, and so it set a standard. The Act that set up the association also contained a provision to enable it to build with experimental materials; to use Highland materials in the Highland area. Think of the cost of building in the Highlands and Islands—in many cases building perhaps only three or four houses in a rural area where no private builder wants to look at the job. I do not know whether the Minister of State realises it, but where possible private builders are used. There is simply no justification for this proposal. There is no logic in comparing the association with the local authorities; there is no comparison whatever. The Scottish Office should think again. Has there been any single complaint regarding the building efficiency of the Scottish Special Housing Association?


    Airedale, L.Greenwood of Rossendale, L.Phillips, B.
    Bacon, B.Gregson, L.Ponsonby of Shulbrede, L. [Teller.]
    Balogh, L.Hale, L.
    Banks, L.Hampton, L.Rhodes, L.
    Beaumont of Whitley, L.Hatch of Lusby, L.Ross of Marnock, L.
    Beswick, L.Houghton of Sowerby, L.Shinwell, L.
    Birk, B.Howie of Troon, L.Stedman, B.
    Blyton, L.Jacques, L.Stewart of Alvechurch, B.
    Boston of Faversham, L.Kilmarnock, L.Stewart of Fulham, L.
    Bowden, L.Kirkhill, L.Stone, L.
    Brockway, L.Leatherland, L.Strabolgi, L.
    Brooks of Tremorfa, L.Lee of Newton, L.Strauss, L.
    Chitnis, L.Llewelyn-Davies of Hastoe, B. [Teller.]Taylor of Gryfe, L.
    Collison, L.Taylor of Mansfield, L.
    Cooper of Stockton Heath, L.Lloyd of Kilgerran, L.Underhill, L.
    David, B.Longford, E.Wade, L.
    Davies of Leek, L.Lowell-Davis, L.Walston, L.
    Davies of Penrhys, L.McCarthy, L.Wedderburn of Charlton, L.
    Donaldson of Kingsbridge, L.Maelor, L.Wells-Pestell, L.
    Elwyn-Jones, L.Minto, E.Whaddon, L.
    Evans of Claughton, L.Mishcon, L.Wigg, L.
    Fisher of Rednal, B.Noel-Baker, L.Wigoder, L.
    Gaitskell, B.Ogmore, L.Wilson of Radcliffe, L.
    Gladwyn, L.Oram, L.Wynne-Jones, L.
    Gosford, E.Peart, L.


    Abercorn, D.Barnby, L.Chelwood, L.
    Abinger, L.Bellwin, L.Cockfield, L.
    Addison, V.Belstead, L.Colville of Culross, V.
    Airey of Abingdon, B.Berkeley, B.Cottesloe, L.
    Allerton, L.Bessborough, E.Craigavon, V.
    Alport, L.Boyd-Carpenter, L.Craigmyle, L.
    Ampthill, L.Bridgeman, V.Croft, L.
    Atholl, D.Brookes, L.Cullen of Ashbourne, L.
    Avon, E.Cathcart, E.Davidson, V.

    I see pictures of Ministers opening houses all over the place for the Scottish Special Housing Association. They are proudly paraded in the Scotsman and the Glasgow Herald—pictures of the Minister of State, or the Under-Secretary for this and that. Yet here, despite all their smiles, all their plaudits and all their congratulations, they come along and say, "Ah!—we do not think you are all that efficient; we do not say that you are not efficient, but we do not exactly trust you"; and for no reason at all, or for the rather specious reason of equity—comparing them with a local authority where there is no comparison whatever—they say, "We must have them in this Bill". My Lords, I think they should not be in this Bill, and I am afraid I have to press the amendment.

    5.31 P.m.

    On Question, Whether the said amendment (No. 50) shall he agreed to?

    Their Lordships divided: Contents, 72: Not-Contents 117.

    De Freyne, L.Keyes, L.Radnor, E.
    Denham, L. [Teller.]Killearn, L.Rawlinson of Ewell, L.
    Digby, L.Kinloss, Ly.Redmayne, L.
    Dormer, L.Kinnaird, L.Reigate, L.
    Drumalbyn, L.Kinross, L.St. Davids, V.
    Ebbisham, L.Lindsey and Abingdon, E.Sandford, L.
    Ellenborough, L.Long, V.Sandys, L. [Teller.]
    Elliot of Harwood, B.Loudoun, C.Savile, L.
    Exeter, M.Lucas of Chilworth, L.Seafield, E.
    Faithfull, B.Luke, L.Shannon, E.
    Ferrers, E.Lyell, L.Skelmersdale, L.
    Freyberg, L.Mackay of Clashfern, L.Spens, L.
    Gage, V.Macleod of Borve, B.Stamp, L.
    Gainsborough, E.Mancroft, L.Stanley of Alderley, L.
    Gormanston, V.Mansfield, E.Strathspey, L.
    Gowrie, E.Marley, L.Swinfen, L.
    Grimston of Westbury, L.Middleton, L.Torphichen, L.
    Haig, E.Mills, V.Tranmire, L.
    Hailsham of Saint Marylebone, L. (L. Chancellor.)Milverton, L.Trefgarne, L.
    Monk Bretton, L.Trenchard, V.
    Halsbury, E.Montgomery of Alamein, V.Trumpington, B.
    Harmar-Nicholls, L.Morris, L.Vaux of Harrowden, L.
    Harvington, L.Mottistone, L.Vernon, L.
    Hatherton, L.Mowbray and Stourton, L.Vickers, B.
    Hemphill, L.Murton of Lindisfarne, L.Watkinson, V.
    Henley, L.Newall, L.Willoughby de Broke, L.
    Hill of Luton, L.Northchurch, B.Wise, L.
    Holderness, L.Nugent of Guildford, L.Wynford, L.
    Hornsby-Smith, B.Orkney, E.Young, B.
    Ilchester, E.Orr-Ewing, L.
    Kemsley, V.Penrhyn, L.

    Resolved in the negative, and amendment disagreed to accordingly.

    [ Amendment No. 50ZA not moved.]

    Clause 19 ( Exemption of small direct labour organisations from requirements of Part III]:

    5.39 p.m.

    moved Amendment No. 50A:

    Page 20, line 11, leave out ("less") and insert ("other").

    The noble Lord said: My Lords, I beg to move Amendment No. 50A and, at the same time, to speak to Amendment No. 50B. I must apologise to the House for my inconsistency, for having spent the earlier part of the day complaining that the Secretary of State was taking greater powers than he needed to achieve his purpose, I am here suggesting that he should have some more. We greatly welcomed, I think, Clause 19 when it was introduced as a new clause at Committee stage allowing direct labour organisations below a figure of 30 to be exempted from the provisions of this part of the Bill. The Secretary of State has taken power to amend that number by order should he see fit to so do, but only downards. I am suggesting that he should have power to vary either upwards or downwards at his discretion. His discretion will be controlled by the need to lay regulations, and for those to be laid before Parliament and to be subject to the Negative Resolution procedure. I would have thought that under those circumstances this would be a sensible adjustment, and I beg to move.

    My Lords, the Government have recognised that there is a point at which the full benefits to be gained from the Bill will not be realised. It is a matter of judgment to decide where that point comes. We believe that point is reached when an authority employs 30 or less in its direct labour organisation. By building industry standards, an organisation employing 30 operatives and with an annual turnover of about a quarter of a million pounds is quite big. The clause will permit those organisations which are genuinely minimum-level DLOs to escape the rigours the Bill imposes. We should not wish to see a higher figure. I recognise that what my noble friend suggests gives a certain discretion; but we have been assailed on all sides for precisely the opposite reason. I do not think that at this moment we should depart from the path on which we have embarked. Therefore, perhaps he may not feel so deeply about it as to wish to press the amendment.

    My Lords, I cannot press the Secretary of State to take powers if he does not want them. I beg leave to withdraw the amendment.

    Amendment, by leave, withdrawn.

    [ Amendment No. 50B not moved.]

    moved Amendment No. 51:

    After Clause 19, insert the following new clause:

    (" Works undertaken on behalf of an authority

    .—(1) Notwithstanding anything in section 101(10) of the Local Government Act 1972, the Local Authorities (Goods and Services) Act 1970 or any other enactment, a local authority may enter into arrangements for the construction of buildings, or the carrying out of other works by them on behalf of an authority to which this section applies.

    (2) This section applies to—

  • (a) another local authority within the county or adjoining county
  • (b) the water authority
  • (c) the police authority
  • (d) the Passenger Transport Executive
  • (e) the Health Authority (within the meaning of section 128(1) of the National Health Service Act 1977) in the county.").
  • The noble Lord said: My Lords, an amendment similar to the one which I am moving this evening was moved at the Committe stage but it was caught up in a debate on a number of amendments and the discussion on this particular one was very brief. At the Committee stage, the noble Lord the Minister said that authorities must first prove that direct labour is the better way of doing work in their own areas. If commercial competitiveness is proven, why should not a local authority undertake work for other public bodies and for other nearby local authorities? I would ask what principle is involved in refusing this provision if competitiveness and accountability are observed.

    The noble Lord, Lord Bellwin, at column 265 of the Official Report for 7th October, said:


    the local authorities—

    "must keep their accounts clearly on a trading basis, earn a return on capital and prove all this before they can think of expanding".

    He was not opposed, I gather, to the principle which we are advocating in this amendment. Therefore, I ask what principle is involved in refusing the amendment.

    At Committee stage, my noble friend Lord Bruce reminded the Committee that the working party on direct labour organisations which reported in August 1978 recommended that direct labour organisations should be permitted to undertake work outside, as well as inside their parent local authorities, for other local authorities and for public bodies. The terms of the amendment provide a new clause which will enable this to be done. This extension would help direct labour organisations to make their position more viable. It would further assist them to serve the desired aim of the return on capital—and this was the principle, your Lordships will remember, in the relevant clause of the Greater Manchester Bill which was approved by this House, and approved after consideration by your Lordships' Select Committee which went into this particular clause in that Bill with great care and decided that the Greater Manchester Authority should be allowed to have that extension which we are asking for in this particular amendment.

    This provision would also help continuity of work and it would help to prevent decasualisation. It is one of the evils of the building and construction industry that when the job is done men are just pushed out. Continuity of work is an aim which I am sure this House will wish to have achieved. It will enable local authorities to be ready with adequate staff for emergencies—and we discussed the question of emergency work on an amendment last Friday. Clause 15 gives the Secretary of State control if the finances get out of hand and, therefore, there is that safeguard to what we are proposing. There is that reserve power and, while we opposed it, the House has now agreed to it; therefore there is that reserve power.

    Lastly, there are accidents of geographical boundaries which should not prevent a local authority asking another local authority to do work for it. If the amendment is rejected, it would stop a local authority from doing that. I am sure that many noble Lords could think of examples where geographical boundaries would make it common sense that one authority should ask another with an adequate direct labour organisation to do work for it. The Minister has on other matters appealed for flexibility and has justified flexibility. That has been argued in other Bills before this House. This is an example of common sense and flexibility which I hope your Lordships will agree to accept. I beg to move.

    My Lords, I should like to support the amendment moved by the noble Lord, Lord Underhill. It does not seem that there can be any political or philosophical reason why the Government should not give the direct labour organisations a wide discretion to carry out new work and maintenance, unless they are saying that they want to reduce direct labour organisations to mere emergency services, which I gather they do not. It seems to me, for the reasons the noble Lord has given, that for convenience and flexibility the only way a direct labour organisation can become competitive is if they can commercially tender for a wide variety of jobs and public and various works for the list of bodies mentioned in the amendment. I think it is a valid point that, from the experience of many noble Lords, a road or something like that would pass in and out of two or three local authorities. It would be more convenient and cheaper if one direct labour organisation was allowed to deal with that, rather than that two, three or four different bodies should deal with small pieces of the work.

    Finally, and probably most importantly, your Lordships will remember a certain Friday morning not long ago when we had a very rumbustious debate about the Greater Manchester Bill. It was an occasion when I saw angry passions rise to a higher point than I remember and where a number of noble Lords on the Government side voted in favour of this very principle being enshrined in the Greater Manchester Bill. As this Bill is drawn, it seems that the Local Government, Planning and Land (No. 2) Bill could overtake the Manchester Bill and undo all the work that was done by your Lordships on that occasion. Therefore, I should have thought that on grounds of flexibility, of economy and of logicality this amendment should be supported.

    My Lords, I must say that I do not quite know what to make of what the noble Lord, Lord Evans, has just said, but I think I should put him right on one point. The debate on the Greater Manchester Bill was not on this issue at all; it was on the issue of constitutionality—as to whether or not something which has been decided by a Select Committee of your Lordships' House should later he reversed. It was not at all on the merits or otherwise of the particular point. I wonder also if the noble Lord quite appreciated what he was saying when he said that only if this amendment is approved can direct labour organisations become competitive. We have been hearing talk for so long now telling us how competitive they already are. I have no wish to attack direct labour organisations as such, but I hope that they have not had to rely on this type of possibility to be competitive in all they have been doing over the years.

