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Lords Chamber

Volume 415: debated on Tuesday 9 December 1980

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House Of Lords

Tuesday, 9th December, 1980

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

Prayers—Read by the Lord Bishop of Chelmsford.

Africa: Cuban And Soviet Involvement

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 is their latest assessment of the number of Soviet-sponsored Cuban military and civil personnel in Africa and whether they have any plans to demonstrate their continuing opposition to this foreign interference in African affairs.

My Lords, we estimate that there are more than 40,000 Cubans in Africa, of whom about three-quarters are military personnel. We have made clear to Cuba and the Soviet Union our concern about the involvement of their forces in Africa and we shall continue to take opportunities to put this message across.

My Lords, while thanking my noble friend for that Answer, may I ask whether he can say whether the severe threat of world conflagration caused by one of these irresponsible rulers of small states in Africa, with their excessive army training and supply of weapons, has been, or will be, raised in particular at the conference in Madrid?

My Lords, I do not think that Madrid is perhaps quite the right place for that, but it has certainly been raised on a number of occasions by the previous Government and also by the present Government. We shall certainly continue to do so. I do not think that the presence of these Cuban troops in Africa helps the cause of world peace at all.

My Lords, is it a fact that these figures—30,000 actual military personnel and another 10,000 or so in support—represent a remarkable escalation over the past year or so? As I recall, and perhaps the House may also recall, we were all concerned about a year ago because 12,000 Cuban military personnel were present, mostly in Angola. I should also like to ask the noble Lord this: Is the concentration mostly in southern Angola, and has he reason to think that this will exacerbate the position in Namibia, which is now hopefully moving slowly towards a solution?

My Lords, my recollection—I may be at fault and I shall have to look it up—is that the figures have not changed very much over the past 18 months. The noble Lord's recollection may be correct, but I do not think it has changed very much during my period in this office. The figures for Angola are that in total there are about 25,000, of whom some 6,500 are civilians. The rest are in the form of garrison troops rather than front-line troops, as I think the noble Lord will agree. This is an added reason why a settlement in Namibia would be of the greatest possible value, because the Angolan Government have made it clear that when the Namibian situation is settled they will ask for the recall of the Cuban troops.

My Lords, arising from that answer, is the Minister aware that those of us who want self-determination in Africa are absolutely opposed to either Soviet or Cuban troops being there? However, is it not also the case that South African troops are in other African countries, and French troops are in other African countries? Should not that be balanced by a demand for the withdrawal of all foreign troops?

My Lords, I think the circumstances in which troops are in various countries vary from place to place. I do not think one can necessarily say in all cases that this is a bad thing. I am afraid I do not know of any case where South African troops are stationed outside South Africa, but if the noble Lord has any instance of it I shall be very interested to know.

My Lords, can my noble friend say whether any significant number of these Cuban troops are in Abyssinia or the Horn of Africa?

Yes, my Lords, there are some in Abyssinia and there are some Soviet troops in Ethiopia as well. I think there are probably something like 12,000 Cubans in Ethiopia.

My Lords, would the Government agree that this form of imperialist aggression by using satellite troops from Cuba and other countries—the East Germans in Aden, for instance—is really a very dangerous development? Is it not true that a great many people regret very much that none of us was able to do anything at the time in order to stop it happening?

Insurance: Eec Tenderers

2.42 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 why tenderers in the EEC bidding for contracts under the Public Works and the Public Supply Contracts Directives are not free to buy the relevant insurances in the markets of their choice; and when they expect this anomaly to be ended.

My Lords, a draft directive which would liberalise the provision of insurance services across national frontiers within the European Community has been under discussion in Brussels for a considerable time. Until that directive is adopted, the EEC Treaty permits member states to maintain their own national requirements for matters covered by the directive, provided that those requirements are not discriminatory. At present all member states restrict to some degree the freedom of their nationals to insure abroad. The Government are doing all they can to bring the negotiation of the insurance services directive to an early and successful conclusion.

My Lords, I am grateful for that reply. May I ask my noble friend whether he agrees that the prevarication and delay which have dogged this draft directive for direct insurance services, other than life assurance, really do fly in the face of the spirit and the letter of the treaties? Is he still reasonably confident that his prediction on 13th October, that it would be "months and not years"—it has been seven years already—before this directive is agreed, is still valid, and, should the estimate prove to be overoptimistic, would not the only thing be for us to appeal to the court?

My Lords, I am very grateful for what my noble friend has said. In answer to his question as to months and not years, I would reiterate and emphasise again what I said to the noble Lord, Lord Bruce, on 13th October this year, that we are taking a very grave view of the prevarication. It is just under two months since I last mentioned this matter to the noble Lord, Lord Bruce. We hope to have something more to report at the end of next year, when I understand that it will be our turn to have the presidency of the Commission.

Iran: Detention Of British Subjects

2.44 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 direct representation continues to be made to the Ayatollah Khomeini so that he personally is aware of the distress and concern of Christians and those of other religions in this country at the continued detention in Iran of the missionaries Dr. and Mrs. Coleman and Miss Jean Wadell and the businessman Mr. Andrew Pyke.

My Lords, Her Majesty's Government are profoundly concerned at the continuing detention of four British subjects in Iran. But direct representations from a foreign Government to the Ayatollah Khomeini himself would, in our judgment, not be effective or indeed helpful. We believe the best way to bring our concern to his attention is to continue our persistent representations to the Iranian authorities and to senior Iranian figures, with help wherever possible from other intermediaries. These efforts will continue until we succeed in obtaining the release of all those detained.

My Lords, may I thank the Minister, the Foreign Secretary, for that reply which, I am sure, will bring, at any rate, some comfort to the families, to the friends and to the many people known to the four who are detained in Iran at the moment. May I ask the Foreign Secretary whether he agrees that Ayatollah Khomeini bases his life, and the life of his nation, on his religious beliefs? Therefore, would it be possible for a group of Christians from this country to make representations personally to the Ayatollah, so that he will understand that the Christians in this country have a deep concern for those and other people held in Iran?

My Lords, I think we all share my noble friend's concern about this matter, and anything which anybody can do to make possible the release of these British subjects should be done. I think it really is up to the leaders of the Christian Churches themselves to decide whether a move of that kind would be helpful.

My Lords, we all, I am sure, feel this deep concern for the four people mentioned in the noble Baroness's Question. But may I ask the noble Minister, the Foreign Secretary, a further question about the harassment and detention of other members of the Episcopal Church, and of other Christians in Iran who are Iranian citizens? They, also, are of deep concern to us. Could the Foreign Secretary inform us whether these matters were discussed when an Iranian delegation recently visited this country, and what transpired as the effect of that?

My Lords, in answer to the right reverend Prelate, the Iranian delegation which came over the other day, with the intention of seeking our support in respect of the Tran/Iraq conflict, was told by me in very specific terms of our anxiety at the fate of the four British subjects who had not been allowed consular access. Indeed, we do not even know where they are, and this is a state of affairs which is very far from satisfactory. I made it plain that there could be no question of an improvement in relations between Britain and Iran until this matter had been settled. The response that I received was that they were worried about our attitude and they would do what they could to sort this matter out legally, as soon as possible. We must wait and see, but so far there has been no indication of any movement.

My Lords, can my noble friend confirm that the presence of these four people in Iran was solely for the purpose of serving their religious faith, and had not the remotest connection with any political purpose of any kind?

My Lords, three of them are missionaries and one, I think, is a helicopter pilot. There have been no charges levelled against these British subjects, but there have been accusations that they have been engaged in espionage. Anybody who knows the four people concerned will know that these accusations are wholly ludicrous.

My Lords, pending the release of these detained prisoners, will the Government try to arrange for regular visiting of them by the International Red Cross?

My Lords, the Red Cross have visited them and we have had reports, though of course necessarily second-hand through the Red Cross, that all four British subjects are well. I hope very much that they will continue to be visited.

Prisoners In Police Custody At Christmas

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 arrangements are being made over the Christmas holiday period for prisoners who are at present being held in police stations.

My Lords, Chief Officers of Police will make appropriate arrangements for the care and custody of any prisoners who, as a result of the prison officers' industrial action, have to be detained in police cells over the Christmas period.

My Lords, I thank my noble friend the Minister for that reply. If there are any privileges in ordinary prisons for prisoners to receive visits from their families over the Christmas period, may I ask him whether such privileges can be extended to prisoners in police stations without any breach of security?

My Lords, the police are, of course, charged with looking after the prisoners concerned at the moment and, although they do not have to conform to prison rules, the police use their discretion to allow normal rights and privileges to prisoners wherever possible. I am absolutely certain that all will be done which can practicably be done to make sure that Christmas for prisoners—if there are prisoners in police cells at that time—is not cheerless.

My Lords, since I understand that a number of prisoners are spending most of their days in police vans travelling between police stations because there is not sufficient room for them in police station cells, may I ask the noble Lord what arrangements will be made for them and whether it is the case that a number of prisoners are travelling around in very small, confined cages within police vans?

My Lords, that is not my information, but I will certainly look into the matter for the noble Baroness.

My Lords, would not the Government agree that the police have been coping magnificently with the extremely heavy burden which has been put upon them?

My Lords, I am grateful to my noble friend for saying that, because I very strongly believe that to be true. We must hope that the Prison Officers' Association will soon end their action so that prisoners may enter the prisons where they belong and so that the police may be able to get on with their primary duties.

My Lords, could the noble Lord tell us how many prisoners are detained at present in police cells?

My Lords, may I ask my noble friend what arrangements have been made over the Christmas holiday period for the police then on duty in police stations?

My Lords, may I ask whether special constables are now helping the police who are very overburdened?

My Lords, I take on board, and I am sure that any members of the police service who read these exchanges will take on board, the burden of the question which my noble friend has asked; but again this is a matter for individual chief constables.

Social Security: Payment Arrangements

My Lords, with the leave of the House, at a convenient moment after 3.30 this afternoon my noble friend Lady Young will repeat a Statement on arrangements for paying social security benefits, which is to be made in another place.

Hybrid Instruments: Select Committee

2.53 p.m.

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

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

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

—( Lord Aberdare.)

My Lords, before the House approves this order, I should be grateful for the guidance of the noble Lord the Chairman of Committees as to the procedure which will be followed in dealing with two orders: the Merseyside Development Corporation (Area and Constitution) Order 1980 and the London Docklands Development Corporation (Area and Constitution) Order 1980. In the Minutes of Proceedings of 2nd December, the noble Lord the Chairman of Committees reported that in his opinion they would require to be enacted by a Private or Hybrid Bill; in other words, that they were hybrid orders.

Before turning to the substance of the matter, a minor, preliminary matter arises from the form of the Motion. It sets out the names of the members of the Select Committee and reads:
"together with the Chairman of Committees and any one Lord of Appeal"
without indicating that the Lord of Appeal will be the chairman of the committee, which would be in accord with Standing Orders. I apprehend that in Standing Orders no amendment of the Motion is required to put the matter in order, but perhaps the noble Lord can assist us about that.

If I may turn to the substance of the matter about which I desire the guidance of the noble Lord, no public inquiry of any kind has been held in relation to the proposed setting up of these development corporations. I am particularly concerned with that which relates to London's Docklands as I had the honour to represent for a great many years part of the Newham constituency. As the House will remember from our discussions during the various stages of the Local Government Bill, the orders give to the Secretary of State unprecedented powers to enable the land and powers of several local authorities to be acquired and taken over by a Quango appointed by him. Hardly any individual or interest in the area will not be affected by the proposed powers that are to be granted.

Absence of any previous inquiry may well be a matter which the Hybrid Instruments Committee may take into account in considering whether there should be a full inquiry into these orders by a Select Committee. Those who will be petitioning against the orders are anxious to know what the procedure will be should a Select Committee be set up and an inquiry take place. In such a case it would be appropriate for the Secretary of State or the Government, whoever will have the responsibility for dealing with the orders, to be required to seek to justify the orders in respect of the designated areas by such arguments and evidence as may be thought fit to be brought forward. It would then be the turn of the petitioners to challenge that case and to bring forward such evidence as they in turn require.

This procedure would accord, as I am advised and verily believe, with the procedure followed by previous Select Committees which have considered previous hybrid orders. The most recent was the Solus Petrol (No. 2) Order. It is a matter of great importance for the petitioners, preparing as they now are for the subsequent stages of the proceedings before Parliament. I should be grateful to the noble Lord if he could give such guidance to me and, more importantly, to them as to the course of events that is likely to be followed.

My Lords, I am very grateful to the noble and learned Lord for having put this question. I will certainly do my best to explain the procedure, although it is somewhat complicated. As the noble and learned Lord has correctly said, what has happened so far is that the orders have been laid and that I reported on 2nd December that in my opinion both orders were hybrid. Under our Standing Orders this means that petitioners now have until 16th December to petition against the affirmation of these two orders. I apprehend that such petitions are likely to be laid, in which case these petitions, and the two orders, will be referred to the Hybrid Instruments Committee, which is the committee I am seeking your Lordships' approval of this afternoon.

I can confirm to the noble and learned Lord that the chairman of that committee will be the Lord of Appeal, whichever Lord of Appeal sits upon it. I am very grateful to him for pointing this out. There is no need to amend the Motion, but on future occasions we will ensure that the Motion is put in such a way that it is quite clear that the Lord of Appeal will be the chairman of the committee.

The procedure then is that the Hybrid Instruments Committee consider the matter. First they have to consider the locus standi of the petitioners. If they agree that the petitioners have a locus standi, they then go on and eventually advise the House whether in their opinion the orders should be investigated further by a Select Committee. If the House so decides, that Select Committee will consist of five Lords. The names will be proposed to the House by the Committee of Selection.

When the proceedings take place before the Select Committee, it will be the first time that such a procedure has happened since the fairly recent establishment of the Hybrid Instruments Committee. But it would be appropriate for them to follow the same procedure as used to be followed by other Select Committees to whom hybrid instruments were referred as a result of a report of the old Special Orders Committee, and the one that the noble and learned Lord referred to, the Solus Petrol (No. 2) Order 1966, was the last of those.

But we now have a different committee, the Hybrid Instruments Committee, and under that procedure I am sure that the Select Committee should follow the same procedure, which is to say that the onus would be on the Government to show the grounds on which the order had been made. In other words, probably they would have to make their case first. This follows from the fact that these are affirmative orders which the Government would have to ask the House to approve before they could take effect. So I think I can confirm all the points that the noble and learned Lord made.

My Lords, with leave, I should like to thank the noble Lord for guiding us through this somewhat difficult course, full of potential hazards on the way, and I thank him very much for his help.

On Question, Motion agreed to.

Standing Orders (Private Bills)

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

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

  • Aylestone, L.
  • Cawley, L.
  • Hailsham of Saint Marylebone, L. (L. Chancellor.)
  • Mancroft, L.
  • McNair, L.
  • Mowbray and Stourton, L.
  • Redcliffe-Maud, L.

—( Lord Aberdare.)

On Question, Motion agreed to.

Companies (Fees) Regulations 1980

3.2 p.m.

My Lords, I beg to move that the Companies (Fees) Regulations 1980 laid before the House on 25th November be approved. The purpose of these regulations is three-fold: first, to raise the fees for public search and related services; secondly, to prescribe fees for the re-registration of companies under the Companies Act 1980 and, thirdly, to consolidate all the fees for the statutory services provided by the Company Records Office.

The Companies Registration Office, which is the responsibility of my right honourable friend the Secretary of State for Trade, is charged with the initial registration of certain documents which such companies are required to deliver to the Registrar, and for providing means of public inspection of those documents. The register now contains almost 800,000 companies, and the Registrar receives about 2 million documents each year. The public search facilities are used extensively by many sectors of industry and commerce, with over 10,000 inquiries being received each day.

I think it right to emphasise to your Lordships that, although the workload of the office has increased considerably over the last five years with 20 per cent. growth in the number of companies on the register and a comparable increase in the number of documents handled, the number of staff has hardly changed and, indeed, has already been reduced during the last 18 months. This increase in productivity, to which I pay tribute, is particularly noticeable in the field of public search, where, with ultimately the same resources, approximately 30 per cent. more inquiries are dealt with than in 1976.

The principal objective of these regulations is to ensure that the costs of maintaining the Companies Registration Office are covered by its revenue. Although the costs of the main services—incorporating companies, registering their documents, and providing public access to that information—have increased in recent years, such annual increases have been matched by increased revenue from the greater numbers of companies being formed and delivering documents for registration. Although the most recently published figures (contained in the Annual Report on Companies for the year ended 31st December 1979) showed a surplus of £2·8 million, derived from costs of £10·6 million set against revenue of £13·4 million, in the current financial year that surplus has been significantly reduced and in 1981–82 the office would incur a deficit of some £600,000 on the basis of present fees. The increases now proposed will enable a reasonable surplus to be maintained at least in the coming financial year. It is necessary, in any event, to prescribe at this time the new fees required for the re-registration of companies under the Companies Act 1980. Part I of that Act comes into operation on 22nd December of this year, creating a new category of companies called Public Limited Companies (PLCs). The fees proposed are in line with the existing fees for registration and re-registration under the 1948 Act.

The reason for increasing the particular fees covered by the regulations is that we believe that, in each particular service provided by Government, charges should reflect reasonable costs. For many years, the facility for inspecting company records has been heavily subsidised by the fees paid by companies for the privilege of incorporation and their subsequent filing of statutory documents. It was not until the Companies Act 1976 came into operation, however, that certain fees (such as that for the public inspection of documents) could be changed without amending primary legislation. Although, as already stated, it has not previously been necessary to look for any change, we have taken the opportunity provided by the need for this review to go some way to redress the balance between the various fees. Nevertheless, none of the increases now proposed will fully reflect the costs likely to be incurred in providing these services.

I hope your Lordships will bear with me if I now outline the increases in the particular fees. First, the search fee has remained unchanged since 1844 and it represents nowadays the cost of producing a set of what are known as microfiche copies—of which I have an example here—of almost all documents delivered since the company was incorporated. The average cost of producing these little microfiches is about £1·30; the proposed fee of £1 is, we believe, reasonable in the circumstances. But I noted with interest that the equivalent to the value expressed by one shilling in 1844 is now £1·17, and while the fee for entry to a place which I am sure will be familiar to many of your Lordships—the London Zoo—was also one shilling when it opened in 1847, that charge is now £2·75. I hope your Lordships will not think that I compare animals in the zoo to company lawyers, but on that basis we consider that the service provided by the Companies Registration Office, which now attracts over 2½ million inquiries a year compared with under ½ million inquiries five years ago, still represents exceptional value for money.

In future 16 per cent. of revenue will be derived from search and related fees, which compares with 1·5 per cent. at present, although these services will still account for over 26 per cent. of the total costs. We are considering means, however, to provide a partial search service at some future date, for the benefit of those individuals—or, indeed, their agents, who account for over 60 per cent. of the total inquiries—who do not need access to the full record of a company. Indeed I am told that as a result of a sample that was taken in July this year it was found that 114,000 separate searches were made in some depth and that approximately 55 per cent. of persons who required access to accounts just required the current accounts—one set of accounts—and that is why we believe this partial search will provide a relevant and cost-effective service.

The second type of service which is rendered are things called certificates of fact, and these currently attract three separate fees of 25p, 50p or 75p according to the amount of information which is required. These fees were fixed many years ago—indeed well into the 19th century—and the cost of producing such a certificate is today estimated at just under £3, to which must be added the cost of obtaining the company's record. It is for that reason that we propose to introduce a flat rate of £3·50 for the first such certificate supplied on any one occasion and £2·50 for any subsequent one relating to the same company supplied on the same occasion. This fee includes the fee for extracting a copy of the company's records in order to provide the certificate, although this would be refunded if the inquirer had already made such a search.

Thirdly, we come to certified copies provided by the Registrar, a service which currently attracts a fee of 3 pence, three new pence, per page. This will be increased to 30 pence per page together with the search fee if the Registrar has to extract the company's records in order to produce and certify a copy of the document.

The remaining statutory fees remain unchanged because the income received in respect of each service covers the costs involved. The fees for registering a company or for changing its name were fixed in 1973 and the fee of £20 for registering a copy of an annual return was fixed in 1975. Although the costs of the services concerned have also increased, increased efficiency will enable these fees to remain unchanged for the time being.

My Lords, this has been a fairly long and complicated explanation. I am very grateful to the House for bearing with me. I beg to move.

Moved, That the regulations laid before the House on 25th November be approved.—( Lord Lyell.)

3.12 p.m.

My Lords, the House will be grateful to the noble Lord for having given such a lucid explanation of the statutory instrument. Perhaps it is proper for me to declare an interest, in that my own firm, Halpern and Woolf, have a direct financial interest, however moderate, in the subject matter of the debate.

The practice seems to have grown up in recent years for changes in company fees to be accomplished by statutory instrument. They were established in 1948 under the Companies Act, Schedule 3, and they were changed some 19 years later in the Companies Act 1967. So for 19 years the fees remained unchanged. Since that time there has been almost a spate not of Acts but of regulations. There was one in 1973, No. 2062, another one in 1975, No. 596, and another one which is now before your Lordships. The use of statutory instruments does have certain disadvantages in that of course one can reject or accept them but not amend them. It is for consideration whether, after reviewing all the circumstances in regard to the company position in this country, it might have been possible to have brought in some amendments, but obviously one cannot do it with a statutory instrument.

It seems rather on the face of it that the idea of the provision of a service to the industrial and commercial community at large which would in the normal way attract at any rate some contribution from the taxpayer has now been completely abandoned. The declared objective is to make the company registration service and all the ancillary offices that go with it self-supporting. Well, my Lords, it does not apply in every department, because in 1975—I am well aware under an administration of my own party persuasion—the fees for filing of annual returns of companies were moved upwards from £3 to £20. With some 750,000 companies on the register as at the end of November, this means that the Government have received revenue to the tune of some £15 million. I am quite certain that the cost merely of storing annual returns of companies, of which the overwhelming mass are private companies, certainly does not amount to this amount of money. Therefore, those, mainly private, companies that are filing annual returns, for which the charge in 1948 was very much less, some 25p, are subsidising the maintenance of the entire records office to a very considerable degree.

This is something I should have thought the Government of the day would have looked at again before they came out with this regulation, because of course this does weigh extremely heavily on small businesses. Twenty pounds per annum may not appear to be very much, but when it is added on to other expenditure it does amount to quite a fair sum. However, it remains £20 in the regulations. As to the inspection charge, which has now gone up from 5p to £1, of course what the noble Lord says is true—it has been there a long time. I would only say that it remained unchanged for a century, from 1847 to 1948. So the effective change so far as we are concerned is from 1948 onwards, and that means an increase of some twenty times. I am well aware that these matters are not of very considerable financial moment, but they all add up and they do amount to a burden, particularly on the small firms with which the Government profess to be very much concerned.

I am bound to say that the changeover from the registry in London to Cardiff has not been without its difficulties. I have made very careful inquiries as to what happens now when one goes along in London to get the microfiche. I am told that on average it takes about half an hour longer per company to get the information that one wants as compared with the old days when the records were here. Moreover, the microfiche does suffer from one disadvantage. Whereas when the original documents were available for inspection, one could get the information even though in some cases it was only faintly written on the documents admitted to the registry, now, when the microfiche is used, you find a very large number of cases where, owing to the defects in the original documents, which would have been seen on direct visual inspection, one no longer gets the same degree of clarity from the microfiche.

The noble Lord did say that there had been an increase in productivity in the Companies Registry Department owing to the fact that staff had to some extent been run down, I do not know whether by dismissal or by way of natural wastage. I am bound to say that I think that the putting of the old Companies House service under undue financial constraints is possibly a little shortsighted. The service that one gets at the moment is not as good as it was previously, even though it is steadily improving and I would not wish to cast any aspersions upon it. I would question the desire to make it self-balancing, on the basis that it receives either from the companies concerned or from the public. Very often today, and particularly in these times of financial constraints and uncertainties, large numbers of creditors find it necessary in regard to individual companies to go along and use the search facilities. Very often they are people to whom every pound counts, and one does not, therefore, look with any favour upon the endeavour to raise these fees too far.

I thank the noble Lord for the extent of his reply and the very lucid way in which he explained the contents of the regulations. I personally—and I can speak only for myself in this instance—am not entirely happy with the way in which this matter has been dealt with. I would have much preferred a regulation which gave some relief to small companies. But, on the whole and in view of the findings of the Joint Select Committee that the matter really was not of sufficient consequence to be brought to the attention of your Lordships, I entirely support what the noble Lord has said.

3.22 p.m.

My Lords, we are very grateful for the reception by the noble Lord, Lord Bruce of Donington, of these regulations. The noble Lord mentioned the microfiches. I noticed that during the course of my remarks the microfiches even found their way over to the noble Lord. I hope that they have all come back, because I should not like it to be a self-fulfilling prophecy of what the noble Lord was worrying about—perhaps the reduction not only of staff, but also of microfiches in Cardiff. Apparently they are all back, but we can deal with that matter later.

I should like to reply to some of the points raised by the noble Lord, Lord Bruce. I take, and indeed the department takes, very seriously, as he put it, the spate of regulations amending fees. I think that the House would agree that this is the third occasion in seven years when we have altered the fees. I believe, for that reason, that the House would agree that it would be better that we should try to amend the fees in, one might say, a block. That would mean that we would be doing it in the form in which I have presented it this afternoon. But we do, of course, note the point raised by the noble Lord, Lord Bruce, that it is very difficult, if not impossible, to amend statutory instruments.

The noble Lord mentioned the question of the large income derived from registering and, indeed, maintaining records of private companies—I think he said that the vast majority of companies in the registration office at Companies House, Cardiff, are, indeed, private companies. I think that it is accepted by the business community—small companies, small businesses, large businesses and the commercial world at large—that incorporation for limited liability is, to some extent, a privilege. I believe that businesses and the commercial world accept that, and that we should, as far as possible, try to cover the costs of supplying this service in this way. Does the noble Lord, Lord Bruce, wish to make a quick point?

My Lords, I was referring to the annual returns rather than the fees payable on the registration of the company.

My Lords, I am so sorry. The noble Lord was typically precise—and I apologise if I have been less precise than I should have been—but I think he will accept "one of the many fees" as spelled out in the regulations. I think that it appears on page 2. I called it the "fees", and I am sorry if I was not precise.

We noted the remarks of the noble Lord about the disadvantages of the microfiche and especially the defects in ordinary documents which were readily discernible by the naked eye when we used to go to Companies House and pull out the thick files. However, we would stress to the noble Lord, and indeed to the House, that it takes no longer to get hold of records now than previously in the old Companies House in London. Indeed, under the old system one out of five searches was abortive or even extensively delayed because other searchers were using the files which the searcher wished to obtain.

I understand that microfiche records can be, and are, in the large majority of cases kept and retained by searchers. But the House will note that even those of your Lordships with eagle eyesight would find it rather difficult to obtain any meaningful information from these little microfiches, and, indeed, a special machine is required to use the microfiches. However, that kind of equipment is extensively used in commerce these days, and I understand that users of the information obtained from Cardiff are ready and willing to have such visual aids. So, the microfiche records can be of great use to them.

We believe that the complaint rate is higher than it need be. The rate is now 0·1 per cent. as regards searches with the new system in Cardiff, and I understand that the complaint rate in London, when the thick files could be pulled out and we could go and inspect the original documents for ourselves, used to be in the region of 8 per cent.—that means that one search in 12 was the subject of a complaint. That is why we would suggest that the new system is making use of the technology available to us, and we hope that it will not be another 136 years before the search fee goes up again. Indeed, that is a span of years which is little more than applies to some of the more long-lived Members of your Lordships' House! I hope that I have answered the points raised by the noble Lord, Lord Bruce. If I have missed any, I shall write to him.

On Question, Motion agreed to.

Building Societies (Special Advances) Order 1980

3.28 p.m.

My Lords, I beg to move that the Building Societies (Special Advances) Order 1980, laid before this House on 25th November, be approved. This order increases from £25,000 to £37,500 the limit above which a sum lent to a person by a building society is treated as a special advance.

Under the Building Societies' Act 1962, special advances, which also include all loans to companies, are limited to a certain proportion of all loans made in a year. This proportion is normally 10 per cent., but is reduced if special advances exceeded that proportion in the previous year.

The special advances limit was introduced in the Building Societies Act 1960 for prudential reasons, so as to distinguish between normal loans to finance owner occupation and larger loans which may be more akin to business transactions and thus provide societies with a less secure investment. The Act prescribes that the limit may be increased by order of the Chief Registrar of Friendly Societies with the consent of the Treasury.

The special advances limit was originally set at £5,000 and has been increased five times since then. The present limit of £25,000 was set in 1979. The original figure was chosen as the sum up to which a person might be expected to borrow from a building society so as to buy a house for himself and his family. The limit should therefore increase approximately in line with the increase in house prices and the consequent expansion in the size of building society advances.

Last year the Government felt that the increase in the special advances limit should not only reflect the movement in house prices, but should also take into account the difficulties that home buyers were facing at that time. This year the situation in the housing market has very much eased and the demand for mortgages is much lower. An increase to £37,500 will do a great deal to restore a reasonable freedom of action to the building societies.

Raising the limit will help a number of societies, particularly those operating in the South-East, where high house prices have led to a demand for larger loans which has made the special advances limit a real constraint. Increasing the limit will also save a certain amount of administrative inconvenience for building society branches, which have to go through a special procedure for each loan which is treated as a special advance, as well as for the Registry of Friendly Societies. It will also enable the societies to compete on more equitable terms with the clearing banks and other financial institutions which operate in the home loans market. This does not mean that societies will immediately make more loans of over £25,000 at the expense of lending to first-time buyers, for example. In fact very few societies have been making special advances up to the permitted 10 per cent. of total advances.

The average building society advance in the United Kingdom in the third quarter of 1980 was less than £14,000, and it is reasonable to expect that the vast majority of advances will continue to be well below the limit. The societies make considerable efforts to ensure that first-time buyers and those at the lower end of the market are helped to the greatest possible extent.

Under the terms of the Building Societies Act, societies may work to the new limit in the financial year which begins after the date on which the order comes into operation. Since the financial year of most societies begins on 1st January, the new limit will affect them almost immediately. Other societies will be able to take advantage of the new limit as their current financial year ends.

The special advances limit was originally introduced as a limit for prudential reasons. An increase to £37,500 is fully justified by the movement in average house prices and mortgage advances over the past several years. It will help building societies in competing with the clearing banks and particularly assist those smaller societies which need to make high value loans because of higher house prices in their areas. I invite the House to approve this order.

Moved, That the draft order laid before the House on 25th November be approved.— ( Lord Cullen of Ashbourne.)

3.33 p.m.

My Lords, I should like to thank the noble Lord for laying this order before the House and explaining the contents of the order to the House. Whilst we accept that an order of this kind is inevitable, we must inevitably question the policies which have led to a 50 per cent. rise in the limit in a very short period of time. As the noble Lord told the House, the limit of £25,000 was set only in 1979, some 12 months ago, which indicates a level of some 50 per cent. inflation during a period of 12 months.

Ironically, the figure of £25,000 also relates to the figure at which income tax relief is granted for mortgages. Noble Lords are bound to wonder whether the fact that the Government have made this order today heralds an increase in the limit figure for mortgage relief. I wonder if the noble Lord would care to comment on whether there is any intention by the Government to increase the maximum figure for mortgage relief to £37,500 as well.

I should perhaps comment for a second or two on the noble Lord's remark that the purpose of this order is to restore freedom of action to the building societies. I think that one of the truths which is becoming more and more evident is that the building societies are finding themselves less able to compete with the clearing banks as the clearing banks are becoming able to offer better terms for mortgages than the building societies, and the building societies are not so competitive as they were in the past. No doubt this is a part of the reason for this order. While not objecting to the order, I should be particularly pleased to hear the noble Lord's reactions to some of the remarks I have made.

My Lords, the noble Lord asked why we have made a 50 per cent. increase this year after having made an increase last year from £20,000 to £25,000. Up to 1975 the Government endeavoured to set the special advances limit in relation to the movement in average house prices and advances. The 1979 limit was set rather too low, reflecting the situation in the housing market at that time, and we now feel that a larger increase is called for for this year. If we were fully to increase the limit from its 1960 value in line with the movement in average house prices it would have to be increased to around £45,000, which would be an increase of 80 per cent. A more gradual approach seems called for, bearing in mind the demands on societies to finance the whole range of the mortgage market. By raising the limit to £37,500, the Government are going a long way to restore the long-term relativity.

The noble Lord asked me a rather trick question about the £25,000 figure. I would say that there is no link. It is purely coincidental that the present special advance limit of £25,000 happens to coincide with the tax position on mortgages. I can certainly not give the noble Lord any help in this matter whatever. Regarding the competitiveness of the building societies, I think the reason why the Registrar of Friendly Societies wanted this increase made was for the small companies in the areas where house prices are above average. I hope I have answered the noble Lord's questions to his satisfaction.

On Question, Motion agreed to.

Social Security: Payment Arrangements

3.38 p.m.

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

"The House will recall that last February we debated arrangements for paying social security benefits and the implications for the sub-post office network. Widespread anxieties had been aroused in the country by misleading reports of what were thought to be the Government's intentions arising from a study of payment arrangements carried out last year in consultation with Sir Derek Rayner. Since then the Social Services Committee studied the matter and issued their own report. The Government are publishing today their reply to the Select Committee (Cmnd. 8106). Because we want to consult widely on the changes we now propose, this reply is in the form of a consultative document. It includes the full report of the original study by officials.

"The consultative document makes it clear that we stand firmly by the pledge of my right honourable friend the Prime Minister of 28th February that retirement pensioners will continue to have their pensions paid weekly at post offices if they wish. We also repeat our commitment to safeguard the sub-post office network. The Government consider that these commitments can be fully honoured without sacrificing our wish both to give the public more choice and to save taxpayers' money by increasing efficiency.

"Three main changes in the system of payment are proposed. The first change that we have in mind is to enable those who so wish to have their pensions or child benefit paid direct to a bank account by automated credit transfer. Such payments would be four-weekly in arrears. There would be no compulsion.

"Secondly, my department will make a number of internal changes which will produce useful administrative savings and which the Select Committee recommended should proceed.

"Thirdly, we propose that child benefit should be paid four-weekly for most mothers. People in receipt of supplementary benefit, family income supplement, the additional benefit for one-parent families and widows pensions together with mothers with four or more children, would be able to continue with weekly payment. This is a much larger group for weekly payment than the team of officials suggested and it takes account of our concern to protect vulnerable groups.

"In the light of the anxieties expressed by the House, the Government have paid particular attention to the effect of these changes on Post Office finances and on sub-post offices. If these proposals were implemented then clearly there would be a reduction in DHSS business in post offices. By about 1987–88, DHSS would hope to reduce its adminstrative costs by about £38 million a year at today's prices. About £25 million of these savings would come from reduced encashment charges paid to the Post Office. In these circumstances, the Government have thought it right to use the opportunity presented by the British Telecommunications Bill to allow the Post Office to conduct across its counters a wider range of business for the public sector. After discussing this with the Post Office, the Government are satisfied that if this Bill is approved there will be considerable scope for new counter business. The Government estimate that allowing for some expansion of current business sales, volume across the counter should increase by about 8 per cent. in the next five years compared with the 6 per cent of business lost as a result of the DHSS changes under the Government's proposals. The Post Office accepts these estimates.

"These proposals will save taxpayers' money and provide more modern methods of paying benefits without damage to the sub-post office network. However, we are anxious that there should be full opportunity for public discussion of these proposals. We shall therefore be discussing them with all the main interests, including the National Federation of Sub-Postmasters, over the next three months before taking final decisions."

3.43 p.m.

My Lords, we are grateful to the noble Baroness, Lady Young, for repeating that Statement made by her right honourable friend the Secretary of State for Social Services in another place. There are a number of questions I wish to put to her. The Statement says:

"Because we want to consult widely on the changes we now propose, this reply is in the form of a consultative document".
Are we really to understand—and I ask this quite firmly—that they are proposals and are not in fact at this stage intentions? It continues:
"we stand firmly by the pledge of my right honourable friend the Prime Minister of 28th February that retirement pensioners will continue to have their pensions paid weekly at post offices if they wish".
However, we also remember that the Prime Minister before the election gave an assurance that pensions would be continued either in line with prices or earnings, whichever was the greater, but within a comparatively short time the Prime Minister went back on that, and some of us understand that she would have reduced the pension had it not been for a few noble Lords in this House, perhaps in the Cabinet, who prevented that from happening. I may be quite wrong about that, but I do not think I am. We want to be perfectly certain, therefore, that any undertaking given today will be carried out.

What exercises the minds of my noble friends and myself is that there is to be a change whereby those in receipt of child benefit can have their money paid direct on a credit transfer and that such payments will be four-weekly in arrears. The Statement says "there will be no compulsion", but if one looks further on, the Statement goes on to say:
"Thirdly, we propose that child benefit should be paid four-weekly for most mothers".
The implication is that people in receipt of child benefit will have no option but will have their money paid four weeks in arrears. This is a very serious matter for a family dependent on child benefit week by week. Why is it that such payments, although made four-weekly, are not made two weeks in arrears and two weeks in advance as is roughly the position with the present retirement pension? It is important that one should not have to wait four whole weeks to get one's benefit in arrears. Payment should be somewhere in the middle, say two weeks in arrears and two weeks in advance.

Can the Minister confirm that the number of people in receipt of benefit payments weekly has increased from 35 to 45 per cent. in the last year, indicating that more and more people have found it necessary to ask for their pensions to be paid weekly? If that increase has occurred in the last year, surely it is important that they should have an opportunity of continuing to get their pensions weekly. The Statement later refers to the administrative costs and says:
"About £25 million of these savings would come from reduced encashment charges paid to the Post Office".
Is there a hidden redundancy in that? In other words, how many jobs are likely to be lost by this proposed change? It goes on:
"there will be considerable scope for new counter business".
I appreciate it may be difficult for the Minister to answer this, but is she in a position to say what new counter business is likely to come the way of the Post Office?

To be frank about all this, is this not really being introduced for no other reason than to save something like £50 million in payment benefits in a year, by paying them in arrears so that £50 million less is paid in the first financial year? In other words, is this not a way of saving in the sense that payment does not appear in one year's accounts but in the next? I am not suggesting there will be that amount of saving and that people will not get their pensions. Of course they will. It just seems to indicate that £50 million is expected to be saved in benefit expenditure in the financial year when child benefit is paid in four-weekly payments. If that is so, it really is not good enough. It is those who are in the greatest need who receive this money and w ho want it weekly, and I hope that there will not be the compulsory element that the Statement suggests.

3.50 p.m.

My Lords, I should like to join in thanking the noble Baroness for repeating the Statement made in another place. We on these Benches welcome the Government's intention to seek the widest possible consultation on their proposals. We are glad that no compulsion is proposed in regard to moving to direct payment to bank accounts, and we welcome the fact that retirement pensioners will be able to continue to draw their pension weekly and to do so at the post office. However, like the noble Lord, Lord Wells-Pestell, I am very doubtful about the proposal to make child benefit payable monthly in arrear for most mothers, even though they will still be able to collect it at the post office. To make a monthly payment possible is one thing, but to make it compulsory for most mothers is another. Do not the Government consider that where there is weekly payment of wages it is best to have weekly payment of benefit?

We welcome the Government's belief that they can safeguard the sub-post office network, and I wish to emphasise that we on these Benches regard the rural post offices as a very important social service. We should like to be assured that the Government will seek to maintain them, even if the increased across-the-counter-sales which they expect do not meet the losses caused by their proposals.

My Lords, I should like to thank both the noble Lords, Lord Wells-Pestell and Lord Banks, for their welcome of the Statement. With regard to the first point raised by the noble Lord, Lord Wells-Pestell, regarding consultation, I should like to make it clear that this is a consultation document and we welcome the views of all those who are interested in the matter. The views should be sent to the DHSS by the end of February. This is an important matter, and in every sense this is a consultation document.

On the very important point about payment of retirement pensions I wish to make it quite clear that we have decided that retirement pensioners and widows should continue to receive their benefits weekly at the post office, if they wish to do so; but at the same time we think that there may be some people who would prefer to receive their payments less often than weekly, and therefore we are making possible direct credit to a bank account at either four-weekly or 13-weekly intervals.

With regard to the question that the noble Lord raised concerning my right honourable friend the Prime Minister, I should make it quite clear that she said that pensions would keep up with prices; and we have stood by that.

The noble Lords, Lord Wells-Pestell and Lord Banks, referred to difficulties that might arise if child benefit is paid at four-weekly intervals in arrears. I think we all recognise that the first time this occurs there will be a difficult transition for some people, because clearly the system will be different, but of course they will not receive any less money; it will come at less frequent intervals. There is no question of there being less money. No one would have the money paid into a bank account unless he agreed to do so. The recipient would need to have a bank account and he would have to give the details of it. So although the benefit will be paid at four-weekly intervals in arrears, it will be paid at a post office.

There is the protected group who would have the right to have the benefit paid weekly if they wished. It is hard to say that there could never be difficult cases, and in such instances it would be possible to go to a local social security office and ask to have the benefit paid, if that were necessary. But there would be the protected group that I have indicated in the Statement.

The noble Lord, Lord Wells-Pestell, asked me whether there would be any hidden redundancy involved and whether there would be a reduction in the size of the Civil Service. In fact more staff will be needed in the DHSS in order to give the public the option of having benefits paid directly into bank accounts. The extra staff, who might eventually number 300, will be required because it will take more staff time to adjust payments following a change of a beneficiary's circumstances with this particular payment method. However, the calculations on savings that we have made represent net savings and include the number of extra staff.

It is difficult for me to give an answer about the precise nature of new counter business, but I can say we believe that this will depend upon the competitiveness and the marketing skills of the Post Office; but I understand that it has in mind work for transport authorities and possibly for the energy industries as well. The power to undertake this work will be included in the new telecommunications Bill, which is currently before another place.

We believe that at the end of the day real savings will accrue from these new proposals, and we think it right that the savings should be made in the administrative parts of the budget rather than on the benefits themselves.

Contempt Of Court Bill Hl

3.56 p.m.

My Lords, I rise to move that this Bill be now read a second time, and, if I may, I would seek the indulgence of the House should my voice prove somewhat hoarser than usual. I shall try to make it carry as well as I can. I regard this as an important Bill, though, mercifully, it is not quite as long as some of those Bills which have occupied your Lordships' attention in the past Session, and although your Lordships will wish to discuss it, both now and at later stages, I hope that it will not give rise to too much controversy.

I fear that I can offer your Lordships very few surprises. On 7th May last, in reply to an Unstarred Question kindly put down by the noble Lord, Lord Ardwick, I had the melancholy task of informing your Lordships that my poor little ewe lamb had been squeezed out of the warm fold of last Session's business by the more imposing flocks of my colleagues' legislative proposals; and in the course of that short debate—if I may switch my metaphor—I disclosed almost every card that I held in my hand. Therefore, what I have to say this afternoon will seem to many of your Lordships little better than vain repetition.

However, may I begin with one or two general philosophical sentiments. The first is that it is well known that from time to time politicians make asses of themselves; that lawyers, including judges, make asses of themselves, and that journalists also from time to time make asses of themselves. I am a politician, a lawyer, and a journalist, and therefore in a sense I can speak from the receiving end of all three. I am probably also the only person speaking in this debate who has been accused twice in his lifetime of contempt: once of contempt of court, and once of contempt of the House of Commons. Therefore I can speak from personal experience of being at the receiving end of that, too.

Conscious as we are of one another's shortcomings, it is very great fun for all three of our great professions to make fun of one another. But, my Lords, the truth is that none of us can get on without the other two. Each is essential to the wellbeing of the others, and since we all three live in glasshouses, we must be careful how often we throw stones; let him who is without sin among us cast the first. So that is my first general sentiment.

My second is this. In the judgment in the Sunday Times case the court was divided. The court was divided in the House of Lords, and it was divided at Strasbourg; and the reason for its division at Strasbourg, in particular, is that the Strasbourg court is a court of human rights based on the convention which we were discussing when Lord Wade introduced his Bill. There are two potentially conflicting human rights contained in the convention. The first is the human right contained in Article 6, which says this:
"In the determination of his civil rights and obligations or of any criminal charge against him everyone is entitled to a fair and public hearing within a reasonable time by an independent and impartial tribunal established by law".
That is the first right involved in these cases.

The second is the right enshrined in Article 10 of the convention, which relates to freedom of expression and which begins with the unqualified words,
"Everyone has the right of freedom of expression"—
and, of course, the freedom of the press is only a particular case of freedom of expression for everyone else. A free press cannot exist except as the possession of a free people, any more than a free people can continue to enjoy its liberties under the rule of just laws without a free press.

The Strasbourg court was divided in its opinion on the result of the Sunday Times case, but the members were all agreed on the principle to be applied when the two sets of rights came potentially into conflict. Justice, they said, comes first, but only to the extent—and here I quote—
"necessary in a free society";
and, when seeking an explanation of the word "necessary" in this context, the court explained that they intended it to carry a meaning somewhere between "desirable" and "indispensable". Whatever my opinion may be regarding the semantics of this, I venture to adopt the principle.

Even before the Sunday Times case I was of the opinion that the law of contempt was in need of clarification and revision; and since newspapers circulate more or less indifferently in each part of the United Kingdom, I was also of the opinion that it was necessary—and here I use the word in the same sense as the Strasbourg court—that the law of contempt should be identical throughout the realm. It was for this reason that in 1971, in conjunction with the Lord Advocate of the day, I caused the Phillimore Committee to be set up under the chairmanship of the late Sir Harry Phillimore. That committee reported to my noble and learned successor and predecessor in 1974, and through no fault of his—at least, I believe it was no fault of his—it remained lying on the shelf unimplemented five years later, when I became Lord Chancellor for the second time.

In the meantime there had been a Government discussion paper and a parliamentary debate, but no action. For aught I know, had it not been for the Strasbourg decision and various other incidents to which I shall come in due course, it might have gone on lying there. As the noble and learned Lord, Lord Elwyn-Jones, will testify, like Popes, Lord Chancellors have few divisions at their command in the mighty struggles which take place in the couloirs of power under the cloak of government. But at last my little ewe lamb has emerged into the open, and, with your Lordships' help, I hope that this time it will be allowed to grow up into a big sheep. Make no mistake: this is a liberalising Bill, and it is intended to be a liberalising Bill. If anyone doubts that, let them look first at Clause 6, the saving clause for the provisions which deal in the main with the strict liability rule and the Strasbourg decision. In that clause nothing is put outside the law which was inside it before the Bill became an Act, and no defence available before the Bill becomes an Act will be taken away by the Act. That is paragraph (a) and paragraph (b) of Clause 6.

Before I come to deal in detail with the clauses, may I, since this is a Second Reading, say what in the main the Bill does not do? The substantive parts of the Bill do not deal with intentional contempt. That is Clause 6(c), although the sentencing clause, to which I shall come, certainly does include it. They—that is to say, Clauses 1 to 6—do not deal with intentional contempt. For instance, they do not deal with throwing a tomato at the judge, intimidating witnesses, deliberately destroying evidence, and so forth. Equally, the Bill does not deal with civil contempt, apart from the sentencing provisions and one or two procedural provisions at the end. That is to say, it does not deal with deliberate disobedience to an order of the court—for instance, an injunction.

Apart from a number of provisions with which I shall have to deal one by one, the first six clauses deal with the so-called rule of strict liability in criminal contempt. That is the rule which puts editors and newspapermen generally in most fear. Moreover, they do not deal with the payment of potential witnesses—that is excluded by the definition in Clause 2— such as that which occurred in the Thorpe case. The Press Council acted in that matter so vigorously that, rightly or wrongly—and I think I referred to this on 7th May—I thought matters could safely he left as they stood; and when I announced this decision I think it was tolerably well received both in this House and outside it.