    My response to the noble Lord, Lord Underhill, is to ask what are the basic objectives? Why are direct labour organisations set up in the first place? Surely it is to carry out a function within their own authority, using their ratepayers' money, as I have said more than once, willingly subscribed as risk capital. Here we are contemplating their going into speculative ventures in competition with the private sector. I just do not see how that does other than destroy the whole argument to justify direct labour organisations being set up by an authority. They are not there to go into business as such. They are set up for a specific purpose, and if we accept, as I accept, that certain functions that they carry out are special to them—emergency situations, certain other maintenance work, and so on—then provided they are competitive, provided they fulfil the requirements of this Bill, I accept them and think there is a place for them. Noble Lords are contemplating widening this whole area of operation in this way. I must say, without going on about it, that we find the amendment quite unacceptable.

    My Lords, it really is not extending the Bill in any way. It is putting into the Bill what local authorities have been doing for quite a long time. Many local authorities, on what one might call the periphery of their area, have need for something to be done when it would be quite expensive for them to put it into operation because it is perhaps 10 or 12 miles from the base at which they normally operate, and so they ask the adjoining authority to take on the task for them. This weekend I was travelling in a part of the country and I came across a big hoarding which said, "Road improvement scheme being carried out on behalf of such and such county council". It gave the name of the local authority. This is the kind of thing that local authorities are doing. All we are asking is that it should be legalised by putting it into the Bill.

    My Lords, I want to refer to the underlying concern, perhaps the unspoken concern. We are talking about the capacity to be competitive; we are talking about direct labour organisations. In truth, whether they are or are not competitive is always going to be open to question. That is the underlying concern, because if one has six competitors and five can go broke by reason of their irresponsibility, and one cannot, that is not competition in terms that business understands it. I think it is best to out with these truths. We might try to rest upon return on capital employed and our accountants might like to finesse and say, "Do you mean return on capital employed? Do you mean return on assets employed? Do you mean return on assets managed?" We all know that in large organisations—not merely local authorities but large businesses—there are vested interests who commit themselves to an activity because it creates managerial status, managerial salary and privilege. Therefore, one sets up a situation which is full of inequality and which cannot, beyond all reasonable doubt, satisfy the test that it is competitive, because it lacks the ultimate sanction.

    My Lords, I am grateful for the support of the noble Lord, Lord Evans of Claughton, and of my noble friend Lady Fisher. I believe they have put forward common-sense arguments as to why this amendment should be carried. It does seem so much common sense. A local authority may say, "Look here, you can do this job better for us; you are nearer or you have got a more effective organisation. Do it for us". Leaving out the public bodies, that would appear to be a commonsense argument for approving this amendment.

    I should like to give my impression of what took place on that Friday morning on the Greater Manchester Bill. If your Lordships will recall, your Select Committee was given instructions to look at a particular clause which was inserting similar powers in the Greater Manchester Bill. It was told to look carefully at this clause to see whether or not the provisions were unfair to the private sector. Your Committee reported that they were not unfair to the private sector. Admittedly there was a constitutional argument on the floor of this House, but there was also an amendment moved to delete that clause. The House refused the amendment to delete that clause; therefore in the Greater Manchester Bill there is this provision, approved by Parliament, and we were asking this afternoon for its extension. I think we are in a situation where, unless the building is almost going to fall down, we are not going to get amendments accepted by the Government, who seem to be in this situation because of the timetable and do not have regard to the common sense and the sensibility behind any amendment. It is not my intention to divide the House, but a principle is involved here and I will ask that the amendment be negatived.

    My Lords, before the House negatives the amendment, I think noble Lords will want to note the quite extraordinary argument used a moment or two ago by the noble Baroness. She said that at present DLOs were doing jobs which required legalisation. If that is true, it seems to me the worst possible argument for extending their powers.

    On Question, amendment negatived.

    Clause 20 [ Consequential repeal or amendment of local statutory provisions]:

    5.55 p.m.

    moved Amendment No. 52:

    Page 21, line 7, leave out from ("to") to end of line 8 and insert ("an affirmative resolution of both Houses of Parliament").

    The noble Lord said: My Lords, at the Committee stage, when a similar amendment was proposed, I asserted that this was another example of the sweeping power being given under this Bill to the Secretary of State—another example of an arbitrary power. I would remind your Lordships that it is a power given to the Secretary of State to repeal or amend a local Act; in other words, a power to vary an Act of Parliament; power to amend or repeal legislation which has been approved by Parliament; and it can be amended or repealed by the Secretary of State. The amendment endeavours to preserve fully the authority of Parliament on legislation which has been approved by Parliament. I was grateful to other noble Lords who, in that debate at the Committee stage, came in to support the view of the seriousness of this power being given to the Secretary of State. I am pleased that the noble Lord, Lord Boyd-Carpenter, is with us this afternoon because he said to his noble friend—it is at column 269:

    "It is, it seems to me, quite a serious matter for a Minister to repeal part of a statute, be it a public or a local statute".

    The noble Lord, Lord Bellwin, said that there was a safeguard that under subsection (3) the Secretary of State would be required to consult the local authority.

    However, what type of safeguard is that? Let us say that the local authority concerned argues that there should not be repeal or amendment of its local Bill. That could be set on one side by the Secretary of State. There is no provision for any appeal, and the Secretary of State can decide, irrespective of the representation that may be made to him, that he will proceed with action by order to repeal oramend. Therefore, there are good reasons why any action of this kind should be by Affirmative Resolution and not the Negative Resolution procedure as is provided in the Bill.

    Your Lordships will recall that there were serious arguments advanced for this. I was pleased that at the Committee stage the noble Lord, Lord Bellwin, was able to say that he would think very carefully about this and see what we might or might not do about it. On that basis, the amendment was withdrawn. This is such a serious matter, affecting the repeal or amendment merely by Negative Resolution procedure of any Act of Parliament that has been approved, that I hope that the Minister will be able to say that on reflection he will agree to what we are asking in this amendment; that is, that we change the Negative Resolution procedure to an Affirmative Resolution. We are not arguing a great principle about the Bill but one of the authority of Parliament to take what is a rightful procedure in a matter of this kind. I beg to move.

    My Lords, it is quite true that I promised the Committee that I would examine this provision and look into the procedures. I assure your Lordships that I have done exactly that and very carefully. But I have to advise that I see no case for it. Before I say anything else, I ought to say that I have been impressed by exactly what is involved in the Negative Resolution procedure. I have heard it diminished in its importance so often in your Lordships' House that I assumed, in my ignorance, that only the Affirmative Resolution procedure could be the real safeguard. But the more that one looks at exactly what is involved, the more one realises that it is indeed very much a safeguard. I think it was my noble friend Lord Boyd-Carpenter who said something on those lines not long ago. Having had a look at it, I endorse that.

    This clause is very much a reserve power. It will allow the Secretary of State to repeal any part of a local Act of Parliament whose provisions are inconsistent with this one. This provision is a standard one. There is nothing unusual about this. It is a perfectly proper way of ensuring that new requirements determined on by Parliament prevail over inconsistent provisions which may exist in local Acts. I have examined the precedents and there are many. The Administrations of both parties have provided recent examples. Section 262 of the Local Government Act 1972 is one. Section 81 of the Local Government (Miscellaneous Provisions) Act 1976 is another. There is in the Health and Safety at Work Act 1974 a power of this kind which is subject to no parliamentary procedure at all.

    In the clause before us now the orders will be used to amend or repeal local Act powers which are inconsistent with the provisions of Part III of this Bill. They will not remove any power to carry out work which may exist in local Acts, but simply ensure that when carrying out such works, the financial requirements of this Bill bite just as they do on "works contracts" and "functional work".

    I said that before the Secretary of State could make an order, he would be required under subsection (3) to consult the local authority concerned. I repeat that again because I think it is important. With this safeguard, and Parliament having signalled its approval of the requirements for competitive tendering and proper accounting set out in this part of the Bill, we believe that it is unnecessary to require specific parliamentary approval of every application of these principles to individual authorities. To do so we feel would not be an appropriate use of Parliament's time. With my other observations on the Negative Resolution procedure, I ask the noble Lord not to press the amendment.

    My Lords, the noble Lord said that it is a reserve power; but then he said that he could not ask that Parliament shall waste its time on all the applications. Therefore, there is a possibility that there may be a number of applications, not merely just a reserve power. I can recall the arguments at Committee stage about the difference between Negative and Affirmative Resolution procedures by noble Lords with far greater experience than I who came down in favour of using the Affirmative Resolution procedure in a case like this. I have looked through the Bill and there are numerous examples of where the Affirmative Resolution procedure is being proposed by the Government, and I should have thought that this is one which is of great importance. It affects the repeal or amendment of legislation. The Minister has made his position quite clear. Therefore, I will not withdraw, but I will ask this amendment to be negatived and will not call for a Division.

    On Question, amendment negatived.

    Clause 21 [ Part III—supplementary]:

    6.7 p.m.

    moved Amendment No. 53:

    Page 21, line 23, at end insert—
    ("Provided that no such order shall specify a date prior to 1st April 1982".).

    The noble Baroness said: My Lords, in moving this particular amendment, it is true to say that all the local authority associations, the Association of Municipal Authorities, the Association of County Councils and the Association of District Councils, while they may not be exactly agreeing to the words of the amendment, have the same feeling that there is a need to give local authorities more time than is specified by the Secretary of State when he has given a date for commencement. That is, so far as I understand it, to come into operation on 1st April next year.

    All the local authority associations have drawn attention to the Minister the fact that there is a great deal of work to be done on the implementation of the procedures to do with accountancy. These have not yet really been worked out. There are all the regulations and directions. Heaven knows! there are enough regulations to keep the Civil Service happy for years, I should imagine, in this first part of the Bill. All those have to be put to the local authorities. The Minister said in Committee that they would continue to listen to further arguments from the local authorities on what they wanted to put in on timing, but they would have to see how things went. They would need good, hard evidence if they were to move away from the targets set for this Part of the Bill.

    The progress of the Bill—and I do not need to remind your Lordships about this—has been very, very seriously altered. The Bill will not get the Royal Assent until practically at the end of this session. Therefore, this gives perhaps four months for local authorities to start changing over their procedures, especially those matters that are to do with maintenance. This is going to be a new set of documentation; a new set of alterations; and it will be of profound importance to local authorities that, to start with, they get this right. The tendering documents that will have to be issued for maintenance are something that the local authorities have to feel their way on and make sure that the right action is taken in the beginning, bearing in mind that that depends on whether or not they stay in business. If they do not get the tendering documents correct to start with, that might be a future hazard for them.

    So I would ask the Minister to recognise the great difficulties that local authorities are to be placed in and some of the difficulties that are being put in their path. I would ask the Minister whether he would look again at this matter and make sure that all the negotiations have been gone through with the local authority associations. What we are asking for in this amendment is for the date to be delayed for 12 months. That will obviously help those local authorities which are going to work with the Secretary of State to try to make this work. The three-year period in earning a rate of return on capital will be much easier for them if they are given that 12 months' grace. I beg to move.

    My Lords, I again rise to support this amendment, as I did in Committee and as did my noble friend Lord Ridley on behalf of the Association of County Councils, because it is perfectly true that all the associations feel that this part of the Bill is being thrust upon them. On the other hand, I have an amendment of my own shortly to be considered and I should like to speak to that now, because it seeks to apply this delay in respect of this Part of the Bill in connection with one or two items. As my noble friend said at Committee stage, it is true that the authorities know what is to be contained in the regulations to control tendering, as set out in Clauses 5 and 7. I still think the time is short to get all this into operation, but the Government have made that clear.

    On the other hand, when we turn to the accounting and financial side of the matter, my noble friend said in Committee that the Chartered Institute of Public Finance and Accounting is developing, with the Department of the Environment's support, a standard computer system to enable authorities to meet the requirements laid down in the Bill. That may be so, but I am advised that it will not be ready in time to meet the requirements of the Bill that come into force in April 1981. It may be ready at some time after that and will then be useful, but it is certainly not going to be available and put into effect by the introduction date of April 1981. Although it is true to say that a draft code of practice prepared by the same Chartered Institute has been available since July, a draft is not the same thing as a settled set of regulations approved by Parliament. Therefore, for those two reasons I think there is a case to be made for considering delay in introducing the accounting parts of this procedure, even if there is not quite such a strong case for delaying the tendering arrangements. I shall be interested to hear how my noble friend justifies the introduction of the accounting and financial side of this matter when the preparations are at this early stage.

    My Lords, the county councils have only a small number of direct labour organisations, but we have done a survey of our members and this shows that this part of the Bill will result in the need for 331 new technical officers and 54 new accountants. These will be required regardless of when it comes into force, but in the first year it is obviously going to be that much more difficult to get the organisation going. I should particularly like to support my noble friend Lord Sandford, who says that the CIPFA computer accounts programme will not be ready until probably next year. The noble Lord, Lord Bell-win, said that we had had lots of warning, but when you are talking of this number of staff, surely you cannot employ them in advance of a code of practice which has not yet been approved and the form of which you do not exactly know. Most local authorities do not have surplus manpower.

    My Lords, I do not know where this figure of 331 technical officers comes from and, with great respect to my noble friend, I just do not accept it at all. I should want a lot more information (a) as to exactly how the figure is arrived at, and (b) how this work would fit into the existing work which such officers already carry out; because time and time again when new requirements have been put upon local authorities and when so many of them have said: "That's going to need so many extra staff" I have heard them go on to say, "How are we going to absorb this with our present staff"? It means everyone pushing up; it means looking again at the distribution of work; it means considering doing exactly what a private business would do, faced with extra work imposed upon it. So while I do not for a moment say that my noble friend is wrong—and indeed how can I, when I do not even know the basis of how he makes it up?—I must nevertheless put a reservation on it as such.

    I fully understand the local authorities' wish that the implementation of this part of the Bill should be delayed. On the other hand I am equally conscious of the strength of the concern in the building industry and among ratepayers who foot the bills for DLOs that we should act as soon as possible to ensure that no further public money is wasted by inefficient building departments. In saying that, I do not mean all of them. The noble Baroness and I had a little interchange on that point the other day and I think we probably agreed at least upon this point between us: that they were not all inefficient and that they were not all efficient. How could they be?

    But, my Lords, we have to strike a balance. We believe that the authorities have had time to put their houses in order, though not, as my noble friend Lord Digby said, to be able to look at the nuts and bolts of exactly what is required: that is understandable. But the fact is that we are going back in time to August of last year, and I should have thought that responsible local authorities would have started moving in the right direction. Indeed I am sure that most of them have, and that implementation is still possible. We have made concessions to ease the burden of starting the new system, with easier tendering requirements—particularly the freeing of all maintenance work below £10,000 and of all highway authorities' winter maintenance programmes from compulsory tendering, together with de minimis exemption for the smallest authorities.

    There have been concessions also in one or two other minor ways. But we really cannot offer further relaxations. Whenever the time comes, it is always at that moment that you have to get to it. I believe this is what local authorities will do, because in matters of this kind the track record is a very good one. I have seen so many things brought in that had to be taken on board, and were taken on board. My goodness me! I pay a tribute to many of them for the way they have done those things. I am sure they will do this the same way.

    My Lords, may I ask the noble Lord for a little information? Having declared a moratorium on all building, where is the opportunity for all this wastage that is somewhere in the lost horizon? What would it do to the Government to delay the implementation, as asked for by a number of experts, and give the local authorities a chance to think about how to get the increased staff they will need? There will be a need for increased staff, and I sincerely ask him whether he can say if the moratorium on housing has altered the meaning of this clause and its implementation and purpose.

    My Lords, I am sorry that the Minister has given the reply that he has. As the noble Lord, Lord Sandford, said, together with the noble Lord who spoke on behalf of the ACC, these are the local authority bodies speaking for the whole of the country. I might have thought that the Minister would not accept it because I was speaking: that might be the voice of the Association of Municipal Authorities and therefore not perhaps particularly important to his party's thinking. I should not have disagreed with that. But the fact that all the local authority associations are concerned about the starting date shows that the Government think very poorly of those who serve on local authorities up and down the country, and take no notice of those officers who guide and give information to councillors.

    The noble Lord who spoke on behalf of the ACC gave some figures. I should be the last one to challenge those figures, but the authorities themselves would challenge them, especially the ACC. They would want to make sure that they were doing their best for the Government and helping to get the Bill through. It seemed quite serious for those figures to be challenged.

    I must remind the Minister that all local authorities have been trying to cut back their staffs. That is what the Government have told them to do, so that is what they have been doing. They have been doing their very best to cut back. I want to make particular reference to the maintenance departments. Their whole revamping will have to be looked at in a different light. People will not follow the normal pattern of costing and there will be a completely new accounting procedure. I am sorry that the Minister cannot accept the amendment and I intend to press it to a Division.


    Airedale, L.Gregson, L.Oram, L.
    Bacon, B.Hale, L.Peart, L.
    Beaumont of Whitley, L.Halsbury, E.Phillips, B.
    Bernstein, L.Hampton, L.Ponsonby of Shulbrede, L. [Teller.]
    Beswick, L.Hanworth, V.
    Birk, B.Hatch of Lusby, L.Rhodes, L.
    Blyton, L.Houghton of Sowerby, L.Ridley, V.
    Boston of Faversham, L.Howie of Troon, L.Ross of Marnock, L.
    Bowden, L.Jacques, L.Sandford, L.
    Brockway, L.Kilmarnock, L.Segal, L.
    Brooks of Tremorfa, L.Kinloss, Ly.Shinwell, L.
    Chitnis, L.Kirkhill, L.Stamp, L.
    Collison, L.Lee of Newton, L.Stedman, B.
    Cooper of Stockton Heath, L.Llewelyn-Davies of Hastoe, B.Stewart of Alvechurch, B.
    David, B. [Teller.]Lloyd of Kilgerran, L.Stone, L.
    Davies of Leek, L.Loudoun, C.Strauss, L.
    Davies of Penrhys, L.Lovell-Davis, L.Taylor of Mansfield, L.
    Digby, L.McCarthy, L.Underhill, L.
    Elwyn-Jones, L.Maelor, L.Wade, L.
    Evans of Claughton, L.Milverton, L.Wells-Pestell, L.
    Fisher of Rednal, B.Minto, E.Whaddon, L.
    Gainsborough, E.Mishcon, L.Wigoder, L.
    Gaitskell, B.Noel-Baker, L.Wilson of Radcliffe, L.
    Greenwood of Rossendale, L.Ogmore, L.Winstanley, L.


    Abercorn, D.Ellenborough, L.Mancroft, L.
    Abinger, L.Elliot of Harwood, B.Mansfield, E.
    Airey of Abingdon, B.Exeter, M.Marley, L.
    Allerton, L.Freyberg, L.Middleton, L.
    Alport, L.Gage, V.Mills, V.
    Atholl, D.Gainford, L.Monk Bretton, L.
    Avon, E.Glenkinglas, L.Montgomery of Alamein, V.
    Barnby, L.Gormanston, V.Morris, L.
    Bellwin, L.Cowrie, E.Mottistone, L.
    Belstead, L.Grimston of Westbury, L.Mowbray and Stourton, L.
    Bessborough, E.Haig, E.Murton of Lindisfarne, L.
    Birdwood, L.Hailsham of Saint Marylebone, L. (L. Chancellor.)Northchurch, B.
    Boardman, L.Nugent of Guildford, L.
    Boyd-Carpenter, L.Harmar-Nicholls, L.Orkney, E.
    Brabazon of Tara, L.Harvington, L.Orr-Ewing, L.
    Bridgeman, V.Hatherton, L.Pender, L.
    Brookes, L.Henley, L.Penrhyn, L.
    Brougham and Vaux, L.Hill of Luton, L.Radnor, E.
    Campbell of Croy, L.Holderness, L.Rawlinson of Ewell, L.
    Cathcart, E.Hornsby-Smith, B.Reigate, L.
    Chelwood, L.Inglewood, L.Renton, L.
    Cockfield, L.Kemsley, V.St. Aldwyn, E.
    Colville of Culross, V.Keyes, L.Sandys, L. [Teller.]
    Cottesloe, L.Killearn, L.Savile, L.
    Craigavon, V.Kinnaird, L.Seafield, E.
    Craigmyle, L.Kinross, L.Skelmersdale, L.
    Croft, L.Lindsey and Abingdon, E.Soames, L. (L. President.)
    Croham, L.Long, V.Spens, L.
    Cullen of Ashbourne, L.Lucas of Chilworth, L.Stanley of Alderley, L.
    Davidson, V.Luke, L.Swinfen, L.
    de Clifford, L.Lyell, L.Torphichen, L.
    Denham, L. [Teller.]Mackay of Clashfern, L.Tranmire, L.
    Drumalbyn, L.Macleod of Borve, B.Trefgarne, L.

    6.22 p.m.

    On Question, whether the said amendment (No. 53) shall be agreed to?

    Their Lordships divided: Contents, 71; Not-Contents, 108.

    Trenchard, V.Vernon, L.Wise, L.
    Trumpington, B.Vickers, B.Wynford, L.
    Vaizey, L.Watkinson, V.Young, B.
    Vaux of Harrowden, L.

    Resolved in the negative, and amendment disagreed to accordingly.

    6.30 p.m.

    had given notice of his intention to move Amendment No. 53A:

    Page 21, line 23, at end insert ("provided that no such order in respect of the accounting and financing provisions shall specify a date prior to 1st April 1982.".).

    The noble Lord said: My Lords, I had intended to move this amendment, but in the light of the result of the Division all I wish to say is that I think that that decision will in the end lead the Government to recognise that it will be a case of more haste, less speed, and, I am afraid, much greater cost.

    [Amendment 53A not moved.]

    Clause 22 [Right of councillor to opt for financial loss allowance]:

    moved Amendment No. 54:

    Page 22, line 33, leave out ("(7)") and insert ("(3)").

    The noble Earl said: My Lords, this amendment is necessary to correct either a printing error or a drafting mistake. It is designed to ensure that the Bill is internally consistent and also to clarify any doubts about the application of this clause to Scotland. The effect of the amendment is to create a new subsection within the clause which explicitly disapplies the whole of the clause to Scotland. I beg to move.

    My Lords, this is a very important amendment. I am vet y glad that the Scottish Office was awake at the time that I made the point at the Committee stage: that to put in that it would not apply to Scotland when what we are seeking to do is to put a new clause into a purely English Act, was otiose. But I hope that the Scottish Office realise what they are doing. We cannot make one amendment without making sure that all the consequential amendments are also made. If any Scot wants to know how much of this applies to Scotland and starts at the beginning of the Bill and reads it through, he will have a devil of a job. No Scottish Act of Parliament should be dealt with in this particular way. But if he does want to find out, he goes to Clause 185, whose rubric is "Scotland". Subsection (1) says that Parts V, IX, XIV, XV and XVII of this Act apply to Scotland to the extent specified in so-and-so. And subsection (2) says that Parts VI, VIII, X and XII of this Act do not apply to Scotland. This means that those parts which are not mentioned there apply entirely to Scotland. Noble Lords will notice that Part IV is not mentioned there at all and it is Part IV that we are now dealing with. We have just left out one subsection of Part IV, so obviously Part IV applies to Scotland only in part. When they come to it, will the Government undertake to amend Clause 185 so that simple-minded Scotsmen who have the sense to look it up as one thing which guides the application to Scotland will be able to he assisted in respect of Part IV? Otherwise, the amendment is impeccable.

    My Lords, I am happy to give the undertaking that the Scottish Office, whenever it arises from its slumbers, will pay regard to the more tautologous arguments of the noble Lord. It always does so.

    On Question, amendment agreed to.

    Clause 23 [ Amendments relating to allowances to members of local authorities and other bodies]:

    [ Amendment No. 54A not moved.]

    moved Amendment No. 55:

    After Clause 24, insert the following new clause:

    (" Vice-Chairmen of councils in Scotland and application of Part IV to Scotland

    .—(1) The following section shall he inserted after section 3 of the Local Government (Scotland) Act 1973:—

    3A.—(1) A council may appoint a member of the council to be vice-chairman of the council.
    (2) The vice-chairman shall hold office until the expiry of the term of office of the council.
    (3) A person holding the office of vice-chairman shall be eligible for reelection as vice-chairman but shall cease to hold that office upon ceasing to be a councillor.
    (4) Subject to any standing order made by council, anything authorised or required to be done by, to or before the chairman may be done by, to or before the vice-chairman.
    (5) A council may pay the vice-chairman, for the purpose of enabling him to meet the expenses of his office, such allowance as the council think reasonable."

    (2) Section 22 above does not extend to Scotland, and this section extends to Scotland only.").

    The noble Earl said: My Lords, during the Committee stage I moved a very similar amendment whose object was to bring Scotland into line with England and Wales and to allow it to have the same privileges and provisions. During the Committee stage the amendment was very much shorter. It was that a council in Scotland may appoint a member of the council to be vice-chairman of the council and then, having appointed him for the purpose of enabling him to meet the expenses of his office, to claim such allowance as the council may think reasonable.