There are three main purposes in the first six clauses: first, to implement the main recommendations of the Phillimore Report with what I hope to persuade the House are minor deviations; second, to harmonise the law of England and Wales with the majority judgment of the Strasbourg court in the Sunday Times case; and, third, to harmonise the laws of England, Scotland and Northern Ireland into a coherent set of rules. The Phillimore Committee recommended that strict liability should be limited to publications. That is, for instance, why it cannot apply to the payment of witnesses; it is limited to strict publications. Your Lordships will find that provision in Clause 2(1) of the Bill. It is this provision, of course, which, with the other, excludes payments to witnesses. This is a liberalising provision.

The Phillimore Committee also recommended that the strict liability rule should be limited to publications which create a risk—and here I quote the words—that,
"the course of justice in the proceedings in question will be seriously impeded or prejudiced".
That is also a liberalising provision. It is achieved by Clause 2(2) of the Bill, and in my opinion it is perhaps the most important clause in the whole Bill. It is the better for being short, and it is made short deliberately because it is designed to be comprehensive—absolutely comprehensive—and because it is intended to be without qualification or exception. It follows exactly the words of the Phillimore Report, and for my part I can think of no better to express the purpose. It puts an end, of course, to the prejudgment criterion which was adopted by your Lordships' House in the Sunday Times case.

The Phillimore Committee also recommended that the times between which the strict liability rule should apply should be more precisely defined. That is a clarifying and therefore a liberalising recommendation. We seek to do that by Clause 2(3) and Schedule 1 to the Bill. Schedule 1 contains a deviation from the detailed recommendation of the report to which, if I may, I will return when I come to deal with the schedules.

Clause 4 also follows paragraph 141 of the Phillimore Report. The need for it was brought to notice by the Border Television case, as it came to be called. The law of defamation, as your Lordships know, protects reports of legal proceedings if published contemporaneously and in good faith. Clause 4 extends a similar protection to the law of contempt while retaining to the court the right to postpone reports by an explicit order postponing for that purpose. The reason for that is that there are cases where a premature release of facts in open court could prejudice current proceedings. An obvious example is the so-called "trial within a trial" when evidence of a confession is given and the judge has to decide as to whether it was properly obtained or not. It would be slightly inconvenient, to say the least, if, the judge having decided that it was inadmissible, the jury were able to read it in the papers the next morning. I think there were subsequent proceedings which have shown the same point in relation to the Kray and Poulson affairs. These are referred to in the Phillimore Report in paragraphs 134 to 140. In fact, our intention is that editors should know so far as possible exactly where they stand. If there has been an order deferring, then they have to be careful; if there has been no order deferring they are perfectly safe.

Before I move on to the schedules, I point to what I believe to be the useful provisions of Clause 3 which, of course, as the noble and learned Lord will know, reproduces existing statute law, dating, I think, from 1960, protecting publication of matter where the newspaper is, without negligence, ignorant either that the proceedings are active (and here I use the word in the clause) or, in the case of the distributor, where without negligence he is ignorant that prejudicial matter is contained in a given publication. Clause 5 is new. Clause 5 implements the recommendation of paragraph 142 of Phillimore in favour of a special defence of general public discussion of matters of public interest to which the prejudicial matter is of merely incidental importance.

This brings me to Schedule 1 of the Bill which, as I have said, deals with the defined time limits before and after which the strict liability rule cannot apply. The Phillimore Report discussed this at length in paragraphs 115 to 132. There are really three vital points to be protected. The first, and to my mind by far the most important—and I hope that your Lordships will agree with me in this—is to safeguard the rights of a man charged with a serious crime to have a fair trial, the fount of justice so far as possible unpolluted by premature and prejudicial publicity. So far as regards jury trials and, to a lesser extent, before lay magistrates, this is of the first importance. So far as regards professional judges and judges of appeal the cases are obviously rarer and the danger less pressing. Magistrates' courts and tribunals, to which I shall refer later, are in the main in an intermediate position, but in these cases enforcement does not normally rest with the court at risk but with the High Court or its equivalent in Scotland.

The second principle to be protected—and this is of only slightly less importance—is the protection of editors so that they know exactly where they stand. The third, which is mainly of importance in defamation proceedings where the civil jury still persists as an institution, is to prevent the abuse of the so-called "gagging writ" by postponing to the last convenient moment the point of time for the commencement of the rule.

In civil proceedings we have sought to give effect to these principles by making the point of time at which proceedings become active the setting down of the action in the High Court, or, as the case may be, the fixing of the date of trial. That can be found in paragraph 12 of Schedule 1. In criminal proceedings, we have selected the grant of a warrant for arrest, the arrest without warrant, or the preferment or service of an indictment or charge. That can be found in paragraph 4 of Schedule 1.

The selection for England, but I think not for Scotland, of the warrant deviates from the precise recommendation of Phillimore. Phillimore recommended a slightly later point of time for the commencement of the risk, namely the point of charge or service of the summons. It treated the arguments in paragraph 123 (where they are set out at length) as finely balanced. Our choice has given rise to some discussion, some of it rather ill-informed since I think the difference between the two recommendations can only apply to a very small minority of cases. I recommend the acceptance by the House of paragraph 4 of Schedule 1 as it stands, with my confidence considerably increased by the fact that, so far as I understood, it accords with the very well informed opinion both of the noble and learned Lord, Lord Elwyn-Jones, and the noble Lord, Lord Wigoder, in their speeches of 7th May.

It puts the quietus to the genuine and well-founded anxiety of the press as to the possibility of liability before proceedings begin—the imminent proceedings which have caused so much trouble—while at the same time safeguarding the accused from prejudicial publicity during a police search for a wanted man. The principal argument recognised by Phillimore in favour of the earlier point of time appears to me to be overwhelming. The disadvantage, it says, of the later point of time—and here I am quoting:
"is that it would allow comparatively unrestricted comment during a police search for the wanted man, which might culminate at any moment in an arrest and charge".
Coupled with the main test in Clause 2 (namely, that in order to attract the rule there must be, as is stated in subsection (2) of Clause 2 a publication which creates a risk that the course of justice in the proceedings in question will be seriously impeded or prejudiced) and coupled with the defence of innocent publication in Clause 3 of the Bill, reinforced by the new defence provided by Clause 5, I take the same view as I think the noble and learned Lord, Lord Elwyn-Jones, did in his speech on 7th May, that this provides an absolute protection in foreseeable cases.

This did not prevent some rather alarmist writers suggesting that the Bill under discussion would prevent all discussion about Lord Lucan, that source of perennial interest to those who write about such things, on the basis that there is something new to be said about Lord Lucan. I must describe that proposition as slightly preposterous. To begin with, the one argument of overwhelming importance which Phillimore gave for its own and slightly later point of time was that editors might be taken by surprise and would not know that a warrant for the arrest had been issued. I am bound to say that I think that an editor who does not know that a warrant for the arrest of Lord Lucan is out would be slightly unworthy of his job. It is almost impossible to conceive a publication about Lord Lucan which would satisfy the test in Clause 2—until at least his whereabouts are better known, if he is alive at all. In any event, any reasonable comment until he is found is covered by Clause 5. So I am not very impressed by this rather alarmist talk either on practical or theoretical grounds.

That is what I want to say about what I might call the first part of the Bill—that is, Clauses 1 to 6 and Schedule 1. There are a number of points of varying importance to which I should now draw attention in the remaining clauses and schedules. Some of these implement Phillimore, but they are concerned with matters other than the strict liability rule. The first and perhaps in some ways the most interesting of these is Clause 7. The law of contempt has seldom been applied outside the ordinary pyramid of regular courts; though it has been held to apply to a coroner's court, an ecclesiastical court, and a court martial.

The reason for this comparative want of authority is that it is only since the war that the whole apparatus of inferior bodies and tribunals has proliferated. To my mind it is clear that no sensible distinction of principle can be drawn between any of the various organs through which the judicial power of the state can be exercised, though a vast array of distinctions of degree and probability could give rise to endless and somewhat profitless discussion. Throughout this field the general principle in the Phillimore Report applies. The law of contempt, says the report:
"is required as a means of maintaining the rights of the citizen to a fair and unimpeded system of justice".
If one prefers to use the language of Articles 6 of the European Convention—which I have already quoted:
"In the determination of his civil rights and obligations or of any criminal charge against him everyone is entitled to a fair and public hearing within a reasonable time by an independent and impartial tribunal established by law".
We think we have done right by clarifying the position of the High Court and its Scottish equivalents to punish contempt in the lower bodies of this kind. Those who are interested will of course recognise that this endeavour has been rendered necessary by certain obiter dicta in a recent case in your Lordships' House which I will not go into in detail. That is protecting them by virtue of the law of contempt but, save and in so far as they already have it, withholding from them jurisdiction to enforce the law. I made a slight error in the last sentence. What is protected is not the court; what is protected is the proceedings in the court.

Magistrates' courts, for example—and they are not a bad example—have some purely administrative functions. These are not protected by Clause 7. Their judicial proceedings, if they were not already protected, would be; and since the local valuation courts in the rating system were the subject of the House of Lords' decision (to which I have just made reference) I made special inquiries as to whether my advisers thought that the local valuation courts would be now protected if the Bill becomes law. The answer was that it was not intended that they should be, and it is believed that they are not since it is believed that their functions are administrative rather than judicial.

Clause 8 of the Bill derives from the facts which the Criminal Law Revision Committee published in July 1968 and subsequent events which, as a matter of fact, resulted from the Thorpe trial. In 1968 the Criminal Law Revision Committee in their report (Cmnd 3750) recommended no change in the status quo regarding the secrets of the jury room, because they said, at that time, the conventions were understood and observed, and so we all hoped they were.

Nevertheless, they recognised that it was undesirable for jurors to reveal what had passed in the jury room even after the conclusion of proceedings. I am sure that that view is correct, and now that there has been an open and deliberate breach in the convention we must decide what to do. In my opinion, it is essential for the protection of jurors that secrecy should be observed, for the protecting of the accused that verdicts, particularly of those of acquittal, should be final and not the subject of subsequent debate, and for the respect in which the administration of justice is held that individual and inconsistent accounts by jurors of the deliberations in the jury room should not be bandied about in public discussion.

My Lords, one can make too much of a meal of this and I hope that I am not doing so. Jurors of course, we all know, do discuss privately with their friends what has taken place; and, provided this takes place after verdict and not before, it may be that no harm comes of it. This is safeguarded by Clause 8(1). Provided that individual cases are not identified, there is also a place for bona fide research in this field, and bona fide research has taken place sometimes of a most useful kind. That is safeguarded by Clause 8(2). It is also possible in pending or subsequent proceedings for some disclosure to take place in the interests of the administration of justice. We seek to safeguard this by Clause 8(3). It is also clear that prosecution in this field is not a proper occasion for private enterprise. This is taken care of by Clause 8(5) which makes it subject to a fine.

Clause 9 follows the lines recommended in paragraph 43 of the Phillimore Report and deals with the use in court of tape recorders, which is a matter which they then thought and which I think to be a necessary provision. Clause 10 is clarificatory; clarification was rendered necessary as a result of the Old Bailey case which was well publicised when a particular journal — not one of the nationals but a political party journal—published the names of two of the victims of alleged blackmail. It follows a footnote in Phillimore (No. 72 on page 60) which was added to the report after the deliberations of the committee were complete, and it follows the line of reasoning set forth in that footnote.

Clause 11 confers powers on magistrates to punish disruption or contempt in the face of the court and allows appeal up to the Crown Court, as indeed appeals to the Crown Court are universally allowed from magistrates. This follows paragraph 36 of the Phillimore Report but with rather heavier sanctions after six years than Phillimore then recommended. Clause 13 and Parts I and II of Schedule 2 apply criminal legal aid to contempt cases, and this of course again follows the Phillimore Report.

Clause 14 and Part III of Schedule 2 follow paragraphs 199 to 208 of Phillimore regarding sentencing powers. I think that they are more appropriately dealt with, if at all, on Committee. Clauses 12 and 15 are adaptations of the Bill to Scottish procedure. In this connection, may I apologise on behalf of my noble and learned friend the Lord Advocate, who is at the moment using his powers as an advocate in Luxembourg and could not be here this afternoon.

Clause 18 and Schedule 4 deal with Northern Irish applications. Clause 19(1) is a definition clause. Subsection (2) follows the Salmon recommendations of 1969 in restricting the application of the law of contempt as it applies to tribunals of inquiry. I do not think I need say anything about Clause 20.

I apologise for the rather "cataloguing" effect of this speech. It is in the nature of the Bill that I should have to explain it clause by clause. I think I can now bring it to a close and I commend the Bill to the House. I must tell the House that I consider it to be a most valuable measure. I have taken the opinion from the Law Officers, who took counsel's opinion, and they are satisfied, as indeed am I, that it brings our law into compliance with the Strasbourg decision. I am satisfied that, except in the respects to which I have drawn special attention, it precisely follows Phillimore. I have sought to justify such deviations. It will leave the law, in areas with which it attempts to deal, a good deal clearer and a good deal more liberal than it is at present. No doubt there will be fuller discussion in Committee, but as it is I commend the Second Reading of this Bill to your Lordships. I beg to move.

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

4.31 p.m.

My Lords, the House will be grateful to the noble and learned Lord for taking us through the provisions of this Bill, which he has, if I may say so, rightly described as a very important one, dealing as it does with an important branch of the law. I think it was Ogden Nash who said that:

"Christmas is what roses is not a bed of them".
Dealing with the law of contempt comes into the same category. Nevertheless, it is of great importance in the administration of justice in ensuring, or helping to ensure, a fair trial. On the other hand, it is equally important that its incidence should not unduly interfere with the freedom of the press and the right of the public to know what is going on. The Bill before us does not seek to codify the law relating to the press and to publications. Indeed, as the noble and learned Lord has pointed out, the savings provision in Clause 6(c) is very wide indeed. The clause reads:
"6. Nothing in the foregoing provisions of this Act …
(c) restricts liability for contempt of court in respect of conduct intended to impede or prejudice the administration of justice".
Phillimore, of course, attempted to deal with that part of the field of contempt also in various ways, and I should like to ask the noble and learned Lord whether it is the intention of the Government to follow this Bill with a later one dealing with interference with the administration of justice by way of criminal proceedings. Those criminal proceedings, of course, if the recommendations of Phillimore are carried out, would establish indictable offences in that field with a right to trial by jury. Indeed, the Phillimore Report recommends that that should be the procedure in those cases.

However, this Bill deals with a limited, albeit an important, part of the law of contempt. As the noble and learned Lord the Lord Chancellor has said, the most important part is Clause 1 which states:
"'the strict liability rule' means the rule of law whereby conduct may be treated as a contempt of court as tending to interfere with the course of justice in particular legal proceedings regardless of intent to do so".
That applies only to a publication which
"creates a risk that the course of justice in the proceedings in question will be seriously impeded or prejudiced".
As the noble and learned Lord has said, that involves a change in the law by adding "seriously" before "impeded" in line 17 of page 1. We on this side of the House think that the matter could be improved further by requiring that before the strict liability rule applies the risk, too, should be serious; so that the provision in Clause 2(2) would read then:
"The strict liability rule applies only to a publication which creates a serious risk that the course of justice in the proceedings in question will be seriously impeded or prejudiced".
That will tend to diminish the bringing of more or less trivial proceedings for contempt.

We have been giving further thought to a further protection which might perhaps be introduced into the Bill, namely, a requirement that the consent of the Attorney-General should be given before contempt proceedings are brought. I do not wish to comment in any detail on a recent case, but it may well be that the intervention of the Attorney-General in that case might have prevented the difficulties which arose. The Attorney-General's consent is required in proceedings under the Official Secrets Act. When I was Attorney-General I received a large number of requests to take proceedings for contempt and I am happy to say that in those six years I took proceedings only once for contempt. I think one must remember that, while one is conscious of the anxieties of the press, it is not a weapon which Attorneys-General have thought it right to use. I am of the view—and I shall be interested to hear what my successor in office as Attorney-General has to say about this—that there would be some benefit and no loss to the public in requiring the intervention of the Attorney-General in this field, his concern being the protection of the public interest and his interventions being impartial and independent.

The strict liability rule is to apply not only to a trial by judge and jury but to a trial by a judge alone. The House may well ask: Is that really necessary? Phillimore thought that it was. The committee pointed out that the strict liability rule was intended not only to protect the judges but others as well, such as witnesses, against being influenced to the point of creating prejudice in their minds. Judges themselves differ in their views on this point. I am delighted to see that in the distinguished list of those who are to take part in the debate there appears the name of the noble and learned Lord, Lord Salmon, who gave evidence to the committee. He said that he would never have contempt in judge-alone cases. He added:
"If a judge is going to be affected by what is written or said, he is not fit to be a judge".
That is typically robust language of the noble and learned Lord, if he will permit me to say so. However, the late Lord Dilhorne, who was not exactly fainthearted, as your Lordships will remember, took a quite different view. In the case of the Attorney-General v. the BBC, in the 1980 3 Weekly Law Reports, page 109, he said:
"This claim to judicial superiority over human frailty is one I find some difficulty in accepting. A man may not be able to put that which he has seen, heard or read entirely out of his mind and he may be sub-conciously affected by it".
There it is: two distinguished judicial minds in disagreement—not for the first time, I may say.

On the whole, I am inclined myself to agree with the Phillimore view, that some degree of control is needed even where, for instance, a civil case is heard by a judge alone. But this is a field where I believe that the intervention of the Attorney-General may be useful in bearing in mind that the fact that the pro- ceedings in question are proceedings before a judge alone should be a factor in considering whether proceedings ought to be brought.

Clause 2(3) of the Bill provides that,
"The strict liability rule applies to a publication only if the proceedings in question are active … at the time of the publication".
The noble and learned Lord the Lord Chancellor has taken us through the provisions of the Bill in relation to the time factor. The present test is whether or not proceedings are imminent. When I was in office as Attorney, I received many representations by the press that it was far too vague, and far too uncertain a test of time, and the Phillimore Committee was impressed by that point of view. It recommends:
"In criminal cases the proceedings only become active"—
so that the strict liability rule then bites—
"when an accused is charged".
The formula in the Bill in paragraph 4 of Schedule 1 rejects that and substitutes instead,
"(a) arrest without warrant;"
"(b) the issue, or in Scotland the grant, of a warrant for arrest".
That is not only an earlier event in point of time than the time of charging, but it has been said to me by the press that it is also something of which they are less likely to be aware. In most cases, in practice, there will be little difference in time, for the charge usually follows fairly closely on the arrest. However, the departure from Phillimore has been universally condemned in the press, and I shall be very interested to hear what my noble friend Lord Ardwick, who has very great experience as a distinguished editor, has to say on this point. That which I am pleased to call my mind is a little more open on this matter than it was in May, because I think one really wants to take on board the anxieties of the press and of editors in this kind of field.

As to civil cases, in the Bill civil cases are to be active when the case is set down for trial or the hearing date is fixed. The noble and learned Lord, Lord Denning, has said that this could stifle comment for two years or more. I am not sure whether, in this context, the press would not find itself to be better off with the old test of imminence, importing as that does—I agree it is uncertain—a greater sense of proximity to the date of the actual trial itself than the date of setting down. But here, again, this is a point which we shall have to consider in detail at the Committee stage. Again, it will be interesting to hear the views of our colleagues from Fleet Street on this matter.

What I find a little more worrying in the Bill is that it applies the same tests to appellate proceedings as to whether contempt proceedings should be brought as it does to trials at first instance. Is there really a risk in the minds of three judges of the Appeal Court, of whom one at least will be a very experienced—I will not say hard-bitten; that may not be a very flattering description—Lord Justice of Appeal? Is it really to be feared that that trinity of experienced judges will be affected by comment in a newspaper or anywhere else in their consideration of an appeal, where, generally speaking, the point under consideration is normally a point of law anyway? In my submission, this is a matter which we really must look at carefully, because I do not myself feel—and here, again, we have the prospect of eminent judicial figures in the field, including my noble and learned friend, Lord Gardiner, who will be winding up and whose views on this kind of matter we shall, of course, listen to with very great advantage—

My Lords, may I make just one point on what my noble and learned friend has just said? I, certainly, was very worried by the recent case of the two girls who murdered their father. The judge in first instance there underwent an enormous press attack upon him which was utterly and outrageously unjust. Did that not put the judges in the Court of Appeal in a very difficult position, in which they had to balance what I feel was a unanimous desire to reject the attack on the judge, with, at the same time, giving proper weight to what was still a very strong case for mercy?

My Lords, may I, first, on a point of fact, indicate that the charge was a charge of manslaughter, not of murder. It is a not unimportant distinction.

My Lords, I think that the noble Lord is right in one sense. That charge was a charge of murder. The plea was a plea of manslaughter. That is what the sentence was about.

My Lords, I am most grateful. I think that should be put on the record in that way. All I can say about that matter is that, in spite of the avalanche of pressure, the judges of the Court of Appeal allowed the decision to stand—

But, my Lords, may it not possibly have been because of the avalanche of pressure? Certainly, if I had been the ladies' counsel, I should have been terribly anxious that that avalanche of pressure would have the opposite effect to the effect that it did have.

My Lords, I think that my noble friend is trying to get a little bit both ways. Let us consider the matter again in Committee. It is not at all easy and I do not think he is contending that it is. But I should have thought there were certain risks here. However, let us consider whether we really need to give the three Appeal Court judges the same extent of protection as the trial judge with a jury.

Coming to the other parts of the Bill, I welcome Clause 3, which states the defence of innocent publicacation or distribution. Clause 5 will, I think, go some of the way to meet the criticisms of the Court of Human Rights about the Sunday Times decision. It may be just a Committee point, but should not the word "serious" be introduced into line 4 before "impediment or prejudice", to maintain consistency with Clause 2 of the Bill?

As to Clause 7, which constitutes a very wide extension of the scope of jurisdiction to protect inferior courts, I must say that, at first sight, I was a little startled to see the phrase,
"any part of the judicial power of the State",
coming into a Bill. I do not think I have ever come across it before. It smacks a little of the imperium of the Roman Emperor—

My Lords, I gather that the noble and learned Lord the Lord Chancellor had a better classical education than I had in Llanelli Grammar School, and I will how to his knowledge on this matter. But it is, nevertheless, somewhat unusual to find this as a phrase in a Bill. More substantially, the description of the province of the law now is almost unlimited,

"The jurisdiction of the High Court … to prohibit and punish contempt of court or in respect of the proceedings of inferior courts extends to the proceedings of all inferior courts, tribunals and bodies (however described and whenever established) which are constituted by law and exercise any part of the judicial power of the State".
Whether the press will find that to be a sufficient definition of the bodies about which they must be careful when they comment or report upon them, I doubt very much. I should have thought there is something to be said for a schedule setting out those bodies. Does it mean that all the tribunals coming under the umbrella of the Council on Tribunals are to be included? As I understood the observations of the noble and learned Lord the Lord Chancellor, administrative tribunals are not to be included. But that description in no way amounts to a sufficient definition. Perhaps this could be looked at again.

Turning to Clause 8, publication of jury's deliberations, I find myself in agreement with what is proposed in that clause, as so skilfully drafted. As it stands, it should remove the fear which existed that jurors would no longer feel free to perform their duties because of possible reprisals by criminals for whose convictions they were responsible, if there were free reporting of what went on in the jury room. On the other hand, academic or other researchers dealing with general issues about jury trials can safely pursue their legitimate studies of the jury system.

At this stage I have no comment to make about Clause 9, and I find myself broadly in agreement with what is proposed in Clause 10. When in due course we deal with Clause 10 it may be convenient to consider the implications of the decision of the court in the case of Miss Harriet Harman, the solicitor for the National Council for Civil Liberties. The freedom of journalists to make full use of documents not only produced but read in open court which has been put in issue by the court's decision in that case is obviously a matter which seriously affects the position of the reporter and of the press. It may well be that Clause 10 will be a convenient stage at which to remedy what seems to many of us to be a very unsatisfactory state of affairs.

Turning to Clause 11, dealing with offences of contempt of magistrates' courts, I wonder whether the magistrates alleged to have been insulted should themselves be the judges of the contempt; or whether or not the arrangements made in regard to High Court judges in the case of contempt—namely, that the facts should be reported to the Attorney and that he should be invited to take proceedings—would be the better course.