    This provision already exists in the Local Government Act 1972, but it does not exist in the Local Government (Scotland) Act 1973. There is no doubt whatsoever in my mind that it should, for at present the chairmen of the councils in Scotland are immensely overworked and rely entirely upon vice-chairmen, who are technically not vice-chairmen although they are carrying out the jobs of vice-chairmen. They also rely upon the good will of those people, since the councils are not able in any case to make suitable allowances to them. In making that particular amendment during the Committee stage, I was very grateful to receive support from all parts of the Committee. The noble Earl the Minister of State was kind enough to say that in view of that lie would take back the matter and have another look at it. On that understanding, I withdrew the amendment.

    Since that time I have received a letter from the noble Earl the Minister and Amendment No. 55 is a copy of a suggested draft that the Minister sent to me. It is slightly longer than mine was originally, for the simple reason that I had automatically assumed that if one retired from a council one would no longer be vice-chairman of it, and one or two other small items like that. But the draftsmen must be safe. Consequently, the amendment has become longer.

    However, subsection (1) is entirely in keeping with my original amendment, and I am most grateful to the noble Earl for having sent this advice to me. Subsection (2) touches a little upon a matter which the noble Lord, Lord Ross of Marnock, commented upon a moment ago. It is a tidying-up purpose. By including in subsection (2) that Section 22 above does not extend to Scotland, and that this section only extends to Scotland, it is hoped that simple-minded Scots like the noble Lord and I will understand what does and what does not apply to Scotland.

    In conclusion, the amendment in subsection (1) is something which I genuinely believe that councils in Scotland require. As we all know, at present they are overburdened. Individuals are unquestionably carrying a great responsibility upon their shoulders. I trust very much that this amendment may meet with the approval of your Lordships' House. I beg to move.

    My Lords, as the noble Earl has said, this amendment is acceptable to the Government. I should like to take this opportunity of thanking the noble Earl for drawing the anomaly to our attention and for providing the means of rectifying it. The second part of the new clause, subsection (2), will require a consequential amendment to Clause 185, which has been tabled in my name.

    My Lords, may I thank the noble Earl for his response and for kindly explaining the consequential aspect of subsection (2).

    On Question, amendment agreed to.

    Clause 25 [ Disclosure of information]:

    6.40 p.m.

    The noble Lord said: My Lords, this amendment transposes Clause 25 from Part IV of the Bill, which deals with local government allowances, to which it is not relevant, to a more appropriate place in the Bill. I beg to move.

    On Question, amendment agreed to.

    Clause 26 [ New Valuation lists]:

    The noble Baroness said: My Lords, this matter was discussed and voted on at Committee stage, but we are still not happy about the arrangements that are laid down in this clause; neither are the local authorities nor the local authority associations. I am moving the deletion of the clause to give the Government the opportunity once again to have a look at this point.

    Briefly, what the clause does is to remove the statutory requirement for five-yearly rating revaluations and replace it with the power for the Secretary of State to order, with the agreement of both Houses of Parliament, a revaluation from time to time. This again is giving a particular power to the Secretary of State and, as was pointed out at the Committee stage by, I think, the noble and learned Lord the Lord Advocate, there have been only three revaluations since the war, and all under Conservative Governments. Therefore, it seems odd to celebrate this by abolishing the necessity to have a look every year to decide whether there should be revaluation.

    Under the existing law, without this clause Parliament has to agree every year if a revaluation is to be postponed, whereas under Clause 26, if this were enacted and became part of the Bill (which we hope it will not) Parliament would hear of rating revaluations only when a Secretary of State saw fit to order revaluations. If revaluations are not carried out regularly the tax base is held at an artificially low level and anomalies in valuations arise both between different classes of property within a local authority area and in the level of valuations between local authorities themselves. As a result the tax base can become extremely unfair as well as outdated, and can also distort the distribution of Government grants to local authorities.

    For these reasons, in company with many local authorities and certainly the Association of Metropolitan Authorities, we believe that Clause 26 should he deleted from the Bill. I hope that in the intervening time since the Committee stage the Government have been able to take the opportunity to look into this subject and to see the really telling arguments in favour of the deletion of this clause, which are certainly not on a party political basis. I beg to move.

    My Lords, I should like to support my noble friend. We dealt with this matter at some length in the Committee stage and we are still concerned that while this clause remains in the Bill Parliament will hear about rating revaluations only as and when the Secretary of State sees fit to order such a revaluation. We all know that if revaluations are not carried out at regular intervals the tax base is held at an artificially low level and it becomes unfair and out of date, which in turn affects and distorts the distribution of Government grants to the local authorities. That in turn gives rise to substantial injustices between individual ratepayers in the size of the rate burden that they are all asked to bear.

    Nothing that has been said from the Government Benches so far during the progress of this Bill has detracted from the suspicion that the clause may be a prelude leading to the abolition of domestic rates and towards a total dependence on Government block grant. If and when that happens it will be the end of democratic local government as we know it, because unless the revaluations are kept up to date the local authorities will be put to very serious disadvantage. We said, both at Second Reading and at Committee stage, that noble Lords opposite do not seem to appreciate that rates are the tax base of the local authorities. They base their revenue estimate upon rates; rates are all that local authorities have to live on to survive, and every time revaluation is postponed it means a greater burden on local authorities to finance those services that they have to provide. Then along comes a Bill like this one, seeking to introduce a system obliging the local authorities to hold their rates down to the levels prescribed by the Secretary of State. We shall go on in Part IV of the Bill to look at the reformed type of the grant, which is very much dependent on rateable value. We maintain that the block grant cannot be fairly and equitably determined unless there is a regular revaluation. I hope that since the Committee stage the Government have had time to think and to decide that this clause could go.

    My Lords, as has been said, we had a fairly full debate on this clause in Committee and in fact the Committee divided on the Question whether this clause should stand part of the Bill before it decided to retain it in tit, Bill. I accept, of course, that the valuation lists provide the tax base for the local authorities. I also accept that the longer the time between one revaluation and the next the more there is risk of anomaly growing up, but one has to balance that against the cost of mounting a revaluation. I mentioned at the Committee stage that the party of the present Government had a reasonable record in this connection as compared possibly with that of the party opposite, not to make any political point but just to underline that the Government would not willingly depart from a system of revaluation at fairly regular intervals unless there was good reason; and we consider that there is extremely good reason in the present circumstances.

    The present circumstances are that the Government are engaged in a fundamental review of the rating system and alternatives to domestic rating. While this is going on it would be quite inappropriate to proceed with a revaluation previously planned for 1982. For the future it seems appropriate to keep the position flexible, as proposed in this clause and in Clause 28. Under the provisions of these two clauses we should be able to mount a revaluation in the future if that seemed desirable following our review; and under Clause 28 such a revaluation might be either across the board, or for one class of property only; for example, for non-domestic or domestic property. These possibilities exist but it would be quite wrong to seek to tie the position down more tightly before the review is complete. I think that also implicit in that is that the review is going on, no decisions on this matter have yet been reached, the review has entered a very difficult stage and there is no truth at all in the suggestion that the Government have already decided what is to be the outcome of the review. Accordingly, I ask your Lordships not to agree with this amendment.

    My Lords, may I ask a question? What I find difficult is this. We are having rapid and short-term increases in everything from postage stamps onwards and now this Bill seems to he abolishing altogether the quinquennial system while we are searching for a necessary new system of rating. The frenetic changes of costs upset more than ever the lower income groups in the case of heating, lighting and rates. In a depression period I think a little stability in this area would be worth while. My idea is that this Bill will increase instability in local rates and will cause much dissension.

    On the contrary, my Lords, there will perhaps be even more stability available in the valuation list than under a revaluation system.

    My Lords, may I say how much I welcome the indication my noble and learned friend has given that the Government are reviewing the rating system, because the rating system is. I think rightly, extraordinarily unpopular, very unjust in its incidence, and if a better system can be evolved, as personally I believe it can be, this will be a very great improvement indeed. May I add one further thing. If another system is evolved I hope it will take into account the impact of the rating system on industry and business. In industry we carry very heavy rate liabilities, and of course we have no local government vote. It is a classic example of taxation without representation.

    My Lords, I think we have had from the Minister an admission that the Government are considering the abolition of the domestic rate, and in the questions that followed both my noble friend Lord Davies of Leek and the noble Lord, Lord Boyd-Carpenter, were really making the same sort of point from perhaps a slightly different standpoint. It seems to me what they were saying, and what I am saying in winding up on this amendment, is, if the Government are intending to change the rating system then they have no right, in our opinion, to change what is happening at the present time unless they are bringing forward a viable alternative. If they are considering changing it, then why not leave well alone at the present time?

    My noble friend Lord Davies was absolutely right. The Government do not seem to appreciate that this is going to mean either a 5 per cent. increase in income tax or 5 per cent. on VAT. There really has been no argument put forward by the Minister which really substantiates what is Clause 26, and we have gone quite a bit further than at Committee stage. It does seem to me quite extraordinary that the Government should be pressing on with this when they admit that they are reconsidering the whole subject and every argument put forward has been for leaving things as they are at the moment while considering what to do in the future. If the Minister cannot now say that he has seen the point, and there seems to be a reason for looking at it again on Third Reading, I am afraid I shall have to press this amendment for the deletion of the clause.

    My Lords, I find it slightly difficult to follow every single clause through all the stages of this very complicated Bill. Did I understand the Minister to say that on this


    Airedale, L.Greenwood of Rossendale, L.Oram, L.
    Bacon, B.Hale, L.Peart, L.
    Beaumont of Whitley, L.Hatch of Lusby, L.Phillips, B.
    Bernstein, L.Houghton of Sowerby, L.Ponsonby of Shulbrede, L. [Teller.]
    Birk, B.Howie of Troon, L.
    Boston of Faversham, L.Jacques, L.Rhodes, L.
    Bowden, L.Kilmarnock, L.Ross of Marnock, L.
    Brockway, L.Kirkhill, L.Segal, L.
    Brooks of Tremorfa, L.Lee of Newton, L.Stedman, B.
    Bruce of Donington, L.Llewelyn-Davies of Hastoe, B. [Teller.]Stewart of Alvechurch, B.
    Chitnis, L.Stone, L.
    Collison, L.Lloyd of Kilgerran, L.Strauss, L.
    David, B.Lovell-Davis, L.Taylor of Mansfield, L.
    Davies of Leek, L.McCarthy, L.Underhill, L.
    Elwyn-Jones, L.Maelor, L.Wade, L.
    Evans of Claughton, L.Mishcon, L.Welis-Pestell, L.
    Fisher of Rednal, B.Noel-Baker, L.Wilson of Radcliffe, L.
    Gaitskell, B.Ogmore, L.Wynne-Jones, L.


    Abercorn, D.Allerton, L.Barnby, L.
    Abinger, L.Alport, L.Bellwin, L.
    Airey of Abingdon, B.Avon, E.Belstead, L.

    particular clause we had had the same amendment and divided on it at Committee stage?

    My Lords, I do not think that in the 11 years I have been in the House I have ever known the House divide on exactly the same amendment at two successive stages. I do not think that this is a precedent we should set, and I ask the Opposition Front Bench to think again.

    My Lords, if, with the leave of the House, I may reply, it is not quite the same amendment, because this amendment is to delete the clause and I think I am right in saying that the amendment on Committee was to alter the words. If the noble Lord, Lord Beaumont, thinks it is improper for the House to do this, he is wrong. This is something of such consequence—and we have heard what the Minister has now admitted, so the answer is different from the previous answer—that the House should have an opportunity to vote again. It is put in a different way.

    6.54 p.m.

    On Question, Whether the said amendment (No. 57) shall be agreed to?

    Their Lordships divided: Contents, 52; Not-Contents, 111.

    Bessborough, E.Hailsham of Saint Marylebone, L. (L. Chancellor.)Murton of Lindisfarne, L.
    Bethell, L.Newall, L.
    Boardman, L.Halsbury, E.Northchurch, B.
    Boyd-Carpenter, L.Hanworth, V.Nugent of Guildford, L.
    Brabazon of Tara, L.Harmar-Nicholls, L.Orkney, E.
    Bridgeman, V.Harvington, L.Pender, L.
    Brookes, L.Hatherton, L.Penrhyn, L.
    Brougham and Vaux, L.Henley, L.Radnor, E.
    Caithness, E.Hill of Luton, L.Rawlinson of Ewell, L.
    Campbell of Croy, L.Holderness, L.Reigate, L.
    Cathcart, E.Hornsby-Smith, B.Renton, L.
    Chelwood, L.Kemsley, V.Ridley, V.
    Colville of Culross, V.Keyes, L.St. Aldwyn, E.
    Craigmyle, L.Killearn, L.Salisbury, M.
    Croft, L.Kinloss, Ly.Sandys, L. [Teller.
    Cross, V.Kinnaird, L.Savile, L.
    Cullen of Ashbourne, L.Kinross, L.Soames, L. (L. President.)
    Davidson, V.Lindsey and Abingdon, E.Spens, L.
    de Clifford, L.Long, V.Stamp, L.
    Denham, L. [Teller.]Loudoun, C.Stanley of Alderley, L.
    Digby, L.Lucas of Chilworth, L.Strathcona and Mount Royal, L.
    Drumalbyn, L.Luke, L.Swinfen, L.
    Ellenborough, L.Lyell, L.Torphichen, L.
    Elliot of Harwood, B.Mackay of Clashfern, L.Tranmire, L.
    Faithfull, B.Macleod of Borve, B.Trefgarne, L.
    Ferrers, E.Mansfield, E.Trenchard, V.
    Gage, V.Marley, L.Trumpington, B.
    Gainford, L.Mills, V.Vaizey, L.
    Gainsborough, E.Minto, E.Vaux of Harrowden, L.
    Glcnkinglas, L.Monk Bretton, L.Vernon, L.
    Gormanston, V.Montgomery of Alamein, V.Vickers, B.
    Gowrie, E.Morris, L.Watkinson, V.
    Grimston of Westburv, L.Mottistone, L.Wise, L.
    Haig, E.Mowbray and Stourton, L.Wynford, L.
    Young, B.

    Resolved in the negative and amendment disagreed to accordingly.

    7.2 p.m.

    My Lords, I beg to move that further consideration on Report be adjourned until 7.45 p.m.

    Moved accordingly, and, on Question, Motion agreed to.

    [ The Sitting was suspended from 7.2 until 7.45 p.m.]

    Local Government Planning And Land (No 2) Bill

    My Lords, I beg to move that this Bill be now further considered on Report.

    Moved accordingly, and, on Question, Motion agreed to.

    Clause 28 [ Valuation and adjusted valuation]:

    moved Amendment No. 58:

    Page 29, line 14, at end insert—
    (" (4) Before exercising his powers under this section the Secretary of State shall consult with such associations of local authorities as appear to him to be concerned and with any other bodies with whom consultation appears to him to be desirable.").

    The noble Baroness said: My Lords, I think that this is one of the amendments which was discussed rather late at night in Committee, where we were somewhat sidetracked in a discussion as to how the Bill should be printed, how wide the margins should be and whether we ought to be introducing Keeling schedules. All that we were asking for then and all that I ask again now is that we should know the outcome of the promise given in another place by the noble Lord's honourable friend, who said that he would look at the possibility of making statutory provision for consultation. All we ask is that before exercising his power under this very important clause and Section 22 of the 1967 Act, the Secretary of State shall consult with the local authority associations and such local authorities as he considers it desirable to consult.

    When this Government first took office they made a decision about revaluation without adequate consultation with the local authorities. The local authorities did not expect the announcement that was then made, and they think that they should at least be brought into discussions before a decision is taken. The councils, the councillors and the ratepayers all have to be taken along when we are considering these matters, because revaluation, in whole or in part, affects the level of rates and on what they ought to be spent. Therefore, it is a matter of considerable interest to all those who are involved in local government.

    The local authority associations have all supported us in this amendment. They do not want to be a party to the decision itself, but they want it written into the Bill that they shall be consulted before decisions are made. Perhaps with the scarce attendance in the House we shall not get sidetracked into Keeling schedules, et cetera, tonight and we might be able to deal with this matter. I beg to move.

    My Lords, I hope that I do not carry any responsibility for sidetracking the noble Baroness. The amendment is very similar to one moved in Committee, but, with respect, I think it has been improved by reference to "other bodies" as well as to local authority associations. Notwithstanding that improvement, which I acknowledge, the Government, having considered the matter, remain opposed to this amendment. In practice we should, of course, in the event of a partial revaluation, expect to consult widely on many aspects. But the nature and timing of the consultation that might be needed must depend on the circumstances and the way in which the revaluation proposals are developed. It would tie things down too tightly to insist on statutory consultation before any exercise of powers under this clause. In the Government's view it is better to leave the clause as it stands and to rely on the assurances that I have given, that when the time comes there will be full consultation on all appropriate aspects when the powers of the clauses are exercised.

    In a way, I think that to put statutory consultation into certain clauses may affect the general policy, which must be to consult with all those who have anything to contribute whenever any statutory power of this sort is to be exercised. Some reference was made to the decision with regard to the revaluation. I think that I dealt with that before by pointing out that a decision on the revaluation was required very quickly after the Government took office. I hope that in the light of those assurances the noble Baroness will feel able to withdraw this amendment.

    My Lords, naturally I am a little disappointed that the noble and learned Lord will not go a little further. Last time we had complaints that we were being rather too limiting in just restricting consultation to the local authority associations. As he said, we have widened it a little now and left him a great deal of discretion as to which other bodies he should consult. But I am sure that the local authority associations will read Hansard with care and will see the assurances that the noble and learned Lord has given, that wherever possible there will be consultations with them on these important matters. Again, with the proviso that I am a little disappointed that we have not got any further, I beg leave to withdraw the amendment.

    Amendment, by leave, withdrawn.

    7.49 p.m.

    moved amendments Nos. 58A and 58B:

    After Clause 28, insert the following new clause:

    ("Rating exemption for fish farms

    . After section 26 of the 1967 Act there shall be inserted—

    "Fish farms.
    26A.—(1) Neither of the following—
  • (a) land;
  • (b) buildings (other than dwellings), shall be liable to rates or to be included in any valuation list or in any rate if used solely for or in connection with fish farming.
  • (2) The gross value for the purposes of section 19(2) of this Act of a house occupied in connection with land or buildings used solely for or in connection with fish farming and used as the dwelling of a person who—
  • (a) is primarily concerned in carrying on or directing fish fanning operations on that land or in those buildings; or
  • (b) is employed in fish farming operations on that land or in those buildings in the service of the occupier thereof and is entitled, whether as tenant or otherwise, so to use the house only while so employed, shall, so long as the house is so occupied and used, be estimated by reference to the rent at which the house might reasonably be expected to let from year to year if it could not be occupied and used otherwise than as aforesaid.
  • (3) In determining for the purposes of this section whether land or a building used for or in connection with fish farming is solely so used no account shall be taken of any time during which it is used in any other way, if that time does not amount to a substantial part of the time during which the land or building is used for or in connection with fish farming.
    (4) In this section—
    • "building" includes a separate part of a building; and
    • "fish farming" means the breeding or rearing of fish or the cultivation of shellfish (including crustaceans and molluscs of any description) for the purpose of producing food for human consumption or for transfer to other waters but does not include the breeding, rearing or cultivation of any fish or shellfish—
  • (a) which are purely ornamental, ornamental, or
  • (b) which are bred, reared or cultivated for exhibition." ").
  • Insert the following new clause:

    ("Rating exemption for fish farms in Scotland

    . After section 7 of the Valuation and Rating (Scotland) Act 1956 there shall be inserted—

    "Provisions relating to lands and heritages used for fish farming and dwelling-houses occupied in connection there with.
    7A.—(1) For the purpose of any valuation roll in force for the year 1981–82 or any subsequent year or for the making up of any valuation roll for any subsequent year the following provisions of this section shall have effect regarding lands and heritages to which this section applies and dwelling-houses occupied in connection therewith.
    (2) This section applies to—
  • (a) lands and heritages (other than dwelling-houses) used solely for or in connection with fish farming; and
  • (b) lands and heritages consisting of—
  • (i) one or more buildings (other than dwelling-houses) used solely for or in connection with fish farming; or
  • (ii) any land occupied together with and used solely in connection with the use of such building or buildings.
  • (3) No lands and heritages to which this section applies shall be entered in the valuation roll, and any reference in any enactment to the person appearing from the valuation roll to be the owner or the occupier of any lands and heritages shall on and after the first clay of April nineteen hundred and eighty-one, have effect in the case of lands and heritages to which this section applies as if the reference to the valuation roll were omitted.
    (4) Subsections (5) to (8) of section 7 of this Act shall have effect in relation to the gross annual value of any dwelling-house which—
  • (a) is occupied in connection with lands and heritages to which this section applies; and
  • (b) is used as the dwelling-house of a person engaged primarily in carrying on or directing fish farming operations on these lands and heritages or employed in connection with fish farming thereon; and
  • (c) is suitable in character and size for such use in connection with those lands and heritages
  • as they have in relation to the gross annual value of any dwelling-house referred to in subsection (4) of that section, and in that connection any reference in the said subsections (5) to (8) to agricultural lands and heritages shall be construed as a reference to lands and heritages to which this section applies.
    (5) Where part of lands and heritages consists of one or more buildings and one or more parts of buildings (being a part of lands and heritages which is used for such a purpose that if it were in separate occupation it would be lands and heritages to which this section applies), then that part of the lands and heritages and the remainder shall each be treated as respects the year 1981–82 and subsequent years for the purposes of the Valuation Acts as if it were lands and heritages in separate occupation.
    (6) In subsection (5) above, any reference to a building or part of a building shall be construed as including a reference to land occupied together with and used solely in connection with the use of such building or part.
    (7) In determining for the purposes of this section whether during any year a building used for or in connection with fish farming is solely so used, no account shall be taken of any time in that year during which it is used in any other way, if that time does not amount to a substantial part of that year.
    (8) In this section—
    • "fish farming" means the breeding or rearing of fish or the cultivation of shellfish (including crustaceans and molluscs of any description) for the purpose of producing food for human consumption or for transfer to other waters but does not include the breeding, rearing or cultivation of any fish or shellfish—
  • (a) which are purely ornamental, or
  • (b) which are bred, reared or cultivated for exhibition." ").
  • The noble Earl said: My Lords, I beg to move Amendment No. 58A and, if it is convenient to your Lordships, Amendment No. 58B at the same time, because the two are completely interrelated. If it is also convenient, perhaps I could speak to Amendments Nos. 74A and 74B, which are also related to the timing of the two amendments which I have already mentioned. Amendment No. 58A concerns the derating of fish farms in England and Wales, and Amendment No. 55B the same subject only in Scotland. Your Lordships will probably remember that there was a fairly full discussion on this subject in Committee. A number of noble Lords spoke in favour of derating fish farms throughout the British Isles, and straightening out this strange anomaly which has arisen where they are not considered as agriculture really because the industry arose since the time of the 1967 and 1971 rating Acts.

    A number of noble Lords spoke in favour and no one spoke against it. The Government assured us that they on the whole were sympathetic to the idea of derating fish farms but that the wording of our amendment as then put down was not quite suitable. I believe that the wording is now suitable to the Government, and I hope that they will be able to accept these two amendments which will give the industry a chance to go ahead and fulfil its proper role in this country, and, quite honestly, give them a chance to operate on a level basis with foreign competitors who are putting fish into our markets. I was asked by the noble Viscount, Lord Thurso, and the noble Lord, Lord Cledwyn of Penrhos, to say that they are both sorry they are not able to be here. They are here in spirit, and I know that they feel strongly about this matter. I beg to move.

    My Lords, may I support this amendment. Last week we had a debate on the fisheries industry. Although the question of fish farming did not arise, it is obvious that this is a vital food for the Community. The problems of fisheries in the EEC, particularly of our own fishing industry, are very great indeed. The question offish farming is vital. Certainly when speaking for Scotland I know that there are many interests there, and that fish farming would develop considerably if it had the opportunities that we ordinary farmers have in relation to rating. I hope that this matter will be dealt with favourably by the Government.

    This is perhaps not actually the moment to do it, but I should like to add that the late Lady Emmet's great subject was fish farming. She spoke more often in this House on that subject than on almost anything else. I should like to pay a tribute to her work in this House, and to the fact that on this particular subject she was one of the people most enthusiastic about it. I should just like to mention that. I hope that the Government will see in this not only an important subject but one that is vital, which could be developed far beyond what it is now if given some aid.

    My Lords, may I also support this amendment. This is a young industry which needs every encouragement. Its future is absolutely vital to the food supplies of this country, and it is an industry on which we may well have to rely in times of crisis. This matter has been going on for a number of years now, and it is about time it was settled.

    7.53 p.m.

    My Lords, may I in a few brief words add my support to this amendment. I am concerned with agriculture, as your Lordships know, and fish farming is a new development in the industry. I can well remember the first time that I went to India and I saw what was being done there by way of providing fish for human consumption, and in this country too this developing industry could do so much more than it is doing. It deserves support.

    My Lords, I should like to thank the noble Lord the Minister for agreeing to this amendment, and I also congratulate the noble Earl on the fact that he raised it. It is nice to see that we have England, Scotland and Wales getting together on these amendments at this time. I should like to ask about one or two points that I am not sure about. In Amendment No. 58B it says: Provisions relating to lands and heritages used for fish farming and dwelling-houses occupied in connection therewith. Does this deal with rating?