The provision regarding legal aid is obviously a desirable and necessary step. It seems to me that we are in for a very interesting and fascinating time during the forthcoming Committee stage of the Bill, and it is good that during this opening stage we shall—at any rate from this moment on, as indeed was the case before—hear some authoritative observations.

4.55 p.m.

My Lords, both the necessity for and the difficulty of this Bill arise from the fact that there is a conflict between two principles of very great importance to our society. The first principle is that the press must have the right to investigate, to expose corruption and dishonesty and to comment freely upon our legal system as it works. The second principle is the necessity for the legal system itself not to be subject to improper pressures or unfair comment which may pollute its course. It is because there is that conflict that I regret that only one noble Lord, the noble Lord, Lord Ardwick, has had the temerity to challenge the monopoly of the lawyers who have put down their names to speak in this debate. Many Members of your Lordships' House who hold the most distinguished positions in the media could be of the greatest possible assistance when we consider the problems posed by the Bill. I hope that they will find it possible to help during its later stages.

What perturbs me is that lawyers are notoriously a little over-sensitive about their own profession. We tend at times to be over-jealous about our procedures, and sometimes when we discuss them, to verge on the pompous. It is necessary that in its final stage this Bill should represent a proper, true balance between the claims of the law and the claims of the press. That is not going to be so if the debate is left exclusively in the hands of only one of those two professions. Indeed, I venture to think that already there are signs that in this Bill the balance has been tilted unnecessarily against the press.

I want to refer first to two aspects of that matter. The first is the point which has already been made by the noble and learned Lord, Lord Elwyn-Jones. Clause 2(2) refers to the strict liability rule applying to a publication which creates a risk that the course of justice will be seriously impeded or prejudiced. It cannot be sensible that we should legislate to cover every fanciful or remote risk. I respectfully agree with the noble and learned Lord, Lord Elwyn-Jones, that some word is necessary there. I should have preferred the word "substantial" to "serious", but that, at any rate, is not a matter about which we need fall out at this stage.

The other area in which it seems to me that the balance is tilted against the press involves our considering whether it really is necessary to protect judges sitting alone to quite the extent that this Bill sets out to do. I doubt very much whether our judges wish to be mollycoddled, if that is not too strong a term, in the way that is proposed here. The judges who sit in the Criminal Division of the Court of Appeal are not, despite the point made by the noble Lord, Lord Paget of Northampton, going to be influenced by press comment. They may well take account of it. No doubt it is right that they should know what public opinion is about any particular sentence that is passed. But anybody who knows the noble and learned Lord the Lord Chief Justice, for example, would not wish to suggest for one moment that he is going to be subject to unfair pressure in any decision which he may make in the Critimal Division of the Court of Appeal.

It seems to me that the only time when strict liability should run in relation to appeal proceedings is on the rare occasion when the Court of Appeal orders a retrial and there are, therefore, going to be further jury proceedings. It is possible that a jury might then be influenced to some extent by comment which appeared in the press.

So far as civil proceedings are concerned, in Committee we should look very seriously at the possibility of limiting the area of strict liability to those civil proceedings in which a jury is known to be going to be involved. I appreciate the argument that sometimes it may happen that the parties to civil proceedings may be said to be prejudiced or put under pressure. However, I should have thought that the public interest in most cases, if not all, outweighs the undesirability of that happening. I believe that in civil proceedings we should concern ourselves only with the comparatively rare cases in which juries are involved. In those two areas it seems to me that at the moment the balance in this Bill has been tilted a little unfairly.

I do not want to suggest that I would wish to take up every point made by the press in the course of its criticisms of this Bill. Some of them are perhaps not entirely well founded. For example, I stand by the view that I expressed in the earlier debate on this subject, that the time when the strict liability rule becomes active is best set out in Schedule 1 and is an improvement on the proposals in the Phillimore Report. I believe that to say that the time should be on arrest without warrant or the issue of a warrant for arrest or the issue of a summons, is as late as one can possibly leave it and that to leave it later than that is to create a risk of very real prejudice to a defendant. I have in mind, for example, cases under the Prevention of Terrorism Act where a person may be arrested and is held at the police station, it may be for seven days or indeed longer, before he is charged. It would be quite improper that during the seven days the press should be totally free to comment on the crime, on the criminal, on the man's previous record, and so on.

The press also claim that they will find this new test will cause difficulties because they may not know whether a warrant has been issued or whether a person has been arrested, but I respectfully agree with the noble and learned Lord on the Woolsack that the provisions of Clause 3(1) give the press a complete defence if their lack of knowledge is one for which they are not to be blamed because they have taken all reasonable care to find out.

The other matter which the press have raised recently arises out of the rather curious case between Miss Harman and the Home Office. I do not wish to embark too far upon that case except to say that it seems to me that neither side came out of those proceedings precisely festooned with credit. One thing that was perfectly clear about that case was that the freedom of the press was in no way involved at all and I believe it to be a misrepresentation of that case to look upon it in that light. In those circumstances I am glad that this Bill is not at the moment seeking to make any provision to deal with the specific rather unusual situation that arose in that case.

I have only two other general comments to make on this Bill at this stage. First, in relation to Clause 7, which seeks to extend the jurisdiction on contempt to tribunals, I think perhaps I should declare that I am a member of the Council on Tribunals but of course I am not in any way speaking on their behalf. It seems to me that it is necessary to look with some care at this proposal. Tribunals are intended to be informal, inexpensive places, lacking the formality of the courts, and I am not sure that there is a case for extending contempt provisions to tribunals at all, provided we can make it clear that the criminal law can cope with the sort of disturbances that have taken place, particularly at public inquiries, during the course of the last few years. If that can be dealt with—and I believe it can, probably under the existing criminal law and if not, by a slight amendment to the Public Order Act—then I should have thought it was not necessary to import the whole panoply of contempt proceedings into those informal tribunals.

I am also perturbed at the attempt in Clause 7 to try to define a tribunal as being a body which exercises any part of the judicial power of the state. I can see endless difficulties arising over that attempted definition. Perhaps I may give one example which has already caused some controversy, privately at any rate. Where there is a public inquiry and a planning inspector who makes his recommendation to the Minister, it would presumably be said that he was not exercising any part of the judicial power of the state, but, where the planning inspector gives the decision himself—as is increasingly the tendency nowadays—it may be that that consideration would not apply. I believe we shall have to look with some care at that definition if we decide in Committee that we ought to extend the contempt part of this Bill to tribunals as a whole.

The other clause about which I wish to comment is Clause 8, because I must confess that I am a little unhappy about it. This is the clause which seeks to make it a contempt of court where a jury's deliberations are published and of course it links Clause 8 to publication as defined earlier in the Bill in Clause 2. I do not object to it as it stands, but it seems to me that by inference it is removing from the area of contempt a large number of communications with juries after a case is completed, provided those communications are not published. I can give certain examples of this. At the present moment if, after a majority direction, the jury acquit, nobody knows whether the acquittal is unanimous or by a majority, but, as I understand it, it would now be open to anybody—defendant, counsel, solicitor—to go up to a jury after a case (provided they can get them to talk) to establish whether or not the verdict had been unanimous. Unless publication was involved, it would not be a matter of contempt.

Equally, and perhaps even more unsatisfactorily, if a jury had disagreed upon their verdict it seems to me that it would now be open—if the law was defined in this way in Clause 8—for counsel or solicitor to go up to any juror who was willing to talk after the case, after the disagreement, and discuss which witnesses were found to be satisfactory, which points appeared to be impressive, how everybody might do better next time, and to have a general discussion about the facts of the case and the jury's deliberations. There again, unless publication were involved, it seems to me that that would not constitute a contempt under this clause. Indeed, as I read it, it does not deal with the issue where danger might arise to particular jurors if criminals discovered that those particular jurors might have been responsible for their conviction, because, if a juror cared to disclose to, let us say, a defendant's solicitor, that it was the fifth juror from the left in the back row who took the lead in pressing for his conviction. I cannot see that that would be a publication within the terms of Clause 8 as defined in Clause 2. That again is another matter at which perhaps we should look with some care when we come to the Committee stage.

At this stage I do not want to make any further comments on this Bill. It is a Bill full of interest. The noble and learned Lord on the Woolsack was optimistic, as ever, in indicating that perhaps it was not very controversial. I believe there are some areas of controversy into which we can usefully go with great care when we come to the Committee stage.

5.9 p.m.

My Lords, the name of "contempt of court" is by no means apt. The law of contempt of court does not, as its name suggests, exist to protect the dignity of judges nor, for that matter, to harass the press. It exists solely to ensure that justice shall be done, and to this end it prohibits acts and words which might obstruct the administration of justice. The horror of trial by press, television, radio, occurs in many foreign countries. I am sure that we should all hate to see it imported into the United Kingdom, and I have no doubt that we never shall. Nor have I any doubt that contempt of court should apply to all jury cases; that is to say, to all indictable criminal cases, and to libel and fraud cases, which in the civil courts are the only cases that now come before a jury. A jury might well be affected and indeed seriously prejudiced by any comments appearing in the press during the course of the trial.

The law, however, does lay down that while the trial is being held the media must confine itself to giving correct reports only of what occurs at the trial. There is no doubt, I think, that a free press has the right, and indeed the duty, to bring before the public facts relating, for example, to fraud and other serious crimes. It is in the public interest that this should be done. Indeed, it is sometimes largely because the facts were discovered and brought to light by the press that criminals are brought to justice.

I confess that I had always thought that in any case tried by a judge alone contempt of court should not apply, because in my view a judge could not be affected by what is written or said out of court. As my noble and learned friend Lord Elwyn-Jones said, I have the temerity to say that if he were he would not be fit to be a judge; I do not resile from that. I am, however, very impressed by Mr. Robin Day's note in the report of the Committee on Contempt of Court. I think I agree with him that in cases tried by a judge alone the minds and evidence of witnesses might be affected, however immune to outside influences the judge himself may be. I at the moment agree with Mr. Day that a date might be fixed, so that after that date the media would know that an expression of opinion in relation to the case could constitute contempt of court. That date should be published one or two weeks before the trial and should continue until judgment is given.

I do not think that the criticism of a judgment given at first instance, or in the Court of Appeal or in your Lordships' House, could be a contempt of court. Nor do I think that what may be said or written while an appeal is being heard could be a contempt of court, because to my mind it is quite incredible that Lords Justices and Lords of Appeal could conceivably be affected by anything the media might say or write about the case with which they were dealing.

5.14 p.m.

My Lords, with that poetry of language of which the noble and learned Lord who sits on the Woolsack is such a master, he described this Bill as his "ewe lamb", and the Bill has indeed had a good and faithful shepherd. I believe that by and large he has led the lamb into green pastures, but occasionaly he has led it by still waters, and it is as to which way those waters flow in the main that this Second Reading debate, I suppose, should mainly be directed. I want, if I may, to raise a few points of a general nature which occur to me.

In the first instance, may I say that, of course, as has been so often proclaimed in the learned speeches we have been delighted to listen to, this is a question of balance. It is a very necessary thing that not only have we got balance but we have got certainty, and one of the first findings of the Phillimore Committee was that the law of contempt was gravely uncertain. On this question of balance, I am afraid that I must say, with the greatest respect to the noble Lord, Lord Wigoder, that I believe that lawyers have to be more than careful and I do not think that they are in this connection too jealous of the duties that they have.

One often thinks of the thalidomide case as the starting-off point for seeing that the media should get indeed the greatest of freedom under our law, because of course it was in that case that the Sunday Times was injuncted first by the Divisional Court, and that injunction was then lifted by the Court of Appeal and reinstated by the House of Lords. I must say this—and I say it in the regrettable absence, I am sure only for a moment, of the noble and learned Lord, Lord Salmon, who so learnedly addressed us a moment ago—that it is a question not just of judges. Those of us who are practitioners in the law know that often parties to civil litigation are frightened by press comment of an unfair nature and of an oppressive nature, to the extent that they agree to settle out of court, very often unjustly, because they do not wish to walk into greater and more objectionable publicity.

And, much more important, in the criminal law it is not just the judges, it is not just the jury; it is a question of whether a witness will have the courage to come before the court after having a great deal of adverse publicity. Indeed this applies in exactly the same way in regard to civil cases where there are merely judges who are trying the matters at issue and no juries. Witnesses again are very necessary if justice is to be meted out, and the fact that witnesses may or may not attend is a matter of grave consequence in regard to justice.

My Lords, I say this with the greatest respect to the national press and to the media generally: we are not dealing with a terribly tender and careful plant when we are dealing with the media as it has in fact evolved. I make no attack upon the press or the media. It is a necessary function of our democratic way of living; it is one of the bastions of our freedom. But more than occasionally, and certainly in regard to some cases that your Lordships can well remember, they have gone over the bounds of responsibility into an area of sensationalism, upon which they feed, but justice does not.

If I may go from the general to the particular, but not too particular, because that will be for the Committee stage, I listened with the greatest of respect, as one always would, to the noble and learned Lord the Lord Chancellor when he dealt with the definition in Clause 2(2) of this Bill and said that on the advice of the Law Officers, and indeed the advice that they themselves had taken, it would appear that this Bill fulfils the function which indeed it states very clearly in the Preamble it was meant to fulfil, which is to harmonise our law with the Convention on Human Rights, and indeed the decision at Strasbourg to which the noble and learned Lord the Lord Chancellor referred.

That definition does, indeed, follow Phillimore. But what it does not do is to follow the Phillimore recommendation which your Lordships will find on page 28 of the Phillimore Report and, indeed, on page 93 at recommendation 19. That recommendation is as follows:
"It should also be provided by statute that bringing influence or pressure to bear upon a party to proceedings shall not be held to be a contempt unless it amounts to intimidation or unlawful threat to his person, property or reputation".
The Phillimore Committee had the benefit, before it issued its report, of having before it the House of Lords' decision in the Attorney-General v The Sunday Times. Therefore, the Phillimore Committee was able to look at the tests which were applied in that case. What the Phillimore Committee did not have the benefit of when it reported was, of course, the judgment of the court at Strasbourg. The only way in which this definition differs from the definition that was considered by the Divisional Court—and so far as I can sec was followed in the Court of Appeal and the House of Lords in the Sunday Times case—was the transposition of the word "serious" from "serious risk", which was what the Divisional Court was dealing with, to "serious impediment" and so on, which is what subsection (2) deals with.

My Lords, I think that the noble Lord has made a mistake. The House of Lords, as distinct from other courts, adopted a different criterion, and it was that criterion which was attacked by Phillimore and was the only live issue before Strasbourg. That was the so-called pre-judgment criterion, and it is that which we get rid of in this Bill.

My Lords, I am more than grateful to the noble and learned Lord the Lord Chancellor. I could not have a better teacher and I am most grateful for that lesson. I merely alter my point by saying that that at least was the basis or the formula used by the Divisional Court and the Court of Appeal. I beg with the utmost deference to venture to disagree with the noble and learned Lord the Lord Chancellor when he says that that was the only difference that the court at Strasbourg had with our law. Perhaps I may say that I am reinforced in that doubt by my own very noble and learned Law Society which has, in fact, prepared a memorandum saying that the Law Society itself has some doubts at this stage as to whether by merely having—and without adopting the other formula suggested by Phillimore—the definition in subsection (2), to which I have just referred, we do in fact harmonise our law with the convention and we do in fact find ourselves in a position where what we are doing is so adapting our law as not to offend against the Strasbourg judgment.

I shall move from that point very speedily to a point which has been made—and made much more effectively than I can make it—in regard to the matter of the tribunals. In fact, before I make that point there is another one which I should like to make on Clause 4(2). That is a subsection which deals with the power for judges to order that the publication of any report of proceedings should be postponed. It is my submission—and again it is the submission of the Law Society—that the basis upon which that power should be exercised should be clearly and much more precisely stated in this Bill.

One of the main sources of difficulty in relation to contempt law at present is whether courts can order the publication of reports of proceedings to be delayed. I hope that I shall not detain your Lordships too long if I show your Lordships the divergency of judicial opinion upon this matter as it appears now in our law reports. Mr. Justice Lawton as he then was in Regina v Kray (1969) Criminal Appeal Cases R421, said:
"I can see no reason why a newspaper should not report what happens in court even though there may be other charges pending. The reporting of trials which take place in open court is an important part of the function of a newspaper and it would not be in the public interest, in my judgment, if newspapers desisted from reporting trials, and from reporting verdicts and sentences in those trials, merely because there was some indictment still to be dealt with".
In the case to which, I believe, the noble and learned Lord the Lord Chancellor referred—namely, Border Television Limited ex parte the Attorney-General and again in Regina v. The Newcastle Chronicle and Journal Limited ex parte the Attorney-General—the Lord Chief Justice said that every reporter should know about one simple form of contempt, the publication of material:
"relating to offences committed by or alleged against an accused, other than those charged.".
I merely venture to suggest that unless the circumstances in which the judges can exercise their powers to order reports of legal proceedings to be deferred are defined in detail, the confusion which now so often arises may well continue.

My final point relates to Clause 7, to which reference has already been made, and it concerns the question of the tribunals, which may be included unless we are very careful; or, to put it another way, the doubt that may be left as the Bill now stands as to which tribunals may be affected. The noble and learned Lord the Lord Chancellor referred, if I remember correctly, to the case of the Attorney-General v. the BBC, which was a case dealt with this year.

Perhaps I may give one quick example of the mess we may be in if the suggestion made by my noble and learned friend Lord Elwyn-Jones is not taken up—namely, either a list specified or another definition given. May I pose the question as to what would happen, for example, with a rent assessment committee? Is that an inferior court, tribunal or body which is constituted by the law, and does it exercise any part of the judicial power of the state? There is no doubt about it: when it fixes rents it perhaps does not exercise a judicial power, but we all know that rent tribunals have the power to order a notice to quit to be deferred. Is that the exercise of a judicial power? It is either necessary to have the list properly scheduled or it is necessary to have a definition like "courts of law", and therefore cut out the administrative tribunals and those which do not exercise the jurisdiction of courts of law. Having said all that, I am perfectly sure that your Lordships will agree that this is a Bill that deserves a welcome.

5.29 p.m.

My Lords, I am in favour of nearly all this Bill. It seems to me to be well conceived, overdue, and, if I may say so, much better drafted than some of the legislation of last Session. So far as it complies with the judgment of the European Court of Human Rights, it deserves respect. However, I shall not enter into the controversy between the noble Lord, Lord Mishcon, and my noble and learned friend the Lord Chancellor because I would wish to study the sources very carefully before doing so.

I am in favour of the whole of Clauses 1 to 6 and Schedule 1, including what I believe is the most controversial point in those parts of the Bill; namely, as to when criminal proceedings should become active for the purpose of contempt of court and publication. I believe that up until now we have always left things too late. Without citing again the examples in which this danger has arisen, I think the Government have now got it right.

My principal doubt arises on Clause 7. Not for the same reason as that given by the noble Lord, Lord Wigoder, who objects to any extension of the concept of contempt of court to tribunals, if I have understood him correctly. That principle was breached years ago. My objection is to the way in which it is proposed to do it as set out in Clause 7. It has already been briefly referred to by the noble and learned Lord, Lord Elwyn-Jones, but I think that we should consider carefully lines 20 to 23 on page 3, which says that:
"…the proceedings of all inferior courts, tribunals and bodies (however described and whenever established) which are constituted by law and exercise any part of the judicial power of the State".
That, I say with respect to my noble and learned friend, is casting the net too wide. It is also imprecise and will create uncertainty as to whether or not a particular tribunal is covered by the law of contempt. The matter is by no means improved by the wording in Clause 19(1) where we find a definition of the word "court", and then a reference to the Tribunals of Inquiry (Evidence) Act.

Surely lawyers, journalists, alleged contemnors, everyone, have the right to know precisely whether or not the proceedings in any particular tribunal will be governed by the law of contempt. It is a very elaborate law. It was already so before this Bill was introduced, and it will not become less elaborate when it has reached the statute book. I do not complain because it is going to become more elaborate, but surely if we can possibly do so we must deal with it now in a way which avoids creating any uncertainty.

There is a simple way out of this difficulty. I suggest that all those inferior courts and tribunals whose proceedings are to be protected by the law of contempt should be listed in a schedule to the Bill. It is not an exact analogy, but we do just that in the House of Commons Disqualification Act with regard to a huge range of appointments within the public service under the Crown. Therefore, there would be no difficulty about having such a list.

Of course some tribunals, not mentioned by my noble and learned friend, have already been given the protection of contempt of court by statute. There is of course the Tribunals of Inquiry (Evidence) Act 1921. That goes back a long way. All tribunals established under that Act have the protection of contempt of court. Then under Section 41 of the Charities Act 1960, which I piloted through its Committee and Report stages in another place with the able help of the noble and learned Lord, Lord Simon of Glaisdale, when he was Solicitor-General, strange as it may seem, we persuaded Parliament to enact that disobedience to certain orders, and very nearly administrative orders, of the Charity Commission might, on application of the Commissioners to the High Court, be dealt with under the law relating to civil contempt. So 20 years ago we already had that precedent. Then there are others, strangely enough, in the Pipelines Act 1962, and also in the Nuclear Installations Act 1965, and the Parliamentary Commissioners Act 1967, which perhaps is more natural because they are presided over by a High Court judge and their proceedings are the subject of public inquiry—some of their proceedings, but not all.

The examples that I have given show, incidentally, that some statutory tribunals which have judicial, or quasi-judicial functions, also have administrative duties to perform. The question will arise for my noble and learned friend to consider, whether the exercise of the administrative powers is also to be protected when the tribunal falls within his definition in Clause 7 of the Bill, because it also exercises judicial functions. We have to be very clear about this. The way to overcome this is surely to have the tribunals listed in a schedule, tabled I would hope by the Government at the Committee stage, and then we should all know what we are about.

The only other thing I wish to mention really arises on Clause 11. It is understood, and has been for centuries in this country, that all contempts of court should be dealt with promptly; especially those committed in the face of the court, a term of art well understood by lawyers. It has a wide meaning and covers a wide range of circumstances. With a few exceptions, up until now all contempts in the inferior courts could be punished only on application to the High Court—a quite unnecessary palaver causing delay and expense when the matter should be dealt with as summarily and cheaply as possible. Therefore, in spite of what the noble and learned Lord, Lord Elwyn-Jones, said when he seemed to cast doubt on Clause 11, I welcome it. It gives power even to lay magistrates to deal with contempts committed in their own courts. That is an important change which is fully justified.

5.38 p.m.

My Lords, I should like to start by congratulating the Government on taking a step towards the implementation of the Phillimore Report. As regards human rights, some progress in this direction even after six years is a matter for congratulation. The Bill, I agree with the noble Lord, Lord Renton, is simply drafted and is clear, and it is perhaps what one might call a well-dressed ewe lamb. I would agree with, and I support, certain parts of this Bill. The unintentional prejudice to legal proceedings will only be caught where a publication causes those proceedings to be seriously impeded or prejudiced; the three defences are provided in Clauses 3, 4 and 5.

I agree with Clause 8, the preservation of the privacy of what goes on in the jury room, although I greatly regret its necessity. When the noble Lord, Lord Wigoder, expresses fears in relation to what may happen if this particular clause is passed, of course it is always the result that if you try to legislate to prevent something which up to that time has always been understood as a matter of honour and good sense, then you can always say that what is not prohibited is allowed. It seems to me that, if you are going to venture into this realm, you cannot possibly ever stop people asking individual jurymen what has happened in the jury room, but at least this will go some way towards preventing the publication of what goes on there.

The provision for legal aid I particularly approve of, and the good sense of being able to grant legal aid for counsel only or solicitor only. That said, I have some fundamental reservations about the Bill and I am pleased to find they turn out to be very much in line with those already expressed by the noble and learned Lord, Lord Salmon. I ask your Lordships to appreciate clearly what is the background to the Bill; why must there be a law of contempt? The only purpose surely is to protect the right of the citizen to a fair trial, and that of course includes the right to have resort to a tribunal, a court, which has the respect of the public and which will act independently and without prejudice.

That of course is the ideal, but in reality no court operates in a vacuum. Every court is subject to the pressures of society; courts are manned by human beings—judges, magistrates, lawyers, police officers—none of whom are paragons of virtue, and every individual who goes to court faces some prejudice in one form or another. Of course, the greatest potential prejudice that he faces is to find a judge, magistrate or lawyer who is incompetent, unfair, simply ignorant or too old. Although the noble and learned Lord, Lord Denning, said in his lecture on television, "Trust the judges", when one set of judges is always upsetting the decisions of another set, it is difficult to know how to follow that injunction.

I do not know how many of your Lordships watched the television reproduction of the Lady Chatterley trial. Dr. Richard Hoggart, who gave a very perceptive commentary afterwards, pointed out that the significance of the trial was not that it opened the floodgates of pornography in the 1960s and 1970s (which, if I may say so, was a great relief to me and my noble and learned friend Lord Gardiner, as we had between us achieved the prevention of the destruction of that lady) but it was the total inability of an upright and intelligent judge and prosecuting counsel even to be able to comprehend that that book could be a work of art and that anybody could read it without being eternally depraved and corrupted. The jury acquitted, in spite of that incomprehension; and the jury acquitted in the second Kray case, although they knew perfectly well that certain people in the dock had just been convicted of the most outrageous murders.

Trials take place every day in circumstances of prejudice—indecent assaults against children in a local town and rapes of women in a local town—but in fact in court, in that atmosphere in the criminal process, British juries are able, and are shown to have been able time and again, to throw away those prejudices which they naturally always start with, as we all do. When a man is eventually arrested as being the Yorkshire Ripper, he will get a fair trial, and if Lord Lucan should pop up one day, he will get a fair trial, and on the face of it there could be no more prejudice—could there?—than that against those individuals.

I would therefore echo, though alter, the words of the noble and learned Lord, Lord Denning, to "Trust the jury". Juries are far more robust than many people would think. The trouble about the law of contempt is that it has grown up over the years as a collection of empirical decisions by judges in particular cases and instances, up until quite recently never going to appeal. Judges, if I may say so, have displayed to this question a paternalistic approach which is now, at this time, out of date, and have looked upon the legal process over the years as an innocent virgin who must be protected from all pressure, from all prejudice, save that of course of the judiciary itself, and so contempts by outsiders have been met with the severest sanctions after what is usually a totally summary procedure.

The time has come to relax this attitude and recognise the importance of the concept of free expression and simply to define the scope of the law which vitally limits that freedom. With that background, I wish to make a few comments on the Bill. It has already been pointed out—and I support those noble Lords who have pointed it out—that in Clause 2(2) the strict liability applies—
"to a publication which creates a risk that the course of justice—will be seriously impeded";
but it must surely be more than a risk, because every trial is full of risks of that kind; it must surely be "a serious and immediate risk", and I would certainly go along with my noble and learned friend who suggested that the intervention of the Attorney-General might be incorporated into that procedure.

In Schedule I the liability regarding the criminal side arises when the criminal proceedings are active, and that is when a person is arrested or on the issue of a warrant. I would still stick to the moment of charging, as suggested in the Phillimore Report. That is the moment when a person is brought within the ambit of the court. It is surely at that moment when the protection should start and when the person requires that protection. There is a good deal of sense in the complaint of the media: how are they to know when that moment is actually reached, whether it is the moment of arrest or the moment of the issue of a warrant.

We all know that persons are taken into custody or are taken to police stations "helping with inquiries" when they are not in fact under arrest, and that police officers' favourite phrase is that a person is "detained", a phrase unknown to the law; either they are arrested or they are not, and usually when persons go to a police station it is said that they "go voluntarily". Photographs of persons being arrested will be taken at riots or affrays at football matches and other such places, and those persons will be taken away to police stations but they may never be charged. I should have thought that in circumstances of that kind there would be difficulties for the media, if the moment that is hit upon is the moment of arrest rather than the moment of charge.

As has already been said with the highest possible authority, that of the noble and learned Lord, Lord Denning, in civil proceedings when a case is set down there would be a gagging of comment of this kind possibly in some cases for a period of up to 18 months or two years. I would absolutely go along with the suggestion contained in Mr. Robin Day's minority addition to the report, that surely it is not beyond the wit of the officials, or the wit of man, to have a list on to which a case goes at a certain time before it is due to be tried, and the media would know that from that time they were in danger.

I find difficult to understand why on earth it should be suggested that judges who are to try cases alone should need protection. I noticed that in introducing the Bill the noble and learned Lord who sits on the Woolsack did not at all mention the matter continuing and covering the appellate stage. If paragraph 14 of the schedule stands, after conviction and sentence all comment which could create a risk of serious prejudice will be prohibited if a notice of appeal has even been lodged. Of course that goes far beyond Phillimore. I must say that to me of all the persons who supported this suggestion the most unlikely was the noble and learned Lord the Lord Chancellor himself; that surprised me. He mentioned that he is one of the rare individuals in this House who has been the subject matter of contempt proceedings. In 1968 an article appeared in Punch under the authorship of a certain Quintin Hogg, who made the following observations about the Court of Appeal, which at that moment had delivered a judgment, or was in the process of doing so:
"Blindness descends upon the judges … Their judgment was unrealistic, contradictory and erroneous. They lambasted the police for not enforcing a law which they themselves have rendered unworkable … Everyone is out of step save the court".
That was described by the judges in the Court of Appeal as rumbustious criticism—not only rumbustious, but regrettably inaccurate, but at the same time criticism which was entirely without prejudice; and the Peers' stream of justice still flowed on unsullied.

If the Court of Appeal could withstand the full fury of a Quintin Hogg at his zenith, what fear is there of the News of the World or even the National Council for Civil Liberties or, if I may say so, any other noble Lord in this House? I venture to suggest that the judges need no protection as regards appeals and that those judges who are ignorant or isolated could indeed profit by the knowledge of public disquiet or dismay. I differ entirely from the approach of the noble Lord, Lord Paget of Northampton, in that surely it would be of assistance to a court of appeal to know that there has been disquiet, protest and public outcry. They are not going to be affected by it in their judgment, but it would make it possible for them so to frame their judgment that they can assist people who had in fact been ignorant of the real facts or who have made a wrong protest; or, if they find in the other direction, to show that they were perfectly justified in the attitude which they took. It is really extraordinary to think that any judge of appeal could possibly be affected by comments of that kind.

The only remaining matter that I should like to mention is that in Clause 2, in relation to magistrates' courts, it is not clear to me whether or not the procedural safeguards demanded by Phillimore are implied in the clause—that the accused person should know the charge and must be given time and opportunity to defend himself. So far as Clause 4(2) is concerned, I am also not clear whether there is any appeal against an order by the court if it orders that publication of any such report should be postponed
"for such period as the court thinks necessary".
That would seem to be quite unlimited, and to me it does not appear clear whether there would be any appeal against such an order, bearing in mind that it is a power given to magistrates as well as to judges. So far as the whole Bill is concerned, I end by saying that I would welcome parts of it, and that in my view it is a Bill which could be substantially improved.

5.57 p.m.

My Lords, may I commence by offering my apologies to the noble and learned Lord the Lord Chancellor for not being here when he moved the Second Reading of the Bill. Like most of your Lordships, I am always reluctant to miss any speech by the noble and learned Lord, especially on this occasion since the speech was about contempt of court. The noble Lord, Lord Hutchinson of Lullington, has just reminded the House of an occasion when Mr. Quintin Hogg was brought before the court on a matter of contempt, which was dismissed; and I hasten to add that on that particular occasion I was counsel for Mr. Quintin Hogg.

When the noble Lord, Lord Hutchinson, says, "trust the jury", I wholeheartedly agree with him in that sentiment. But he would be the first to appreciate that we do not actually simply trust the jury, because, for instance, in a criminal trial we make sure that the jury do not know the previous convictions of the person accused. We make sure that the jury do not hear what the soldier said. In other words, we have rules which restrict knowledge given to the jury because it is believed that that knowledge would so influence the jury as to be unfair to the person being accused. Therefore, though I believe that the noble Lord, Lord Hutchinson, is right when he says, "trust the jury", one must look seriously at the rules and precautions so that a person can enjoy a fair trial.

Since this appears to be a time for reminiscences, may I point out that my qualification here is that in the case concerning the Sunday Times—the case to which almost every noble Lord has referred—I was party to the proceedings, party in the sense of the matter coming within my office. I was the person who brought the proceedings, and I happened to be counsel in the case itself; so I was doubly involved. Every dart wounded me and every time that, for instance, the Court of Appeal reversed the decision of the Divisional Court I suffered. When I came to the House of Lords I rejoiced. I am glad to say that by the time the matter went to Europe it was the turn of someone else to suffer.

There was a great deal of misconception about that case, to which I shall refer in a moment, but I should like to say that I so much agree with the noble and learned Lord, Lord Salmon, when he said that "contempt of court" is such a misleading name for what we are really seeking to guard against. It is not, as he so rightly pointed out, maintaining the dignity of the law and of the judges, but is indeed that which all born and bred in these islands believe is one of the great rights of every Britisher—that is, to have a fair trial; and that whatever be the crime he may eventually be convicted of having committed, and whatever his previous career and conduct may have been, nevertheless he will come before an unprejudiced jury and get a fair trial. We believe that that is one of the greatest liberties of the Englishman, and one of the paramount matters of importance in any society in which we live.

My Lords, other countries do not share that view. In Europe and in the United States of America they do not consider it so important. Their approach is therefore different; and, of course, that affects the whole consideration of the problem. We have made the decision that the paramountcy lies in the fair trial. As a result of that, freedom of comment has to suffer. But the vice of our system has been uncertainty for those whose duty it is, whose important duty it is, to report and to comment, as to when they are liable to be offending against the principle of the fair trial, thus to be guilty of contempt of court.

The vice on the Continent of Europe and in the United States of America is in the unfairness to the accused. For instance, on the Continent of Europe the person accused may be referred to as the assassin and be treated as the assassin before his trial has even commenced. That is wholly alien to our concept. In the United States of America, where the system of trial is of course very much more similar to ours, nevertheless because they do not have contempt of court they have to have a much longer and a much slower procedure. They have to have the voir dire, where hours and even days can be spent cross-examining members of the jury. It is said that an English case commences when the jury has been selected and an American case ends when the jury has been selected. In fact, if you really wished to permit total freedom of comment you really would have to alter the whole of the basic process of the English trial.

I share the view of other noble Lords who have spoken that the Phillimore Committee got it about right. With regard to the cut-off point, whether it should be arrest or charge, I share the view of Lord Hutchinson. Indeed, I made a recommendation in a committee of which I was chairman when the party to which I belong was in opposition, that it should be at the moment of charge. But on reflection I can see the force of the decision which has been taken that it should be at the time of the warrant. "The police are searching for the foul murderer of Mrs. Y. His name is so-and-so; a warrant is out for his arrest". I do not think that that is really wholly desirable. Therefore, on balance I can see why the Government have taken this decision. The quotation which is always used of the Lord Lucan case seems to be very particular, and in general I can see the reason for their decision to make it the moment of the issue of the warrant.

Now I turn to the case of the Sunday Times v. Attorney-General. It was not the distillers who sought an injunction—nothing of the kind. The distillers complained to the Attorney-General and invited the Attorney-General to intervene. The Sunday Times submitted articles to the Attorney-General and sought the opinion of the Attorney-General as to whether or not those articles amounted to a contempt. I gave that opinion, and warned that in my opinion a second article which they were going to publish might be construed as contempt of court. I want to make it clear that the whole of this process was totally and wholly amicable. There were extensive discussions with my officials; and eventually, when my opinion had been expressed that that second article was a contempt of court, then there was the agreement that that should be tested in the courts. So the Attorney-General was a reluctant litigant, but he was doing the duty of the Attorney-General, from which he cannot escape—and any Attorney-General who is a popular gentleman is in my view certainly not doing his job properly as an Attorney-General. I say that in the presence here of a very popular man, the noble and learned Lord, Lord Elwyn-Jones, but he will understand what I mean. The very nature of the office is that you have to carry out tasks in the public interest and in the public name which you would probably much prefer not to do, but it is because of the burden which is put upon your shoulders.

So the implication which I heard on the radio shortly after that case was over, from somebody who ought to have known better, who said, "It is not very pleasant when you hear the Attorney-General banging on the door threatening to send you to prison", is utter and total bunkum, because it was the Sunday Times who asked for the advice, it was the Sunday Times who received the advice and it was the Sunday Times who agreed that this should be tested to see what the law was. So we came to court; and, as I have said, being party and counsel I was very satisfied with the final decision of your Lordships' House—a unanimous decision which upheld the Divisional Court and reversed the Court of Appeal.

Subsequently, when it went to the European Court of Human Rights, I believe that the approach of that court, because of the tradition of the European systems of law, was totally different. But the prospect of powerful media being able to influence an individual against defending or prosecuting a case is something which I think we should look on with very considerable reserve; and I agree with the noble Lord, Lord Mishcon, when he talked in his speech here today about the power of the press, which we must understand and appreciate. There is a great distinction between the private influence of you going to your neighbour and saying, "If you bring that case against that particular person, I shall never see or speak to you again", and where, for instance, a local newspaper takes upon itself, where there is an action pending, to traduce or attack one of the parties to it and say, "They have no right to bring that case", or "They have no right to defend it". You can translate that to the media, where you can have a whole television programme about a particular case. In my submission that is totally undesirable. Therefore, I believe that the limits which have been introduced in this Bill are the correct distinction and the correct balance.

My Lords, I turn to the point which has interested others this evening in your Lordships' House, about the prejudicing of judges of the Court of Appeal. This, it is said, is never possible. That may be true. I have never been a Lord Justice of Appeal, nor a Lord of Appeal in Ordinary, so I do not know. If they say it will not prejudice them, then, very well, I accept it. But there is another consideration that has nothing to do with them, but it has a lot to do with the rest of us; and it is the effect on public opinion of a vast barrage of comment—a vast barrage of comment all directed in one way. I believe that to permit such a barrage, unlimited, can have an effect upon public confidence in the administration of justice.

If there is a campaign for or against an appellant, then the decision of the judges or Lords Justices will be viewed in the light of that campaign in the press and the media; and either the result may arouse bitter hostility to the Court of Appeal or it will look as though the Court of Appeal has bowed to that campaign. Therefore, it is too much to say that you need not have any restraint upon comment where a matter is going to appeal. I have no doubt that the law of contempt needed reform. It was not right that editors should not have the degree of certainty to which they are entitled. The situation was too uncertain and it put upon them an unfair burden.

I should have liked to see in a Bill a proper codification of all the restrictions upon reporting, of the committal proceedings, of identification in rape complaints, of domestic proceedings and of children, of indecent evidence in matrimonial cases and cases of national security. It would have been far better if that had been in a Bill, but, if so, it would have been a very major and much more substantial Bill. This, clear as it is, is to me another example of what I believe to be our haphazard way of legislating and our haphazard way of making law. But, generally, I think it is right for the Government to have done what they have done. In my belief, we must base our attitude to such matters as this on where lies the paramountcy. And the paramountcy will rest—and I trust will always rest—in our country and with our procedures upon the balance of a fair trial for the citizen.

6.12 p.m.

My Lords, I approach this Bill from a point of view which I hope is not a controversial one: that we should encourage the widest possible participation of the public in the administration of justice. We have one unique and priceless asset within the common law judicial system; that is, that we actually invite members of the public to take part in the administration of justice by serving on juries; and, like my noble friend Lord Hutchinson, I believe that juries' verdicts are eminently to be trusted. But the participation of the public is needed also and is needed more in those decisions which are left to the judges and other judicial persons acting on their own. Justice, thank goodness! is not done behind closed doors, except in very exceptional cases. The reason why the public are invited and are entitled to come, either themselves or through their representatives in the press, to listen to cases is not in order that they might worship the majesty of the law but in order that they may pass their own judgment upon what is done both in terms of praise and in terms of criticism.

Much has been said this afternoon of the extent to which judges ought to be affected by expressions of public opinion. I take the view that judges ought to take account of public opinion and that the justice that they dispense is the better for it when they do so. I spent part of this summer studying the judicial process in a far-off country, but one which I think has a lesson for us this afternoon. The country is Mozambique, where they hold their trials and hearings amid the largest possible gathering of local people. At the end of the hearing, the judges invite the public to express their views and to ask questions. Then, when that has been done, the judges retire and they consider what is to be done with the case in the light of what the public has said. If they disagree with what the public has said, they can say so and can seek to educate the public to their view. So, in a different way, in this country the public should be encouraged and has the right to express its view of the judicial process, whether it be in newspapers or in public meetings or in demonstrations of a peaceful kind outside the court.

From that point of view, what has this Bill achieved? Certainly, as the noble and learned Lord the Lord Chancellor said in opening, it extends in some cases the circumstances in which it is legitimate for the Press and the public to comment upon pending proceedings—and that is a distinct gain. But there are other aspects of it which are alarming. The first, which has been referred to by many noble Lords, is what appears to be recognition of what is still a grey area of the law: that it is possible to be in contempt by commenting upon proceedings under appeal. That section of Schedule 1, I suggest, ought to be radically altered and the view of the noble and learned Lord, Lord Salmon, be put into law so as to be clear to all. There are other areas where openness seems to be attacked. Clause 9 has not been commented upon very much. That clause prevents the use of tape recorders in court. I would ask, why? Why, in a public court, should there not be used a convenient, modern means of recording what has been said?—provided the court is not distracted by the use of wires, microphones and so on. Let the proceedings of the court be better disseminated; let the information be more complete by whatever means are available.

Another provision which seems to attack openness of reporting is in Clause 4(2) which allows a court to make orders preventing the publication of reports of proceedings in any case,
"where it appears to be necessary for avoiding the risk of prejudice to the administration of justice in those proceedings or in any other proceedings pending or imminent …".
This, I would suggest, is a dangerous power. It is not needed. The circumstances in which the press must refrain from reporting proceedings—for instance, when evidence is given of previous convictions—are already perfectly well known.

Of course I accept that safeguards are needed. I think that all noble Lords have been unanimous in saying that jurors should not be subjected to a bombardment of press comment while they are trying to arrive at a verdict. Everybody also would accept that to hound, to victimise or to intimidate a litigant or a witness is something which must be avoided. In relation to this, I think that we must bear in mind that litigants who are great and powerful institutions are much more able to withstand pressure and adverse comment than is the ordinary impecunious individual. It would be much more legitimate, for instance, to campaign against the Attorney-General for bringing proceedings which people think he should not have brought, or to campaign against the Distillers Company, as was the case in the Sunday Times case, or against Sir James Goldsmith, or some great magnate using his financial power to bring proceedings against Private Eye, or cases of that kind than to make the same kind of attack on somebody who is much more susceptible personally and economically to pressure. I do not know whether it will be possible to provide for that kind of distinction in a Bill of this kind. Those safeguards ought to be strictly limited.

Side by side with the view that the public should have the maximum participation in the system of justice, is another point of view; that is, that the judges cannot be relied on to make objective decisions about contempt of their own process. They are, I think, too involved. They overestimate the risks. Let us not forget that the very genesis of this Bill is the fact that a European Court of Human Rights had to put right our own House of Lords for having taken a view which was in their opinion, as a court of human rights, too narrow. They were taking that view as sovereign judges not trammelled by a statute. Contempt of court is of course a judge-made law.

Only last week in the case of Harriet Harman (which has been referred to and on which I do not propose to comment in detail) we heard a judge describing something as a serious contempt which many commentators have considered to be an absurd view. If we look at the Bill in the light of those considerations, there are at least two causes for concern. The first is that it retains the power to deal with contempt of court exclusively in the hands of the judges. Much has been said about the value of juries. Contempt of court is a proceeding which can be penalised by imprisonment or very severe fines. Why not let the jury determine whether there has been a risk of serious impeding or prejudice to the course of justice? It is a very vague criterion and one which the judges are likely to interpret very strictly and which the public, represented by a jury, is likely to interpret in the light of common sense. So let there be trial by jury.

The second worrying feature of the Bill is another clause which has not been much commented on, Clause 11, which creates a new offence of wilfully insulting a justice or wilfully misbehaving in a magistrates' court, and subjects that offence to a maximum penalty of one month or a fine of £500. I fail to see the need for this offence. I have been in magistrates' courts from time to time when decisions have been made which outraged the assembled public gallery. There were expressions of that feeling and the court has never found any difficulty in either calling for silence or asking for the police to eject the people who are shouting.

Why do we need a fresh offence of wilful misbehaviour or wilful insult? Let us recognise that what goes on in the courts provokes strong feelings, not just in the minds of the newspaper commentators but in the minds of those who listen. I would say that the balance of this Bill is wrong and that we can make a great deal better; and that we will get it better if we remember that we can trust the public and their representatives and that we should welcome their right to participate in the judicial process. We have talked all along about the need to protect the course of justice; but the course of justice is much better if the public are involved in it.

6.25 p.m.

My Lords, the noble Lord, Lord Wigoder, was good enough to refer to my temerity as the only layman to intervene in this debate. I remember what happened some years ago in another place when a Member found himself in the same situation as I am today. He was noted for his intellectual arrogance and he said that although not a lawyer he thought he could make a valuable contribution to the debate. Pritt, K.C., following him, referred to him rather disparingly as the "almost learned gentleman."

My Lords, my decision to participate in this legal moot is not an attempt to make a valuable contribution, but to enter a plea as the scarred victim of a vague law interpreted by unpredictable judges. I am scarred not by sins of commission but of omission. I have left out too many stories, and left unwritten too much comment. If anybody argues that few editors have been arraigned for contempt, it is because contempt makes cowards of us all—apart from a few brave souls such as Harold Evans or the noble and learned Lord who sits on the Woolsack. Most of us, faced with the law as it is, act as though the better part of valour is suppression.

Seriously, my Lords, it is only seven months since I put down an Unstarred Question on two of the problems which worry, chafe and inhibit journalists, and especially those working on fast-moving daily papers. One of those problems was what a layman might call the test for contempt; or a lawyer might call the definition of strict liability for the contempt of court. The other problem was what the starting point of liability should be in civil and criminal cases. That debate of seven months ago was, of course, on a much narrower base than today's which covers the entire subject. But again I propose to concern myself only with the basic problems, leaving the other complexities to the noble and eminently learned Lords whose names are on today's speakers' list.

It is recognised, and certainly was recognised in that debate, that there are strong arguments for and against almost every proposal that Phillimore makes. Yet a consensus emerged in that last debate that on many subjects Phillimore has just about got it right, having examined in considerable depth the practical side of the problems. I must admit that there are those like the noble Lord, Lord Wigoder, whose instinct for freedom is as strong as that of anyone in this Chamber, who are still doubtful about the proposals for fixing the point in time when strict liability should run in criminal proceedings. And we were under no illusions as long as seven months ago, when the noble and learned Lord who sits on the Woolsack spoke to us and made clear that the Government shared Lord Wigoder's doubts.

The Lord Chancellor's conclusion was that the right moment in the criminal law at which to commence the point of liability was arrest or the issue of a warrant. The argument is that editors are protected, first, by the new definition of liability for contempt—that is, it must risk seriously impeding or prejudicing the course of justice—and, secondly, by the defence of innocent publication. That defence enables an editor to plead that he did not know and could not reasonably be expected to know that criminal proceedings were active. But what editors today are wondering is what inquiries should an editor make, or cause to have made, in order later to avail himself of this defence, should it be necessary. For example, if his reporter rings the police and fails to get information although an arrest has been made, is that sufficient evidence of innocent publication? As every journalist knows, some police officers are excessively cautious about giving any information at all, while in other cases there may be a well-established method for providing the press with information, the police may have good reasons for not revealing at that particular moment that an arrest has been made.

In the past, what has given editors most cause for anxiety was that liability begins when proceedings have become imminent—and we have never known how imminent "imminence" is. Now we are to have certainty, but the certainty about imminence is based upon an event about which there is no certain public knowledge: that is, the arrest or the issue of a warrant. At the Committee stage there must be amendments to be proposed for the starting point of liability both in criminal and civil proceedings.

In the May debate, I expressed belief in the Phillimore recommendation that liability should start in civil cases when an action was set down in the superior court because there was no discernible point in time later than that. I am afraid I was overlooking the minority proposal from Mr. Robin Day, who advocated fixing a point in time by the provision of a sub judice list for cases "shortly before trial". What is wrong with that? Another proposal would fix the point when the case came into the term's list. Surely there are, or there could be found, discernible points which might be used to hold a fair balance between what the public interest requires and what the parties need to ensure a fair trial. Since May, there has arisen the absurdity of the Harman case, and it is the fear of judges who think like this which lies behind the journalists' concern about the vagueness of the existing law.

The Bill before us is regarded by editors as a mixed blessing. The Guild of Editors, to which I do not belong, goes so far as to say that unamended it may do more harm than good. I do not accept that judgment but they are justifiably concerned about the strengthening of the law of contempt in appellate proceedings and the extension of the law to inferior courts and tribunals. Of course it is impossible, particularly today, to defend all that the press does, and it would be wrong to pretend that newspapers do not have a commercial interest in wider freedom to publish. But that is not the whole story. The freedom of the press to give information is the freedom of the public to have access to that information: the only access they are likely to have. Once again I should like to quote the words of the late Lord Morris of Borth-y-Gest:
"We look to our newspapers to inform us in regard to current events; to give guidance on matters of public importance; to expose all forms of tyranny, corruption, evil practices or harsh dealings. We must not restrict the ability of the press to do all of those things unless it is really necessary to do so".
I am grateful for the distance the Government have come and for the definition of "strict liability" although it is capable of further improvement by insisting, as my noble friend has suggested, that the risk of seriously impeding or prejudicing justice must be "a serious risk". During the subsequent stages of the Bill we must argue very closely its provisions to ensure that the balance between freedom of information and comment, on the one side, and the needs of justice, on the other, has been found and that we have not merely exchanged the hazards of uncertainty for unnecessary frustrations of legitimate and indeed essential press activity.

6.35 p.m.

My Lords, for obvious reasons, but not for a very long time, I hesitated to intervene in this debate. However, I feel it would be a sad occasion if one thing were to go unsaid. Some 11½ years ago the Royal Commission on the Law of Contempt as it affects Tribunals of Inquiry reported, mercifully shortly. There were eight recommendations. If one were to ignore one recommendation, which is a recommendation to legislate, and another recommendation which goes slightly outside the scope of the Bill, each of the remaining six recommendations, it appears to me, has been embraced by this Bill. As the chairman of the Royal Commission happened to be my noble and learned relative Lord Salmon, it gives me considerable, if vicarious, pleasure to note what must be some sort of parliamentary record.

6.36 p.m.

My Lords, I find myself speaking from this exalted position by request simply to sum up for the Opposition. That does not, of course, mean that this is a party political question. It should not be, and I am sure it is not. It is a question on which we all have individual opinions. All I can do, therefore, is warmly to welcome the Bill and to summarise very briefly the points that have been made. We are all equally grateful to the noble and learned Lord the Lord Chancellor for introducing the Bill. We know it would have been his wish, had he been able to do so, to have introduced it during the last Session. We thank him too for the clear way in which he has explained the provisions of the Bill to us. I do not believe I am alone in thinking that, in so far as the Bill carries into law the recommendations of the Phillimore Committee, it is right, and in so far as it departs from them it is wrong. That has always been my feeling about the Bill, and so far as the media are concerned I think that is the sort of view which roughly has been expressed.

If I might start with a question of my own, the Phillimore Committee recommended a definition of "publication"; namely,
"any speech, writing, broadcast or other communication in whatever form which is addressed to the public at large".
That is carried through in the Bill in Clause 2(1) except that these words have been added to it—
"or any section of the public".
We have not had any explanation of this. I should have thought "a section of the public" is the exact opposite of "the public at large" and, like each of the points on which the Bill differs from Phillimore, is restrictive of the right of free speech. I think I am right in saying that there are no differences between Phillimore and the Bill which give more freedom of speech: it is all the other way. This seems to me to be an addition put in—
"or any section of the public"—
which I should think would greatly extend the number of publications which would be subject to the law of strict liability.

On the opening clauses, my noble and learned friend Lord Elwyn-Jones has suggested the insertion of the word "serious"—"serious risk"—and also that prosecutions should be subject to the fiat of the Attorney-General. In that he was supported by the noble and learned Lord, Lord Hutchinson, and I would support both suggestions.

Also there is a very real and understandable controversy as to what, in the case of "strict liability", should be the moment in the criminal proceedings at which they should start and, in particular, whether it should be as proposed by the Phillimore Committee, when the accused prisoner is charged or a summons is served, or, as in the Bill, on arrest. This is obviously a very arguable point. It is one of the points made in a leading article in The Times of 28th November, headed "Too cautious reform of contempt". They preferred the recommendation of the committee to what has been suggested in the Bill. But, clearly, these are very much matters of opinion.

The question of appeals is another point on which The Times was unhappy. It said:
"Why, too, does the Bill put the press at risk of contempt during the period of appeal?"
I have never understood why it should be necessary, so far as appeals are concerned. But this, again, is a matter which we can argue about at the Committee stage of the Bill. Some, of course, including the Law Society and, I think, my noble friend Lord Mishcon, have said that this should never apply in a case which is tried by a judge alone and not by a jury.

My noble friend Lord Mishcon, and also my noble friend Lord Gifford, have discussed the question of postponing reports—I will not add to what they said—and also the question of tape recorders. Why a tape recorder should be so unfavourably regarded, I am not sure. A tape recorder is simply the equivalent of the old shorthand note. Why, if somebody is entitled to take a shorthand note in a court of law, he cannot have a tape recorder if he wants to, and why that should be in the nature of a criminal offence, I cannot think.

As regards the defence that the publication complained of formed part of a legitimate discussion of a matter of general public interest, I understand that the clause purports to follow the Phillimore recommendation, but it does not quite do so, because it adds to the statement of that principle the words "in good faith". Perhaps at some time, if not today, the noble and learned Lord the Lord Chancellor might be kind enough to let me know what the effect of those words is supposed to be. In Recommendation (15) the Phillimore Committee said:
"It should be a defence to an allegation of contempt to show that a publication formed part of a legitimate discussion of matters of general public interest and that it only incidentally and unintentionally created a risk of serious prejudice to particular proceedings".
We can go into these matters of detail at the Committee stage, but I wondered why in the Bill itself the words "in good faith" were added.

Clause 7, of which there has been a fairly general review, really will not do as it stands. That is the clause which refers to contempts in relation to inferior courts. At the very least, I should have thought there would have to be a list of them, because here is the constitution of a criminal offence and people must be entitled to know what they can and cannot do,
"in respect of the proceedings of inferior courts … tribunals and bodies (however described and whenever established) which are constituted by law and exercise any part of the judicial power of the State".
I cannot believe that I am the only lawyer in the country who does not understand that at all, and if a lawyer cannot understand it I do not suppose that a layman will be able to.

It is a little disappointing that the Bill does not enact the provisions recommended by the committee on scandalising the court; that is Recommendation (21):
"'Scandalising the court' should cease to be part of the law of contempt. Instead, it should be made an indictable offence both in England and Wales and in Scotland to defame a judge in such a way as to bring the administration of justice into disrepute. Proof that the allegations were true and that publication was for the public benefit should be a defence. In England and Wales this offence should be made a branch of the law of criminal libel".
That has apparently been left over, but, in the context of contempt of court as a whole, one has always to bear in mind that for at least the last 200 years the main objection which has always been made to our law of contempt, apart from its uncertainty, was that it was usually a case complaining about something said about a judge. The judge was the accuser, the judges decided, and all the ordinary citizens' rights of protection—namely, trial by jury, a proper indictment and so on—were not applicable. That has always been the main complaint that, so far as scandalising the court is concerned, it should be subject to the ordinary criminal process of the law.

The one thing that is clear is that we are all going to have a very interesting Committee stage of the Bill. Although, as I have said, I am in a sense winding-up for the Opposition, this is not at all a question of party politics, but is something on which we all—lawyers and laymen alike—have our own views.

6.46 p.m.

My Lords, I am not quite sure how I can sum up this rather rambling debate without transgressing on your Lordships' patience beyond endurance, because what we have really heard, except for one speech, is very largely a long catalogue of Committee points. All I can promise is that they will all be taken into account. I shall have them very carefully analysed and will see what we can do about them.

But I should like, if I may, to come back to one or two points of general principle, because I think that there were times when speakers were a little in danger of getting lost in the trees, without recognising that we were dealing with a fairly well-defined wood. I should like to begin at the point where I started my opening speech, by saying that what we are really trying to do is to reconcile two human rights. One is contained quite clearly in the first sentence of Article 6 of the European Convention, and the other is contained equally clearly in Article 10. The Strasbourg Court quite clearly laid down, both as regards its majority and as regards its minority, that the right thing was to say that Article 6, where necessary, must take precedence over Article 10, but only in so far as it was necessary in a free and democratic society. I have not quoted verbatim from the actual words which I gave in my opening speech, but that was the effect of them.

I must say to the noble Lord, Lord Gifford, whose speech I listened to with interest, that he is quite wrong in saying that the European Court do not have a statute to rely upon, except in the purely technical sense that they were relying upon the Convention on Human Rights, which for this purpose has for them a statutory force, and their decision was based upon their view of that convention—

My Lords, I apologise if I did not express myself very clearly. It was the United Kingdom which did not have a statute and, therefore, we had to rely on the House of Lords to interpret—I was submitting erroneously—the law.

Yes, my Lords. But I think that when the noble Lord reads what he said in Hansard he will find that I have not misrepresented him. If I have, I apologise at once. There is a very clear policy behind the Bill, which is to give effect to the two principles, Articles 6 and Article 10, in the Convention on Human Rights, and to give precedence to Article 6 in the sense in which the court itself, both the minority and the majority, intended that it should be given precedence.

I agree with the noble and learned Lord, Lord Gardiner, whom I should like to thank not only in parenthesis but sincerely for the courteous words with which he began his speech, that the point of departure which I make in that search for a balance is identical with his own: that if you are going to do anything this Session you must start from Phillimore, and that the burden of proof rests upon those, including myself, at the point at which they want to deviate from Phillimore.

I must point out to the noble and learned Lord, Lord Gardiner, that the number of deviations which he adumbrated as his own opinion were far more numerous than my peccadillos. Take, for instance, the role of the Attorney-General, with which he began. The noble and learned Lord, Lord Gardiner, and to some extent the noble and learned Lord, Lord Elwyn-Jones, wanted the rule of strict liability to be triggered off by the Attorney-General only, omitting the fact that what we are trying to do and that what Phillimore is trying to do is to protect the rights of individuals who go to law or who have been brought to law on a criminal charge.

I read verbatim the first sentences of paragraph 187 of the Phillimore Report:
"We are sure that the Attorney-General must retain his right to act in the public interest where he thinks fit to do so … We believe, however, that the normal practice should be, especially where the alleged contempt is in relation to criminal proceedings, that the attention of the Attorney-General should be drawn to the matter before any private proceedings are begun".
It is clearly laid down in the discussion on that point that in the last resort the private individual is to have the right to vindicate his own rights to contempt proceedings, where his own rights are in his view invaded, before an impartial and independent court which is there to judge things precisely of that kind. We are not solely concerned with public rights in this case. We are concerned with the right of the individual to have access to a court of competent jurisdiction. This is laid down in Article 6.

May I, in passing, refer again to tape recordings. From what he said about them, I should have thought that the noble Lord, Lord Gifford, had read neither the Bill nor the Phillimore Report. Referring only to what was said by the noble and learned Lord, Lord Gardiner, paragraph 43 lays down clearly the policy which is recommended in relation to tape recorders—that they should be allowed only by leave of the court, which is what our clause says—and gives at length the reasons for it, which I will not rehearse. It is we who are sticking to Phillimore. It is those who have criticised us who, on the whole, have deviated from Phillimore.

We have had a great deal of discussion about the alleged total immunity of the judge alone and the judges in the Court of Appeal from any kind of influence which the press may have. I think that my noble and learned friend on the Cross-Benches, Lord Salmon, whose views I always treat with the utmost respect, was a little too optimistic in his view of judges. He thinks that they are all as robust and courageous as himself. I am not so sure. I do not differ from the view expressed by Lord Dilhorne, recently deceased, which is referred to in the Law Society's report:
"This claim to judicial superiority over human frailty",
said Lord Dilhorne,
"is one that I find some difficulty in accepting. Every holder of a judicial office does his utmost not to let his mind be affected by what he has seen or heard or read outside the court and he will not knowingly let himself be influenced in any way by the media. Nor, in my opinion, will any layman experienced in the discharge of judicial duties. Nevertheless, it should be recognised that a man may not be able to put that which he has seen, heard or read entirely out of his mind and that he may be subconsciously affected by it".
I am afraid that we must go into this in a little more detail so that we can see the wood for the trees. We are not, as a matter of fact, concerned only with judges and juries. We are certainly also concerned with magistrates and other laymen who have judicial functions to perform, either in the Crown Court or elsewhere. As the noble and learned Lord, Lord Rawlinson of Ewell, my previous defender, rightly pointed out, we are concerned with witnesses, and we are concerned with the law of evidence.

It is no good having a rule against hearsay or a rule against the disclosure of previous convictions and then blandly to say, "Trust the jury", having pumped into them outside the court everything which they are not allowed to hear inside it. That is carrying things to extremes. When we talk about judges being uninfluenced by what they read, I am not sure that I can accept it. What becomes of the rule that judges are supposed to listen to the arguments of counsel if they have been subjected to some kind of previous barrage of propaganda before counsel has had a chance to present his arguments? These are matters which we have to consider very carefully.

Let us consider also that we are not concerned only with the great national organs. We are not concerned with the organ which the noble Lord, Lord Ardwick, is famous for being connected with. We are not concerned with The Times, the Daily Telegraph, the Observer, the Sunday Times. We are concerned, maybe, with some small local paper. We are concerned with some scurrilous "rag" put out with a view to encouraging demonstrations outside a magistrates' court in order to influence the decision of a small bench of lay justices. We are concerned with organs which may desire in one way or another to cause rude telephone calls to be sent to magistrates who can be identified. We are not simply concerned with the great national organs. The right to freedom of expression and the right to a fair trial is the right of the individual in each case. It does not make sense to talk about Lord Salmon as a typical judge of appeal and Lord Ardwick as a typical editor of a national newspaper. We are talking about people who are possibly less upright, possibly less courageous and possibly less sensible than either.

When I am asked to explain why the words "any section of the public" appear in Clause 2(1) of the Bill, I have only to reiterate what I have just said: Is publication designed to affect only the attenders at a public meeting? Is publication of a small local paper or a small but highly tendentious organ to be entirely excluded from this rule? I should have thought that it was precisely that kind of thing which might most seriously offend against it. It is a mere drafting point, but again it is a deviation from Phillimore which I am prepared to defend.

On the other hand, when I am asked to rule against any kind of contempt applying to appellate proceedings or judge alone proceedings, I am bound to say that I cannot find any such rule in Phillimore. What I do find in Phillimore is that the strict liability rule applies only to a publication which creates a risk that the course of justice in the proceedings will be seriously impeded or prejudiced. That is what I find in Phillimore, and if it be true and so far as it is true—and of course there is more than an clement of truth in it, a substantial truth—that when you are dealing with a serious case in front of a High Court judge or an appeal before three distinguished appellate judges or five distinguished Law Lords, you are dealing with a very different kind of court from what you are dealing with when dealing with a magistrate's court or a trial by jury.

I should have said that is exactly what Phillimore had in mind when he recommended a criterion for the triggering off of the rule which was applicable to any kind of court, because if we had a Court of Appeal composed (as the Court of Appeal until fairly recently was composed) of, say, Lord Scarman (Lord Justice Scarman as he then was), Lord Salmon (Lord Justice Salmon as he then was) and Lord Diplock (Lord Justice Diplock as he then was), I do not think anyone would have any more difficulty than Lord Denning in dismissing any conceivable case of alleged contempt as Lord Denning dismissed the case against me. It is absurd to think that such people could be seriously prejudiced. The Bill is designed in the terms of Phillimore precisely to cover all kinds of courts.

Of course I take the point made by the noble and learned Lord, Lord Elwyn-Jones, that it might be well to put the word "serious" in front of "risk" as well as the word "seriously" before "impeded or prejudiced". I will certainly look at that. I took the precaution of trying to find out what the draftsman thought about it while the debate was going on, and he thought it would make no difference at all because that is what the effect would be either way. At any rate I have made this claim for myself and the draftsman, that we were sticking to Phillimore and the noble and learned Lords who preferred the addition were deviating from him.

I have dealt with the point about the Attorney-General and I ought to have dealt with the point about scandalising the court. I think the noble and learned Lord, Lord Gardiner, and perhaps the noble and learned Lord, Lord Elwyn-Jones, overlooked this rather relevant consideration. The Law Commission's report on offences relating to interference with the course of justice has, so I am advised, superseded the Phillimore Committee in the recommendations—contained, I think, in Chapters 6 and 7—to which they were referring, that is reprisals against witnesses and scandalising the court. That report of the Law Commission, which was Lord Gardiner's own child—no ewe lamb, that child—is with the Home Office. I am told that they are favourably disposed, but no announcement has been made and that is why there is no reference in this Bill.

I do not want to talk about the case of Harriet Harman, or anything like that, partly because I suspect that it may be under appeal and I might be in trouble if I did, but I should like just to say this to those noble Lords and noble and learned Lords who referred to it, that that was a case in which what was alleged was civil contempt. The Crown claimed Crown privilege for certain documents; the judge in the interlocutory proceedings having perused the documents, allowed—as he is now entitled to do under the House of Lords rulings—the interests of justice to outweigh the public interest element, but only on an undertaking that the documents should be used only in a particular way for the purposes of those proceedings. Whether or not the court was justified in saying that that undertaking had been broken is the issue at stake. Personally I should prefer to express no opinion whatever until the question of the appeal, if any, has been put out of mind.

I agree with the noble and learned Lord, Lord Gardiner, that obviously these questions will be looked at in Committee, no doubt with care, and I hope, so far as I am concerned, with an open mind after I have taken further advice on what has been said. I have said all that I need to say about the cut-off point at the moment. We shall discuss these questions again when we come round to it.

The only thing that I would seriously say to the noble Lord, Lord Gifford, who was the only one, I think, who expressed the view that the Bill gave him cause for alarm, is that any idea that we should introduce the practices of Mozambique into this country, which he seemed to favour, would give me a great deal more alarm than he has ever given to me; and I wonder how he knew that members of the public had been admitted to the Mozambique court. My belief about the courts run by Marxist dictatorships is that the public which gets into the courts would not include me, at any rate, and it would not include many members of the National Council for Civil Liberties or the English press either, and that any comments that that public was likely to make were not so much likely to engender a sense of justice in the judges as to bring pressure to bear upon them to do something which they knew they ought not to do.

My Lords, the noble and learned Lord has not been to the courts that I am thinking of. The public are the people of the village and they take a most serious interest and a useful participation in the affairs of the village and the decisions of the court.

My Lords, I know that the noble Lord, Lord Gifford, is in very good faith, but I suspect that he is a little more naive than he knows. So far as I am concerned, and so far as I think the great majority of Members of this House are concerned, what we are concerned with is basically a law founded on Phillimore. Those, including myself, who want to justify deviations from Phillimore, will have to justify them; but if we are not going to found ourselves on Phillimore we are not going to have a law at all.

In thanking my noble friend Lord Renton for his intervention, I should just like to say to the House that this Bill may be well-conceived, overdue (I think he said) and better drafted than a good deal of the legislation with which we have been dealing recently. I do not quarrel with any part of that, but I beg the House not to kill it by kindness. I got the impression sometimes during this debate that everybody said: "This is a jolly good Bill; it ought to have been brought in before", but that nothing was quite right about it. If that attitude is going to be taken, I am afraid we may lose the Bill; so I hope the House will not blame me or claim undue rigidity if I pursue the course proposed by the noble and learned Lord, Lord Gardiner. I start with Phillimore and I demand justification for deviations from it. Having said that, I put the Question, That the Bill be now read a second time.

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

Insurance Contracts: Ecc Report

7.9 p.m.

rose to ask Her Majesty's Government whether they will state their views on the draft EEC Directive on insurance contracts and on the conclusions of the Sixty-fourth Report of the European Communities Committee (H.L. 348).

The noble Lord said: My Lords, I beg leave to ask the Question which stands in my name on the Order Paper. The European Communities Committee considered on balance that the draft directive on insurance contracts would be useful but pointed out a number of serious defects in it. The Law Commission recently published a report on insurance law and adopted a rather different view. At one point they suggest that Her Majesty's Government should be advised to reject the proposed directive. Sub-committee "A" of the Select Committee had the opportunity of an informal discussion with the Law Commission prior to their report being published, but nevertheless the Committee was not as critical of the draft directive as were the Law Commission. There is one fundamental point on which the Select Committee differed from the Law Commission and also from the views of some of its witnesses. This is the proportionality rule. The draft directive seeks to make an important alteration to insurance law in the United Kingdom.

Under our present law a policyholder may receive nothing if the insurer is entitled to refuse to pay under the policy because the policyholder has failed to disclose a material fact or because of a breach of warranty. An example is a decision made by this House in 1925 on marine insurance. I realise that marine insurance is not covered by the draft directive, but the principle of what I am about the describe is applicable to any form of insurance.

Insurances were effected on a ship and her cargo, and there was a failure to disclose to the underwriters that a substantial interest in the ship was owned by Greek nationals. This was at a time when Greek ships were unwelcome in the insurance world; they were thought to be sinking at an alarming rate. This ship sank off Portugal on a fine day. The failure to disclose the Greek interest was material and the insurers were able to avoid their contracts. The proposition derived from this case is that there is a duty on the person taking out insurance to disclose material facts, even if not asked to do so by the insurers. Of course, we know that insurers often do ask many questions of a potential policyholder. But what happens if the answer is wrong, honestly wrong and trivially wrong? The result can be drastic.

In another decision of this House, this time in 1922, the case was the insurance by a Glasgow removal firm of one of their lorries. On the proposal form it was asked where the lorry would usually be garaged. By mistake the wrong address was given. The lorry was burned in a fire at its garage on the outskirts of Glasgow. It was held that it did not matter whether or not the mis-statement was material; the answer to the question had been made the basis of the contract by the terms of the proposal form. The answer was wrong, and the insurers refused to pay. The late Lord Haldane observed:

"The result may be technical and harsh, but, if the parties have so stipulated, we have no alternative, sitting as a court of justice, but to give effect to the words agreed on. Hard cases must not be allowed to make bad law".

It is the intention of the draft directive to alter this law. At the moment the policyholder may not receive anything if he has made a mistake in completing the proposal form. Under the draft directive he may receive a proportion of the sum insured. Take the case of the lorry which I have just mentioned. Under the draft directive, the insurers would have been asked what difference in premium would have resulted if the correct answer had been given to the question about where the lorry was to be garaged. If the response had been that the premium would have been doubled, the policyholder would have received one-half of the value of the lorry. In fact, in that case the premium probably would not have been altered. It really did not matter to the insurers whether the lorry was garaged on the outskirts of Glasgow or in the centre. Indeed, the inaccurate answer made no difference to the risk. So under the draft directive the lorry owner almost certainly would have been paid by the insurers. In fact under our present law lie was not.

The Select Committee considered that the proportionality rule was fairer than our present law. But the Law Commission did not like it. They think it will be difficult to operate. Evidence from some of our witnesses, however, showed that some insurers often do settle claims on something approaching a proportionality rule without strict insistance on their legal right. Indeed, my own experience as a director of a British insurance company for over 30 years bears out that a form of proportionality is becoming what one may describe as best practice among such companies. So we have the rule in practice, but only to some extent. It exists in France, and according to some of our witnesses to a limited extent in Italy, Germany and Denmark. But, to be fair, I believe in Sweden, where it has operated, they are about to abandon it next year.

The position one takes on proportionality probably depends to a large extent on who you are. If you are an insurer you will probably prefer the existing British law to the proportionality rule in the draft directive. But the British Insurers European Committee, who gave evidence and submitted a memorandum to us, said that while they would prefer not to have it, if it was necessary in order to secure better harmonisation, they would do their best to make it work. But I believe that some insurers really would quite like, in fact almost would prefer, to have some rules about proportionality rather than to have to make up their own rules in difficult cases. If you are a policyholder you would probably say that the draft directive does not go far enough.

The Select Committee took the view that in principle the proportionality rule as proposed in the draft directive was a middle course and about right. Much can be made of the problems of drafting a proportionality rule and the difficulties in its application, and I do not minimise them. But, with respect, I believe that the Law Commission do make too much of these problems. Striking a middle course may be difficult, but we on the Select Committee thought it was fairer. The present law adopts an "all or nothing" approach to the entitlement of a policyholder. Surely justice can be more sophisticated than that. I believe that we should adopt a proportionality principle. I hope that the noble Lord, when he replies, will say where the Government stand on this.

There is another issue which is almost of constitutional importance. The preamble to the draft directive and the explanatory memorandum both indicate that it would be inconsistent with the harmonisation of law in the EEC if member states, after implementing the directive, adopt differing legal provisions on the rights of policyholders. The Law Commission state quite clearly:

"The enactment of the directive by legislation would preclude Parliament from enacting any further legislation within the domain of the directive. In particular, any legislation for the protection of the consumer insured. The enactment of the directive would therefore freeze our law indefinitely in an unsatisfactory state".

Surely, what the directive should do is to provide minimum standards, while permitting improvements under national law. It seems to me a somewhat novel idea that implementation of a directive prevents not merely future law contrary to the terms of the directive but also future law additional to the issues mentioned in the directive, if that law is within the domain covered by the directive. It is also unsatisfactory that this is achieved not by the terms of the articles of the directive, but by inference from its preamble and the explanatory memorandum. I hope that the noble Lord, when he replies, will say whether the Government accept that the directive, as at present drafted, inhibits future legislation. And, if so, whether the Government will seek to obtain a change, an amendment of the preamble, to permit this.

In conclusion, I would mention that this draft directive is only one of a series of measures aimed at harmonisation of the Community laws on insurance. An earlier draft directive is commonly called the "draft services directive". The Select Committee thought that it was essential to the interests of the United Kingdom insurance industry that the draft services directive should be adopted and implemented. It would greatly facilitate our insurance industry to compete in the EEC more effectively than it can at present. The Select Committee consider that the adoption of both directives would be beneficial in this country to both insurers and policyholders. But they considered that the draft directive we are now discussing should not be adopted until the draft services directive has been adopted, or that the two should be adopted at the same time.

7.22 p.m.

My Lords, I must begin by declaring an interest. I am a director of a life and pensions subsidiary company of a firm of Lloyd's Brokers and although life assurance and pensions are excluded from the directive which we are considering this evening, the parent company has, of course, an interest in the subject matter of this particular directive.

The House would wish to thank the noble Lord, Lord Plowden, and his committee for the work which they have done in producing this report which is both concise and comprehensive. I should like too, if I may, to thank the noble Lord for the way in which he has put the Question to the Government this evening.

I regard myself as a federalist, somebody who wants to see a politically united Europe, and that must involve a further application of the supra-national principle in the government of Europe, in the government of the Community. That supra-national principle affects the way in which decisions at the centre are taken. It does not necessarily mean that there should be a multiplication of such decisions, but it does mean that they are taken in a particular way. Certainly very important matters would have to be transferred from national Governments to the centre if we were to proceed, as I hope one day we shall, to economic and monetary union. In those circumstances, it becomes more than ever necessary to avoid any unnecessary centralisation or any unnecessary harmonisation.

It is against that background that I would question whether this draft directive on the co-ordination of laws, regulations and administrative provisions relating to insurance contracts, is really necessary, and I wonder whether the Government are convinced that it is. Is harmonisation of insurance contract law necessary in order to promote freedom of services in insurance and to make it possible to have a free choice of law by which an insurance contract is governed? It is not essential to the functioning of a common market that there should be a common legal system throughout that market. The lack of harmonised law of sale of goods in the EEC has not prevented the creation of a common market in manufactured and agricultural products. The United Kingdom has been a single market for both goods and services for centuries, but the English and Scottish legal systems continue to exist side by side.

The memorandum from the British Insurers' European Committee, which is included in the evidence in the report, states that they feel that:
"co-ordination is not strictly necessary for freedom of services".
Mr. Alan Teale, on behalf of the United Kingdom Insurance Brokers' European Committee said in evidence:
"We would share the view of the insurers that to a large extent the directive has no real merit".
We have heard from the noble Lord, Lord Plowden, of the criticisms of the Law Commission. It seems to me that the Select Committee themselves have had similar doubts, but they conclude, as the noble Lord told us, that "on balance" the draft directive would be useful, particularly if it accelerates the adoption of the Linked Services Directive which the Committee regard as essential, as the noble Lord made clear. That is a somewhat limited welcome. Still, I sympathise with what they say about the services directive. Anything which helps to get that into operation deserves some kind of welcome. The directive is also committed to the idea of consumer protection, which again one would welcome.

If we were to accept the view that, "on balance", the directive would be useful, we then run up against the point made by the committee, and emphasised by the noble Lord, that the directive contains serious shortcomings. In that connection, I am not quite clear as to the status of the rapporteur's amendments. They are shown in the annex as amendments which the rapporteur intends to put forward. The rapporteur himself in evidence said that they had been approved by the Legal Committee of the Parliament. I wonder how far they have gone now. Are they incorporated in the draft directive or at least in the Parliament's version of it?—I am not quite clear about that.

The rapporteur's amendments would deal with some of the specific objections raised by the committee and by others, including Lloyd's Underwriters. As the noble Lord explained, one of the major innovations, so far as this country is concerned, in the directive would be the introduction of the principle of proportionality. As he has explained to us, if all the facts have not been disclosed, then the insurer calculates the premium he would have charged, and the proportion of that premium, which the premium actually paid represents, is the proportion of the sum insured paid out. One of the objections raised to that—and it is only one of them—can be summed up in the question: what if the insurer would have declined the risk? The directive originally did not deal with that position. The rapporteur's amendment does, and says that:
"If the insurer can show that a prudent insurer would not have accepted the risk if he had been aware of the circumstances which the policyholder should have disclosed, or if the insurer can show that a prudent insurer would not have accepted the risk unless certain conditions were complied with, he shall not be bound to pay any claim".
That is only one of the objections that have been raised, but I give it as an indication of how the rapporteur's amendments in fact offset many of the objections that have been raised in detail, not to the principle of the directive, but to the details of the directive.

Then there is the question of risks outside the EEC. The report says that the directive is not clear on that point. The rapporteur's amendment would seem to make the directive apply only to risks within the EEC. If that were so, then there is the difficulty to which the report draws attention of two legal frameworks for the same type of contract, not merely for different classes of insurance as would otherwise be the case.

The suggestion is made that the directive should be incorporated into the United Kingdom law when it would apply to all risks in the same class. But the insurers say that if the principle of proportionality—and this is to be seen in the evidence in the report—were in fact adopted in this country for all risks, for risks overseas outside the EEC, then that would create chaos. So there is a difficult problem there, and one would be glad to know what the Government think about that.

Then there is the question of warranties. These do not seem to be covered satisfactorily by any amendments put forward by the rapporteur, so far as I can see. The practice of including warranties of various kinds which are described in the report is a particular feature of insurance in this country, and insurers would need to know what the position of these would be under any new directive.

In conclusion, may I briefly say three things. First, I repeat that I doubt whether the directive is necessary. Secondly, I hope that at least the rapporteur's amendments will be included, if they are not already included in the draft. Thirdly, I agree with the committee that the draft directive should not be adopted until the services directive has been adopted, or alternatively that they should be introduced together.

7.32 p.m.

My Lords, I should like to congratulate the noble Lord, Lord Plowden, on the very persuasive way in which he introduced this debate. Unfortunately, for reasons over which nobody has any control, the debate comes at a time when it is extremely easy for the Government to give just the sort of answer which ordinarily nobody would wish to hear. They will be able to say with great force that they have not yet reached any views on the draft directive, and they will certainly be able to say with equal force that they have not yet reached any conclusions on the 64th Report of the Select Committee.

The reason for that is one of timing. The Select Committee reported in August of this year at a time when the only record of Law Commission thinking was in their working paper. Now in October of this year, two or three months after the report of the Select Committee, the Law Commission have published an extremely thoughtful, thorough, and lengthy final report on insurance law, non-disclosure and breach of warranty, and in that report they deal at length and in detail with the draft directive with which we are concerned tonight.

I have, as best I can in the time available, studied the Law Commission Report. With all respect to the noble Lord, Lord Plowden, it cannot just be brushed aside as an indication of a preference for a state of the law other than that which is recommended by the draft directive. That report contains a detailed refutation of the validity in a United Kingdom context of the so-called proportional rule which lies at the very heart of this draft directive. I could not, as a lawyer with some experience in these matters, suggest to the Government that they ought to reach any conclusions on the applicability of the draft directive before they have considered carefully, and consulted with others, upon the Law Commission Report.

I hope I shall not weary your Lordships if I indicate very shortly indeed the Law Commission view. Of course, the Law Commission agrees with the Select Committee, and indeed with all others who have studied our present law, that our present insurance law bears far too harshly upon the policyholder. If the duty of disclosure is not fully met by the policyholder, even in a matter which does not touch the risk that has eventuated, the insurer can refuse payment against the risk. Similarly, if the policyholder has entered into a so-called warranty and that warranty has been broken even though the breach of the warranty has nothing whatever to do with the loss that has arisen, the insurer can rely on that breach of warranty to withhold payment.

The harshness of this law is ameliorated only by the very fair-minded practice which UK insurers follow, which is not unreasonably to withhold payment even though they are under no obligation to do so. I agree with the noble Lord, Lord Plowden, with the Select Committee, with many others, and indeed with the Law Commission, that that is not a satisfactory state of the law. Reform, therefore, is necessary. The problem to which the Law Commission had to address itself was simply: Do we reform the law along the lines of the draft directive, or do we reform the law along the lines which the Law Commission itself then develops? Reforms which are consistent with the historical pattern of our law, and reforms which would not include the proportionality rule.

The case against the proportionality rule is that although superficially attractive it cannot be enforced in the way in which it would appear from its formulation to be capable of being enforced. I shall not repeat it again—the noble Lord has told us what it is—but the superficial but false simplicity of the rule is that it appears to permit of an arithmetical calculation, based upon the difference between the premium actually paid and the premium that ought to have been paid, in order to achieve how much of the loss the insurer should pay where there has been this non-disclosure.

If it could operate in that way there might be something to be said for it, but in no country in which it operates does it in fact operate as a mathematical formula. If you look at the French law—and it is essentially a French rule—you will find that it reduces to, "Well, the insurer will have to pay whatever the judge thinks is just in all the circumstances". Learned French commentators have said it is an arbitrary, discretionary rule. That of course is the reason why Sweden, which has had the strict proportional rule, has recently passed an Act of Parliament ending it for consumer insurance, and as from 1st January next year it will not be part of the Swedish law so far as consumer insurance contracts are concerned.

I shall not take up time developing the reasons for the Law Commission view. They are all set out in the Law Commission Report. Just two matters I will mention which indicate what a badly tailored rule it is. It assumes that the insurer would have dealt with the new situation which was not disclosed to him merely by increasing a premium. But, of course, there are many other options open to an insurer; he might decline the risk altogether, he might put an excess on the policy, and there are other things he can do. None of those matters can get within the mathematical calculation which lies at the heart of the proportional rule, so it is not surprising that the Law Commission reached the conclusion that the proportional rule was not an adequate or sufficient way for reforming our own law.

Whether the Law Commission is right or wrong is not a question which I think any of us today can answer. All I would say is that we must look at it very carefully. The Law Commission has published this report and includes as an appendix to the report a draft Bill of 15 clauses reforming our law in this field. This material was not available to the Select Committee and, speaking from experience as a lawyer and judge, I would not recommend this House to indicate approval, even in principle, of this draft European directive until we have had a very full opportunity of considering the recommendations of the Law Commission.

I must declare an interest. I was the first chairman of the Law Commission, and I am not going to have my Law Commission dealt with too summarily, even in your Lordships' House, and I am certainly not going to have their views dismissed as a matter of preference when they have spent pages and chapters arguing the matter. There is much more to be investigated here than we have yet been able to investigate, and I would not advise the House to introduce into English law a continental principle which has never found any place in it merely because our law needs reforming. We have a law reform body and it has given its views as to the way the law should be reformed. Therefore, since I have not been as kind as I might have been to a rule of French law, I end in the French language: Mes seigneurs soyez prudents.

7.43 p.m.

My Lords, I must at the outset declare an interest in two respects, first that I am an underwriting member at Lloyd's and secondly that I represent an area in North West London many of whose electors work in the insurance industry. It is in this second respect that I congratulate the noble Lord, Lord Plowden, and his colleagues on the Select Committee who have brought their traditional and usual expertise and care to bear on a very serious and complicated problem of European legislation.

As usual, the Select Committee, or part of it, has come up with an excellent document, one with which I substantially agree, and I support those who have spoken for some sort of doctrine of linkage between the present draft directive on insurance contracts and the far more important draft directive of principle on insurance service contracts, because it is the second proposal that strikes at the root of the matter and which could mean tens of millions of pounds per year for the British Exchequer. It is that which really matters to the people of this country rather than, if noble Lords will forgive me, the commas and fullstops of the present directive, carefully and necessarily though it has been considered.

The Prime Minister and my noble friend the Foreign Secretary have emphasised in recent weeks the importance of the draft Services Directive and I suggest it is time, in the context of this special debate on the current directive, to point out that we are supposed to have a Common Market, that we are supposed to have a Treaty of Rome and that we are supposed to have Article 59 and the articles that follow it guaranteeing, at the end of a transitional period, freedom of services. We cannot surely have our European Community and its treaty, its constitution, when significant parts of it are simply being passed over, ignored and pushed on one side year after year, meeting after meeting. The transitional period ended more than 10 years ago. There have been more than 30 two-day meetings dealing with the draft Services Directive, and, if anything, we seem to be going backwards rather than forwards on it. I therefore strongly urge my noble friend Lord Lyell to consider the idea that we should link the draft directive which is before us with the more fundamental one and indicate, as other noble Lords have done, that the one that is first should come first or at least simultaneously with the one we are at present discussing.

The restrictions placed by certain member states on the choosing of an insurance company of an insurer, seem to me to run contrary to the Treaty of Rome and I doubt very much whether any insurer or policyholder who made a contract contravening those national laws could in effect be called to account in the courts of national Governments. I wonder whether at the end of this debate my noble friend would indicate whether it is the Government's view that the restrictive laws of certain member states, such as France and Germany, are or are not in conformity with the treaty. Is it his view in fact that the European Court would probably override the decision of a national Government convicting an insurer or policyholder of such a violation?

I believe that the way to clarify a doubtful law is to test it, especially when we are dealing with such a new code of law as that of Europe. I therefore urge the Government to treat this matter as a bargaining counter to consider the fact that in insurance we in this country have a most valuable national asset bringing us across the exchanges hundreds of millions of pounds in surplus—about £900 million per year in surplus—and that if we had a services directive that was in conformity with the law of Europe and in conformity with the ideals and constitution of Europe, as it happens this country would benefit considerably. We would benefit, I am advised, to the tune of some £50 million in the first year and larger sums thereafter. The fact that our member state stands to gain from such a directive should not deter us from pressing for it. It is helpful and encouraging sometimes to be able to stand up and press for a more European approach because, as it happens, it would bring our member state greater benefit. I am reminded of another services matter, namely the airlines, which we debated a few months ago in this House, where again it is the British sector of the European market which is the most efficient, which has the best profit record and where a more European approach would benefit this country to the tune of many millions of pounds per year.

I see the directive which is before us as perhaps a necessary hurdle along the track leading to the finishing line of an insurance Services Directive. It may be necessary, but it is probably a hurdle, and I hope the Government will note the lack of enthusiasm expressed in your Lordships' House for this document tous court as it stands. It does not seem to have very much merit other than as a means to an end, and only in that very modest respect can I express the hope that it will become the law of Europe.

7.50 p.m.

My Lords, it is, I believe, generally accepted that the draft directive is welcomed in this country by both insurance companies and brokers, for the obvious reason that they expect to benefit from greater freedom to operate throughout the Community. However, in certain of the member states the restrictions, or the restrictive conditions, are more severe than they are in this country, and therefore to some extent the enthusiasm of the insurance industry is dictated by certain aspects of the draft directive.

However, having said that, I must point out that the main problem is the question of what is the best course for us. Is it for the United Kingdom negotiators to continue with their efforts to greater liberalisation at the risk of further delays, or to take a softer line in the hope that the directives could be adopted in the foreseeable future?

In particular—digressing for a moment—I am very concerned about the situation which exists at present in connection with those who are earners of considerable foreign currency for this country. I refer to the professional consultants—engineers, surveyors, and so forth—who are operating abroad. It appears to me that as they stand things make it very difficult, if not impossible, for them to be provided with adequate liability insurance across a frontier, because as professional individuals they do not come under the category of traders. This is a point which requires examination. It might be possible to undertake such insurance under the law of the country in which the risk was situated, but I understand that so far as United Kingdom insurers are concerned they would find the requirements of the insurance laws applicable in some member states so complex that they would be unable, without undue risk, to enter into contracts subject to those foreign laws. Insurance coming under this heading has substantially increased in recent years, largely due to increased costs both at home and abroad. In my view, insurance of this kind should be—and I hope will be—liberalised without conditions.

It is, I hope, well understood that the idea of the services directive is to create a common market in non-life insurance. The United Kingdom has always been strongly in favour of this. It is of course natural that in the Community member states are in favour of opening up a common market in areas where they are particularly strong, and are not quite so anxious perhaps in areas where they are weak.

In this country we have probably one of the strongest, if not the strongest, most competitive, and extremely efficient insurance industries, and therefore we stand to gain very considerably if we are able to provide insurance in a common market without having to establish companies in other member states with all the costs that that obviously would involve. It would be much easier for Lloyd's, for instance, based in London, to insure risks in other member states without having to think of establishing themselves elsewhere.

I have heard it said—and I think that the noble Lord, Lord Bethell, referred to this—that the United Kingdom could expect to earn between £55 million and £60 million net each year if the services directive were adopted. It is only natural that the prospect that we should gain in this way leads other member states to fear that we might encroach upon, or invade, their preserves. I believe that only the Dutch, the Irish and ourselves are in favour of the services directive in its present form. But, my Lords, other member states who are not in favour of this particular proposal cannot expect to control the Common Market purely for their own ends and to exclude competition from outside. That was not what the Treaty of Rome and the Community were all about in the first instance.

Perhaps some noble Lords may be wondering what relevance this has to the insurance contracts directive on which the Select Committee reported. There were those who were not enthusiastic about having the services directive. To them I would say that if we are to have a common market in non-life insurance, we must standardise contracts so that competition is fair. The fate of the two directives is therefore linked. We in the United Kingdom have no particular incentive to change the law, or to change our law, on insurance contracts if that is not accompanied by opening up the common market in which insurers can compete, and perhaps other member states who do not care for the services directive might be reassured to some extent if it were accompanied by a harmonisation of contracts.

It would seem that so far very little progress has been made with regard to the services directive. The noble Lord, Lord Bethell, referred to these delays. As I think he mentioned, and as I believe, it has been discussed at more than 30 meetings of a working party of the Council of Ministers; it has been discussed by the Committee of Permanent Representatives, yet so far nothing appears to have materialised.

As has already been said by the noble Lord, Lord Plowden, both directives should be adopted at the same time, because they are linked. On the other hand, if it were impossible to proceed with both directives together, I would dare to suggest that it would be more important for the services directive to be adopted first, and it would be helpful if Her Majesty's Government could give us some indication as to whether they feel that there is any likelihood of that happening in the foreseeable future, or whether in fact very much progress has been made.

I should like to end by saying that at last it would appear that in connection with the Common Market something is being considered which might be of benefit to this country. I have heard it suggested that we should not see this as any great development, nor make too much of it, nor press too hard for it to be brought to fruition. But I hope that your Lordships will feel that that is not so. It seems to me that this is the first step, and a very important step. It could, and should, open up the whole of the commercial and industrial risk market, including marine, aviation and transport business, to British insurers, to be covered from London. It is, I agree, a first step, but it is nevertheless a very important step indeed.

7.59 p.m.

My Lords, I apologise for intervening unannounced at this rather late hour. I should mention that for health reasons I was unable to attend Sub-Committee A's discussions on this subject during July, but some 50 years ago I spent five years working for a British insurance company in an EEC country, and so I have a residual interest in the matter.

The effects of this directive on the insurance industry in this country could be very wide and very complicated. It is therefore extremely important that the directive should be considered with great care, both in its general implications and in the detailed drafting. The Select Committee's report examines a number of the general implications, setting out the arguments on both sides. It also makes various criticisms of the drafting, to which attention should be paid. The drafting is in some places obscure, or at least uncertain.

Much has been said this evening about proportionality, and I should like to add just one word. The noble Lord, Lord Plowden, and others, referred to the arguments in favour and against. There is considerable conflict of evidence on both desirability and practicality, and also—and this is a point which I wish to emphasise—on its effect on international business generally. It would seem to be a change which benefits the policyholders. On the other hand, it is argued that it would be confusing and that in practice it would make little difference because insurers in this country are normally ready to make reasonable compromises. The committee conclude in principle in favour of the proposals. I personally feel that what the noble and learned Lord, Lord Scarman, said has a great deal of force, particularly when he says that the application of this proposal would need a great deal of further discussion before it was definitely accepted.

My Lords, I should like to refer briefly particularly to paragraphs 21 and 22 of the report, and to the position of the United Kingdom insurers' business outside the EEC, on which the noble Lord, Lord Banks, made some pertinent observations. This world-wide business is of course very large and very important to the British insurance market. It is much more important than British insurance business in the other EEC countries. On this question—the question of geo-graphic limitation—the directive is perhaps naturally silent. Presumably, a directive from Brussels could not directly affect non-EEC business, and would therefore cover only business where both insurer and insured were within the EEC. But to implement the directive there would have to be legislation in this country. It seems likely that this could lead to three or more types of insurance law operating in this country; namely, the general insurances—motor vehicles, property, et cetera—within the EEC under this directive; risks outside the EEC under our common law; and possibly life insurance under other EEC directives. Marine, aviation and transport insurance are, anyhow, outside the directive.

Thus there could be three or four insurance laws, with the inevitable problems of definition of the categories. Some differences in the law applying to the different types of insurance may be desirable. There is, for example, already a statute governing marine insurance. But, generally speaking, until now the United Kingdom insurance law has been pretty well uniform. So that harmonisation of the law within the EEC might in fact lead to less harmonisation within the United Kingdom, and to a certain amount of confusion in international business. As is the case in so many proposals from Brussels, harmonisation is a generally desirable end, but it can often cause a good deal of local difficulty.

There seems to me to be a problem here which needs very careful examination. Either non-EEC business would be left as it is, with the complications to which I have just referred of three or four different bases of law, or it might be decided in drafting the United Kingdom legislation to extend the terms of this directive to cover other forms of insurance on a more general basis for the sake of more uniformity. Anyhow, it is extremely important that the competitive position of British insurers outside the EEC, particularly in the USA, should not be prejudiced. Interference with existing practice might well reduce the freedom and flexibility for which our market has had such a good name for so many years throughout the world. I shall be particularly glad to hear any comments which the Minister is able to make on this point, which seems to me to raise important and difficult issues.

My Lords, I support what Lord Plowden said in introducing this report, particularly that it would be wise to keep the draft directive to the imposition of minimal standards. Future legislation to improve the rights of policyholders should not be prevented so long as it does not prejudice the competitive position of British insurers. The link with the draft services directive is essential; so is clarification of the territorial limits of the directive. Subject to these points and to various amendments suggested in the report, and to some clarification of the drafting, the committee concludes that the directive should on balance prove useful. I agree with the noble and learned Lord, Lord Scarman, that it is extremely difficult for Her Majesty's Government to take a very definite position at this moment, but we shall be very much interested to hear anything which the Minister can tell us.

8.5 p.m.

My Lords, I am an unadvertised nuisance, but I say in mitigation that at best I can claim to bring a breath of refreshing ignorance to this interesting discussion. I find that the House has a certain problem in having to choose between the recommendations of its Select Committee, as expounded to us today, and the very weighty words of the noble and learned Lord, Lord Scarman, with his vast experience of the law. I am myself deeply in the debt of Lord Plowden, as well as his committee, but particularly Lord Plowden, because of the temperate, lucid and persuasive way in which he presented this issue. But I have to speak with timidity bordering on, or more than bordering on, trepidation in that I find myself preferring the recommendations of the noble Lord, Lord Plowden, to the approach of the noble and learned Lord, Lord Scarman, who has brought the weight of his immense standing and erudition to bear on this matter. I should like to tell the House why.

It seems to me that the noble Lord, Lord Plowden, and his Select Committee approached this question in the right spirit and, with the deepest respect, that the noble and learned Lord, Lord Scarman, approached it in the wrong spirit. I am myself a lawyer, and I practised at the Bar for many years, and I must say that my heart beats more quickly when the noble and learned Lord, Lord Scarman, refers to the great historic traditions of the English law. I wish very much that the Community had incorporated in the Treaty of Rome that, when we came in, the historic traditions of British law would apply throughout the Community; but by some odd happening they did nothing of the sort. They intended that the law which was to operate in co-ordinating the Community's efforts would be the collective effort, which would I hope pay due respect to the contributions we would make, inspired by our traditions.

Of course, the very breadth of Lord Scarman's speech, with great respect, was inspired by a spirit which has not taken into account the new world to which we are attaching ourselves in the European Community. Of course every one of us would prefer to do our own thing, but that is the very antithesis of co-operation. It is even more the antithesis when you are dealing with other nations. The whole point of the European Community is that it is a vast and potentially noble and creative development of the postwar period to make the peoples of Europe learn to live with more co-operation—co-operation in the field of politics, co-operation in the field of economics and finance, co-operation in defence and matters of that kind. That is the spirit which I think has been behind the Select Committee's report, and it is the only spirit in which we can approach this matter.

I think the noble and learned Lord is entitled to ask us all that we go home and in due time study with deep care the case for the Law Commission's better improvement of the law. But we are not dealing with a law which is to apply only to our country: we are dealing with a law which is to apply throughout the European Community, and if we want to trade with our insurance policies throughout the European Community it is no good saying that we think that our law would be better in some minute or even important particular. We have to come to a decision as to whether we really mean to be members of the Community and play a part in the co-ordination of its economic and commercial co-operation—making the kind of concessions which cannot be made if you are absolutely infatuated with the notion of doing your own thing, and doing it as it has been done for centuries past, which may have been infinitely superior to the way it has been done by anybody else. But the trouble is that you have to make that simple decision, and I do not think that the noble and learned Lord, Lord Scarman, has made it.

I wish he had raised the curtain of his affright at what is proposed, as compared with the Law Commission's proposals, a little more than he did. I fear that the bogeyman who emerged from his own lifting of the curtain has not scared me. He says that perhaps somebody will want to refuse the risk altogether. As I understand it, if anybody can show a reasonable case that he would have refused the risk altogether and it is not merely a specious way of implementing the existing commonly-accepted harsh effect of the present law, that the genuine insurer could say, "Had I known they were Greeks, or whatever, I would not have insured the risk and nor would any prudent, reasonable insurer"—then I think he appears to be covered by the rule of proportionality.

The noble and learned Lord, Lord Scarman, said that there would be difficulties in interpreting it and that it could not be reduced to the kind of mathematics that could be worked out on a pocket computer. Horror of horrors!—the decision about what the proportion is might end up being at the discretion of a judge. If any noble Lord considers anybody, apart from me, ending up before the noble and learned Lord in a criminal trial, the law here confides to him a considerable exercise of discretion as to whether he binds me over with a rebuke or incarcerates me for the rest of my life. That is all within the discretion of the judges; and nobody regrets it.

I would tell the noble and learned Lord, if he were here—very flatteringly I hope he would think—that I prefer (and that the best of insurance companies would prefer) that this matter of proportion should be left, with all its perils, at the discretion of a judge rather than at the discretion of an insurance company which inevitably feels itself partial in exercising that discretion; whereas in the case of a judge it would be wholly impartial.

I have studied the details provided and the afterthoughts of those who wanted to make my flesh creep with other horrors of the proportionality rule, such as saying that you could not have an excess taken into account so that if somebody is suing for £1 million and there might have been a £50,000 excess or some such, this can be taken into account in assessing the premium; but if you are dealing with motorcar policies, the commonest type of excess, or theft, where modest excess is provided, it is so irrelevant as to be hardly worth considering. I do not accept from what I read of the matter that the proportionality rule excludes specific warranties upon specific points but deals with the point of warranties of knowledge which are innocently inaccurate and therefore must not be allowed to have the present harsh, inevitable result.

I am a little troubled about the minimum standards of the future being affected. I hope we may leave it open if we want to make our law better than the Commission now wish. I must remind noble Lords that the present rule has been in force without change for a great length of time. I do not think we have to be afraid that we are denying the British public some extra benefits of a speculative kind which are not yet on offer. I mention the final point that the directive is obscure and uncertainly drafted. This is, to say the least, very interesting coming from the noble and learned Lord, Lord Scarman, because I have had occasion to study some of our modern legislation and I must confess that the interpretation of the results of inspection of the Delphic oracle would have been less complicated than the accurate interpretation of some of our statutes. So uncertainty, with the best will in the world and the most detailed mock-Elizabethan drafting by our parliamentary draftsmen, always exists in the interpretation of law. That is what the judges are there to clarify.

My Lords, I come back to the beginning. This is where the British Insurance Association appears to stand. They have recognised that co-operation is a two-way business. If we want the kind of co-operation which would permit our successful insurance people to trade in Europe, then we must accept that we cannot do so if we are offering terms which infringe the general will of the Community about what should be offered to their citizens. If we do insist that our law, which may be superior in a minor particular, is to be the rule, then our prospect of trading there will be remote. I very much welcome Lord Plowden's urge that we should seek to get the other directive applied at the same time. I very much welcome the report of the committee. I find it inspired by the right spirit of Community purpose, by a national contribution to that Community purpose which entitles us to scrutinise, examine and weigh up these things. I am grateful to the committee and to the noble Lord.

8.15 p.m.

My Lords, we on this side of the House would like to join in the tributes which have been paid, justifiably, to the noble Lord, Lord Plowden, and to Sub-Committee "A" which has produced the report on this subject. If I may, I should like to compliment the noble Lord and his committee on the report itself, the 64th Report of this particular Session. It has been drawn up with its usual clarity, which has become one of the hall-marks of the reports that come from the Select Committees of this House. We ought also to express our appreciation to the permanent staff of these committees who are in the main responsible for the marshalling and presentation of the conclusions and of the opinions of the committee itself. We are well served by them and that is one of the reasons why, as I am sure the noble Lord, Lord Bethell, will confirm, the reports which emanate from this House, particularly on European subjects, are very widely read in Europe.

It is a little extraordinary for me to find myself in agreement with practically every noble Lord who has spoken save (for reasons that I will presently explain), my noble friend Lord Lever. I wish therefore to come straight to the concluding and, in my view, decisive opinion of the committee which recommends in paragraph 26:
"They consider that the draft Directive should not be adopted until the draft Services Directive has been, or that the two should be adopted at the same time".
This is one of the courses I shall urge on the noble Lord opposite for the Government to follow for reasons which I will explain.

The Treaty of Rome, in Articles 59 and 60, permits and encourages the freedom of each member state to provide services in other member states. As the noble Lord, Lord Bethell, pointed out, this is one of the cardinal principles on which the Community is based—just as valid as (dare I mention the words?) the common agricultural policy. If the Community means anything outside the common agricultural policy, it means also Articles 59 and 60, which extend to, among other things, the service industries the right to conduct businesses across frontiers, if necessary, from their headquarters in London, Paris or wherever it may be, and across the national barriers. There have been several drafts of the directive. Eventually on 30th December 1975 there was a proposal for a second Council directive stipulating exactly that member states should be allowed to provide services across frontiers. This from my own experience in the European Parliament, in Common with that of the noble Lord, Lord Bethell, is a proposal which would have greatly benefited the British insurance industry had it been enacted and followed, but it has been systematically and deliberately filibustered and postponed.

Every conceivable device has been used by at least two of the member states—and I will name them: Germany and France. Every conceivable endeavour has been made to avoid the second directive being passed and put into European law in conformity with Articles 59 and 60. For two years this directive was before the Economic and Monetary Affairs Committee of the European Parliament, where it had to be considered. It was missed from the agenda from time to time; the rapporteur was absent from time to time; and it needed the utmost pressure, taking nearly two years, to get the directive discussed intelligently at all. All this was quite deliberate. I will be quite frank about it: the insurance industry in Germany and France—and this is common knowledge in Brussels, Luxembourg, Strasbourg and everywhere else—is scared stiff of having competition from Lloyd's of London and the other principal insurance companies of the United Kingdom, and is using every conceivable device to ensure that the second directive does not come into operation.

All that the British insurers have been asking for is the right to provide services in other EEC countries in accordance with the laws of the particular countries. They are not asking to export British law into Germany or France. They are asking for the right to sell insurance in France according to the provisions of the French law, and they are asking to be able to conduct insurance business of the type specified in the directive, which is of course non-life, according to German law in Germany. Every conceivable device has been tried in order to avoid this.

The original directive was dated 30th December 1975, and after nearly three years—on the 21st February 1978—a weighty series of amendments to the second directive was brought out and now, once again, we are in the process of detailed discussions on this matter. Even though the European Parliament ultimately agreed with the contents of the amendments contained in the proposal of the 21st February 1978, it is still impossible to get the agreement of France and Germany to it.

It is within this context that I feel that we ought to approach the whole question of this new directive. I entirely concur with the noble Lord, Lord Banks, that it is not necessary for the purpose of the conduct of services in other countries to have a standard form as to the services provided, any more than it is necessary, as the noble Lord cogently pointed out, to have standard goods that are produced in every country for sale in the Community. There is no real necessity for it at all.

If I may put a somewhat jaundiced view about it—and I do it with much sorrow—I am hound to say that the new draft directive which is before us, does not stand a chance of coming into operation anyway, because of course it has been introduced precisely as a further delay to prevent the services directive coming into operation. This is the whole reason for its introduction. The members of Sub-committee A, and their distinguished chairman, have done this new draft directive more than honour in even considering it. I firmly believe that events will prove me right when I say that it was never intended to come into operation anyway.

That still leaves us with the problems that have been raised concerning the defects in our own insurance laws. I am not expert in insurance law but I know enough about it to know that an insurance contract is a contract uberrima fides, of the utmost good faith, and any inaccurate fact on a proposal form, whether or not it is material in regard to the risk, is nevertheless the law, as the noble and learned Lord, Lord Scarman, indicated. In those circumstances, the insurance contract should not be capable of being avoided by the insurers. Therefore the course of action that I would respectfully urge on Her Majesty's Government is this: they should decline to give further consideration to this directive save for internal purposes until and unless they have complete agreement on Britain having her rights within the Community under Articles 59 and 60, by the passing without further undue delay of the second directive which I have in front of me.

There is no point at COREPER level, parliamentary level, commissioner level or any other level, in giving consideration to this particular item of harmonisation legislation which—and I entirely concur with the noble Lord, Lord Banks—is probably of dubious value anyway in terms of harmonisation, before they give further consideration to other matters. This is not to say that we do not have some lessons to learn domestically from the directive itself and some of the thought that lies behind it. Indeed, I feel the Government should give very serious consideration to the report of the Law Commission on this subject; and, after having considered that report, and after having considered within that context the provisions of the draft directive, they might then see fit to bring forward their own Bill, applicable in the United Kingdom only, for the purpose of the reform of certain aspects of insurance liability without which I feel that most noble Lords, and not least my noble friend Lord Lever, are somewhat uneasy. This, I think, would be the sensible course: it would be without prejudice.

After all, if we improved our own domestic legislation very much on lines that we took from the draft directive and also from the law Commission's Report, and if at some later stage we suddenly apprehended that our colleagues in the European Community were prepared to work a genuine Community, as distinct from a common agricultural policy, with a lot of small, peripheral items of very little national consequence, it would put us in a much stronger position so to do.

What I have said does not prevent Her Majesty's Government from pressing forward with the utmost degree of co-operation with our colleagues in Europe on matters upon which we can agree, but the time has long since passed—and the insurance industry is one example of it—where we can continue to acquiesce in policies that are now of proven disadvantage to us in money terms (such as the common agricultural policy) and when we can acquiesce without receiving a proper and due degree of consideration for industries in this country, including insurance, which are just as vital in many ways as agriculture and its benefits are to France. We ought to get our European colleagues to appreciate that we are just as interested in the extension of our invisibles, particularly in the field in which we are so expert—the field of insurance—as they are concerned to preserve their advantages under the common agricultural policy. May I say, across party boundaries, that any efforts made by the noble Lord's right honourable friend the Prime Minister to assert Britain's rights along these lines will receive the support of all of us on this side of the House.

8.33 p.m.

My Lords, first of all this evening I believe that the Government, and indeed the whole of your Lordships' House, would like to thank, and indeed should thank, the European Communities Committee under the very able chairmanship of the noble Lord, Lord Plowden, who introduced the debate this evening, for producing the report on the draft European directive on insurance contract law and also for affording us the opportunity to have what I personally have found to be a fascinating debate, both in the details that have been discussed and in the oratory, the eloquence and the passion that have been expressed by noble Lords in every part of the House.

As your Lordships will appreciate, the directive itself and all its implications are certainly not simple matters. The Government believe that the clarity of the report in dealing with some of the directive's major issues is of great value, though that is not its only virtue. At this stage I hope the House will allow me to declare a small personal interest, in that I am an underwriting member of Lloyd's. I understand that this is in no way incompatible with my duties in your Lordships' House and elsewhere. That is the position as I understand it but your Lordships, I believe, ought to know that I have a small interest to declare.

Five speakers—indeed, probably all those who have spoken—have referred to the recent report of the Law Commission and I should like, on behalf of the Government, to express our gratitude for this substantial and very thorough piece of work. The Government's attitude towards this draft directive takes into account the position of the directive within the development of the insurance market of the European Community. The Treaty which has been mentioned, certainly by the noble Lord, Lord Bruce, and by my noble friend Lord Bethell, provides for freedom of establishment for insurers within the Community and, above all, for those insurers to be free to provide their services throughout the Community.

Despite some notable decisions of the European Court, progress on establishing a common European market has been slow. Those are the words I am advised I should use without arousing further passion. It has now reached the stage where the rules making freedom of establishment effective cover most insurance; but the rules making freedom to provide services effective cover certain limited areas. Your Lordships may be aware that those areas are reinsurance, insurance intermediaries and coinsurance. The next step will be the long-overdue adoption by the Council of Ministers of the insurance services directive. I use fairly calm and, I hope, unemotional language, but I hope the House will accept that there is a driving commitment on the part of this Government to see that the insurance services directive is adopted as speedily and effectively as possible.

We believe that this measure is long overdue and is one which will allow insurance to be provided across frontiers in Europe, in accordance with Articles 59 and 60 of the Treaty. We also believe that the directive will be of considerable importance to policyholders and for business insurance of all kinds, though of considerably less importance for domestic insurance such as the private citizen's car or house insurance in the member states.

The draft of this insurance services directive provides for some limited freedom of choice of contract law, limited in particular to business insurance. The noble Lord, Lord Plowden, and indeed your Lordships' House, would wish to have my comments on the directive we are discussing today, and they would wish me to be relevant. This particular directive has evolved as part of the programme for providing freedom of establishment and services for insurance. However, so far as United Kingdom interests are concerned, both insurers and policyholders, we do not see the directive as directly important. Harmonisation of laws on the points it deals with will not, we believe, sensibly reduce the specialised knowledge or advice needed by a United Kingdom insurer or policyholder, when contracting under a law other than that of the United Kingdom. In other words, harmonisation in the way proposed does not seem likely to reduce important barriers to trade in insurance services. Also, there does not seem to be any clear evidence of United Kingdom policyholders suffering from different protection of interests under other laws. I would emphasise that in the United Kingdom we have greater experience than there is in many other member states of freedom of choice of law for insurance contracts.

But that is not the whole story, because introduction of the insurance services directive will allow some freedom of choice of the laws applying to insurance contracts, and this will be an innovation in some member states. Moreover, we see the Community's common insurance market continuing to develop beyond the services directive. It is not reasonable or practicable to ignore the possible arguments of others that they should be sure their policyholders have some defined protection when contracting under a foreign law, wherever it may be. While, therefore, we should be content to see the draft insurance contract law directive dropped, we are prepared to co-operate in further discussion on its adoption, subject to three criteria.

First, that the interest expressed by other member states in its adoption is clear and substantial enough to justify the very considerable efforts involved. The second criterion which we insist on is that there is in the EEC Treaty a proper juridical basis for the directive. Thirdly, we insist that United Kingdom interests are met adequately in the final text of the directive. These three criteria are, we believe, basic to the adoption of this directive and, indeed, to further progress. I do not think any Members of your Lordships' House can believe that there is any lack of continuing European co-operation or commitment in requiring these three criteria, because we want to see this directive adopted.

But reference to the United Kingdom's interests takes me to the second part of the noble Lord's Question, which asks for the Government's views on the conclusions of the Select Committee's report. The Government have, in some way, dealt with these in their initial reaction to the report of the Law Commission. They have said that they want to give all those who are concerned in this directive, in the report of the Committee and, indeed, in the Law Commission's report time to comment on the Law Commission's report. Some comments have already been received on the report, but others will not be in this year and we believe that it is too early to give any kind of considered view.

But the Government have done more than merely be polite. The Department of Trade has prepared a note setting out its initial reaction to some of the points raised by the Law Commission. The Government take the line that the note has been sent to every one of the numerous representative bodies who had earlier been consulted about the draft directive, and those bodies include representatives of insurers and consumer interests.

The note has also been sent to everyone who gave evidence to the Law Commission, as well as being submitted to the Select Committee of your Lordships' House on the European Communities. I would emphasise that the note was merely a preliminary reaction and not a final position. But it would not be unreasonable to rehearse some parts of the department's note for, in its tentative way, it meets some of the main points in the Select Committee's report.

First, the Government believe that the directive would be useful, particularly if it accelerated the adoption of the insurance services directive. The Government believe that the adoption of the services directive is long overdue. I stress that and will continue to stress it. The Government are far from convinced that adoption of the insurance contract law directive is a necessary adjunct to adoption of the services directive, but are, as I have said, not opposed in principle to the adoption of the contract law directive which we are discussing this evening.

It may be that one factor which influenced the Select Committee was the attraction, on their merits, of some parts of the directive. Reform of United Kingdom law would, however, be possible without a directive. I would not want to go further on this than to refer to the department's view that reform of the United Kingdom law on the duty of disclosure by an insured to an insurer, and of the law of warranty in relation to insurance contracts, is necessary and desirable. Secondly, the Committee considers that the draft directive requires amendments or clarification on a number of important matters, such as territorial scope and warranties. I think that the Department of Trade's note shows considerable sympathy with most of these points which are made by the Committee and, above all, with the point about not preventing Parliament from legislating in future to improve the rights of policyholders.

The noble Lord, Lord Plowden, in the course of his excellent and concise introduction to the debate this evening, raised a point about the ability of the United Kingdom Parliament to legislate. I think it would be right for me to add that the Department of Trade's note states:
"The Department proposes in further Community discussions on the proposed directive to seek to get its scope clear and to take a critical line on the requirement for uniformity".
I hope that that will go some way to answer that point made by the noble Lord, Lord Plowden.

The important point of proportionality was raised by most of your Lordships who spoke this evening. The department is very mindful of the criticisms from many quarters of your Lordships' House which gave evidence and, above all, from the law Commission, and would reserve its position. It is interesting to note that the European Parliament has proposed limitations on the operation of proportionality that would seem to avoid most of the difficulties which were seen by the. Law Commission.

I wonder whether I may go through some of the points that have been raised this evening. I hope that I shall clear up most of them, but if I miss any perhaps I may write between now and when we next meet in your Lordships' House. I hope that I have covered the two queries of the noble Lord, Lord Plowden. I should like to thank the noble Lord, Lord Banks, for his strong support for what I would call the European ideals. I think that the noble Lord, Lord Lever, put it as European co-operation. But the noble Lord, Lord Banks, left no doubt in our minds that he and, I think, his party are very much in support of co-operation in fields of European commerce. But we were very grateful to hear that he gave a great deal of support to the reservations of the Law Commission.

I applaud and congratulate the noble Lord, Lord Lever, on his courage in differing from the noble and learned Lord, Lord Scarman. I certainly found the noble and learned Lord's exposition admirably clear. Perhaps the noble and learned Lord had a slight interest as the founder of the Law Commission, but I think your Lordships will agree that he made a particularly clear and lucid speech which I, and I suspect your Lordships, certainly appreciated. He made one point which bears repeating, which was that the best practice concept, which I think was first mentioned by the noble Lord, Lord Plowden, is used wherever reasonable by insurers, and that the harshness of the law is not too much in evidence so far as insurance contracts and services around Europe are concerned.

My noble friend Lord Bethell asked me about the European Treaty and referred to Article 59. This was referred to by the noble Lord, Lord Bruce of Donington, who referred also to Article 60. My noble friend Lord Bethell asked whether an aggrieved person could take his case to the European Court. I hope that the House will accept that the Commission have been reluctant to take member states to the European Court in advance of the adoption of any directive. The decision would not be certain and would make progress on any directive, especially progress on the services directive which we have been discussing this evening, difficult. The services directive is needed in order to obtain effective freedom. I hope my noble friend will accept hat were a consumer to take his case to the European Court it would not have the effect which is desired by my noble friend, by the whole House and by the Government.

The noble Lord, Lord Cobbold, raised a valuable point. I hope he will accept that the Department of Trade's note to which I referred earlier suggested that he starting point for considering any change in insurance contract law should be that it should apply to all contracts of insurance, including contracts of life insurance. The noble Lord, Lord Cobbold, raised a slightly technical point, but I hope that my answer will go some way towards meeting it.

Every Member of your Lordships' House who has spoken referred at some stage to the services directive. The noble Lord, Lord Bruce of Donington, made a very powerful speech and asked what further strong action we should be able to take to speed the implementation of the services directive. Perhaps both he and the House will note the comment of my right honourable friend the Prime Minister at the meeting of the European Council last week in Luxembourg. The Prime Minister said:
"I draw attention to the very slow progress being made on questions such as insurance and air fares where the Community has yet to show its readiness to have freer competition in the service sector".
I believe that the Prime Minister is committed to the desire which has been expressed in your Lordships' House that the second services directive should be pushed through speedily.

Your Lordships will know that the noble Lord, Lord Bruce of Donington, and I dealt with the matter during the last session of Parliament, and indeed earlier today. The Government believe that the service directive is a bell-ringer of European co-operation. I hope that the noble Lord, Lord Lever of Manchester, accepts that the Government's commitment to co-operation in this field is especially strong. However, we believe that our interests are being frustrated, whether or not wilfully, or involuntarily, or needlessly, by this directive. The noble Lord, Lord Bruce of Donington, pointed out the long-time gap—all but five years—since the proposals were first presented.

I hope that this explanation of the Government's view upon the directive which was discussed by the Committee under the chairmanship of the noble Lord, Lord Plowden, and upon the allied directive and other matters has been of some help to the House. I have been unable to give the Government's final view on the directive points raised by the committee, but I hope that what I have said will be sufficient to show that the reaction so far, and the way that that will develop, is aimed at meeting the interests of both United Kingdom insurers and the policyholders whom they serve.

Felixstowe Dock And Railway (No 2) Bill

Brought from the Commons; read 1a , and referred to the Examiners.