    I have read Amendment No. 58A and, if I understand it aright, in both sections there will be no rates on the dwelling-houses if they are occupied by people actually employed in the fishing. It is essential, particularly at night when there can be a lot of stealing from some of these fish farms, and I should like to know if I have read this correctly because it would be of very great help.

    When I spoke in the previous debate I brought up a question concerning a fish farm which was in an old mill and had a roof of two acres. That was rated at £13,000. I should like to know whether under these amendments we are clear of the rates in that higher proportion.

    7.56 p.m.

    My Lords, in a relatively thin House it would be dangerous for a Minister to decline to accept an amendment which has had the support of every noble Lord who has spoken so far in this debate. I am grateful to my noble friend Lord Radnor for saying that he would couple with Amendment No. 58A Amendments Nos. 58B, 74A and 74B because they are all closely connected and tie up England, Wales and Scotland.

    When the noble Viscount, Lord Thurso, moved an amendment with similar intent at Committee stage I said that the Government were urgently considering this matter, and that we would wish to consider it further and that was the reason why I could not accept the amendment at that particular stage. If the noble Baroness, Lady Stedman, was disappointed—and it surprised me that she was disappointed—with Lord Mackay's answer to the last amendment, that he was not able to accept it, I hope that she realised that f would be about to commend to the House that we should accept three pages of amendments, which is quite a substantial advance even on what my noble and learned friend Lord Mackay has done.

    In saying this I would re-echo totally what my noble friend Lady Elliot of Harwood said about Lady Emmet. She was a forthright pursuer of fish farming interests. Since I have held this particular office she has, if I may mix my metaphors, badgered us consistently about fish farming. Indeed, she was sorry that she was unable to be present at the Committee stage which was just about two days before, alas, she died. I am able to tell your Lordships that the Government have decided in favour of the derating of fish farming throughout Great Britain. We have therefore been able to offer my noble friend Lord Radnor and the noble Viscount, Lord Thurso, some help in trying to draft this new clause. I can say on behalf of the Government that we would be glad to see it added to the Bill.

    It might be helpful if I were to say a brief word about some of the provisions in the clause. In general, it follows corresponding provisions for agricultural derating as closely as possible, and I am sure that this is right in the interests of equity. I would say to my noble friend Lady Vickers when she asks whether dwelling-houses are derated, she will of course know that in agriculture agricultural land is derated, agricultural buildings are derated, but agricultural dwelling-houses are nevertheless rated but in a special category peculiar to themselves. That applies, and will apply, with dwelling-houses related to fish farming. They are not derated as such but they will be rated on the same basis as those dwelling-houses used in agriculture.

    The rating exemption will extend to the farming of all kinds of fish for human consumption and indeed those which may relate to sporting interests. It will not, however, extend to the rearing of ornamental fish or to research establishments. Nor will it extend further down the chain to food processing establishments; in other words, factories which produce fish fingers will not be derated under the amendments. I think those are the correct parameters to be used and I commend the new clause and the amendments which go with it to the House.

    My Lords, I thank my noble friend for his remarks, having been forced into accepting such an enormous acreage of amendments all in one go, and echo what has been said about Lady Emmet, who was a tremendous fighter for this very new industry.

    My Lords, it may be convenient to take the amendments together, Nos. 58A and 58B; there is a small drafting amendment to be made to 58B; in subsection (5) on page 7, in the second line, "and" should read "or". That correction should be made.

    On Question, amendments agreed to.

    Clause 43 [Commencement and extent]:

    Amendments moved—

    Page 41, line 6, at end insert
    ("(1A) Section (Rating exemption for fish farms) above shall have effect for any rate period, within the meaning of the 1967 Act, beginning on or after 1st April 1981.").
    Page 41, line 42, leave out ("Section 42 above extends") and insert ("Sections [Rating exemption for fish farms in Scotland] and 42 above extend ").

    On Question, amendments agreed to.

    8.2 p.m.

    moved Amendment No. 59:

    Before Clause 29, insert the following new clause:

    (" Rate relief for unoccupied property

    In paragraph 1(1) of Schedule 1 to the 1967 Act (which provides for the rating of certain unoccupied property), for the words "three months there shall be substituted the words "one year".").

    The noble Baroness said: My Lords, since the Local Government Act 1974, local authorities have been free to levy up to 100 per cent. rates on property after it has been empty for three months. A number of local authorities have used this discretion to levy between 8 per cent. and 100 per cent. on empty properties. This has created real hardship for small landlords and for people who have bought a house but have had to sell the house in which they have been living before they can move in. This has meant them paying rates on their new home before being able to take up residence. It is said that one of the reasons for this is that, although they are empty and bring no income for the owner, they still get the benefit of the services of the fire brigade and police if necessary, and it is therefore suggested there should by a payment.

    There are at present in certain areas thousands of empty properties. In Devon and Cornwall, it is stated that there are as many as 24,000, and even the Borough of Islington, so I read in the newspapers, has 100 empty council houses. In reply to a Question, my noble friend Lord Bellwin said there were 22,700 vacant houses belonging to the Ministry of Defence, and I understand that area health authorities and water authorities have empty properties. I should like to know whether they are exempt. I know that many buildings belonging to the Ministry of Defence are exempted. In other words, is this payment intended only for private persons owning residential accommodation?

    Nobody wants their property left empty and most would like to sell if possible. Another difficulty is that when a private landlord obtains possession of previously rented premises and decides to improve the property, possibly with a grant from the local authority, it would appear to me to be impossible to prepare plans, specifications, estimates and obtain approval for grant all within three months, let alone get the work done, particularly if the property needs a great many repairs. I understand that one authority has decided not to impose rates on empty houses because they have discovered that they would receive only £4,800 in rates—and of course they are not absolutely certain of obtaining that figure because some may have changed hands mean-while—but the cost of an inspector with a travel allowance would be about £7,000.

    My reason for inserting one year in the amendment—of course I should like to see such properties not rated at all—is that it would give landlords a chance to make the necessary arrangements. I gather that many councils are looking for extra revenue, which is why local government may decide to take action in this sphere whereas they may not have done so up to now. For this reason I urge my noble friend, if he cannot in present circumstances waive the entire rating system in this respect, to agree that residential property should be relieved for one year instead of three months, which would give those concerned a better opportunity to get their property in order. Property left empty for some time deteriorates very quickly, which is another reason why many repairs may have to be done. I therefore hope my noble friend will accept the amendment. or even include a longer period if he thinks that is possible.

    I support the amendment, my Lords. May I ask my noble and learned friend to say what the situation is in Scotland? In my experience empty dwelling-houses there are not rated, provided they are completely empty—that is, not containing furniture and so on—and pay rates only when they are inhabitated by people using the facilities provided by the local authority. It seems most unfair that if one has an empty house which one cannot let—one might like to but there is no possibility of so doing—one should be charged rates when one is not using any of the services supplied by the local authority. I hope the Government accept that people will be very upset if they suddenly find, through no fault of their own—because they cannot let a house—that they must pay rates on it.

    My Lords, I too support the amendment, which is in keeping with Amendment No. 60, to which I shall be speaking at much greater length in due course. The basic principle, as has been said, is that it is not fair to have to pay rates on an unoccupied building. It is as simple as that and I hope the Government will take this extremely seriously.

    My Lords, the present situation in England and Wales—and it is not very different in Scotland so far as I recall—is that statutes give local rating authorities full discretion to levy rates on empty property at up to 100 per cent. of ordinary rates, subject to an initial free or grace period of three months; the amendment would increase that to one year. I should add that so far as current legislation is concerned, newly-erected dwelling-houses have a six-month period of grace. The Government are far from unsympathetic towards those whose property stands empty longer than they would wish and who must pay rates they can ill afford. Such problems are all the greater, especially for industry and commerce, in times of economic difficulty. Noble Lords will know, however, that the Government have taken steps in the Bill to improve their situation.

    Clause 38 provides for the maximum level of the rates on unoccupied property and the initial grace period to be varied by the Secretary of State by order. Noble Lords have already heard that the Government intend to use the order-making power to reduce, with effect from 1st April 1981, the empty property maximum to 50 per cent. of ordinary rates for non-domestic property. The maximum rate for domestic property and the length of the grace period will be kept under review. I therefore hope your Lordships will agree that this is the right approach and that it is not right to get by statute a generous and unvariable grace period, as the amendment would provide. In contract, we would say that the correct approach is to put some flexibility into the scheme so that it may respond to changing circumstances in the property market. The Bill as drafted has this flexibility. The Secretary of State would have the power to come forward to Parliament with an order to vary the grace period when it seems timely to do so. I hope that, in the light of that explanation, my noble friend will feel able to withdraw the amendment, which has very much the same purpose as the more flexible approach which the Bill adopts.

    My Lords, may I remind the noble and learned Lord of one question that he has not answered?—that relating to property belonging to the Ministry of Defence, as well as other Government property. Is this property going to go rate free?

    My Lords, I am obliged to the noble Baroness for reminding me of that point which I should have answered earlier. The situation regarding Crown property is that technically it is not liable to rates, but the Government pay a contribution in lieu of rates to the rating authority, and the same sort of situation would apply so far as they are concerned.

    My Lords, I am obliged for that answer, though I am not very happy about the whole situation. The other point that I do not like is that relating to powers of the Secretary of State. I am on the Statutory Instruments Committee, and tomorrow we have 111 Statutory Instruments to go through. It seems that in more and more Bills the Secretary of State of whatever department is concerned is empowered to decide this and that. I am not very happy about all the powers given in this Bill to the Secretary of State. In the other House I was able to vote against an earlier local government Bill. I have not voted against this one entirely; I did not think there is much good going on doing such a thing. In all these Bills Secretaries of State are being given far too much power. I shall withdraw my amendment in the hope that my words have not fallen on deaf ears and that in future we shall have less of this situation of the Secretary of State ruling our lives. I beg leave to withdraw the amendment.

    Amendment, by leave, withdrawn.

    8.12 p.m.

    moved Amendment No. 60:

    After Clause 29, insert the following new clause:

    " Rating relief for hereditaments which are (partly used

    . There shall be added after section 25 of the 1967 Act the following new section—

    "25A.—(1) This section applies where—
  • (a) the whole or part of any hereditament, which has been and remains constructed or adapted for use as a factory, mill or other premises of a similar character for use wholly or mainly for industrial purposes, is not so used (the unused part); or
  • (b) the whole or part of a hereditament comprising a commercial building is not used for the purpose for which it has been used remains constructed or adapted for use (the unused part)
  • provided that in either case no other use is made of the unused hereditament, but notwithstanding that the building or plant or machinery therein, or appurtenant land is or continues to be maintained in a workable condition.
    (2) In this section, references to a hereditament comprising a commercial building are references to a hereditament (not being a dwelling-house or a hereditament having a floor space not exceeding 240 square feet and used as a lock-up garage) whose net annual value falls to be ascertained under section 19(2) of this Act.
    (3) If the rating authority is satisfied upon application in the prescribed form being made to it that
  • (a) either paragraph (a) or (b) of subsection (1) above applies in respect of a hereditament, and
  • (b) the unused part under the said subsection (1) is sufficiently identified in the prescribed form then it shall request the valuation officer to apportion the rateable value of the hereditament between the unused part and remaining part of the hereditament; and if the apportionment made by the valuation officer is agreed by the authority and the occupier, then as from—
  • (1) the date upon which the unused part became unused; or
  • (2) the commencement of the rate period in which the request was made whichever is the later, until the event in subsection (4) below occurs the value apportioned to the remaining part shall be treated for rating purposes as if it were the value ascribed for the hereditament in the valuation list.
  • (4) The event referred to in subsection (3) above is whichever is the first to occur of the following:
  • (a) any of the unused part becomes used;
  • (b) a further apportionment of the value of the hereditament is made;
  • (c) the person in occupation of the hereditament at the time that the apportionment under this section is made ceases to be in occupation.
  • (5) (a) In determining whether the unused part is sufficiently identified for the purpose of paragraph (b) of subsection (3) above the rating authority shall have regard to the requirements of the valuation officer in determining whether he could reasonably carry out the apportionment mentioned in subsection (3) above if requested so to do and if either the applicant or the valuation officer is dissatisfied with the decision of the rating authority he may apply to the local valuation court who on hearing the applicant, the rating authority and the valuation officer or such of them as choose to appear before it may confirm or reverse the decision of the local authority.
    (b) No appeal shall lie from the decision of the local valuation court.
    (6) Without prejudice to any other statutory rights vested in any person where an application has been received by a rating authority the valuation officer may at any time enter upon the relevant hereditament to satisfy himself that the unused part is or has been or is likely to remain unused and such right of entry shall continue until any of the events mentioned in subsection (4) above occurs.
    (7) (a) Where at any time in any period during which it has been represented to the rating authority that part of a hereditament is, was or will be an unused part as defined above that part or any of it was not in the opinion of the rating authority unused as so represented the authority may require rates to be paid in respect of whole hereditament as if none of it is, was or had been during the relevant period an unused part and may require interest to be paid on the said amount of rates at such reasonable rate as may from time to time be prescribed by the Secretary of State as if the whole of the said amount of rates had been due on the first day upon which any part of the rates in respect of the unused part would normally have fallen due if no application under section (1) above had been made.
    (b) Where a rating authority requires an amount to be paid by way of rates under paragraph (a) above the said sum shall be paid, without any option to pay by instalments under section 50 of the 1967 Act, on such date following the notification by the rating authority to the person liable for the rates on the hereditament upon which the next normal payment of rates on that hereditament falls due or if there is no such date on the thirty-first day after the said notification and allowance shall be made for any rates already paid on the part of the hereditament which was not represented to be unused.
    (c) Where an amount falls to be paid under this subsection all rights and remedies shall be available to all parties concerned as if the said amount was a normal amount of rates and all time limits shall apply having due regard to the date for payment specified in paragraph (b) above.
    (8) In this section
  • (a) the prescribed form shall be such form as the Secretary of State shall from time to time prescribe as being necessary for the proper application of this section.
  • (b) The Secretary of State shall issue regulations governing proceduses for appeals under subsection (5) above.
  • (c) The Secretary of State shall exercise his powers under this section by Statutory Instrument which shall be of no effect until laid before and approved by a resolution of both Houses of Parliament.".").
  • The noble Lord said: My Lords, in moving Amendment No. 60, with the leave of the House I should like to speak also to Amendments Nos. 72 and 72A, which are consequential on this amendment. A similar amendment on what we call "mothballing relief" was tabled in Committee and withdrawn. In the meantime we have endeavoured to improve the wording to meet the points made by my noble and learned friend at the Committee stage. At that time my noble and learned friend made a persuasive case for the earlier amendment and then sought to destroy his own argument for three main reasons. I hope to try to persuade your Lordships, and indeed the Government, that the reasons given at that time are in fact answerable; and where perhaps they were not previously answerable, they are now.

    The first point made was that of the so-called

    "fundamental principle that the use of part of a hereditament constitutes occupation of the whole "—

    and I quote exactly my noble and learned friend's words as reported at column 340

    of the Official Report. I find that a hard fact to accept, since I have endeavoured to read the General Rate Act 1967, and it seems to me that within that Act there is provision for this so-called fundamental principle not in fact to be such.

    I would go further and say that I remember an occasion back in the 1940s when my own noble father had part of his property derated because he completely evacuated it and took all the furniture, et cetera out of that part of it. As I understand it, it is still the law that one can do that. Therefore it seems to me odd that it should be regarded as a fundamental principle that the use of part of a hereditament, presumably the part one is living in, constitutes the occupation of the whole when I have had practical experience of that not having been so, at any rate in the 1940s.

    Secondly, my noble and learned friend referred to the question of definition, interpretation and enforcement. We fully recognise that those three points are valid, and indeed we have attempted to deal with them in the extensions to the amendment, and it is in this area that the amendment differs from the earlier one. I shall come back to that. The third point is that in effect my noble and learned friend said that industrial and commercial judgments would be seriously affected, and, he implied, detrimentally affected, by the fact that if the amendment were passed, businesses would be enabled to reduce the rates that they paid on part of their property.

    I have sought not to labour your Lordships with the argument that I produced at the Committee stage, since I think that to do that is terribly dull, though one often hears it from noble Lords opposite. I try to avoid it myself. However, I must refer back slightly to the extent that the whole point of my argument on Committee was concerned with firms making judgments on properties. At the moment businesses are having to operate in rather adverse circumstances, with high interest rates et cetera. If possible they should be helped to make a judgment in which they can say, "Don't sell that property", or "Don't vandalise this property "—and both those things have happened in order to get over this very point—so that they could feel that at least payment of rates will be cased during this time of difficulty. When

    things look up in the next couple of years, as I am fully confident they will, the firms can then use that part of their premises and the plant within it which had been taken out of use, and they would then pay rates on that part as heretofore.

    But all this is a matter of commercial judgment and of encouraging the wealth-earning part of our overall industry to take not snap decisions, but longer-term decisions. Therefore, I should have thought that that third argument of my noble and learned friend was not wholly reasonable.

    Fourthly, there was the argument of who pays if the business does not pay the full rates even though it is not occupying all the premises? I found it extraordinary that a responsible Government, a reasonable Government, even a Conservative Government, could put forward such an argument. Surely it must not be a fact of life that industry must be clobbered somehow, and that if it is not clobbered in this way, it will be clobbered in another way. That is an upside down way of looking at things. Surely what the Government are saying in all kinds of other areas, what I am endeavouring to support them in saying, is that wealth-earning productive industry needs encouragement at every corner, whether it is small businesses or large ones. Without that all the services provided—whether they be service industries, local authorities, or central government itself—have nothing on which to build.

    This is a very fundamental point. To ask, who pays for the relief if someone is being encouraged to keep his business going when otherwise he might have to go to the wall, strikes me as an argument which I am sure my noble and learned friend would not put forward if he stopped to think, and an argument of which the Government could never be proud.

    My noble friend Lord Harmar-Nicholls gave great point to the fact-I am delighted to see my noble friend enter the Chamber as I mention his name—that basically all the arguments that my noble and learned friend Lord Mackay of Clashfern put forward were those of the bureaucrat, and that the bureaucrat is here to serve us, to do his best to make life easy for people. It is not for him to say, "Oh, we can't do that because it is bureaucratically difficult." I think that that is the sense of the argument that my noble friend put forward.

    I would repeat that and add not merely is that the case, but really the Government must recast their approach to this question. I realise that the situation can be difficult, with a long Bill and with many things to think about when one is trying to balance everyone's efforts. But, in terms of being a responsible Government, it is going a bit far to be taken for a ride by people who might find things administratively difficult.

    To come back very briefly to the points on which we have sought to amend this amendment in order to take care of the Government's points, which were obviously very sensible ones—I say that hesitantly—the identification and definition of the particular types of property are spelled out within the added subsections. There are only two points, really, that I would make. One is that it is so written that if the valuation officer feels that he cannot reasonably identify the part of the property which is to have its rates reduced or be de-rated, then it is not a starter. It entirely depends on the valuation officer's being confident that he can do this, and that is taken care of in (I think it is) subsection (5)( a).

    The second point we make, which is a point of which my noble and learned friend made quite a lot, is that the valuation officer may at any time—and this is in subsection (6)—enter upon the relevant hereditament to see that it was not being used; in fact, that people were not cheating. I should like to think that those supplements, coupled with the fact that on reflection my noble and learned friend may think that his earlier and other arguments do not really stand up as those of responsible government, may enable him to see his way to accepting my amendment. I beg to move.

    My Lords, my noble friend has come back to this point with his usual vigour, and has provided a new clause which attempts to deal with some of the matters I raised—which I must say I do not regard as bureaucratic, or as irresponsible. The main provision that is made for dealing with the definition of an unused part of a hereditament is by providing that the rating authority:

    "shall have regard to the requirements of the valuation officer in determining whether he could reasonably carry out the apportionment".
    My Lords, I do not think that this has achieved its purpose. There are very real difficulties in defining an unused part of a hereditament, and the amendment would do nothing to overcome them. I shall come a little later to my noble friend's experiences of the 1940s, because I think that is a slightly different point. The amendment would leave these difficult issues to the local valuation courts to resolve, which is a formula for uncertainty, inconsistency, and a great number of contested appeals. Nor am I happy about the provision in subsection (5)(a) for there to be no appeal beyond the decision of the valuation court. If the solution proposed is that of leaving it to the courts to settle all the difficulties, then I should have thought that the possibility of appealing to a higher court would require to be brought in—not that I am suggesting that that would be satisfactory, either.

    However, this is simply to find fault with the clause as drafted, and my noble friend might, with justice, feel that if there is a way to overcome these practical difficulties then it is for the Government to find it and draft a suitable clause. Let me therefore return to the nature of these difficulties and ask your Lordships to consider whether a satisfactory formulation could be found.

    I would suggest in relation to what has been criticised as bureaucratic that one commonly finds in legislating or devising rules for rates and other taxes that each attempt to bring relief to one group of people brings into question the fairness with which one is treating closely analogous cases. With exemptions and reliefs from taxes, the borderline can be shifted this way or that in response to pleading on behalf of particular groups. What is generally needed is a line drawn where it is most readily understood and defended, and where it gives rise to the least number of anomalies and inequities. The difficulty with this sort of relief is that it erases what is currently a clear line in rating; that is, that the occupancy of a hereditament is the unit, and that something less than a hereditament is not really a unit which is recognised for rating purposes. In place of this fundamental principle the clause would give relief to an office occupier who left much of his office empty, but not to an old person living now in only part of a house. The line would bring relief to a firm that was able to close down specific areas of floor space, but would leave fully rateable another whose factory was now at less than full production but operational in all its parts.

    It may help to consider some examples. Imagine a large steel works that has two boiler houses; one is used throughout the year, but the other provides supplementary heat for only three winter months. Consider blast furnaces at a steel works where a furnace is put out of action for nine months or more so that it can be relined but perhaps not all of that time is needed for re-lining work. Consider factories for sugar beet processing, where plant is used only from September to January; and so on. One could multiply examples fairly readily. I should like to emphasise that it is not my intention to say that a statute could not distinguish between one case and another. Rather, my point is that in attempting such fine distinctions as this the statute would give rise to new anomalies, new grievances, new accusations of unfair treatment. In comparison, the present concept has served for many years without a great deal of complaint, is readly understood and, I hope, reasonably readily defended.

    My Lords, I have been speaking of the difficulties of defining an unused part of a building. We should not forget the cost to the public sector of reasonable steps to police such an exemption. As drafted, the amendment would provide that the valuation officer should inspect premises when called on to do so; and it appears from subsection (5)(a) that either the ratepayer or the rating authority may take the initiative in asking for a reassessment to be made. It is easy to imagine that in major industrial or commercial centres, with hundreds of business hereditaments, the valuation officer and his staff will be kept very busy just making inspections in response to claims, both from ratepayers and from rating authorities, either side claiming that a floor area has changed or a piece of equipment has been switched on or switched off.

    I should also say, as I did in Committee, that no one knows what the cost of these proposals would be, and the proposers themselves have so far not produced any figures. I think the cost would probably be quite substantial, not only of the actual relief but of the steps necessary under this amendment for setting it up; and all these costs would have to fall on other ratepayers or national taxpayers. My noble friend refers to the wealth-producing part of our economy, and, of course, I go along with him a great deal in that; every possible encouragement is needed to the wealth-creating sector of our economy. But the burden would fall on other wealth-producers if his particular proposal were accepted.

    Perhaps I could say in conclusion that my noble friend's experience to which he refers in relation to the 1940s is, I think, a reference to the present law under which the clearer cases of mothballing are already catered for. Where it is possible for a building or a part of a building to be rendered suitable for separate occupancy, then the unused area can legitimately be described as a distinct hereditament and valued accordingly. Of course, if that distinct hereditmant is not in use, then the exemption applies. What my noble friend is trying to do, with respect, is to extend that principle into a completely uncharted area, where the difficulties of definition to which I have referred would be substantial. Where they are not substantial you can get relief just now. The ratepayer has the right to propose that a hereditament should be split in this way, and many cases arise. At one end of the spectrum there may be a shop with an unused flat above: at the other end, we find the office block with unused floors or the factory with unused units. Finally, may I remind noble Lords that in regard to the new provisions for empty property rating in this Bill the Government will bring forward an order under Clause 38 to ensure that wherever a hereditament as a whole is empty rates will be kept below a ceiling of 50 per cent. This will be to the benefit of many non-domestic ratepayers. Therefore, as before, I am very sympathetic to the point behind this amendment, but, for the reasons that I have given, we do not feel able responsibly to accept it. I hope that the noble Lord will withdraw it.

    My Lords, I do not think that my noble friend Lord Mottistone would claim that his carefully drafted amendment was free from flaws. But, with respect, I do not feel that my noble and learned friend the Lord Advocate has done justice to the very important issue of principle which arises from it. I could not help feeling during some parts of my noble and learned friend's speech that if the rating system necessarily involved such injustices and anomalies as exist at present there was a very strong argument relating to an earlier discussion for getting rid of the rating system itself.

    There is here a very practical problem which anyone with connections with industry or commerce knows only too well is very relevant at the moment. Great firms, famous companies, are closing parts of their plants or of their offices and if one simply leaves the position as at present one is presenting them with the alternative of having to pay heavy rate payments when they are, as a matter of definition, earning no profits out of that part of the premises, or, as my noble friend has said, selling them or vandalising them, hereby excluding the possibility of putting them back into use when times get better.

    Everybody in this House, and, I know, in the Government, is desperately concerned about levels of employment. If plants can be kept (although they cannot be used at the moment) in possession of their owners and ready to be put back when demand increases, the problem of unemployment will be of shorter duration. But if the whole force of the rating system is to be used—and that is how it works in many cases at the moment—to compel them to get rid of the unprofitable burden of a partially empty building attracting high rate payments, it will take all the longer to find appropriate premises when things get better, in which to give additional employment.

    Therefore, notwithstanding all the difficulties I hope that my noble and learned friend will look at this further. I know very well from my own experience during two stints at the Treasury that my noble and learned friend is right when he says that when you try to remedy anomalies it is only too easy to create further ones and that the pursuit of some improvement can carry compensating disadvantages. All of us who have been involved in these things know that that is so. But I do not think that that dismisses the strength of the case of my noble friend Lord Mottistone. I hope that the Government, even at this stage of the Bill, can offer a little more than my noble and learned friend the Lord Advocate has offered us.

    Finally, he used the argument which my noble friend Lord Mottistone anticipated which, if I may say so with respect, seems a poor one. He said that if you exempt these parts of these buildings from rates then the burden will fall on somebody else. Let us analyse that. If a local authority finds that the rateable value subject to its imposts is reduced, it is up to that local authority to reduce its own expenditure pro tanto and not simply to transfer the burden on to its otherwise heavily-burdened ratepayers. Every local authority in the country knows that it has to some extent to adjust its expenditure to the amount of rateable value available to its imposts. This, with respect, is what local authorities should do, and, I believe, could do, if they tried.

    I do not know what my noble friend Lord Mottistone is going to do on this amendment, but I should like my noble and learned friend on the Front Bench and the House to realise that in the present state of industry and commerce this is an issue of much greater importance probably than anything else we have discussed this evening and does demand, if he will allow me to say so—and I have the greatest admiration for him—a rather more understanding and sensitive treatment than he has so far given it.

    My Lords, the noble and learned Lord the Lord Advocate said that he was not being bureaucratic; but I thought that his answer was the most obviously bureaucratic answer that I have heard from the Dispatch Box for a long time. In effect, he said, "We recognise that something should be done in this field"—that is surely what he meant when he said that he had a certain sympathy with the idea behind it—"but we must not make any attempt to do it now because, by moving the dividing line, it may create anomalies somewhere else; we must let everybody suffer because in relieving people who deserve relief from it it may be that other people will not be having the same advantage ". I do not think that anybody expects in this world that in remedying what is an unfair state of affairs one can put it right for everybody. I should have thought that where there is an opportunity to put it right even for a few, that ought to be done. The words that my noble friend Lord Mottistone has on the Marshalled List may not be the right words, but if the noble and learned Lord's department and his colleagues in Government really want to turn that sympathy which he said he had into real effect, they could find acceptable words which would fit into this Bill as it now stands.

    I would re-echo the point made by my noble friend Lord Boyd-Carpenter. If we are not going to recognise now that industry and commerce deserve special thought and special aids if they can be given I tremble to think what the situation will be that we are going into over the next 12 months or two years where we know we shall have real problems. Commerce and industry can do nothing about the world recession. That is not within their parameters. I think they recognise that they cannot do anything about the interest rates which are so great a burden on running their businesses, but in order to defeat inflation they accept that they must remain. They do not now expect any drastic reductions in general tax, because they know we are committed to defence and to maintaining the general standard of living in this country which people expect.

    But they are entitled to think, when it comes to the level of rates where they are being asked to pay for something they are not using, that the Government (and particularly a Conservative Government who are supposed to have sympathy and understanding for the problems of private enterprise) ought to go to a great deal of trouble to find words which will give relief—and it will be only a modest relief—against all imposts and expenses that commerce and industry have to pay today.

    I was not at all impressed when he said that we may want extra values in order to justify the expenses. As I said at Committee stage, there is no need for that. The Government are prepared to accept a certificate issued by a chartered accountant as to what the profitability of a company is and on which tax would be levied. Why cannot the same accountants whose integrity and understanding is high because their very existence depends on their integrity issue a certificate, to say that this part and other parts of premises have not been used in the course of a particular year. I believe that this is an occasion where the sympathy which my noble and learned friend expressed could be translated into practical action. It would be fair, but even above fairness, I think it would be letting commerce and industry know that where help could be given this Government would be prepared to give it at a time when they are asking them in the national interest to accept many other imposts, which it is not within their power to do anything about.

    My Lords, in supporting my noble friend Lord Mottistone and other noble friends on this particular issue, which I supported also at Committee stage, I would ask Her Majesty's Government to consider it very carefully indeed. As noble Lords are aware, my noble and learned friend in no way proferred an argument against the principle. He mentioned the difficulties in definition, the difficulties about location, the difficulties of policing. As my noble friend Lord Harmar-Nicholls so rightly said, there will be no difficulties at all if the hereditament is properly metered for power, for water, for electricity. These are matters of fact, and it can be evidenced quite clearly that if the power charges are not paid it is because the building is not occupied. I cannot see the difficulty there at all. If this particular point became law it might have the extremely healthy effect of concentrating the minds of local authorities on their industrial ratepayers' needs rather more than is the case nowadays, if a monetary proportion of their rates were not paid because of non-occupation. I would implore my noble and learned friend to consider these issues with his normal great care.

    My Lords, by leave of the House, I should like to say that I certainly do not wish to give any impression that I am not sympathetic to the matter which has been raised by my noble friends; I hoped I had said that on the earlier occasion. But I do believe that what is proposed here involves a fundamental difficulty of principle in giving this kind of relief through the rating system, for the reasons I have sought to explain. Taking the example that my noble friend Lord Boyd-Carpenter mentioned, I think that where there is an identifiable area of a factory which is not used and that can properly be regarded as capable of separate accommodation, then relief is available. That is as far in this direction as it is possible to go under the present system of rating. But, as noble Lords know, the Government are very much committed to examining the rating system with great care to see whether there is some better system available, because the rating system in its nature must build on units which are hereditaments, and if one once goes beyond that one is into a very uncertain area indeed, a very difficult area to define.

    I should like to pay tribute to the care with which my noble friend Lord Mottistone has proposed this amendment. He has endeavoured to grapple with the difficulty, but in grappling with it he is forced to a situation where it is entirely a matter of discretion for the local valuation officer. With all my noble friend's care, I am sure that if a better definition, a more satisfactory principle were available to separate out from others the cases he wants to benefit, he would have found it. The very fact that with all his care and all his attention to the matter this is the best he is able to do indicates the difficulty in principle that we face in this area. The point is not a bureaucratic one. It is a point about the limitations of differential relief which the rating system, as presently constituted, is capable of producing. The Government are heavily committed to try to improve on that rating system. It is not easy to see how to do it, but this is something that certainly we are endeavouring to pursue.

    I shall read very carefully all that has been said, as I read what was said on this amendment at Committee stage, but knowing the situation as I do it would be quite unfair on my part if I were to give the House any impression that I was in a position to give anything on this particular matter. We have thought about it very deeply. I personally have thought about it a great deal, not without some experience in practice of trying to operate the rating system in a professional capacity. It is against that background that I say very seriously to my noble friends that we have thought about it very carefully indeed and it is with the greatest regret that I do not feel able to commend it.

    My Lords, before the Lord Advocate sits down, may I ask him if he would examine what the Italians and the Japanese do in similar circumstances? In those countries, when there is a depression the unit of production is the one that is dealt with and the mothballing is commanded by the Government. It is the unit of production on which they give relief; it is not the building.

    My Lords, when my noble and learned friend replied a few minutes ago to my question about the Ministry of Defence property I thought he stated that there were special arrangements for empty houses. The figure I was given the other day was 22,700. Whose word do they take that these are all empty? It has been suggested that the auditor could do it. Whose word is taken that there are 15,000 or 20,000 empty houses?

    My Lords, with the leave of the House, I should like to answer that question. So far as Government property is concerned, the situation is that being in the possession of the Crown it is not subject to the rating law, as that is laid down by statute, but by agreement the Government make a contribution in lieu of rates to the appropriate rating authority. These matters are much more capable of being dealt with by a discretionary arrangement of that sort than they are under the terms of the statute. Of course, the statute applies generally indiscriminately to all ratepayers and potential ratepayers. The difficulty of applying that system, the statutory system, to the situation my noble friend Lord Mottistone has raised is our fundamental difficulty here.

    My Lords, I am not in the least bit satisfied, though I fully see my noble and learned friend's difficulty. He did not take up the point


    Airey of Abingdon, B.Elliot of Harwood, B.Houghton of Sowerby, L.
    Birk, B.Elwyn-Jones, L.Howie of Troon, L.
    Boardman, L.Gage, V.Kaldor, L.
    Bowden, L.Gainford, L.Kemsley, V.
    Boyd-Carpenter, L.Gainsborough, E.Killearn, L.
    Brooks of Tremorfa, L.Gaitskell, B.Kirkhill, L.
    Bruce of Donington, L.Greenway, L.Lee of Newton, L.
    Chelwood, L.Haig, E.Llewelyn-Davies of Hastoe, B.
    Collison, L.Hanworth, V.Lovell-Davis, L.
    David, B.Harmar-Nicholls, L.Macleod of Borve, B.
    Davies of Leek, L.Hatch of Lusby, L.Maelor, L.
    Ellenborough, L.Hill of Luton, L.

    that my noble friend Lord Boyd-Carpenter made and which my noble friend Lord Harmar-Nicholls endorsed. This is a special situation; it is not normal. We are in an altogether abnormal situation. We must encourage productive industry. There is an attitude of mind and a steady looking at things from the point of view of the administrators, who do not want to have things untidy, do not want to be faced by the fact that whenever one produces a borderline one creates anomalies and difficulties. I know that from practical experience. My noble friend Lord Boyd-Carpenter was saying how he knew it. I know it, too, but the fact of the matter is that we must get through to the Government the realisation that this is of much greater importance than just an amendment to a Local Government Bill. It is a matter of attitude of mind which is fundamental not just to the administrators of the country but to the country as a whole.

    We have got to earn our living, and until we are really earning our living we cannot face up to the world; we cannot pay for all the splendid things we would like, including local government. With that in mind and with the thought that. with a push, perhaps the Government might come back at Third Reading with something of their own, which is what I was hoping my noble and learned friend would offer to do, rather than just to look at things—we are too far down the road for that-I must test the feeling of the House and see what it feels about this amendment and about the need to encourage productive industry.

    8.49 p.m.

    On Question, Whether the said amendment (No. 60) shall be agreed to?

    Their Lordships divided: Contents, 59; Not-Contents, 61.

    Mishcon, L.Peart, L.Stedman, B.
    Monk Bretton, L.Pitt of Hampstead, L.Stewart of Alvechurch, B.
    Monson, L.Ponsonby of Shulbrede, L.Stewart of Fulham, L.
    Morris, L.[Teller.]Radnor, E.Stone, L.
    Morris of Kenwood, L.Renton, L.Strauss, L.
    Mottistone, L. [Teller.]Rhodes, L.Underhill, L.
    Mountevans, L.Ross of Marnock, L.Vickers, B.
    Northchurch, B.Spens, L.Wynne-Jones, L.


    Abercorn, D.Ferrers, E.Reigate, L.
    Airedale, L.Gowrie, E.St. Aldwyn, E.
    Alport, L.Hailsham of Saint Marylebone, L. (L. Chancellor.)Sandford, L.
    Avebury, L.Sandys, L. [Teller.]
    Avon, E.Harvington, L.Savile, L.
    Beaumont of Whitley, L.Hatherton, L.Soames, L. (L. President.)
    Bellwin, L.Holderness, L.Stanley of Alderley, L.
    Belstead, L.Hooson, L.Strathcona and Mount Royal, L.
    Brabazon of Tara, L.Hornsby-Smith, B.Torphichen, L.
    Brookes, L.Lloyd of Kilgerran, L.Tranmire, L.
    Brougham and Vaux, L.Long, V.Trefgarne, L.
    Campbell of Croy, L.Lucas of Chilworth, L.Trenchard, V.
    Carr of Hadley, L.Lyell, L.Trumpington, B.
    Cockfield, L.Mackay of Clashfern, L.Vaizey, L.
    Cullen of Ashbourne, L.Mansfield, E.Wade, L.
    de Clifford, L.Marley, L.Watkinson, V.
    Denham, L. [Teller.]Middleton, L.Winstanley, L.
    Digby, L.Mowbray and Stourton, L.Wise, L.
    Drumalbyn, L.Murton of Lindisfarne, L.Wynford, L.
    Evans of Claughton, L.Nugent of Guildford, L.Young, B.
    Faithfull, B.Pender, L.

    Resolved in the negative, and amendment disagreed to accordingly.

    8.58 p.m.

    Clause 30 [ Payment by instalments]: