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 the total sum of commissions, fees and other expenses paid by them and by the public corporations concerned in connection with the sale of shares in Cable and Wireless, British Aerospace, National Freight Corporation and Amersham International.

My Lords, excluding VAT and stamp duty, the amount payable by the Government was about £12·2 million. The appointment of advisers and payment of fees by the companies themselves are matters for the companies concerned.

My Lords, I am obliged to the noble Lord for that figure. He will probably recall that when I last asked for payments made, they were around £3 million. Now they are £12 million. Do not the Government have some misgivings—even slight misgivings—about these payments made for services which have not contributed one pennyworth of new wealth to the nation?

My Lords, we are now dealing with four companies and not one. It is not surprising, therefore, that the figures for four companies should amount to more than the figures for one taken alone. Individually, the net figure in the case of British Aerospace was £5 million; in the case of Cable and Wireless, it was £5·4 million; in the case of Amersham it was £1·7 million and in the case of National Freight, which, of course, was a sale to the management and staff, the figure was £125,000.

As regards the noble Lord's other question, the position is that these four companies have successfully been transferred to the private sector. We wish them every success in their new role. Among other things, of course, it removes them from the constraints of the PSBR, a subject which no doubt will greatly appeal to the noble Lord.

My Lords, is the noble Lord aware that the amount he has mentioned payable to these various concerns is a very large sum? Is he prepared to subject these sums and their payment to the same rigorous audit requirement of value for money as the Government are seeking to impose on local authorities?

My Lords, we always look at any payments we make very much from the point of view of value for money and, indeed, in these cases competitive tenders are sought to ensure that that happens. The gross amount realised on these four sales amounted to £500 million, and costs of £12·2 million in relation thereto represent only a little over 2½ per cent.

My Lords, the noble Lord is, of course, absolutely right, that the amount realised was something like £500 million, but the value of the assets that were sold were probably in the region of £6·5 billion. For the loss of this £1½ billion, they are actually paying £12 million to the finance houses concerned. Does the noble Lord really think that this is a great achievement or a stimulation to industry?

No, my Lords, I do not accept either the noble Lord's allegations or his arithmetic.

My Lords, would the noble Lord the Minister agree that in the case of Amersham International the price at which it was floated was probably lower than that which it deserved, inasmuch as when dealings opened an immediate premium of 50p was quoted?

My Lords, hindsight is one of the most widespread and valuable of all human attributes. What matters in the present case, of course, is what circumstances were like at the time the price was fixed. The views expressed at that time were as follows. The Investors' Chronicle on 12th February, the day after the price was announced, said that it was "a shade ambitiously priced". The Daily Telegraph on 15th February took the view that the price of the share "is ambitious". The Times, in its usual dispassionate and judicial manner, on 15th February said:

"The merchant bankers seem to have weighed up the interests of the future shareholders and the Government pretty well.".

My Lords, will the Minister agree that that probably indicates that you should not believe everything that you read in the papers?

My Lords, the noble Lord expresses a view of great wisdom. That is why I quoted to him a selection of newspapers rather than taking one only.

My Lords, is the noble Lord the Minister aware that I have had considerable experience over many years in fixing prices for issues on the stock market of various kinds, and that it is notoriously extremely difficult to fix a price which is absolutely right on the day? It is just as likely that on the day the price will be wildly wrong one way as the other and, of course, one gets criticised whichever way it is. I am quite sure in this particular instance that those concerned acted in good faith and did their best.

My Lords, I am most grateful to the noble Lord for his intervention. Perhaps I may illustrate his point and say that only last week British Aerospace shares changed hands at 170p, while yesterday they were up to 195p, which illustrates the extent to which shares can fluctuate in price over a very short period of time.

My Lords, I am not quite sure what lessons the noble Lord draws from that, but while he and I would deprecate hindsight, is it not also to be deprecated if we fail to learn lessons from the past? Are there not some lessons to be learned from the way in which these assets have been disposed of under market value?

My Lords, there is one point which the noble Lord makes with which I entirely agree; it is that one must always learn from past experience. What has happened in these three cases is the subject of very careful consideration.

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, separately from the review being undertaken by the Parliamentary Under-Secretary of State for Trade of the way aviation security is organised and financed in the United Kingdom and the subsequent report, they are now able to make a statement on the methods used by other countries to finance security charges.

My Lords, the Government do not propose to make a statement on the methods used by other countries to finance security charges before the review being undertaken by my honourable friend the Parliamentary Under-Secretary of State for Trade is complete. But in the course of that review he will have regard both to the financing of security charges and to the organisation of airport security in other countries.

My Lords, in my Question I did say:

"separately from the review being undertaken by the Parliamentary Under-Secretary of State for Trade",

and I am wondering whether the Minister is able to look at that again, because as usual he has not answered my Question. Anticipating that this might be the case, is he aware that I have found out the facts for myself? Does he know that in the EEC, in Australia, in the United States of America and in Canada standards are set by the Governments through the national security agencies of their countries, and that airlines are expected to maintain these standards?

Furthermore, is the Minister aware that the United Kingdom is the only country in the world which has a Government levy to finance security charges? No other country has an Aviation Security Fund. Finally, can the Minister tell me whether he is maintaining that these facts are not available on the files of the department, or whether the department is determined that an answer shall not be given to the Question that I have asked?

My Lords, the noble Baroness is most mistaken in the last assertion which she put to your Lordships. I am aware of course that in general the arrangements that we have in this country for financing our aviation security are not those which are followed in other countries. Not all countries, however, choose to make this a charge upon the taxpayer, which I think the noble Baroness has in mind. In the United States, for example, the charge falls upon the airlines themselves. As for the statement which the noble Baroness is asking for, we have no intention, as I said, of making a statement in the way that the noble Baroness asks, but these matters will certainly be taken into account by my honourable friend in the review of which she is aware.

My Lords, obviously I accept what the noble Lord says, but it seems most extraordinary. Obviously the files of the department are quite inadequate. May I ask him whether he is aware that, in our Companion to the Standing Orders of the House, it is stated:

"The essential purpose of Starred Questions and supplementaries is to elicit information from the Government"?

Does he really consider that I have been treated fairly by the department over the past two years and again today in the questions that I have put, which I would submit are reasonable questions and which have obviously been researched? Is it not right that it is the duty of a Minister to provide answers to such questions?

I must say, my Lords, that I somewhat resent the suggestion that the answers I give to the noble Baroness do not comply with the Companion to the Standing Orders. Not only do I reply to the noble Baroness often once, twice, or even three times a week, but I, and my successor at the Department of Trade, correspond with the noble Baroness almost equally frequently, and I am surprised that she is still in ignorance of the position.

My Lords, but I never get anywhere from any of the answers, either written or spoken.

My Lords, in that case perhaps I may refer the noble Baroness to the answer I gave to her in correspondence on 23rd March.

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

The Question was as follows:

To ask Her Majesty's Government whether they will introduce legislation to enable loans on house property to be transferred along with the property itself so as to minimise costs of transfer and facilitate the mobility of labour.

My Lords, there is no impediment in the existing law to prevent loans on house property being transferred with the property either if the mortgage deed so provides or if the parties so agree. I am advised that it is doubtful whether there is any significant saving in cost.

My Lords, I thank the noble and learned Lord for his reply. May I assume that he is aware that this is a common practice in North America, where it is not only convenient but saves a great deal of money in costs?

My Lords, it is enough for me to know a very little, and all too little, about English mortgage practice, and I am afraid I do not know the practices in North America. Their methods of conveyancing, I think, are far more complicated than ours, but I may be doing them an injustice. The fact is that if this is preferable in England it would be done in England if the parties wanted it, but I do not think we could force it on them by legislation.

My Lords, could the Law Society, the building societies and the others concerned be encouraged to look at this? There would be a saving of money and it would be valuable in this kind of transaction.

My Lords, I speak subject to correction, but I understand that there is at the moment a scheme being put forward by the Abbey National—with which I believe I have some personal connection, and I should declare this—and the Law Society, but that is a matter for them on the whole rather than for the Government.

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 to what extent research carried out in the Ministry of Defence is made known to British industry.

My Lords, defence research and technology is made widely available to British industry, subject to security constraints. We make research reports available; our scientists publish their results, attend symposia and join learned societies; we run joint consultative committees with industry covering particular research areas; we join with industry in developing technologies of mutual interest; and, most importantly, firms undertaking defence work are in general free to use the results for non-defence applications.

My Lords, while I thank my noble friend for that Answer and appreciate what the Government are doing at the present time in the various schemes to help industry, I wonder whether I may put to my noble friend that news of this character might be more speedily disseminated if someone were made responsible, or if arrangements were made within the Ministry of Defence to pass to industry discoveries of an unclassified nature which might have a competitive edge. Would my noble friend give me an answer as to whether the Government are aware that this type of procedure is in operation in the United States and Japan?

My Lords, in addition to the publication of results in learned journals and participation of our scientists in symposia, we contribute to the Department of Industry's Tech Alert Scheme for circulating information to industry. We also make unclassified reports available through the Department of Industry's Technical Reports Centre, now transferring to the British Library. However, we recognise that firms are not always aware of what information may be available and we are currently looking into possible ways of extending the dissemination. The Ministry of Defence welcome the fact that the National Enterprise Development Organisation have asked Sir Ieuan Maddock to look into the exploitation of defence R and D in the electronics industry, and we intend to co-operate fully with this inquiry. I hope that that helps my noble friend.

My Lords, I am grateful for that answer. It is a good answer. The Ministry of Defence has great possibilities for development in the development areas. Are there any plans to make sure that the development areas also get their fair share? This would help to cure unemployment and would be a great contribution.

My Lords, my reply to the noble Lord is that really we come to the spin-off from Ministry of Defence R and D through industry and I think through the construction world, as such, for development. I think you will find that is where it comes in.

My Lords, in warmly welcoming the initiative the Government have taken in inviting Sir Ieuan Maddock to undertake this study, may I ask the noble Viscount whether the exact terms of reference given to Sir Ieuan will be published either in the form of an addendum to the Official Report or otherwise?

My Lords, of course this has come from the House of Lords' scientific body, and I should think that they in turn will have the report, and I am sure your Lordships will receive it in due course when it is ready in the Library.

My Lords, would the noble Viscount accept that the only certain way of ensuring that the results of defence research end in industry is to have the research done in industry under contract, as they do it in America, thereby ensuring that not only the knowledge but the associated knowhow vests where it starts?

I note, my Lords, that the noble Earl has referred again to the question of the American way of dealing with knowhow. I well remember the way in which they dealt with the spacecraft secrets; once NASA had finished with them, the secrets were given to the Library so that everybody could see them. That is what I think the Ministry of Defence will try to do, anyway.

My Lords, would the Minister agree that there are really two processes involved, dissemination and declassification? What arrangements are there in the Ministry for the regular declassification of secret research, just as there are for the declassification of secret papers?

I am unable to answer that question, my Lords, and I will write to the noble Lord.

My Lords, is it possible to estimate in financial terms the value of the transfer of defence research to industry?

My Lords, it was stated in the report on R and D that, out of a total estimated procurement expenditure of some £5,800 million for the defence estimates for 1981–82, there was provision for nearly £1,700 million to be spent on research and development—about £260 million for research and £1,420 million for development—and I think that gives the noble Lord the information he requires.

Is the noble Viscount aware, my Lords, that in certain fields of scientific research some of the best work is done in Government establishments, including the Ministry of Defence? Is he aware, for example, that, in the sphere of batteries and electro-chemical work, some exceptionally good work has been done? Does he appreciate that that work is not normally published simply because the people engaged in it are not doing work which is regarded as fundamental, although it is extremely important industrially? Would he agree that it is very important that a method should be found of transmitting those results to industry? Are the Government representatives of the Department of Industry in various parts of the country able to convey to firms in their regions the results of that work? I am not referring to large firms—I do not worry about them; they have their own methods of getting the results—but the small firms.

First, my Lords, I am grateful to the noble Lord for his tribute to the work that goes on on the scientific side at the Ministry of Defence and the work that is pushed on to the civil side. There is the problem of trying to make firms aware of the existence of defence research results which they could exploit. We recognise that the Tech Alert Scheme and the Department of Industry's Technical Reports Centre may, by themselves, not be totally adequate and we are currently looking into how the process of dissemination might be improved.

A particular problem is caused by the intellectual property rights limitation on the dissemination of information from extramural research contracts. It is difficult to ensure that that information reaches all those in industry. We could make use of it, particularly through non-defence manufacturers, and that is why I announced to your Lordships that Sir Ieuan Maddock would be heading an investigation to see if more information can get through to the smaller industries.

My Lords, while I appreciate what the Minister said about help to industry, may I ask the Government to consider whether more direct research might be made through the Government for industry? Am I right in thinking that four-fifths of Government aided research is for military equipment?

Although that is not quite right, my Lords, I do not have the correct figure to which the noble Lord referred. It is vitally important that the two sectors, the Ministry of Defence and private industry, work together. Thereby one gets a better job done, more competitiveness and better prices.

My Lords, I understand that no amendments have been set down to this Bill and that no noble Lord has indicated a wish to move a manuscript amendment or to speak in Committee. Therefore, unless any noble Lord objects, I beg to move that the order of commitment be discharged.

My Lords, I beg to move that this Bill be now read a second time. I should explain at the outset that this is a Private Bill, not to be confused with the more usual Private Members' Bills. Unlike Private Members' Bills, which are public Bills although introduced by private Members and not by the Government, Private Bills are promoted by individuals—outside Parliament, by statutory or private corporate bodies or local authorities—with the purpose of obtaining particular powers or benefits beyond those provided by the general law of the land. Thus, a Private Bill affects only a particular category of people—in this case the members of what is described as the Community of Lloyd's—or sometimes they may affect a particular place, but never the public as a whole. It is an important distinction, and I make it at the start of our proceedings so we may have it in mind throughout what promises to be a lengthy debate.

I would also say at the outset that I have no financial interest in Lloyd's, nor have I had any previous connection in any capacity, save as a policyholder. At this stage I should point out that the interests of policyholders—people who hold Lloyd's policies, members of the public—are not in any way affected by the Bill.

I accepted an invitation from the chairman and Committee of Lloyd's, who are the promoters of this Private Bill, to act as its sponsor, and I did so for two reasons. The first is because I believe Lloyd's is a unique and important national institution of high standing and great value to the British economy. The second is because I admire the vision and courage shown by the elected members who serve on the Committee of Lloyd's, supported by a very large majority of the membership, in bringing forward proposals to modernise and update the constitution and certain working practices of Lloyd's.

I think we can all agree from our experience in different fields that internal reform is never easy to accomplish, especially in a community as large, now numbered in several thousands, and as individualistic as is the case with Lloyd's. The office-holders and committee have persisted with determination in the task of self-reform for three years or more. It is two years since the publication of the important report on which the Bill is based; that of the working party chaired by a former High Court judge, Sir Henry Fisher. There were also some outsiders unconnected with Lloyd's, who served on Sir Henry's working party.

Let me say a word or two now about Lloyd's as background to the Bill. Although Lloyd's is often thought of as an entity, and particularly so overseas, it is in practice a market, an insurance market, sharing certain common services—a common building, for example, and supporting services—and accepting certain common rules. Therefore Lloyd's is very different from a company. It has no shareholders; nor does it accept any corporate liability for the risks that are insured at Lloyd's. It is a society of underwriters, all of whom accept insurance risks for their personal profit or loss and are liable to the full extent of their private fortunes to meet their insurance commitments.

The basic principle of Lloyd's, going back to the origins of marine insurance in a City of London coffee house nearly three centuries ago, remains unchanged. It is this: that private underwriters, in accepting a risk, bind themselves, in the hallowed phrase used by Lloyd's,

"each for his own part, not one for another".

This principle of individual and unlimited liability lay at the heart of the Lloyd's Act 1871, which is the basis of Lloyd's operations from that date until now. That Act, again a private Act, promoted by Lloyd's and brought before Parliament, created a corporation. The Corporation of Lloyd's has provided premises and centralised services, and also, through an elected committee, laid down regulations governing the financial requirements for Lloyd's membership. Since 1904 there has also been a requirement for the audit of underwriting accounts. This is an important matter to which I shall return later.

The Act of 1871 was amended by four further Acts of Parliament between that year and 1951; all private Acts of Parliament promoted by Lloyd's. It is hardly surprising that the constitution, based as it is in the 1871 Act, should be found wanting in certain respects today. The conditions in which Lloyd's operates have been transformed, and consequently it was the unani- mous conclusion of the Fisher working party, to which I referred earlier, that—and I quote their words:

"…the constitution is no longer appropriate and the Committee's powers are inadequate for self-regulation in modern conditions. We have, therefore, recommended that the Committee of Lloyd's should promote a new private Act of Parliament so that the constitution of Lloyd's can be brought up to date and the powers of self-regulation enlarged".

That, in brief, is the case for the Bill.

I turn now to the contents. It is not a long Bill. It contains 18 clauses and 4 schedules. It is not, in my judgment, compared with some other legislation that we have seen, a difficult Bill to read. It is clearly expressed, and much of its contents are generally accepted. It would be in the interests of time if I did not go through the Bill clause by clause, but instead concentrated on those matters—there are three—which have attracted particular interest and attention.

These aspects of the Bill are opposed by six petitioners to the House of Lords; that is, interested parties who have lodged petitions which will be considered in the quasi-judicial proceedings, which apply in the case of opposed private Bills, before a Select Committee made up of five of your Lordships. The subject of two of these objections raised by petitioners is raised again, it must be said exceptionally, in the Instructions which are on the Order Paper today and which will be moved by the two noble Lords on the Liberal Benches.

I should now like to examine these three aspects of the Bill in the order in which they occur. First, there is the matter of the composition of the new council which will be set up by the Bill. This is contained in Clause 3. It was inherent in the Fisher Report that the transfer of the power to make by-laws for the management and regulation of Lloyd's away from the cumbrous procedure of a general meeting of all the members (several thousands of people) should be to a new and an expanded council which represented not just the working members of Lloyd's, as is the case at present, but also the outside names who provide Lloyd's with so much of its underwriting capital. The composition proposed in the Bill embraces three categories of member. There will be 16 working members of Lloyd's. They will form the Committee, an executive body, to manage the affairs of the Lloyd's market. They will be supplemented by eight external members, and three nominated members, unconnected with Lloyd's, whose nomination will require the confirmation of the Governor of the Bank of England.

The Bill provides for the representatives of the external members on the council to be elected by all the other external members and for the working members of the market to elect their own council representatives from among their own number. Schedule 1 to the Bill classifies the members of the society into two categories for this purpose. The aim of the separate electorates—working members and the external members—is to strike a balance, as Fisher recommended should be struck, between the interests of the two categories of member, and to ensure that some of the external members are in fact elected to serve on the policy-making body of Lloyd's and are not over-shadowed by the professionals, as has happened with the elections to the presently constituted committee on the basis of a single electorate.

The next part of the Bill to which I should like to draw your Lordships' attention—this is the second of the provisions of the Bill that have attracted a good deal of attention and comment—is to be found in Clauses 10, 11 and 12. These contain the so-called divestment proposals. Clauses 10 and 11 set out the restrictions affecting Lloyd's brokers and managing agents, and it is this matter which is the subject of the Instruction in the name of the noble Lord, Lord Wigoder. The clauses prohibit any Lloyd's broker, or any group comprising a Lloyd's broker, from having any interest in, or any connection with, a Lloyd's managing agency, or vice versa, and they require the disposal of any such interests within a period of five years following Royal Assent. These clauses were not originally included in the Bill, although there was a power conferred on the council to provide for divestment.

This method of resolving what the Fisher Committee found to be a conflict of interest between brokers and managing agents was the one recommended by Fisher, but it did not find favour when the Bill was debated and considered in another place. An Opposed Bill Committee in the House of Commons concluded that the matter was of such significance that it should be specifically incorporated in the body of the Bill itself. Consequently, the divestment clauses were added to the Bill in the course of the Committee stage in the House of Commons by means of a petition for additional provision. This petition followed a ballot (with postal votes) conducted by Lloyd's in order to obtain the views of the members. On this ballot, 76 per cent. of the members voted and the results were as follows: 13,511 were in favour of the proposed additional provision, and 1,013 voted against.

If I may continue with the sequence of events, the next development was that a petition was lodged against the additional provision by a Lloyd's broker. The House of Commons Select Committee then reconvened and sat for a further six days, during which the merits and demerits of divestment were argued at length. Its conclusion was as follows—and I quote their actual words so that there should be no misunderstanding. This is what the chairman of the Committee said on 22nd December last:

"We are fully aware that considerable consequences would follow from divestment, both for Lloyd's as a whole, and for individuals and companies. Nevertheless, on balance, our view is that it is in the public interest that the additional provision should form part of the Bill".

The matter was then raised again on the Floor of the House of Commons, this time by a Member of Parliament who was a director of the broking firm which had petitioned against these additional provisions. Nevertheless, the Bill was approved in the form in which it is now before your Lordships. A further petition from the same broking firm, and others similarly affected, will be considered by your Lordships' Opposed Private Bill Committee, and it is reinforced in the Instruction before the House today in the name of Lord Wigoder. So no one can accuse those who believe that their business interests are threatened by these provisions of any lack of persistence.

The third matter to which I should like to draw your Lordships' attention is more appropriately, in my view, a subject for parliamentary debate by the House as a whole, and it concerns the provisions for exempting the society from liability for damages in certain circumstances as set out in Clause 14 of the Bill. The exemption conferred on Lloyd's by this clause is the subject of the first of the two Instructions on the Order Paper, that in the name of the appropriately-named Lord Lloyd, although in this case of Kilgerran rather than of Lime Street. I confess to being better disposed towards the purpose of the first Instruction than I am towards the second. This limited immunity from suit for damages is a provision of the Bill, it must be recognised, which has been the subject of a great deal of comment inside and outside Parliament; and in my view it is entirely proper that our Select Committee should be asked, as the Instruction suggests, to give "special consideration" to this clause and to report to the House.

It needs to be said, however, on behalf of Lloyd's, that the proposal is not one that was lightly included in the Bill. It originates, as do so many of the provisions of the Bill, from the Fisher Report. I should like to quote to your Lordships what Fisher said on this contentious matter. I quote his words—or more accurately, I quote the words of the report of the working party of which Sir Henry Fisher was chairman:

"It is in the public interest that Lloyd's should be efficiently regulated. … It would be contrary to the public interest and inconsistent with the patterns of control established by the Insurance Companies Act, if the Corporation of Lloyds was to be inhibited in the task of self-regulation by the fear of legal proceedings against it. In particular, if the Council and Committee of Lloyd's were to decide that, for fear of possibly legal liability they could not undertake functions designed for the protection of Members, the whole body of Members would suffer".

I should also like to repeat a point I made earlier on in my speech; that is that this provision affects the members of the Lloyd's community only. It does not affect the public and it does not affect policyholders, whose rights are unchanged.

There is one further practical matter in connection with immunities which I should like to put before your Lordships because I consider it to be one that is worth keeping in mind as we debate the merits of this proposal. Recent events have shown that acute problems can be faced by Lloyd's in obtaining the all-important audit certificates while legal proceedings are pending at the suit of members who have suffered underwriting losses. Without these audit certificates, which have to be produced annually in respect of each underwriting member of Lloyd's—it is a statutory requirement of the Insurance Companies Act 1974—Lloyd's cannot obtain a global certificate of solvency. It is on this certificate that Lloyd's ability depends to satisfy nearly 100 separate public authorities throughout the world who are responsible for regulating insurance business.

Let me now bring together what I have to say with two final comments. The first relates to the standards and wellbeing of what we can all agree is a major financial institution. The second relates to how we should handle the debate on Second Reading, including the two Instructions, this afternoon. Lloyd's is the City of London's largest earner of overseas currency from invisible exports. It has a worldwide business and a reputation overseas that is of immense value to this country. In 1980 (the last year for which figures are available) the community of Lloyd's contributed no less than £579 million in invisible exports. Moreover, it provides employment for some 72,000 people. Its future and wellbeing, I submit, are matters of national and not simply of any sectional importance.

After lengthy and careful consideration, and on the basis of the recommendations of a working party chaired by a former High Court judge, to which I have already referred, Lloyd's came to the conclusion that it needs, and needs urgently, structural changes and powers included in the Bill.

The membership has been consulted systematically and regularly by the Committee of Lloyd's. It is significant that at a general meeting of the membership, the Wharncliffe meeting, as it is known, which was held at the Albert Hall on 4th November 1980, 3,772 members attended in person. The result of the poll which included proxy votes was overwhelmingly in support of the Bill: 13,219 members voting in favour of the Bill to 57 against. The vote in favour was thus 99·57 per cent. of all those voting or 71·99 per cent. of the entire membership of Lloyd's. There is no doubt that the powers in the Bill will be used and that the new constitution will be implemented without any delay once the parliamentary processes are complete. Already no less than 21 task groups have been set up to study and make recommendations on the detailed implementation of the various changes. Well over 100 working members of the society and officials employed by the Corporation of Lloyd's are engaged in this work.

That is all I have to say on the Bill. I apologise that it has taken me some time to describe the background to the Bill, the controversial points in it, and why it is that the measure is brought before the House today. Let me, in conclusion, turn to how we should conduct the debate in this House this afternoon. We have before us the Motion that the Bill be read a second time, and there are also two Instructions on the Order Paper, the first in the name of the noble Lord, Lord Lloyd of Kilgerran, and the second in that of the noble Lord, Lord Wigoder. It has been suggested after discussion through the usual channels it would be for the convenience of the House to have one general debate rather than three separate debates. Accordingly, the movers of the Instructions are intending to make their speeches at the start of the debate and then formally to move the Motions standing in their names at the end, provided that the Bill receives its Second Reading, as I hope will prove to be the case.

It is most unusual to have two Instructions to a Select Committee on a Private Bill. I have looked up the precedents and find that there have been only 13 Instructions in all over the last six Sessions of Parliament, including those relating to several wide-ranging local authority general powers Bills. The noble Lord, Lord Wigoder, is aware that I regret the fact he did not feel able to accept arguments against tabling the Instruction in his name. Nevertheless, it is his right to do so and I appreciate his courtesy in discussing and agreeing the wording of his Instruction with the promoters of the Bill.

My Lords, may I get this clear from this side of the House? Those who are laymen try to follow intelligently this debate and I find this important. I do not want to divide the House. I agree with the scholarship and legal knowledge of both noble Lords; but we shall vote for the Second Reading, I gather, and then the noble Lords will move their Instructions. Here comes the rub. Are we under this rule and procedure, which has not happened many times, then forced to a vote whether we go into the Lobby to instruct the committee? Is an Instruction enough to that committee without dividing the House? Do I make myself clear?

My Lords, the noble Lord has made himself clear and his question may help to clarify any doubts that may be in the minds of other noble Lords. My advice to those who support the measure is not to divide the House. I do not believe it would be in the interest of the House to have a Division on either of the two Instructions. I have had some exchanges with the noble Lord, Lord Wigoder, and he knows my view. Nevertheless I counsel against calling a Division against either of the Instructions.

What was in my mind in particular when I reached that conclusion was the guidance given last week to the House by the Leader. I believe that there are some 194 Members of this House who are also members of Lloyd's. It may be recalled by those noble Lords who were present on Wednesday last week that the noble Baroness the Leader of the House strongly advised such Peers to refrain from voting on the Bill during its passage through this House, and I fully endorse that guidance. I am sure it is wise and in the best interests of the House. Therefore, I recommend to supporters of the Bill, and any other noble Lord, that if the Bill receives a Second Reading without Division (which I hope will be the case, since there is much general agreement about its desirability) both Instructions should be agreed without Division when the Question is put formally. I beg to move.

My Lords, the noble Lord, Lord Windlesham, has explained the scope of this Bill fairly and comprehensively with his accustomed care and clarity. It is a Bill dealing with a society of great financial distinction. It is very difficult to compare this society with other bodies or institutions, regulatory or otherwise. What the noble Lord, Lord Windlesham, has emphasised, and I am sure noble Lords will concur, is that one of the main characteristics of the society which is the subject of this Bill is its truly international nature in terms of its business and liabilities. The purpose of the Bill is a difficult one. As the noble Lord, Lord Windlesham, has described, its main purpose is to bring up to date the scope of the society's laws and functions.

The part which I have to play so early in this debate is solely to explain to your Lordships certain procedural matters relating to the consideration of part of this Bill; namely, the scope of Clause 14 of the Bill. I have to assure your Lordships at this early stage in the debate, mainly in order to save parliamentary time, that in the event of your Lordships giving this Bill a Second Reading (as I hope will be the case) the Motion standing in my name will be moved immediately afterwards. That Motion, if I may remind your Lordships, is:

"That it he an Instruction to the Committee to whom the Bill is committed that they should give special consideration"—

and I emphasise the words "special consideration"—

"to the exemption conferred on the Society by Clause 14 of the Bill".

As the noble Lord, Lord Windlesham, has indicated, he has considerable sympathy with the terms of my proposed Motion and would not oppose such a Motion when it is formally introduced. Therefore, I repeat that the sole purpose of my intervention at this stage is, in accordance with your Lordships' rules of procedure, to satisfy your Lordships that a full consideration of Clause 14 can be postponed, perhaps to the hearing by the Select Committee, and that the matter can then be further considered by your Lordships when this Select Committee report is received in this House.

I feel I must say that Clause 14 is a long and intricate one. It is to be found at page 18 of the Bill, and is entitled as follows:

"Liability of the Society, et cetera".

Clause 14(1) is in these terms:

"This section shall only exempt the Society from liability in damages at the suit of a member of the Lloyd's community".

The subject matter of this clause has caused considerable discussion inside and outside Parliament as to what is the precise scope of the exemption referred to in subsection (1). It is clearly a contentious matter. Your Lordships should know that there are several petitions lodged for and against the Bill, and objections raised by the petitioners will be presented and argued by several eminent Queen's Counsel, and particularly in relation to the scope of Clause 14.

Unhappily, a phrase which is not in the Bill has been much used in connection with this clause. It is a phrase along the following terms:

"The granting of immunity from legal proceedings".

In these days, naturally, to suggest that any institution or person is seeking immunity from the due process of law is clearly to raise basic questions of public policy which must be considered by Parliament.

I repeat that if your Lordships, after acceding to a Second Reading, also accede to the Motion in my name, as suggested by the noble Lord, Lord Windlesham, the Select Committee will give full consideration to the anxieties expressed and which no doubt will be also expressed in your Lordships' House this afternoon.

I do not propose to enter into any general discussion on questions of immunity from the law. I have been concerned at the Patent Bar with questions of immunity which have been asked for and demanded by Government departments, for instance, when they used Government patented inventions which belonged to firms and persons. But the liability in relation to Clause 14 is totally different from any matter that I have had any experience of having to deal with relating to liability. I hope therefore that this brief explanation of the reason why I am participating so early in this debate—to shorten the proceedings, if that is possible, in the public interest—has been of some assistance to your Lordships.

My Lords, may I join in the tribute which was paid by my noble friend to the noble Lord, Lord Windlesham, for the very clear, helpful and fairminded way in which he has introduced this important Bill to your Lordships' House this afternoon. My only task is to speak for a few moments on Clauses 10, 11 and 12 in order that the Instruction which stands in my name might become incorporated in the general debate and we might avoid the appalling consequences of my having to speak a second time at a subsequent stage later in the day.

May I make four preliminary points. First, I, like the noble Lord, Lord Windlesham, have no pecuniary interest of any sort in the matters under discussion this afternoon. I sometimes rather think that I would wish that I had. But I have not. Secondly, this is in no way a matter of party politics; it is pure chance that my noble friend and I happen to sit on this Bench, and it is not in any way a party issue. That goes without saying.

Thirdly, perhaps I may indicate that I happen to have come into this matter only because I am acquainted with some of the members of one of the companies which are concerned in the Bill; and many, many months ago I indicated to them that if I thought it was proper for me to do so, I would be perfectly prepared at an appropriate stage to speak in the course of these proceedings. Finally—and I make it clear, as my noble friend Lord Lloyd of Kilgerran has done—I do not propose to talk on the merits of the three clauses or their demerits, about which my Instruction is concerned. Noble Lords may wish to do so in the course of the Second Reading debate. For reasons which will become clear in a moment, it is not for me, when I come to put forward this Instruction to the committee as to how they should deal with the matter, to attempt to embark upon any discussion of the merits or demerits.

Clauses 10, 11 and 12 are generally known as the compulsory divestment clauses. That is a somewhat ugly phrase which rather suggests that we have gone back to the subject of sex shops which has been occupying your Lordships' House for so many weeks recently. What those three clauses, in a very few words, do—and noble Lords who are familiar with the Bill will of course know this—is to prohibit any Lloyd's broker or group comprising a Lloyd's broker from having an interest in or connection with a Lloyd's managing agency or vice versa.

The side note to the first two clauses (the third is the interpretation clause) somewhat euphemistically refers to the two clauses as containing restrictions. Restrictions they certainly are, because of course their effect—and this is not in dispute—if they become law, would be that a number of individuals and public companies would be compelled to submit to the forced sale of very valuable assets within a fixed time limit. It may be that that is necessary. I do not seek to argue that; I seek only to indicate that the consequences are of very, very great concern to a particular number of people, both individuals and public companies.

In those circumstances, it is not surprising that there are petitions awaiting to go to the Select Committee if and when—as I assume—this Bill receives its Second Reading today. There is one petition by a group of four large public companies, and another petition by some six independent underwriters. Those petitions will in the ordinary way in due course be heard by the Select Committee, with the petitioners arguing, as is their right to argue, that these compulsory divestment clauses are against their interests and property, and that their interests and property will be materially affected by these proposals.

I can leave it, I have no doubt, to the petitioners through their representatives to argue that case in due course as forcefully as they wish. As I have already made clear, that case is no concern of mine. What the petitioners will not be able to argue is anything at all outside the scope of the effect of these three clauses on their own particular interests and properties. It may very well be that the committee—which will be free to do so if it wishes—will wish to go a little outside that issue and will want to consider the effect of these clauses on the Lloyd's community as a whole and on the insuring public. I would have thought that the Select Committee very, very probably, would wish to embark upon that limited inquiry.

The only effect of the Instruction which is tabled in my name today is to ensure that what is in any event very likely will in fact happen—in other words, that the Select Committee will take account not simply of the effect on the interests of the petitioners but, on the slightly wider field, of the effect on the Lloyd's community and the insuring public. That means that so far as the effect on the Lloyd's community is concerned, the Select Committee will want to consider a series of issues of some consequence.

They will, for example, want to consider what will happen to the assets that are disposed of as a result of these clauses when they come into operation: will they pass into the hands of people who will be altogether outside the control of Lloyd's and, if so, what will be the consequences and will they he desirable or otherwise? Secondly, they will want to consider whether overseas business will be affected. The noble Lord, Lord Windlesham, has already given the figures—and very substantial they are—of over £550 million a year being brought in by way of invisible earnings as a result of the activities of insurance brokers. They will want to consider, for example, what will be the significance, if any, of the fact that three exchanges have recently been established in the United States, which has specifically encouraged the interrelationship of interests that this Bill seeks to prohibit so far as interests in this country are concerned. Is that going to lead to a degree of competition which perhaps may not be in the interests of the Lloyd's community? Those are the sorts of matters—and no doubt there are many more—upon which the Select Committee will have the task of embarking.

As to what will be the effect on the insuring public, again the issues are perhaps clear and I do not want to make any comment, one way or the other. Is there evidence of abuse in the present position? If so, is it infrequent and limited to the smaller organisations where management has not been separated? Is it the position that in the larger concerns where there is a separation of management there has not been abuse? Might it not be that what is sought to be achieved by these clauses could be achieved perfectly well by the compulsory separation of management? As I say, there are all sorts of matters which the committee will want to consider.

I would only add that these clauses I have spoken of are not, of course, the crux of the Bill. Indeed, as the noble Lord, Lord Windlesham, made clear, the Bill started out in another place without them and they were added subsequently. It is clear that the committee which considered these clauses in another place took the view that they would have considerable consequences, and they came to the conclusion that on balance the clauses should be accepted. Again, I make no comment about that. I know that Lloyd's are anxious, and perfectly properly so, to see this Bill on the statute book. I know that Lloyd's, being the great organisation that it is, will want to make quite sure that the Bill has gone fully through all the processes of our parliamentary democracy and has been analysed with care in every respect where it is likely to be controversial and where serious consequences might ensue.

I may say that the only object of the Instruction which I propose to move formally at a later stage is to ensure that that will happen and, if I may say so, it is an indication of the extremely responsible attitude taken by Lloyd's and by the noble Lord, Lord Windlesham, that he has been able to indicate at an early stage of this discussion that he does not propose to suggest that the House should be advised to divide against this Instruction.

My Lords, may I make it clear at the very outset, on behalf of the Opposition, that we certainly support the Second Reading of this Bill. I should also like, if I may, to add to the tributes already paid—and no doubt they will continue to be paid with your Lordships' usual courtesy—to the noble Lord, Lord Windlesham, for the very clear manner in which he introduced the Bill's provisions to us. He was modest on behalf of Lloyd's, whom he obviously admires. He referred to Lloyd's as "a major financial institution". I would call it a great national institution and one which has carried British integrity throughout the world and enhanced the name of Britain in many parts of the world.

Reference has already been made to what Lloyd's have been able to do for the economic well-being of this country. It makes very interesting reading. I shall not quote the figures already mentioned by the noble Lord, Lord Windlesham, about the record profits that were made in 1980. Indeed, during that year the figure I have for the net overseas earnings of Lloyd's is £860 million. It compares rather interestingly with another figure for the overseas earnings of the whole of the United Kingdom banking institutions of £314 million. As the noble Lord said, when you consider the employment of 72,000 people, and bear in mind that whereas this great traditional institution had some 675 members in the year 1871 (which we were talking about earlier) and now has some 20,000 members, your Lordships will appreciate that we are dealing with something very fundamental, responsible and sizeable in deeming ourselves worthy of assisting in the creation of an institution for Lloyd's which is worthy of itself, worthy of this century and of modern trading.

I mention the question of responsibility because I feel that this debate should be conducted in a thoroughly responsible manner. I am not suggesting that so far anyone has been unworthy enough to be irresponsible, but I am sure the noble Lord, Lord Wigoder, will forgive me for a moment if I wonder whether it is really a sensible procedure for us to follow in future, to assume that when we have a Second Reading debate on a Private Bill the Second Reading speeches made, where that Bill is opposed, are not going to be read by the Unopposed Bill Committee. I would have assumed that any contribution the noble Lord made would always be regarded with the greatest respect in this House and in any committee of this House. Why, therefore, is it necessary for us—and I am thinking of the future—to put down Instructions instead of making points in speeches? That seems to me a matter which ought to be raised and thought about rather seriously.

I make the point only for this reason—and I will come on to deal very briefly with the three controversial matters to which the noble Lord, Lord Windlesham, fairly and justly referred. I hope it will not be thought that when we nod our heads, or if we do not murmur the words, "Not Content" it means that the committee who will be considering this Bill should feel that your Lordships were not so terribly worried about Clauses 10, 11 and 12 (the divestment clauses), that we were saying to them that we were not very worried about the divestment clauses and the effect they may have on the general Lloyd's community and on the public at large.

I make that point so that it may be clearly seen from my personal point of view—and I am speaking only for myself—that I would not want the committee to have that impression. I hope they will have the impression that this is a matter which the noble Lord, Lord Wigoder, raised with his usual eloquence and which may be raised also by other Members of this House in the course of debate, and that we take it for granted that in any event it is something to which the committee will want to give consideration, and we have expressed no opinion at all that we are so specially concerned with it that we want the committee to give it attention at the request of this House.

Having said that—as I said, I am merely expressing a personal point of view—I want very briefly to refer to the three matters which the noble Lord, Lord Windlesham, mentioned. I do so against the background that I am sure that it would be the wish of the House—and I do not say this disrespectfully—that Lloyd's are allowed to put their house in order after 110 years in a way that they should do. Indeed, I noted the plea that was made in the Financial Times quite recently, in an editorial which put it in the following terms:

"The Lloyd's Bill is of vital importance to London's insurance community. The market needs a modern disciplinary framework and this will he provided by the Bill. This vital legislation is unlikely to be implemented until much later this year and protracted delay can only weaken confidence in the Lloyd's market in the world's insurance community. The Lloyd's Bill has rightly received close examination and wide debate, but the legislation must be enacted as soon as possible".

I agree with that.

There were 65 hours of scrutiny in another place, and examination of the very issue to which the noble Lord, Lord Wigoder, referred, and which is referred to in the Instruction. It took the committee six days, after objection had been raised in regard to Clauses 10, 11 and 12, before they came out with their own findings in this matter. It is against that background of wanting to assist in the speedy passage of this Bill, and realising the responsibility of Parliament to see that its wisdom and experience is at the benefit of those who are promoting this Bill, that I refer briefly to the three points which the noble Lord made.

The first point he made was on the question of the constitution of the council. I think that that is very much a matter for the membership of Lloyd's and a certain view has been taken in regard to it. If it be a fact that the wisdom is that there should be 16 working members and eight external members—again, I have no financial or other interest in this matter—then I do not feel competent to give any opinion at all and, therefore, I shall not weary the House with any comments upon it.

On the second matter, which is Clauses 10, 11 and 12, the divestment clauses, I repeat what the noble Lord said. Fisher, in his report, said that there was a conflict of interest unless divestment took place. That was the view of a committee chaired by a very much esteemed former High Court judge. The committee in another place, after examination, also took the view that there was a conflict of interest. If I remember correctly, the official evidence on behalf of Lloyd's was that there was a conflict of interest.

The only difference arose as to whether one followed the working party's recommendations, by incorporating this in some by-law procedure in order to get the divestment, or by leaving it internally to Lloyd's, or whether it should be written into the statute. Parliament, in its wisdom, has so far decided that this is so necessary for the protection of many interests—including, I imagine, those to which the noble Lord, Lord Wigoder, referred—that this would be in the statute itself, so that there is no doubt at all that Parliament has considered the matter and enacted it, and a conflict of interest should not ensue.

Therefore, I come finally to the point that concerns every one of us and which the noble Lord, Lord Lloyd of Kilgerran, in his usual way, put extremely fairly. One must admit that, on one side, it seems to be a very innovatory, and, possibly, a wrongly innovatory, provision to have written into a statute an immunity from suit for anyone or any institution. I am treading on very dangerous ground, speaking from the place where I do; and I can see noble Lords realising what I am saying. But it is very innovatory to write into a statute a complete civil immunity in regard to all torts, be it libel, slander or whatever.

I at once appreciate that it is for the protection of the members of Lloyd's itself, and that policyholders are free from this immunity clause and have their rights in the civil courts. I appreciate that the remedy of a judicial review is still available, in spite of this immunity clause, if the rules of natural justice have not been observed. It may very well be, too, that in certain circumstances injunctions could still be obtained. Nevertheless, what is spelled out here is an immunity from civil action, with the exception of clerical and administrative matters which were added at a later stage of the Bill, for those who are directing Lloyd's, the members of the council and the employees of Lloyd's. So one has to go very carefully—which I am sure the committee of this House will do—into whether or not this clause is too widely worded.

There has been a suggestion that the immunity granted under the Companies Act might be a more suitable one for those in Lloyd's, such as directors and other employees who have been shown to have acted in good faith. I think that that begs the issue, only because the court will have to be seized of all the facts before it can possibly decide whether the directors, the members of the council and the employees of Lloyd's are entitled to that protection. Therefore, the ensuing litigation would not answer the case of Lloyd's, who are saying that they are in special circumstances.

But, in all fairness, I must admit on the other side that this is an exceptional case. It is not like the other institutions, such as the Law Society, to which I have the privilege of belonging, the General Medical Council and so on, which deal with disciplinary matters. Those bodies deal with professional matters. They do not hold up trading. Nobody will be very much prejudiced if a disciplinary hearing is wrongly conducted by the Law Society, as a result of which some solicitor goes to court and tries to get the matter set aside, quite apart from the appellate procedure which already exists in that connection.

This is a question of trading. This is a question of trading throughout the world. This is a question of having to make immediate decisions in critical circumstances. This is a question of not wanting to give too much advantage to the competitors of Lloyd's throughout the world, who would be only too anxious to take advantage of publicity about litigation which was taking place. Indeed, I believe that in certain recent litigation, in the rather unfortunate Sasse case, there were American banks which, for a time, were refusing to accept Lloyd's contracts as security, because they wanted to know the limits of this extraordinary litigation.

So I accept that it could do Lloyd's a tremendous amount of harm if they happened to be joined together with others engaged in litigation, purely because Lloyd's—and I am using blunt language—might give in to blackmail, and might give in to the fact that so much might be lost if the litigation, which could be protracted, eventually came before the courts, and if one did not know when "eventually" was. So Lloyd's have to capitulate, or the council has to capitulate, and say, "We had better settle this litigation".

It is a question of balance. It is a very difficult question indeed—I am sure the noble Lord, Lord Lloyd of Killgerran, would agree with me—as to how one decides this matter. It is with the confidence that I personally would have in a committee of your Lordships' House and that the speeches which will be made this afternoon, and my own small contribution, will be considered, that I am sure the judgment they will finally give regarding Clause 14 will be of use to us and to Lloyd's, to whom this afternoon my noble friends and I wish to give every support in putting their house in order by the Bill.

My Lords, if noble Lords will listen to me for just a minute, may I ask the noble Lord, Lord Mishcon, what he means by "a basic balance"?

My Lords, as I see it, the balance is between, on the one side, the desire in principle to give civil remedies to those who feel that they ought to have them and to give them a hearing before our courts. The balance on the other side is not interfering, most unfairly, to their prejudice with a very great national institution which trades throughout the world for our advantage.

My Lords—

Order!

My Lords, I ask for your Lordships' indulgence in taking up a few minutes of your time with perhaps more nervousness than many other maiden speakers. Neither my father nor my grandfather before him had the opportunity to speak in this place. This is the first time therefore that anyone from my family has attempted to contribute to a debate here.

In attempting to make a contribution to your Lordships' understanding of the workings of Lloyd's I must first of all say that I am not an underwriting member of Lloyd's but do work for an underwriting agency at Lloyd's. Having said that, I should add that the views which I am about to express are entirely my own and have not been put upon me in any way.

Lloyd's has existed for over 300 years. It has grown from a small group of merchants in a coffee house into a community of over 20,000 members. I am now going to give a third set of figures to add to those about which we have already heard. The premium income of this community at the last count was in excess of £2,000 million, with earnings for the United Kingdom at the last count in excess of £600 million.

Your Lordships might assume that these figures would be from 1980 or 1981. They relate in fact to 1978 for, as I am sure most of your Lordships know, one of the ancient customs of Lloyd's is that a year lasts for 36 months in order that underwriters may assess the amount of the outstanding claims as accurately as possible before declaring their syndicates' results. The accurate assessment of these outstanding claims is of prime importance to underwriting members of Lloyd's for, as we have already heard, they have unlimited liability in respect of their underwriting activities.

This unlimited liability is, to my knowledge, unique in its role in business affairs. The noble Lord, Lord Windlesham, has already explained that it is several. Perhaps I could put in it my own words by saying that, unlike a partnership where unlimited liability is joint and several, which binds each partner for the excess losses of the others, in Lloyd's it is several only. No member is responsible for losses incurred by another member's underwriting activities.

I believe that this type of structure may he a major reason for the length of time that this Bill has taken to reach this place. Over 20,000 individuals have been attempting to accept the first new self-regulation for over 110 years. None of them is liable for the losses of the others, each has unlimited liability, and it does not surprise me therefore that a great number of differing opinions should have been expressed.

After much debate in another place we have heard that a number of points have come to the fore. The three main ones would seem to be Clause 3, which deals with the composition of the new council; Clause 14, which concerns restraint upon suit; and Clauses 10, 11 and 12, which concern the potential conflicts of interest over the ownership of managing agents.

My personal view is that if the community of Lloyd's is to continue to act in its members' best interests, and therefore in the country's best interests, the first two of these clauses should be enacted in their present form as quickly as possible. They are measures designed to enable the new council to recognise the differing emphasis of interests of underwriting members by admission of non-vocational members to the council, and also to allow that council to act speedily in disciplinary action without fear that the principle of unlimited liability, which is several only, will be overturned.

I now turn to the third point, which is, to my mind, perhaps most central to the effectiveness of this legislation. Clauses 10, 11 and 12 deal with the potential conflict of interest in the ownership of a certain type of Lloyd's agent. There is no doubt that this point will be debated in your Lordships' House with far greater expertise than I am able to give, and I ask again for your Lordships' indulgence in explaining the role of the two different types of Lloyd's underwriting agents.

The first, dealt with in Clauses 10, 11 and 12, is the managing agent whose principal task is to allow the underwriter as much time as possible to underwrite insurance, rather than spend valuable time in administering the myriad of other items which this increasingly complex world requires. Clauses 10, 11 and 12 do not mention the second type of agent. This is the member's agent who introduces potential underwriting members in order to provide a wider capital base from which Lloyd's may increase its business.

My personal view of these clauses is that if they are enacted in their present form they will not go far enough. It appears to me that if a broker, by owning a managing agent, creates a potential conflict of interest, that same conflict is also there if he owns a member's agent. Both agents represent and act for the underwriter and underwriting members who are commercially opposed to the broker. However, I must say that in my work for both types of underwriting agent I have yet to experience a situation in which a major conflict of interest between the agent and the broker who owns him could not be satisfactorily resolved. And this without the help of legislation. I therefore wonder whether these clauses are necessary at all, especially as they deal only with one of the two types of underwriting agent.

I bow to those with far greater experience than I for the necessity of these clauses, but would ask that, whatever refinements may be felt necessary to the Bill, they should be made by the new council at a later time. Indeed, as we have heard, a working party has already been set up by the present Committee of Lloyd's to review all the aspects of the underwriting agency system which I have mentioned.

If this Bill should go to a vote, I would not feel able to vote because of my personal involvement with Lloyd's. However, I hope that my support for the Bill in its present form is quite clear. If it is enacted in its present form, the community of Lloyd's may concentrate once again on its business of providing a valuable and profitable service to its members and the country, by serving its policyholders with utmost good faith.

My Lords, as the House will recognise, I am singularly privileged to follow the noble Lord, Lord Strathalmond, after his highly informed maiden speech. So modest is the noble Lord's self-description in works of reference that I have been hard put to it even to discover that he is a chartered accountant under the Scottish rules, which the Scots will tell me are far stricter than those of their Sassenach colleagues. I had also discovered, before he told us so, that neither his father nor his grandfather had been able to speak in this House. Therefore he is the first in three generations who has addressed us. Up to that point I had attempted to interpret his title, which I had picturesquely taken to signify "the valley of the almond trees", but I found it difficult to imagine such a scene in Scotland where the "straths" are. I was also mindful of the Arabic expression which I picked up while serving in the Middle East: "Bukra fil mish mish". This means, "Tomorrow, when the almond blossoms", which is the same as saying in Spanish "Mañana, mañana", or "Tomorrow never comes." We must be grateful that today the almond tree has blossomed among us; we all hope that it will blossom continuously and that we shall receive many more informed contributions on a variety of subjects from the noble Lord who has just spoken.

A matter of years ago, it would have been necessary for me to declare an interest in the points I am about to raise for your Lordships' consideration within the scope of this Bill. This has not been so since I withdrew as a "Name" at Lloyd's in a mood of some disenchantment that has no bearing whatever today.

Among the six petitions which have been deposited for presentation to the Select Committee, there are two concerned with "Classification", which is the issue I am raising this afternoon. It is my view that this issue would have made a fair subject for an Instruction to the Select Committee and I have therefore received and pensively considered requests to present it as such. I have been persuaded—fully persuaded—that such a course would be out of line with the normal and proper practice of your Lordships' House in a case where two Instructions are already due to be moved or have been moved in a Private Bill. I am therefore restricting myself to putting the argument in a normal Second Reading speech, although keeping to a single issue in the cause of brevity. I hope that this abstinence from more direct action will in turn persuade the Select Committee to give due, serious and even particular attention to these individual petitioners when they come to present their case. I hope also that other noble Lords, when speaking later in the debate, may feel drawn to take up the same matter.

As I hope will be seen, I have no personal interest to declare but I do see a semi-public interest in seeking the fair treatment of those members who are now in danger of being classified as "external members"—a term which creates, in effect, a new under-privileged class within Lloyd's; making the non-working members subject, with minimal redress, to the decisions of the governing council and committee of the society. These non-working members represent 80 per cent. of the membership of Lloyd's, and without them Lloyd's could not operate, I dare to affirm, as the powerful institution and service it has been for so long a time. This premise has always existed. It will continue to exist, but the voice and influence of the non-working members would be diminished under Clause 3 as it stands. In this clause they would lose a large element of the defence and right of scrutiny, the right of advice or amendment over rules and appointments, which up to now is a right which has been preserved and available.

There is no argument that I have heard against the need for a new Bill to replace the Act of 1871. It will be cogently argued in the two petitions which I have studied that some of the methods of updating, chosen by the promoters, are not progressive but retrograde and inequitable. Clause 3 provides that the new governing council shall consist of 16 working members, 8 external members and 3 nominated members (that is, from outside the organisation altogether). This signifies in material terms that 80 per cent. of the members would be left with their influence depleted in a way which has never been visualised before. Clause 3 does not propose any representation whatever for nonworking members on the committee.

The origin and inspiration of these proposals is contained in two passages of the Fisher Report, in paragraphs 4.10 and 4.15 of Chapter IV. For precision I will quote the significant sentences:

"We see nothing controversial in our proposal that membership of the Committee of Lloyd's should consist solely of working members of Lloyd's: the members elected to the committee for as far back as anyone remembers have always been working members, and there are good practical reasons why this should be so".

Those words appear in paragraph 4.10, but the "good and practical reasons" are not there described.

In paragraph 4.15 the working party said:

"We consider that the value to non-working Names of the right to vote in committee elections is more apparent than real, and that their interests will be adequately protected by the presence of non-working members and outside nominees on the council".

Conversely, in one of the two petitions for presentation to the Select Committee, there stands the passage:

"Your petitioner most strongly objects to the proposal to classify the members of the society and alleges that any such classification is unnecessary and, furthermore, would be contrary to the interests of those members who are not working members of the society and, consequently, not in the interests of the society as a whole".

The Select Committee will be able, therefore, to establish that the proposal, whatever its merits, cannot be seen as being non-controversial at this stage and will need supporting arguments to obtain the blessing of the Select Committee.

The pattern put forward would, it is true, gives eight places on the council to non-working members but none on the committee. It is not yet clear to me whence the outside nominees would come but the argument adduced in the Fisher Report for their inclusion is convincing and widely accepted. The assumption that their presence would "give assurance to the nonworking Names" must depend to some degree on the personalities and the method of nomination.

It would be unsuitable and undesirable to spell out in the Second Reading debate the merits of any one or two petitions. They will be studied in depth and detail by the Select Committee itself. The provision would set up an unevenly composed council and an unrepresentative committee with almost unchallengeable rights of decision in the making of by-laws, the making of regulations, and in the appointment of the chairman and deputy chairman of the committee and other members of the committee—overriding or ignoring the views of 80 per cent. of the membership. The membership as a whole has a recourse, post facto, in the case of a by-law, to revoke that by-law by organising (as described in Clause 6 of the Bill) at least one-third of the whole membership of the society to obtain a majority within that one-third.

One of the valid justifications for the Bill is that in 1871 there were something like 700 members but that now there are more than 20,000 members, many of whom live abroad. I suggest that over so large and varied a field, the calling and collection of such a vote would entail costly and complicated logistics beyond the organising capacity of private objectors. The recourse visualised seems to me a weak and impractical provision which can hardly satisfy the legitimate needs of non-working members.

There is no general attack on this Bill—nor should there be—yet it has certain aspects which alarm some of those closely concerned. As has been said, it is based on the careful inquiry and recommendations of the Fisher Committee. By normal and respectable practice, the evidence given to the working party has not been made available to anyone outside, including the promoters, and it will not be made available to the committee. It is clearly a wish on the part of at least some of the 16,000 non-working members (and, in logic, probably on the part of most of them) to express reservations as to some of the fruits of the Fisher Report, while respecting all members of the working party.

I sincerely hope that the Select Committee will consider it proper, and even essential, to require the presence in person at some point of Sir Henry Fisher, since neither the promoters nor the petitioners have the right to require his attendance. It seems to me certain that a strong measure of confidence at present withheld (possibly due to an unclear picture of the reasoning behind parts of the Bill) would in this way be established, and is crucially desirable.

My Lords, first, may I apologise to the noble Lord, Lord Saint Oswald, and to the House for attempting to precede him by rising in my place? I was quite out of order. I did so, I think, because of my enthusiastic desire to congratulate the noble Lord, Lord Strathalmond, on his notable maiden speech. His father was a friend and colleague of mine for some years and I am delighted that his son has acquitted himself so well in your Lordships' House. Now that he has broken the family duck, I hope he will come to the wicket many times in the future.

I should also like to congratulate the noble Lord, Lord Windlesham, on a notably balanced and lucid exposition of the facts surrounding this Private Bill, which I am sure will help the House in the debate to follow. I must again apologise for not being able to remain in the House until the end of the debate, to my great regret, owing to prior commitments; I hope I may be forgiven.

My Lords, I am not a member of Lloyd's. If I have any interest to declare it is a continuing concern that the great financial institutions of the City shall be enabled to continue their work as efficiently and as much to the benefit of the community as I believe they have done in the past. The noble Lord, Lord Mishcon, has said that Lloyd's is a great national institution, and there can be no doubt that this is the case. I first made contact with them as a junior employee of the Bank of England over 40 years ago, when it fell to me, among others, to hold their hands through the vagaries of exchange control, a sufficiently complex subject made doubly so when applied to a great international business. The efficiency and integrity, the co-operation and the loyalty to the authorities of the people I then dealt with was a great lesson to me. In subsequent years, of course, I made closer contact with the Committee of Lloyd's and with successive chairmen, many of them, and those first impressions were never in any way impaired. This is a great institution which must be enabled, in the very difficult and different circumstances which prevail today in the turbulent world in which we live, to do the job which it has been doing so successfully over hundreds of years. I believe this Bill gives it the basis for this further lease of useful and indeed distinguished life.

So, my Lords, I come to you as a supporter of the Bill. It is a Bill which results from the work of the Fisher Committee. I think Lloyd's were extremely enlightened to decide that the whole of their affairs must be reviewed in this way and very wise to choose such a man as Sir Henry Fisher. As a result, we got a report which I think noble Lords who have read it will agree is unmistakably a great document—trenchant, lucid, indeed beautiful to read. It is not surprising that the Society of Lloyd's decided that it formed a good basis for the reforms which they now wish to make. The Bill which has resulted from these deliberations so far has had a long passage through the other place, where it has been most carefully examined and amended. I believe it now comes to your Lordships in a form which by and large we can accept, though I know that, as has been said, there are still matters in it which are the subject of controversy.

As to the two Instructions which are now before us, on the question of divestment, I have come to the opinion that on the whole it is something which should take place. It is perfectly true that in the City of London the ability to run under one umbrella two activities which should be kept separate has been successfully shown for many years. For example, in the banking system merchant banks can be general bankers and investment bankers, and keep, as they should, those two activities entirely separate one from the other. Unlike the USA, where the Glass Steagall Act many years ago decided that those two activities should by law be physically separated, we can do it here without that, I think quite satisfactorily. Nevertheless, I think Lloyd's is a different case and I believe that divestment would be for its benefit.

Then there is this very important question about immunity. The noble Lord, Lord Mishcon, has talked very learnedly about this, and I realise that many splendid lawyers could make an almost unanswerable case for not including such a provision in the Act: equally, of course, many other splendid lawyers could do the reverse; that is what lawyers do frightfully well. If I may presume to call it a common-sense practical point of view, I believe it is right that this immunity should be granted. It is a limited immunity, not a general immunity. The people who have been appointed by this great society to act for them and to see that their activities are properly controlled and regulated are given very responsible jobs.

They represent the members, and, as against the members, I think it is right that they should be safe from prosecution in respect of acts which they in good faith perform on behalf of the whole society. The noble Lord, Lord Mishcon, says the definition of "good faith" is very difficult, but I hope that that difficulty can be overcome, because I do think that this immunity is very important in securing the proper people to take on these extremely onerous jobs and in making sure that when they have taken them on they perform the tasks with courage and forthrightness, so as to give Lloyd's the kind of leadership it will need in the future.

I realise that these things are going to a Select Committee and will be further debated, but I should like to say at this point that, in my view, immunity should be granted and divestment should take place. I hope in general that the House will feel able to pass the Bill in very much the form in which it has come to us.

My Lords, before the noble Lord sits down, I wonder whether he will allow me to take advantage of the quotation that he very properly made of something I said and to correct myself. I did use the words "in good faith". I should have quoted the words of the section of the Companies Act and said, "reasonably and honestly"; those are the words that do create difficulty, only because you have to hear the case before you can decide whether people have acted reasonably and honestly. I know the noble Lord will forgive me for taking advantage of this to put myself right.

My Lords, it is heartening indeed to hear such an authoritative figure as the noble Lord, Lord O'Brien, adding his voice to all those who have spoken this afternoon in recognising the importance of the institution we are discussing and the competence with which it has been run throughout its long history. May I, as an underwriting name and indeed I think probably the first underwriting name to address your Lordships this afternoon, first thank the noble Lord, Lord Windlesham, on behalf of the underwriting names, for taking on the onerous task and discharging it in such a distinguished manner that he makes a rather complicated issue sound relatively simple. He reminds one of the famous solicitor who said he was sorry he had not had time to write a short letter. The noble Lord succeeded very well in summarising all the issues.

I find it interesting, in view of the debates we had last week, that this institution, or the laws governing this institution, are almost as old as the constitution of Canada, which turned out to be in need of a little modernisation. I find that the last time the law was changed was the year 1911, which your Lordships may recall was not a wholly auspicious year as far as the laws concerning this particular House are concerned. As has been properly said, it is scarcely surprising that an institution of that age, which has expanded in the way that it has, should need a little overhauling.

It is perhaps a fair criticism, one that I believe the committee themselves would accept, that possibly they were a little slow off the mark in deciding to seek modernisation of their legal constitution. It was my noble friend Lord Trenchard who last night quoted his father, who very often used to say, "Why change?". One can understand this, because it is a successful institution; but they have recognised, to their credit, the need to move from the atmosphere of a cosy gentlemen's club in order to adapt to the harsh world of contemporary commercial pressures, and all credit to them for appointing Fisher who produced the noble report upon which this legislation is based.

This Bill, as has already been said, has been discussed at great length and with great authority in another place. I am bound to say that I go along with those noble Lords who feel that probably the Instructions were really unnecessary for the committee in view of the fact that these issues were bound to be raised during the course of this debate and that there was no way in which a committee of this House was not going to tackle those problems. Nevertheless, at least it can be said that they do not do any harm.

It seems to me that to resist divestment in the light of the admitted possible conflicts, flies in the face of the explicit condemnation of insider trading which has permeated a number of recent comments and changes in the law in this country. I think that one must accept that the penalties of forgoing the possible benefits of informal ties are more than outweighed by the need to be seen not to show special favours. What I find curious about some of the criticisms of the Bill is that the criticism of that particular area—Clauses 10, 11 and 12—is precisely opposite to the criticism which has been levelled against Clause 14, which has suggested that there is a danger that the council (as it is now going to be called) might act unconstitutionally and beyond reasonably accepted powers. Indeed, I confess that when I first heard of the immunity I reacted with a certain degree of outrage and I wondered whether we were once again seeing some kind of self-perpetuating oligarchy seeking to protect itself against any kind of criticism or claims for damage. I certainly would believe that the proof of the need for immunity of this kind must lie with the Council of Lloyds. But I would like to suggest that they have given ample proof of the need for this admittedly very special provision.

It has been said several times already that Lloyd's is a very special institution. Indeed, I believe that this is one of the rare occasions on which the word "unique" is the proper word. It is a typically British institution which has been allowed to evolve over 300 years and I doubt very much whether it could be recreated from scratch even in this country. I believe that there have been attempts in other countries to create insititutions of a similar kind and they have not been successful. We must accept that Lloyd's competitors are not going to forgo any opportunity that they have to attack a competitor and, of course, the more effective the competitor, the more likely it is that those who are competing will seek to attack it.

I believe that the institution is a difficult one to understand and we need to give it every opportunity to protect its unique—again I use the word—reputation throughout the world. I am not a lawyer and there will be other lawyers who will point out that the so-called restraint on suit is, indeed, a very limited one. It is limited to members of the organisation; it does not affect the public. It is limited to damages, suits for damages brought by members of the organisation against their council. My understanding is that they will still be able to go for a quick judicial review and to seek a quick injunction if they feel that they are being wronged. Speed is of some importance in an institution of this kind.

The positive reason for immunity is not hard so see. It is essential to protect not only the good name of the institution itself but also the interests of the underwriting names. This activity is encapsulated in the expression, "regulate the market". It has already been said that Lloyd's has to satisfy over 100 institutions throughout the world of the correctness, the honesty, the accuracy, the validity and the financial soundness of affairs.

Comparisons with the Stock Exchange are not valid. The Stock Exchange is essentially an institution for home consumption; Lloyd's is essentially an international affair. I think that it was the noble Lord, Lord Mishcon, who mentioned the Law Society, and we have also sought analogy with the General Medical Council. As far as internal discipline is concerned, I dare say that that is a slightly closer analogy than the Stock Exchange. The noble Lord, Lord Mishcon, referred to the professional standing of those who belong to the institution as being of very great importance. But the medical council and the Law Society are not running a market and they are certainly not—and I am sure that they would be very concerned if somebody suggested that they were—dealing in the business of risk. That is what Lloyd's exists to do.

I think that we can usefully have a look at the example of the Sasse affair which had something to do with the promotion of this legislation. Here I find myself somewhat surprised by some of those who suffered as a result of the Sasse affair. Should we not ask ourselves: Would the names who have suffered have been more or less likely to be protected if this legislation had been in existence at that time? I find no difficulty in concluding that they would have had a vastly better chance of being protected by the council—as we are going to call it—than was the case under the committee. One cannot guarantee that everybody would have been protected, but I am sure that they would have had a very much better chance. The committee would have attempted to stop a member of this institution from embarking upon a suicidal course of self-destruction. My understanding is that the Committee of Lloyd's were mortified to discover that they really had no powers to act in that case, when things started to go wrong as far back as 1976. It was a case of the club rules. If a gentleman chooses to flout the club rules it is extremely difficult to bring any pressures on him. In some clubs it is not even possible to force him to resign. I said earlier that we were now moving out of the era where we could regard this as a comfortable club. It may be sad, but I believe that that is the reality.

However, there is another aspect of the Sasse affair which produced rather surprising and, to me, regrettable results, again relevant to what we are discussing. It has already been said—not least in the notable maiden speech by the noble Lord, Lord Strathalmond—that it is fundamental to the concept of Lloyd's that the underwriting name writes business on his own account or gets his agent to do it for him, and neither the risks nor the rewards are spread among fellow underwriters.

If I may digress further from the specific issue, I believe that in considering this legislation we must be careful not to try to over-regulate. The great merit of the Lloyd's system is that underwriters can act for themselves in an infinite variety of ways. This is their great strength. Some want to go for high rewards and high risks; some may choose a slightly more conservative policy of lower risks with relatively lower rewards. That is their privilege: and this is one of the great strengths of Lloyd's. So, clearly, what is needed is the maximum flexibility for the individual underwriters within an enforceable set of clearly understood rules, which, of course, are necessary for the international operation of the Lloyd's market.

In that context perhaps I may return to the Sasse affair. What eventually happened was that the names whose resources had been put at risk by irresponsible underwriting were able—by a brilliant combination of legal manoeuvring and a measure of realistic high-pressure horse trading, which havery properly been called blackmail by litigation—to spread some of their losses across the other names in the community of Lloyd's. The question of the certificates of solvency has already been discussed. If one part of the institution cannot produce that certificate, then the certificate cannot be produced for the institution as a whole. The possibilities for pressure of this kind are obvious. I suggest that this kind of spreading of the risk is totally contrary to the spirit of Lloyd's. I can assure the House that at least one underwriting member resents being saddled with the misjudgments and misfortunes of his fellow members.

I think it is just worth mentioning that there is, of course, in existence a fund which protects the public against the bankruptcy of any individual name, and I understand that, in fact, that fund was called into operation in respect of three or four individual names who were concerned in the Sasse affair.

My Lords, will the noble Lord give way? I am glad that the noble Lord has mentioned that fact. Am I right in saying that, despite whatever may have happened inside Lloyd's in its history no one who has been insured has ever suffered as a result of some error inside the concern?

My Lords, I am but a humble underwriting name. I hope no one will contradict me when I say that what the noble Lord says is true, and it is precisely that of which we are very proud. I am sure that that is the case.

I have been trying to say that recent events have demonstrated that the great institution of Lloyd's needs a revision in its constitution; that the proposals have been very carefully considered, and that they are all needed. I believe that the Bill in its present form, as it comes before this House, is the best that we are likely to get. I hope that your Lordships' House will give it a Second Reading with enthusiasm.

My Lords, I also am an underwriting member of Lloyd's and I used to work very happily for a Lloyd's insurance broker. I should like to congratulate the noble Lord, Lord Strathalmond, who, judging by what my noble friend Lord Saint Oswald said, will now be known as "Blossom" to the rest of your Lordships' House. Perhaps we ought also to introduce the Motion that "Peers may only speak once every three generations"! It might speed up the proceedings of your Lordships' House.

On the Sasse position, I should just like to correct my noble friend Lord Strathcona on one instance. The Committee of Lloyd's will intend to claim under its errors and omissions policy for the fact that it had to pay out on the Sasse syndicate. So that stops the risk being spread to other underwriters, because those other underwriters have had the premium for the risk which they underwrote when they underwrote the errors and omissions policy of Lloyd's.

I welcome this Bill. As has been said frequently, the noble Lord, Lord Windlesham, has moved it with skill and made a very complicated situation extremely clear. I welcome the fact that the Lloyd's Committee is to be given great powers of discipline and control. I welcome them especially as an interested underwriting member. Your Lordships will hear from my noble friend Lord Fortescue and from the noble Lord, Lord Napier and Ettrick, how the Lloyd's Committee paid up because of their possible negligence over the Sasse affair. You will hear, because of their experience, how it may not be so appropriate that the indemnity clauses are included in the Bill; and that is why it is so important that the noble Lord, Lord Lloyd of Kilgerran, should move his Instruction. It allows the public interest factor of the indemnity clause to be considered by the committee.

It has already been said that Lloyd's is a powerful, unique and go-ahead concern. It earns enormous sums of foreign exchange; it is a real leader in the insurance industry. It pioneered the insurance of oil rigs and actresses' legs. It has earned some of its names large sums of money. I would also add, of course, that some of them have lost large sums of money; happily, very many fewer than those who have gained. It has grown up from a few hundred people to several thousand now, and it needs this Bill.

The two most important clauses of this Bill are Clauses 7 and 14. Clause 7 makes the council establish a disciplinary committee and an appeal tribunal. It endows them both with enormous powers. They will have the right to subpoena documents and witnesses. Subsection (4) sets all this out and details these powers. They are the same powers as are given to the High Court. Clause 14, as is already known, gives the committee immunities from suit for negligence or tort when carrying out the powers given it by Clause 7. Clause 14 (3) reads:

"Subject to subsection (1) above, the Society shall not be liable for damages whether for negligence or other tort, breach of duty or otherwise…".

Those are very wide words indeed. One of the excuses that has been advanced for the fact that it needs this immunity—and I have seen it in the documents set out on the opinion by Lloyd's counsel—and that it takes up too much of the time of its servants and that it will deter people from sitting on the committees and council is not a very good excuse; it has not up to now. The noble Lord, Lord O'Brien of Lothbury, has said that he has met men of great distinction and great integrity. The Committee of Lloyd's are men of great distinction and they are of great integrity, and they would have continued without the immunities that they are now claiming. It is said that the legal disputes will damage the community. Surely insidious gossip of negligence, unsettled by the courts of law, will do far more damage than the fact that it is proved either to be the case in the very minor incidents—the few numbers—which could arise, or the fact that it was disproved beyond peradventure.

Mr. Christopher Moran tried to get an interlocutory decree to stop the Lloyd's present committee from activating its disciplinary procedures. He failed. Lord Denning said that the alleged bias was "mere tittle-tattle, and nowhere near enough to show bias". Proper use of the regulatory powers will have considerable effect on some people's pockets. If this is the case, surely it is wrong that Clause 14 can allow the Lloyd's Committee to remove a Lloyd's name's entire fortune through negligence with impunity.

Of course, I am not saying that this is going to happen. I am merely suggesting that it is just possible that it might. That is totally unsatisfactory. The danger, my Lords, surely is that the committee members will not be spurred on with immunity. This immunity gives them the right to do perhaps not as much as they ought to do. To say, as they do, that lack of this immunity will stop them disciplining a member is surely baseless. The only grounds on which they could do that would be bad faith. Bad faith is specially excluded from Clause 14 anyway.

The present chairman of Lloyd's is an extremely tough and dedicated servant of Lloyd's. He has not hesitated to act with the powers he now has. I do not insult him by thinking that he would fail to act in the same way as The Stock Exchange Council did recently over Halliday and Simpson. They were suspended following an investigation into their affairs. The Stock Exchange Council has no Act to govern it, just an agreement drawn up in the mid-19th century. It has no immunity, but no writs followed. Furthermore, it pursues at the moment a fairly active interventionist policy. I am conviced that Peter Green would act in the same way, and with the same sense of duty, if he did not have his immunity powers that he seeks.

My Lords, Mr. Robert Cryer voted for immunity. I wonder why? Could it be that when discussing the trades union immunities which Her Majesty's Government are at present keen on trying to limit, he will be able to say, "It's all right for your friends in the city in the Committee of Lloyd's, but it is not all right for the working man"? It may be said that this is a difference of substance. It may be a difference of substance, but it will not stop people making that accusation. No one else will have these immunities laid out in Clause 14: not the Crown; not the Law Society nor the Bar Council; nor the Stock Exchange Council, which now trades worldwide since the abolition of exchange controls; nor the estate agents' governing body, all of whom have the right to deprive members of their livelihood.

My Lords, Peter Green is, as I have said earlier, a courageous and good chairman of Lloyd's, but he does not deserve—and even if he did, he should not have—these immunities. He stated at the Wharncliffe meeting at the Albert Hall:

"The working party concluded that the existing protection [from suit] would he wholly inadequate were Lloyd's to take on the responsibility of regulating the market in the manner proposed in the report".

Mr. Mann, QC, and Mr. Stephen Ruttle, in their report to the petitioners, say:

"We are unable to find any such conclusion in the Fisher Report".

My noble friend Lord Nugent of Guildford will chair the committee upstairs with skill and discretion, and I happily leave to him and his co-Peers the decision; but I hope they will bear in mind that immunities are wider than Lloyd's, and as my noble friend Lord Windlesham said, they are something of great concern to us all. The noble Lord, Lord Mishcon, was right over his question of balance. I hope that the balance will come down to modifying and restricting these immunities just a little, but I am still sure that the Bill needs an urgent and speedy passage through your Lordships' House.

My Lords, may I begin by congratulating the noble Lord, Lord Strathalmond, on his able and remarkable speech? May I also take the opportunity of saying to my noble friend Lord Windlesham that, listening to his cogent exposition, I began to get a far clearer idea of what the Bill was about than I have had in my mind for the last two years? Three in a row: I also declare my interest, as being what used to be called a "name" at Lloyd's but what is now, I am afraid, going to be referred to by the rather ugly phrase "external member", which rather puts one outside the pale in a horrible way.

I also want to say to my noble friend Lord Onslow, with whose views in his speech I mostly disagreed, that I have been a member of Lloyd's since before he was born. A little research in Who's Who has enabled me to say that. When I joined Lloyd's in 1936, there were only 1,674 members, and there are now 20,000. It is this increase which has enabled Lloyd's to cope with the volume of new business and make this outstanding contribution to our not very stable economy in the last two or three decades.

There is a difference, too, in this: when I joined Lloyd's, I had dinned into me not only by my agent but by everybody I knew in Lloyd's the immense risk that I ran in becoming a name; that I placed at risk my entire fortune even down, as the phrase then went, to my cufflinks. Your Lordships may note with pleasure that I still have my cufflinks.

I find, however, that there is nowadays a slight change in some of the expressions I hear from newer members of Lloyd's. They read of vast profits, they read how wonderful it is and what a large income you derive from Lloyd's, but they forget the risk that hangs over you the whole time you are there as a name. It is most important that that should always be borne in mind. You also have to remember in discussing this Bill that no one has to be a member of Lloyd's.

The need for the new Act is obvious. I hope that the whole House will be agreed that self-regulation is the only possible answer for Lloyd's, and surely the only acceptable one either to Lloyd's or to Parliament. The alternative of state regulation would be possible, but pretty unsatisfactory. I am reminded that in 1975 your Lordships were considering the Policyholders Protection Bill which, by a slight subterfuge, in my view, sought to bring Lloyd's within the ambit of the Bill by statutory instrument. I disapproved of this and I moved an amendment at the Report stage to delete the reference to Lloyd's.

At that stage, I had no encouragement from the chairman of Lloyd's at all. In fact, he wished to dissociate himself entirely from my action. But, to my astonishment, the noble Lord, Lord Beswick, who was Minister in charge of the Bill, gave way. I was delighted. The only snag was that I had prepared a long and rather critical tirade against his action in refusing to accept my amendment, so I had to climb down rather quickly. However, I then got my thanks from Lloyd's for what I had done.

Now we have this new Bill, and at long last. The Fisher Report appeared two years ago. The draft Bill was approved by the Wharncliffe meeting in November 1980 with the stupendous majority of over 13,000 to 57. I should think the 57 were responsible for the 57 varieties of petition and objection that have been levied. It was an outstanding majority. It means that the bulk of the members of Lloyd's are wholeheartedly behind the committee.

The Bill received its Second Reading in March, 1981. It has taken a year to reach here. I really trust your Lordships will make swifter progress. Delay is not in Lloyd's interests and, in my view, it is not in the country's interests either. I do, with great respect to the noble Lords who are to move the two Instructions—and I think it is quite right that they should do so—say that I regret that exactly the same issues are going to be raised here as in the House of Commons.

I cannot believe, as one who has read all the documents and proceedings, that there are any new arguments which can be raised. I am not in any way questioning the Motions or the sincerity of the petitioners, but I ask myself, do they wish to defeat the Bill? It might happen. If the Bill is amended and goes back to the House of Commons, the House of Commons will, I am sure, insist again on divestment that was enforced by its own Select Committee. They have accepted immunity, and it is possible that if the Bill is changed again it will be impossible to get it through in this Parliament. If that happened, Lloyd's could not continue much longer under its constitution and it might be necessary to ask, disastrously in my view, for state regulation and a Government Bill.

As for the contents of the Bill, there are some valuable changes and I am wholeheartedly in support of the whole Bill. I have only one quibble or cavil, which is that I do not think there is much value in the external members proposed for the council. I view with some horror the paraphernalia of elections and canvassing and election addresses which would be involved. Personally, I have always looked to my agent, whom I trust implicitly, to represent my views where necessary to the council. But it is proposed in the Bill and we might as well see what happens.

On the other hand, I strongly support the three independent members, and that is a most welcome addition to the Bill. I am sure the Council of Lloyd's would appreciate having on their governing body three people who could bring in from the outside world a totally new and different point of view. To make a modest suggestion for consideration at a later stage, when the Bill becomes law, it might be wise and politic to have one member of very high legal standing, seniority and experience who could watch the operation of Clause 14 if, by then, it is, as I hope, part of the law. That might be worth considering; he at least could keep a check on any misuse of the clause.

The main bone of contention, as we all realise by now, is Clause 14. I shall not comment on divestment. I have read the facts and I think the arguments on balance are very much in favour of divestment, but obviously I understand the objections of those who are opposing it. On immunity, I find the clause wholly acceptable. As a member of Lloyd's, I have no compunction in surrendering my right to sue the council. You do not have to be a member of Lloyd's and, as I have said before, if you do not like the rules of the club it is up to you to resign. That is what I feel about it.

My noble friend Lord Onslow paid a warm tribute to Mr. Peter Green and said he would act courageously without the immunity. Why in that case should he be asking for it? I am sure he needs it as much as anybody else, and some of the scandals that have arisen would not have done so if they had had these very powers. That is the important point to remember. Anyway, having read the debates in another place, some of the arguments contain elements of hyperbole and even hysteria; the argument seems to run that the trade unions have immunity, which is bad, so Lloyd's cannot have it, and they do not need immunity anyway because the Stock Exchange does not need it. That, as others have said, forgets the disparity of the institutions and the totally different scope of immunity which is sought. As to the argument that it could form a precedent for other institutions to claim immunity—the Bar Council, the General Medical Council and so on—the other extreme was taken and it was said that the Average Adjusters' Association might ask for immunity. My comment is that if the Average Adjusters' Association felt they needed legal immunity, they would, no doubt, promote a Bill in due course, and I do not imagine your Lordships would give it much support.

I hope the fears about immunity will die down from now on. When the point first arose I looked up "immunity" in the dictionary and discovered to my astonishment that one of the definitions was "privilege", so I looked up "privilege" and discovered that one of the definitions was "immunity"—two sides of the same coin. I could not help thinking: who are we to criticise other people seeking immunities when one considers the immunities which we in your Lordships' House have? It forced me to study the Companion tothe Standing Orders, and I discovered that we have both Privilege of Parliament and Privilege of Peerage. Although I would not want to be examined on it in too much detail, I understand that under Privilege of Peerage we have the right not to be arrested for a civil action, and so do our wives; they too enjoy our immunity. And so do our widows, though I am delighted to tell your Lordships that the Companion adds that widows lose their privilege if they marry commoners. If that is a slightly flippant interlude, I hope it does something to put the argument into perspective. This is a good and important Bill and the sooner it is on the statute book the better for everybody.

My Lords, may I ask my noble friend a question for clarification? With his vast experience of these matters, may I ask if it is his view that without Clause 14 the same sort of pressures—I prefer to use a more neutral term—which were exercised in the Sasse situation could be exercised again to the detriment of the society?

I must make it clear, my Lords, that I am not a lawyer or a working member of Lloyd's and I disown any expert knowledge of Lloyd's. I have heard from Lloyd's only as one who from time to time has drawn a nice cheque from Lloyd's. I would not want to answer my noble friend's question off the cuff. Frankly, from my exeprience and from what I have heard discussed, I should have thought that the Sasse situation could have been nipped in the bud much earlier if they had had the immunity clause.

My Lords, I wish at the outset to add my warm congratulations to the noble Lord, Lord Strathalmond, on his wholly admirable maiden speech. It is some years since I last addresesd your Lordships' House. I declare an interest: I am an underwriting member of Lloyd's and, as some of your Lordships may recall, thanks to the horrendous publicity that my name attracted at the time, I was a member of Syndicate 762, more commonly known as the Sasse Syndicate. It was a situation in which just over 100 individuals, or names, were faced with losses over a two-year period in excess of £21 million and where we had strong grounds to suspect not only gross negligence but fraud. That is the point, and it helps to concentrate the mind.

Since the only other member of the syndicate here today is the noble Earl, Lord Fortescue, both he and I felt we could perhaps contribute a little to this debate. And for the avoidance of doubt, I wish to place on record that I am speaking solely for myself and in no way whatever on behalf of the Princess of the Royal House for whom I work.

Lloyd's require a Bill to enable them better to regulate their own affairs, and I suspect they should have promoted one years ago. I have no quarrel with any of the proposals in the Bill, except for the immunity clause, Clause 14, and I shall take a totally different view from that of the noble Lord, Lord Reigate. I find that clause wholly objectionable, and my remarks will be confined in the main to it alone.

The aim and effect of Clause 14 would appear to be an attempt to place the society, its officers and employees above the law in their dealings with the entire Lloyd's community; that is, the underwriters, underwriting agents and brokers operating at Lloyd's. I understand that in English constitutional law only the Sovereign can do no wrong in the eyes of the law and is immune from all suits and actions at law. A limited protection from suit exists in respect of judges, magistrates and justices of the peace acting in their official capacities. All other citizens are equal before the law. No man is above the law and every man is subject to the ordinary law of the land. This is the very essence of the rule of law and applies to everyone, including Her Majesty's Government, servants of the Crown, local authorities, and similar bodies.

Now, I know that it might be argued that the immunity from liability now being sought by Lloyd's applies only to members of its own "family" and should therefore be acceptable. But the "family" now has about 20,000 members, and it is therefore rather large But even if one accepts that the Lloyd's community is in the nature of a club, it would I think be hard to find a similar institution enjoying immunities of this kind—and this has been said earlier today. The Stock Exchange is established by deed of settlement, not Act of Parliament, and its council and officers certainly do not enjoy immunity from suit. Bodies such as the Law Society and other professional organisations mostly exist by Royal Charter. Many of them have statutory duties, but none is immune from suit. The General Medical Council and the General Dental Council are statutory corporations (like Lloyd's) but they have no immunity from liability.

Perhaps the best reason why the proposed immunity is undesirable is to be found in the recent Sasse case because it provides a practical example of the circumstances under which the question of liability has arisen. In his address to members at Lloyd's annual general meeting on 19th November 1980, the chairman of Lloyd's informed members that it was the advice of Lloyd's three leading counsel that the members of the Sasse Syndicate had—and I quote:

"justifiable grounds for complaint",

and that,

"whilst the Plaintiff Names were unlikely to succeed on the main issue relating to the conduct of business under binding authorities, similar assurance could not be given in regard to certain other issues".

Here perhaps I may also mention one other matter, since it was referred to by the noble Lord, Lord Windlesham, when he moved the Second Reading of the Bill, with, if I may say so, his customary charm and skill. He mentioned the question of the annual Lloyd's audit as required by the Department of Trade, and I would not wish there to be any shadow of doubt in the minds of noble Lords regarding the position of the litigants in the Sasse case.

In the case of myself and my colleagues, Lloyd's issued writs in the High Court against us, alleging that we had indicated a reluctance to comply with the Lloyd's audit requirement. Far worse, in my case not only was the writ never actually served upon me, but before it was even issued Lloyd's had the effrontery to issue a press release. In addition to my immediately issuing a counter-writ—

My Lords, it is with the greatest reluctance that I rise, and I look for guidance to the Front Bench opposite, but if this House is to be used for the purpose of airing grievances in regard to litigation already completed—and I suppose that it would be even worse if it were litigation already in existence—there would be set a precedent which I should have thought would be most unfortunate. But from where I sit I can merely look at the Front Bench opposite and ask for guidance.

My Lords, I should not dare to intervene in this debate, nor indeed in this particular aspect, since I understand that we have, if I may say so, legal privilege in this House, but no doubt the comments of the noble Lord will be noted. I think that it might be the wish of the House that the noble Lord, Lord Napier, might take the greatest care as to what has been indicated by the noble Lord, Lord Mishcon, although I think that your Lordships will agree that there is nothing laid down with great clarity in the Standing Orders on this particular matter. But I am sure that we are grateful for the will of the House that might have been suggested by the noble Lord, Lord Mishcon.

My Lords, surely the noble Lord, Lord Napier, at the moment that he was interrupted was quoting something said publicly by the chairman of Lloyd's, at a meeting of Lloyd's members, and something which had received a great deal of publicity. That is as I heard it.

My Lords, I am afraid that the noble Lord, Lord Renton, most unusually, must not have been paying attention for the past few minutes. That particular point had passed and there was no objection to it. The noble Lord, Lord Napier, was going on to talk of the way in which a writ had been served, the manner in which it was done, and his general objections in regard to certain litigation. Of course, I would never in any way have objected to a part of a speech which dealt with a publicly-quoted statement. As I said, I was merely trying to find what was the will of the House because from my point of view this seemed an unwelcome precedent.

My Lords, if I have acted incorrectly, I am appalled, and I would withdraw, but I should like to think that what I was doing was in fact repeating what is now history.

Hear, hear!

I think that I have the feel of the House. Thank you, my Lords.

I found it necessary to seek an apology—and this is public knowledge—from the chairman of Lloyd's. Perhaps I may read a small comment, written in the Financial Times at that time—and I quote an apology to myself:

"Mr. Green, chairman of Lloyd's, has apologised to Lord Napier, a member of the troubled Sasse underwriting syndicate for embarrassment which may have been caused by the issue of a public statement on the Sasse affair last September"—

Your Lordships will see what I am coming to in a minute.

"Last September Lloyd's had instituted legal proceedings against a number of members of a syndicate to complete the annual audit which all members of Lloyd's have to satisfy. Disputes surrounding the Sasse syndicate had held up the completion of the whole market's audit. Lloyd's alleged that some members of the syndicate had indicated a reluctance to comply with the Lloyd's audit requirements'. Lord Napier said through his lawyers that he had not indicated a reluctance to comply with the audit requirements; rather he was reserving his rights to say that those payments are obligations which he cannot legally be called upon to make. He has honoured, and will honour, all legal obligations upon him".

A great deal of responsible and informed comment on this subject has been published in the press in the past two years. I should like, if I may, to give your Lordships just one example. In July last year the Economist had this to say, under the heading "Charter for Chumps"—and I quote:

"Lloyd's hopes that if it knuckles under to Parliament on one important issue, Parliament will nod through the rest of the Bill intact, including the outrageous Clause 11 [now 14], which gives Lloyd's immunity from legal action by members for damages for negligence and breach of duty".

The article went on to say:

"All the brouhaha about divestment has succeeded in obscuring the more contentious issue of immunity. Lloyd's says that without this safeguard it will not be able to discipline members, or expel rogues, because it will then live in fear of litigation. Balderdash: other clauses of the Bill give Lloyd's adequate powers to exercise discipline. Clause 14, which confers immunities not even enjoyed by the Department of Trade, is an indemnity simply against incompetence. It should not be allowed".

I wrote a letter to The Times, which was published just over a year ago, on 3rd March—I am coming to the end of my speech—and with the indulgence of the House I should like to read it, since it really sums up my views in a nutshell:

"Sir, The chairman of Lloyd's, Mr. Peter Green, has recently written to all the underwriting members of Lloyd's seeking, inter alia, to justify the inclusion of Clause 11"—

now Clause 14—

"(the illegal immunity clause), in the Private Bill shortly to be considered by Parliament.

"I was a member of the Sasse Syndicate … at Lloyd's. Mr. Green has publicly admitted that grave irregularities had occurred in the affairs of this syndicate', and hence the settlement made by Lloyd's. It has been put about in certain sections of the press that this settlement was some kind of rescue operation. It was, of course, nothing of the sort. It was a settlement, offered at the instigation of Lloyd's, out of court. It was accepted by the names concerned, thus saving Lloyd's from the appalling embarrassment of the whole fiasco coming out in open court—which it would have done, no doubt causing irreparable damage to the good name of Lloyd's throughout the world.

"As part of the settlement over £6 million was left as had underwriting', and this was readily accepted by the one hundred odd names on this particular syndicate. None of us denied the principle of unlimited liability; what the litigants, in the Sasse case, were questioning was how much of a loss in excess of £21 million was their legal liability? …

"I do not believe that any future disgruntled name could ever sue the committee simply for bad underwriting. Lloyd's could only be sued if they had been in breach of their duties, either statutory or contractual, owed to the name. If Lloyd's have behaved properly they have nothing to fear in the courts. On the contrary, they would be vindicated. Of course the position would be different if in fact they have behaved improperly.

"It seems to many of us that Lloyd's are now seeking to place themselves above the law".

This was written a year ago, my Lords.

"Should this come to pass, then I believe it would be prudent for every name to reconsider his or her own position most carefully with a view to deciding whether they wish to continue as underwriting members of Lloyd's—and it is, after all, a fact that without the financial backing of the external names, Lloyd's would cease to function".

I do not wish it to be thought that the Sasse names were not left with considerable losses after the out-of-court settlement. I do not mind it being known that I myself sustained a loss in excess of £80,000. That is quite a grown-up figure.

As I said in my letter that I have just read, no one is going to issue writs against Lloyd's unless they are very sure of their ground and know that they have a very strong case. The risks are far too great. I well remember myself when a most distinguished lawyer, not unknown to your Lordships, said to me: "I see you are involved in litigation against Lloyd's. I hope you are right, for it can be a very expensive thing to do". In our case we were right to take the action that we did, as has been subsequently proved by events.

To a large extent the action that I and my colleagues took has resulted in this Bill before the House today. But I maintain that Lloyd's are seeking blanket immunity against negligence and breach of duty, and if Clause 14 is accepted it will mean that they are in effect placed above the law. I would go further and ask all noble Lords whether they have considered the political implications of granting such an immunity as has been mentioned. It will not just stop at Lloyd's; the ripples will spread wide. I submit that there can be no genuine justification for it at all. I say to Lloyd's: "Have you no faith in the courts? If you have done your job properly, what have you to fear?"

I support the Instruction in the name of the noble Lord, Lord Lloyd of Kilgerran, wholeheartedly, and I hope it will not be necessary to divide the House.

My Lords, as a lawyer in private practice I desire to say a few words concerning Clause 14. It is perhaps appropriate that I should do so at this stage, after the very strong language that the noble Lord who sits beside me has just used in referring to this clause. He has said it is, "the outrageous clause". He adds that it gives Lloyd's "a blanket immunity" to a position in which Lloyd's may be seeking to act, as he suggests, "above the law".

Before I go any further I should like to congratulate the noble Lord who has made a maiden speech today, Lord Strathalmond. I share some of his ordeal. I have not spoken in your Lordships' House now for some time; my father never spoke in this House. But I warmly congratulate the noble Lord on the execution of his maiden speech.

I do not have an interest to declare—I have indicated that I am a lawyer in private practice—but I have received a number of representations from those who are in favour of the proposed revisions and those who are opposed to them. If I may thank persons outside this House, I am very grateful for those representations which have been given to me. Indeed, it was an interesting and educative experience which had its lighter moments. I was provided with written opinions from eminent and distinguished counsel on both sides, and I noticed on reading the second opinion, which was presented by the eminent and leading counsel for the opponents of this provision in the Bill, that it began by castigating Lloyd's counsel for basing their opinion not on legal judgments but on "political" and "policy" judgments. Therefore, it was of some enjoyment to read later in that opinion that these same judgments were being expressed although with different interpretations!

The starting point, I believe, and particularly so after the words that have just been presented by the noble Lord who sits beside me (even if it means repeating and covering ground that has already been covered by other speakers in this debate) is to establish precisely what Clause 14 is, for if indeed it is a clause as described by my noble friends it is a clause that your Lordships clearly would have to look at very closely and, indeed, perhaps send in some different direction to the Select Committee.

Perhaps I may paraphrase (subject to any correction from any other noble Lord) what this clause is seeking to do. First of all, it is seeking to exempt only the Society of Lloyd's (acting through its council, its committee or its officers) from civil suits from members of the Lloyd's community, and that is not simply members of the Society of Lloyd's but other persons who work in the Lloyd's community, such as the Lloyd's broker, the underwriting agent and those associated with those men.

There is nothing in this Bill, therefore, to prevent a member of the public from suing the society; and there is also in this Bill nothing—and this is of supreme importance, in my view—to prevent one member of the Lloyd's community from suing another in a situation where, for example, members of the syndicate have grounds for serious complaint—grounds, let us say, for a suit in negligence against an underwriting agent. Thus, nothing in this Bill prevents any member of the syndicate, by this example, from suing an underwriting agent for negligence.

The second feature of this clause is that it is limited to civil suits for damages for pecuniary loss, and there are even two qualifications to that. There is no exemption for damages suits for personal injury or death. It is a little difficult to imagine how the Society of Lloyd's could be involved in such suits, but I suppose a member of their staff could fall down a lift shaft. There is also no exemption from suits arising from exercise by the society or an officer of the society of clerical duties. For example, if there was a misprint describing a member of Lloyd's being suspended and that members of Lloyd's suffered pecuniary loss as a result of this wholly erroneous misprint, then that member of Lloyd's would be entitled to bring an action for damages to recover what he had suffered as a result of this erroneous information being published upon him.

The third feature of the clause is that it places no prohibition on taking injunctive or declaratory proceedings. Reference has already been made to that, but may I just enlarge upon it slightly? In detail, no prohibition lies against a member of the Lloyd's Society applying to the Divisional Court for a judicial review giving that Divisional Court authority to quash the society's action and to require the society to reconsider its position on the grounds, for example, that the society was acting beyond its powers or that the society's powers were being improperly used.

But more important concerning injunctive proceedings is that the remedy for an interim injunction also remains available to members of the Lloyd's community or any member of the Lloyd's community who feels that action is being wrongly taken by the council or committee to his financial or other disadvantage. Thus, that a member of the Lloyd's community can place himself on an ex parte application within 24 or 48 hours before the Divisional Court, and, most important of all, before any losses have been suffered by him—at least, of any serious consequence. Indeed, only recently this remedy was used in an attempt to restrain the society from continuing disciplinarian proceedings. This particular application was unsuccessful on its merits, but it illustrates that full access to the courts was given to this applicant. Finally, Clause 15 is only effective when the society is acting in good faith. If any acts are done or omitted to be done in bad faith, then this clause provides the Lloyd's Society no protection.

Within these parameters, what requirements lie on the promoters of a Private Bill to satisfy this House that the provisions should be accepted? I suggest that there are two basic requirements for the promoters. First, to satisfy the House that the provisions within the context of the Bill as a whole—and not simply the exemptions provisions—are in the public interest and are not against public policy. Second, they should satisfy this House that the provisions properly represent the views of the society on whose behalf the Private Bill is being promoted. As the noble Lord, Lord Windleham, has pointed out, the answer to the second question has already been given an emphatic, Yes. On the questionnaire of August 1980, I think the questionnaire was sent to 18,441 members of Lloyd's, and of these 13,587 replied, and among those 13,124 were in favour of the Bill. Incidentally, this was in favour of a Bill which contained an immunities clause as Clause 10 (and it has now gone down to Clause 14) of the Bill with wider application than the present one.

As the noble Lord, Lord Windlesham, has said, the overwhelming majority of the Wharncliffe meeting on 26th November 1980 gave a resounding vote in favour of 99·5 per cent., representing 71·99 per cent. of Lloyd's membership. But that is not the whole answer. This Bill affects more persons than simply members of the Lloyd's Society, who now number some 20,000; and it now affects more who are outside the membership, but illustrates the position of the Society on whose behalf the Bill is promoted.

What is the position on the issue of public interest? As I understand it, Lloyd's put their position simply. They say, "It is in the public interest that we are now given greater powers which are long overdue. We must have effective powers to make by-laws and to regulate the business of those who trade to their benefit under the Lloyd's name". Thus, the public will be better served. Secondly, they say it is in the public interest that there should be more efficient and expeditious means to exercise disciplinary and other executive powers. I draw those two to the attention of your Lordships because it is within the context of those powers—that is, powers to make by-laws and to exercise disciplinary and other powers under the by-laws—that the sought exemption provisions should be judged.

Therefore, Lloyd's go forward and say, "It is in the public interest in making by-laws and in exercising executive powers that we are freed from certain civil suits from members of our own community".

Some would say that Lloyd's could stop there. This is a matter concerning a community and it cannot be shown to be against the public interest and certainly not against public policy. But Lloyd's produce further arguments, some stronger than others. One of them is the argument which has been criticised by some noble Lords that suits and the threat of civil suit would deter men of honour and integrity from serving on the council or be an administrative burden on Lloyd's. However, I believe that the central argument, whether this was strongly advanced by Lloyd's or not, is correct. That is that in the interest of Lloyd's business as a whole it should remain, on the one hand, innovative, daring and profitable, but, on the other hand, the size of the community has now grown to be so large that it should be subject to some control. Therefore, the choice in making regulations and by-laws is a delicate balance between under-regulation and over-regulation; and the threat of suits carries the danger of upsetting that delicate and important balance by which the whole Lloyd's community will gain.

The decision—and this is where I concur with the argument presented by the leading counsel—rests in a field not so much of law, so long as the position of the law is understood, as of policy judgment. Noble Lords have referred to other institutions: The Law Society, the General Medical Council, and The Stock Exchange. I have seen reference to immunity granted to local authorities under the Highways Acts, but I believe that this issue can be judged only on its merits as it applies to Lloyd's, Lloyd's as a worldwide business of high risk. Applying the test to Lloyd's, I have no hesitation in saying that this provision is needed.

My Lords, before the noble Lord sits down, may I say that I think he slightly misrepresented the case regarding this clause. He said that Clause 14—or Clause 11, as it was at the time of the Wharncliffe meeting—was put to the membership of Lloyd's. At that meeting, the Bill was submitted—

My Lords, is the noble Earl asking a question—he is to speak shortly—or is he pre-empting himself?

My Lords, I am asking for clarification. That issue was put to the membership of Lloyd's as a general acceptance of the Bill and not as an acceptance of the immunities clause.

My Lords, I hope that I did not mislead your Lordships. I thought I made it plain that at the Wharncliffe meeting the Bill, as it stood in its entirety, was put to the meeting and the voting was on the Bill as a whole; but it was a Bill which contained Clause 10—or Clause 11 as the noble Earl has suggested—with wide application and wider immunities than the present clause contains.

My Lords, I have to declare an interest. I, too, am a non-working member of Lloyd's— an expression which I regard as nicer than the expression "external member", to which the noble Lord, Lord Reigate, rightly objects. I am also, I am sorry to say, solely concerned with Clause 14, the immunities clause. If I may begin by intervening in the exchange that has just taken place, I think that the noble Earl who intervened—and I hope I have him aright—was saying that when the members, the 13,000, voted on that occasion, they were voting for a package deal. Many of them may have said: "A Bill with an immunities clause in it is better than no Bill at all. Therefore, although we do not much like the immunities clause, we think we ought to have a Bill". I think that the noble Lord, Lord Hacking, took that on board and we have to accept that what was being voted for was a package deal. Incidentally, I am glad that the noble Lord, Lord Windlesham, welcomed the Instruction about the immunities clause that is to be moved by my noble friend Lord Lloyd—not of Lime Street but of Kilgerran.

I think that the easiest way to explain what the immunities clause, Clause 14, does is to say this. We all have common law rights. One of those rights is that, when we suffer damage as the result of anybody else's negligence, we can go to the court and sue for damages to compensate us for what has been done to us and, if we prove our case, we are entitled to damages. But what Clause 14 says is that if you are a member of the Lloyd's community and you have a complaint owing to the negligence of members of the Council of Lloyd's, you shall be debarred from attempting to obtain compensation as a result of the damage that you have suffered. The question that the Select Committee are going to have to consider very carefully is whether that is right and just.

It has been said that Lloyd's are different from all these other bodies which manage to "rub along" without this immunity from suit. Lloyd's are unique, and so of course they are different, However, I think that this point can be made: when you consider the enormous field of human endeavour covered by all these other bodies that do not have the immunity—and I do not want to list them all again—such as the doctors, dentists, the Jockey Club and Stock Exchange, if they all manage without an immunity for their regulatory body, is it really so sure that Lloyd's alone can no longer function efficiently and properly without immunity for their regulatory council?

Until fairly recently, it was not uncommon for people to be deprived of their common law rights. People entering into contracts with suppliers found terms in the contract which said that the supplier was not to be responsible or liable even for his negligence. Under the old Post Office Acts the protection given to the Post Office was so enormous that Mr. Bernard Levin was moved to write in The Times that the Post Office could throw all your letters into the sea if they chose, and still you would have no redress. But the tide turned against that extraordinary situation and we had the Unfair Contract Terms Act of 1977. It is very interesting to read what the Fisher working party had to say about that Act of 1977. At paragraph 6.07 (b) they say that one of the ways that the Council of Lloyd's could have achieved their immunity might have been by getting the members of the Lloyd's community to agree to it. But, said the Fisher working party, if they attempted to do that by agreement, they might find themselves in trouble under the provisions of the Unfair Contract Terms Act. So the situation we now have is that the promoters of the Bill are saying: "Something which we could not achieve by agreement among ourselves, because Parliament regarded it as being against public policy, we nevertheless seek to achieve by a clause in a private Bill to which we are asking Parliament to give its blessing."

This is a great deal to be asking. We have heard so much about the terrible fears that members of the new Lloyd's Council are going to have about the prospect of being sued for negligence, that they are going to be looking over their shoulders. When one sees the picture painted by the noble Lord, Lord O'Brien, of the type of people who are presumably going to become the elected members of the new Council of Lloyd's, they are not the kind of timorous souls who are going to be looking over their shoulders in this way. Furthermore, I think it a much healthier situation to achieve, if one can, to have a Council of Lloyd's saying, "We take the very greatest care to have proper procedures for conducting all our investigations. We have had innumerable advice from the old Committee of Lloyd's about this. There are all kinds of tribunals who have all kinds of rules about the proper conduct of inquiries and we have access to advice about this, and we are quite satisfied that we have adopted a practice of conducting investigations which we would be willing at any time to place before a High Court judge, in the confidence that we should not be found to have been guilty of any negligence in carrying out those procedures". It is not easy to get a High Court judge to pronounce somebody guilty of negligence. It is not something that any judge is lightly going to do. The plaintiff has to prove his case very strictly indeed.

It is said that Lloyd's may be the subject of vexatious and frivolous claims. Again, the courts know all about this. One of the great interests that the courts have is to see that their time is not wasted by frivolous and vexatious claims. Furthermore, it is a very expensive business indeed to start pursuing a frivolous, groundless claim just because one is trying to injure somebody else in their business. It is said that the Council of Lloyd's are going to have to act with great speed. All sorts of people in highly responsible positions have to act with great speed. The police have to act with tremendous speed, but they do not get immunity from what may happen if they tread on the toes of innocent people just because they are acting with tremendous speed in order to catch a criminal.

One way in which the immunities clause has been referred to is that it is an agreement by the members not to sue one another. That sounds very civilised and good-natured. But turn it round the other way: an agreement not to club together to compensate one of your number who has been injured in his business as a result of the negligence of members of the committee who have been elected in that position in the expectation that they were going to conduct their affairs without negligence. It does not look quite so cosy when you turn it round in that way.

The noble Lord, Lord Hacking, referred to these alternative remedies which the promoters tell us about, the injunction and the declaration. It is at that point that I would have thought that the promoters are giving their case away entirely. If the declaration and the injunction are as effective as a claim for damages, why worry about immunity from the claim for damages? If the injunction and the declaration are not as effective, does not the person who has been damaged need to fill the gap with the other remedy normally available to him, which is the action for damages? I would have thought that really is the point at which the case for Clause 14 is given away. I very much hope that the Select Committee will pay very strict attention to the Instruction that my noble friend is about to move.

My Lords, I, too, should like to add my warm congratulations to the noble Lord, Lord Strathalmond, for his speech today. He in his person represents the rich variety which we have the honour and privilege of knowing in this House. I do hope he will speak to us again, speaking with the authority that he has.

I must declare an interest as an external member of the society, but my first task must be to congratulate Mr. Peter Green and his predecessor Mr. Ian Findlay for promoting this Bill. There are many people in this country who find themselves in high positions but they do not necessarily have the initiative and the courage to go through with a big reform which they know, and all of us know, is absolutely necessary. For that reason, I congratulate them very strongly and I also congratulate them on the care and trouble they have taken, the examination and attention to detail they have carried through and the consultations they have held—consulting with their own members and with others not once but several times. This was not an easy thing on which to get the degree of agreement among the members of Lloyd's which has already been received.

I would add only one thing to the stories of the strength of Lloyd's. It is that it has been astonishingly resistant to the recession which has affected practically all aspects of our economy. I believe that year by year the annual contribution to overseas payments, the numbers of persons employed and the important contribution made to the Chancellor of the Exchequer, which is no doubt much appreciated, have steadily increased. I think that is a very remarkable tribute to the people who are engaged in this work.

We have heard a lot about Lloyd's having been founded in a coffee house, and it is quite fascinating to speculate on the immense potency of that drink, when we consider that it was only introduced into this country about 40 years before the coffee house got working. It was said to have been introduced through the agency of Archbishop Laud, who took some poor Christian who was being maltreated by a member of another faith to Balliol College, Oxford. It was there that the first brew of coffee was established, and it spread widely from there.

I think the approach to Lloyd's must be that it is a living creature. Here I should like, if I may, to give a translation of Goethe which will be well known to your Lordships. It is this:

"All theory, my friend, is grey,

But the tree of life is green".

This is essentially a tree which is growing. We are perhaps pruning it a little bit so that it will grow even more healthily, but it is an actual living organism that we are dealing with here, and it is on that basis that I think we should proceed.

The key to the problem is this: for some very odd reason, Lloyd's has existed for some 300 years with no effective disciplinary power. That is really at the centre of the whole Bill. It is based on a self-regulatory system of personal responsibility with no real power of enforcing agreements. Indeed it is very much like a cricket match—when the umpire says that you are out, you go out: we do not wait for a policeman to arrest the batsman and carry him off the pitch. You are expected to obey the rules. That has been good enough until the beginning of this century, but, with 20,000 members spreading all over the world and, as my noble friend Lord Napier said, with some members perhaps being less honest than others, a regulatory power is now essential. It is an essential and integral part and, to repeat what the noble Lord, Lord Windlesham, said, it is a question of the responsibility of each underwriting member for his own part and not one for another. That is the essence of it.

Two noble Lords have put down Instructions and, of course, strictly speaking neither of them is necessary. I agree with the noble Lord, Lord Mishcon, that in fact it is a slight misuse of the process, in one sense. The noble Lord, Lord Wigoder, has explained his views and explained them quite clearly. I would say, if I may, to the noble Lord, Lord Wigoder, that everybody recognises that there is a conflict of interest between the broker and the underwriting agent. The broker wants the cheapest price he can get and the underwriting agent wants the biggest price he can get. It is as simple as that: you cannot get away from it. As the noble Lord, Lord O'Brien, said, there are many cases in business where people have diversities of interest and you try, according to conscience or absence of it, to reconcile the two points of view. But here in insurance alone you have the principle of uberrima fides. That, to my mind, sets the whole of Lloyd's business on a totally different footing. If on this business, and indeed on a wider scale, there should be an element of what is not correct at the very centre, we should be in a weak position. I very much hope that that will not be carried any further, because I think this is absolutely essential. I know that there are people who have built up a business in which this does not matter. I am terribly sorry, but I feel that individual businesses must be subordinate to the strength and honour of Lloyd's itself. That is the basis on which I think we should proceed.

My Lords, if I may intervene for one moment I should like merely to say that I never suggested for one moment that there was any dispute that there was a potential conflict of interest. What I was asking the Committee to consider when they came to the clauses in question was the most effective way of dealing with that conflict of interest or whether there is perhaps any more effective way than the one which is in the Bill at the moment.

My Lords, of course I accept absolutely what the noble Lord has said. I was merely putting my own point of view on this matter. We come to the point of immunity, and here one has to remember two things. First, this only applies to members of the community. These arguments about the police and the Post Office having immunity are different because that would be immunity against the public; so this is quite different. I feel we are greatly indebted to the noble Lord, Lord Hacking, for his extremely able exposition of the very real problem. It is a question of decision. I think that every one of the syndicates in Lloyd's is subordinate to the quality and image of Lloyd's itself. That is the approach we have to make, because, after all, the syndicates themselves benefit by the high integrity of Lloyd's as it stands. Therefore you have to have pretty powerful discipline.

May I also say that, supposing you did sue the committee of Lloyd's, who would pay for it?—Why, all the underwriters, of course, because Lloyd's committee would not pay for it. So you are breaking the rule here and that is that you shall not be liable for what other people undertake. Of course the Committee will look at it and of course I accept that the wording might be changed, but I believe that there should be no reduction of the power for action—you see, you talk about negligence but anyone can raise an action for negligence and it might go on for years. It is very wide and could go on and might be holding up something on which it is essential to come to an immediate decision. I would say to my noble friend: if this had been the rule when his unfortunate affair took place, possibly it might never have taken place. Of course I do not know and I am not familiar with the details, but certainly that sort of thing should never happen again under these proposals. I believe that these powers are necessary for that purpose.

My Lords, from this side of the House I am the only speaker and let me say that I have no interest at all to declare; but, like any moderately intelligent citizen, since my college days I have followed with interest what happens in the financial world, not only here but in Hong Kong and other places. One of the regrets about Lloyd's is that the image of it for many, many years has been kept hidden. It is always a delight to follow the noble Earl who has just spoken, because he is well acquainted with the ramifications of The Stock Exchange, of Lloyd's and of the building societies. The building societies are getting roughly the same problem, with the growth of money. The kind of people who put money into Lloyd's are not those whose money is young. They are people who know and understand how to use that money. That has always been part of the strength of Lloyd's: it has been pivoted on millions of money in the hands of people whose money is not young. I do not want to expand that sentence but in itself it is historically true.

I shall not detain the House for long or repeat things that have been said, because the story has been told pretty well and I want to spike down one or two points. We have the statement on behalf of the promoters, which I welcome. They say:

"It is respectfully submitted that the proposals contained in the Bill are needed to enable the Society to regulate its affairs and are needed urgently".

I need not say why. There have been so many speeches today, explaining the growth up to 20,000 members from a few hundred. That is the whole story. Anything more that I say will only be repetitious and tautological.

The promoters continue:

"The Society, therefore, respectfully requests that the Bill be read a Second Time so that it may be considered on its merits by a Select Committee of your Right Honourable House in the usual way".

That does not mean that we must rush the Bill through. One of the strengths of the British constitution is that this place can steady up the bandwagon a little, and take time to think. Today, I took the trouble to interrupt about the procedure, when we had that excellent opening speech on Lloyd's itself. I wanted it to be clarified. I think that it would be wrong to divide the House on this issue, and we would not do it. The voice of the House has been heard and the Select Committee will be intelligent enough to listen to that voice, and cannot avoid doing so, and to approach the Bill with the kind of understanding that those people will have.

Mr. Justice Foster, the senior Chancery judge, said a while ago that he was baffled by the complexity of the organisation of Lloyd's. He is not the only one. I took the trouble to read everything, including the report of the Second Reading debate and the minutes. Some of the speakers did not know what they were putting forward. I also looked at the Bill, and I have come to the conclusion that more account should be taken of Schedule 2, Regulations 21, 22, 23, 24 and 25. I am not a lawyer, but I know something about semantics. Those give tremendous power, beyond that which is necessary for the working of Lloyd's. What are the issues in this Bill? I was going to expand on them, but if I did so I would merely be repeating what has already been said and I want to finish within eight to 10 minutes.

The issues are now clear from the debate that we are having today, but that does not mean that we should finish there. The motto of Lloyd's is Fidentia, which means confidence, and confidence means that you cannot put any financial or other organisation above the rule of Parliament. I think—and here I take the ruling of learned Lords who have already spoken on the law—that to concede Clause 14, as it is roughly drafted now, would put Lloyd's above the rule of Parliament. I do not think that that should be. However, I do not say that dogmatically. Let us take the 72,000 people who are working for Lloyd's. Any one of those 72,000 people could, in one way or another, come under Clause 14. Therefore, too much power is being put there.

I have had letters from the other place and one is from Sir Nicholas Bonsor, who wrote:

"Lloyd's is a great financial institution. It has come to Parliament with a request for support in giving it statutory powers of self-regulation and no one is keener that it should obtain the support than I am. But there is a fundamental issue arising from the Bill which causes me great concern, both as a member of Lloyd's and as a barrister. If the Bill were to be passed in its present form, the council and committee of Lloyd's would be given immunity from suits of negligence and tort, including libel and slander, by any member of the Lloyd's community. This community includes not only working and external members of Lloyd's, but also a proportion of the 72,000 employees within the organisation".

There is no need to read the whole of the letter. But I want the Select Committee to know that on both sides of the House there is a feeling that Clause 14 should be looked into. I wanted to make a flourishing speech, but I regret that I must discipline myself.

On page 42 of the minutes for May, 1982, Mr. Peter James Frederick Green said:

"There never has been a case of a Lloyd's policyholder suffering".

Whatever misdemeanour there may have been by various members, or by those inside of Lloyd's, it has been a great world asset that never has an insured person suffered, and it is important for the record, nationally and internationally, that that was said by such an eminent person as the chairman.

Lastly—and there is a bit of a bite in this—I want to speak about the Common Market. I should have liked the television to show Lloyd's as they have shown the House of Lords. There is no need to be ashamed of our financial institutions, expecially one whose invisible earnings are in the region of £860 million. That is something which is of paramount importance, because it is helping investment and helping to keep employment. On 28th November, 1981, The Economist wrote:

"Insurers at Lloyd's of London could be forgiven if they wrote the EEC off as a dead loss".—

even I, who voted against the Common Market, have not said that—

"Though 24 years have passed since the Treaty of Rome was signed, there is still no real common market in insurance".

I shall paraphrase the rest, because I do not want to bore your Lordships. I am speaking now with the authority of The Economist. It said that, in France, VAT is charged on insurance, and that we are failing to get agreement with the Dutch and the Germans. Insurance is of paramount importance and it will take five or six years of discussion within the Common Market to get that agreement. Consequently, that increases the urgent need for this House to get this private Bill of Lloyd's settled as quickly as possible. I have been exactly 10 minutes.

My Lords, I had just got to my feet before the noble Lord sat down. During his speech to the House, the noble Lord referred with concern to Regulations 21 and 22. I wonder whether the noble Lord could enlarge upon his point. Those regulations concern the supply of information and the conduct of internal inquiries within the Lloyd's community.

I know, my Lords. But suppose that the information was wrong and that, as a result of that wrong information, loss was incurred or the reputation of an organisation went adrift. This is so wide that you could wheel a horse and cart through it, never mind a Ford car.

My Lords, there is the provision of confidentiality, if the noble Lord will look at that regulation.

My Lords, I give way to the legal argument, but what I have said is more or less right. Let me put it, so that we can agree, that it needs careful consideration.

My Lords, may I begin by congratulating the noble Lord, Lord Strathalmond, on his excellent and informative maiden speech. It is always a pleasure to hear noble Lords with inside knowledge of a subject such as we are discussing this afternoon. I hope that we shall see him again in this House, contributing as he did this afternoon. May I add that when I made my maiden speech I, too, suffered from an interruption just as I was getting to my feet, so I sympathise with the noble Lord. I know what the feeling is like. But I hope that it will not deter the noble Lord from coming again to this House. May I also add my congratulations to the noble Lord, Lord Windlesham, for the excellent way in which he has put forward the case for the promoters of the Bill.

I have been associated with and worked at Lloyd's for 28 years of my life, 17 of which were spent as a broker on the Floor of the Room, the past 11 as an underwriting agent. I have therefore not only to declare an interest as an underwriting member of Lloyd's but also as a director of an underwriting agency. In addition, I have an interest in a small non-Lloyd's reinsurance brokers who place a substantial proportion of their business with Lloyd's underwriters.

The views which I wish to put to your Lordships this afternoon in respect of the Bill now being considered are purely my own interpretation of the needs of the Lloyd's insurance market, now and for the future. I have purposely avoided seeking the opinions and advice of both the promoters and the petitioners to the Bill, other than in general conversation with individuals inside and outside the market. Having said that, I think it can be said that the great majority of those connected with Lloyd's, both working and external members of the society, wish there to be a new Lloyd's Bill to replace the Act of 1871. It must, however, be an Act which, like its predecessor, can survive well into the next century without undue criticism and strain. The new Council of Lloyd's must be provided with the means to regulate and discipline the workings of the market, which has changed out of all recognition within the last 10 years. Membership has increased during that period from around 7,000 to 8,000 to over 20,000. The increase in working capital which that has brought in has only enabled Lloyd's to hold its own relatively small percentage of the world's total insurance business. However, as has already been mentioned, this premium income forms a very important part of this country's invisible earnings. Lloyd's provides, through its services, employment for over 70,000 people. This, I feel, should be uppermost in our minds when considering the detailed aspects of the Bill.

As noble Lords will by now have gathered, I am broadly in favour of the Bill. I therefore intend to limit my remarks to those clauses of the Bill which have been petitioned against. If I may, I will deal first with Clause 3, upon which there is no Instruction. Clause 3 deals with the composition of the new council. I have a certain amount of sympathy with the petitioners in so far as the present constitution of Lloyd's provides for a committee consisting of 16 members. The new provisions will provide for a council consisting of 27 members, 16 of whom will be elected by the one-fifth working members of Lloyd's—approximately 4,000 members—with eight members of the council being voted for by four-fifths of the membership, consisting of external names.

Under the present provisions—this point has not so far been mentioned—all members of Lloyd's are entitled to vote for the existing 16 members of the committee. In the past it has only been the working members of Lloyd's who have taken any interest in the election to the committee, but the right has been there for external members to vote for the governing body. There could be resentment among the external names if they feel that something is being taken away from them. However, there is the danger that if the external names had the vote for the total council they could be lobbied by interested parties who are putting forward candidates. This is a point which your Lordships' Select Committee should bear in mind when considering the petition.

The only other point I should like to make about the composition of the new council relates to Clause 6(4)(a)—the powers of the council and of its committee. This is what is known as the long-stop provision. The new council—on any new by-law which they may introduce which is objected to, so long as 500 members of Lloyd's petition against the new by-law—would have to comply with the majority wish of the members of Lloyd's.

May I turn to Clauses 10, 11 and 12, which are known as the divestment clauses, and quote from the statement:

"The Bill was subjected to the most careful scrutiny by the other House, the three main topics argued being the electorate for the Council, the restraint on suit clause and divestment. The divestment clauses were added to the Bill during the Committee Stage by means of a petition for additional provision, following a postal ballot conducted by the Society in order to obtain the views of its Members. On this ballot, 76 per cent. of the Members voted; 13,511 were in favour of the proposed additional provision and 1,013 against".

At that time I do not think that the great majority of the members of Lloyd's really understood what divestment was about.

I make no apology for saying now that I was one of the 1,013 who voted against this provision, partly because I felt that there had been inadequate debate. However, I have changed my views and now accept—and I feel that this House should accept—not only the recommendations of the Fisher Report but also the recommendations contained in the Cromer Report, since when the issue has been debated extensively on the Floor of the other place. Evidence was given to a Select Committee of another place and after further consideration the committee upheld that divestment must take place. This, I feel, we in this House should accept.

Having said that, I think the duty of the Select Committee of this House is to consider the further implications of divestment. Very little has been said about what is going to happen to these managing agents when they have to divest. At the moment, the brokers control the shareholding. If these shares are put on the market, who will buy them? Will it be to the advantage of Lloyd's and the Lloyd's community if the ABC merchant bank or the XYZ investment trust company control these managing agents? Will they have the interests of the members of Lloyd's at heart any more than the broking houses did? Lloyd's is a community. My experience of working in the market is that I have never found any animosity or conflict of interest in dealing, as a broker, with an underwriter, and vice-versa.

There is here a very important aspect that ought to he considered in Committee. What I should like to see is an opportunity by which members of Lloyd's would have the prior right to purchase shares in these managing agents, giving them additional interest within the market. It does not add to their unlimited liability because most of these agents are limited liability companies. I do not want to elaborate any more on that, but those are just some ideas that I wanted to submit to your Lordships' House.

Finally, I come to the most controversial issue before us, which is Clause 14. An awful lot has been said this afternoon on this particular issue. I am not a lawyer and do not wish to get into a legal tangle; I would rather leave it to those of your Lordships with experience in these matters. I am only going to say that, basically, I am against immunities of any type. I do not like any immunities, from whatever quarter they come. I have yet to be convinced that Lloyd's require this particular aspect of immunity from people connected with the society—whether they be brokers, underwriters, members, agents or whoever.

It has never entered my mind to sue the Committee of Lloyd's. When I became a member of Lloyd's, if I was going to enter any dispute at all, I would go for my agent and him alone. Not even the underwriter should be sued, in my opinion. The underwriter is there to accept a risk on behalf of the names who underwrite on his syndicate and they should accept that. He is not there as a sort of target, to be got at. The same applies to the Committee of Lloyd's. The agent is there to advise the name about his underwriting affairs and whether he is on the right syndicate or not. The provisions required at the present moment by the Committee of Lloyd's is that all agents take out a professional indemnity errors and omissions policy amounting to a minimum of 5 per cent. of their annual premium income. I personally do not think that is enough, but I gather that consideration is being given to increasing this minimum requirement; so the agents have a required protection there.

It is very difficult for me to go any further at this stage. There are alternatives, and in fact Fisher did recommend in Chapter VI of his report alternative protection for the Committee of Lloyd's other than by the required immunity which I have mentioned. With that I shall conclude, and I feel that the sooner this Bill goes to a Select Committee of this House, comes back to the Floor of this House, and then goes on to the statute book, the happier I shall be.

My Lords, I will start by confessing that I am an underwriting name at Lloyd's and have been for some 30 years. It has been a happy marriage, although as in all good marriages there has been the occasional hiccup. But I must pay tribute to my syndicate, the chairman of which has for all these years also acted as my agent, because most of my underwriting syndicates are in that company. I for one have always found them to be most helpful and I have no complaints whatsover about the composition of the committee and council as advised by my people.

That brings me to the usual but nevertheless very pleasant task of congratulating the noble Lord, Lord Strathalmond. I suspect that, like him, I am also "the third bite at the cherry". My father, certainly, never spoke in this House although he was a member here for many years. And, so far as I have been able to find out, my grandfather, who was a Member from 1890 until 1936, also never spoke in your Lordships' House. Perhaps I have more than made up for their lack of speech-making.

The promoters of this Bill have not only done themselves and this House a good turn by producing such an excellent explanatory statement, but they have done themselves an even better turn by getting such a distinguished sponsor as my noble friend Lord Windlesham who, as we might all have expected, put the case so simply, lucidly and persuasively. I had notes on a number of things to say, but there is nothing which has not already been said. All I will do is run my dirty finger very briefly over some of the things which have been said already. First, I should like to say that, like the noble Lord, Lord Mishcon, I too hope that the Select Committee which has these Instructions will listen to what this House has been saying in this Second Reading debate. I would not like to think that our words have been wasted.

My noble friends Lord Strathcona and Mount Royal, Lord Reigate and Lord Selkirk have exactly expressed my feelings on this Bill. They have all pointed out the necessity which Lloyd's feel for taking action where Lloyd's have a suspicion that there is a dirty smell. As my noble friend Lord Selkirk asked in regard to the speech of my other noble friend Lord Napier and Ettrick: Had the committee had these powers? Let us be honest; the council that is going to be in existence in the future will be a very much more powerful and interesting animal than the animal we had before. This council, being given some teeth, will, let us, hope, smell out the dirty smells, put in their little investigative fingers and, if necessary, apply a sharp bite of the tooth. That might stop the calamities which might occur and have occurred.

The noble Lord, Lord Airedale, quite rightly questioned earlier whether these powers were really necessary, and were they not dangerous. But, of course, one cannot compare this situation with that of the Jockey Club, which is one of the bodies he mentioned. The Jockey Club has only to decide whether a horse was wrongly passed or whether a jockey did something he ought not to have done. That is a simple question of yes or no. With Lloyd's, one has an ongoing situation with world-wide financial implications. If the bud is not nipped pretty quickly, it is not only Lloyd's that will suffer but, as we have heard, also this country's finances. I therefore believe that Lloyd's do have a special case for being considered.

My Lords, I did not seek to equate Lloyd's with the Jockey Club. The point I was making was that if all these other self-regulatory bodies over such a wide field do not need immunity from suit, why should Lloyd's be picked out?

My Lords, I take the noble Lord's point but I was just using an absurdity to make a point. If they can find the smell and kill the bad bud, that is really the main point. My noble friend Lord Strathcona and Mount Royal said that he did not like paying out his profits on the losses of other members and, as my very clued-up friend Sir Philip de Zulueta wrote in The Times, the other point to this Bill would be to stop seeking protection for individual members of Lloyd's seeking to mitigate their own commercial losses by transferring the cost of these on to all members. I say "Hear, hear" to that. I hope that this will not happen in future.

The divestment point has been dealt with very well by my noble friend Lord Lindsey and Abingdon. I think the fact that the Meacher Committee, the House of Commons and the Fisher Committee gave it their overwhelming support goes to show that there is, anyhow in their eyes, a prima facie case for that. My noble friend Lord Lindsey and Abingdon put forward some very interesting suggestions as to what might happen to these shares.

My Lords, I have said already more than I was intending to say. I would just like to add that I wholeheartedly support this Bill and wish it every success. I hope that the committee which is to look at these points will have full returns of all the points which have been made in this debate, and that they will come to a speedy conclusion, so to enable us to get the Bill into law.

My Lords, I must declare an interest in that I am an external member of Lloyd's, and in 1976 I was what my noble friend Lord Strathcona called one of the blackmailers in the Sasse syndicate. However, I will try to show later that he is wrong in that description.

My Lords, I entirely agree that Lloyd's needs a new Act to meet modern conditions and the present size of the organisation. Mr. Green, the present chairman of the committee, is most energetic and he has taken a lot of trouble to put over his case fairly and efficiently. My only complaint is that he is very wrong about Clause 14; that is, the immunity clause. The noble Lord, Lord Napier, has fully and fairly covered the Sasse saga. I will only stress what I consider the important points and hope to persuade your Lordships that we, as members of that syndicate, acted properly and reasonably.

In 1976, the Sasse-Turnbull syndicate got involved with some very dubious business in America, business which was contrary to the rules of the Committee of Lloyd's, and the Committee of Lloyd's also failed to observe its own rules in tribunalising agents. The committee knew of this contravention in mid-1976 but did nothing about it until they suspended the syndicate in December 1977, some 18 months later. The syndicate lost £15 million in 1976 and a further £61½ million in 1977. Several members of the syndicate resisted settling this loss, on the grounds that much of the business was more than dubious and that the Committee of Lloyd's was negligent and in breach of duty in not policing its own rules properly and promptly.

Writs were issued against Sasse-Turnbull, the names' agents and the Committee of Lloyd's. Sasse and the agents had nothing approaching £21½ million to meet the damages which might have been awarded. In the event, Lloyd's settled a large part of the claim out of court, paying the entire 1977 loss and about two-thirds of the 1976 loss. I would stress that if Clause 14 had already been enacted the names would not have been able to commence litigation against Lloyd's.

I do not in any way deny that I agreed that my liability should be unlimited against normal underwriting risks. However, I never agreed, nor do I now feel like agreeing, that I should accept unlimited liability if the underwriter or his agents act fraudulently or outside Lloyd's rules, or if in particular the loss is due to negligence or breach of duty on the part of the Lloyd's Committee or the future council. In a country governed by the rule of law an aggrieved party is surely entitled to go to court for redress. I therefore support the Motion in the name of the noble Lord, Lord Lloyd of Kilgerran.

My Lords, at this rather late hour it is extremely difficult to think of anything new or original with which to entertain your Lordships, if that is the right phrase. I have to declare an interest. I, like my father and grandfather before me, have been an underwriting name at Lloyd's. I was brought up in the tradition of respect to what Lloyd's was doing for the nation and the country, and in a sort of small way felt rather proud of being able to contribute at least my name and a little cash from time to time towards it. My respect for Lloyd's, I may say, was often increased in the years when it made losses, because it seemed to me it was the sort of operation which was able to meet overseas competition and overseas disasters quickly, efficiently, and, as far as I could see, with the minimum of loss passed on to the names, and get back quickly on to profits soon afterwards.

But then—and I think, my Lords, this is the only point I want to make today—it fell to my lot to be President of the Board of Trade, and as such I was responsible for the whole of the insurance industry. This was the time immediately following the V & G crash. I am glad to say it happened before my day, so that I was not responsible in any way for it at that time, but that may surely have been good luck. The result of this was that for most of two years we at the Board of Trade were very deeply interested in what was going on in the insurance world, trying to make sure that where there were loopholes they were filled in and where there were weaknesses they were watched, and trying to make certain that the insurance world as a whole was run as your Lordships' House would have wanted it to be run.

I would like to say that during the whole of that period there was not one single moment when we had the slightest worry about what was happening at Lloyd's. I am speaking now of the Board of Trade. I had very considerable personal worries because they were making very large profits and I was in suspension and was not allowed to underwrite; but that was neither here nor there.

The point I think I should like to stress to your Lordships is that these were the days before North Sea oil began to flow, and from the point of view of any Minister for Trade—as the poor chap is now rather miserably designated—the success of Lloyd's was every bit as important to our balance of payments as North Sea oil is today. It is very likely that North Sea oil may run out in the next 40 or 50 years. If we do the right thing by this Bill, it is very likely that Lloyd's will continue to function for at least another 100 years, by which time perhaps another Bill will be brought before your Lordships.

I would simply like to ask for this advice to be taken by those who want to bring more petitions. Lloyd's is famous for three things: for its international success, for its integrity, both of which have been stressed already today; but there is one other that is often forgotten, and that is for its power of innovation. In the whole of this very complex, changing world more new types of policy have been produced at Lloyd's than in any other part of the world. This intense competition, and this ability to innovate, essentially means that Lloyd's must be able to deal quickly and responsibly with its problems. We have already been nearly three years on this function and I hope that those who intend to petition this House again, in almost exactly the same terms as they did the other place, will please bear in mind that there are major interests at stake for this country.

My Lords, I should like to apologise for not having been in the House earlier today, particularly to hear the speech of the noble Lord, Lord Windlesham, but I was involved in giving evidence to a Select Committee. I must also disclose an interest, for a company of which I am chairman has investments in a broker and in a managing agents.

I wish to raise one point. I think that it would be agreed that it is desirable, indeed helpful, to the development of the insurance business for financial institutions to be able to make investments in the businesses of brokers or managing agents. But if a financial institution has an investment of more than one-third of the equity in, for instance, a broker—and this works the other way round too—and more than 5 per cent. in any managing agent, it would be deemed to control the broker under Clause 12(2)(c)(ii) and the managing agent, being a related company with the financial institution, will, as I understand it, be deemed to be associated with the broker. Since this is not permitted, divestment of one or the other would have to take place.

I submit that it was not the intention of the Bill to prevent a financial institution having investments in brokers and managing agents. It is not clear to me why one-third of the voting power is specified in Clause 12(2), but maybe that is due to some ignorance on my part of the detailed point. If the proportion were raised to, say, 49 per cent. of the voting power, very few investments by financial institutions would be affected. I suggest that an alteration to 49 per cent. from one-third in this subsection would improve the Bill. So far as I can see, it would in no way affect the main principle of the Bill, and nor would it widen the scope of the Bill. So I would like to draw the attention of the promoters of the Bill to this point in the hope that they might consider it favourably. I should like also to give notice that I may put down at a later date an Instruction suggesting that the Committee should consider amending the Bill accordingly, which, I believe, is within the rules of your Lordships' House.

My Lords, I do not think that I can follow my noble kinsman, who has just sat down, too far on the point that he has made, but I have no doubt that the Select Committee, as well as the promoters of the Bill, will look at the matter. It seems to me that, if one is a financial institution, one has to choose an interest between backing a broker or backing the underwriting agents. But perhaps some compromise can be reached, because certainly one would not wish to forgo the development of Lloyd's through lack of money, through an inhibition accidentally built into this Bill.

I would like to declare an interest. For many, many years—several decades—I have been an underwriting name. I have always trusted my broker and trusted my underwriters for the syndicates on which I am a name. I must say that my trust has never been undermined in any way. They are people of great honour, great dedication and great reputation.

I want to refer to a number of clauses which have been criticised during this debate. Before I do so, I should like to congratulate three sections of people. First, we all owe a debt to Lloyd's themselves. It would have been so much easier to do nothing after 110 years. The chairman, Peter Green, and his staff and advisers have been very patient whenever I have been uncertain. Indeed, I think that we have all had uncertainties and anxieties on certain clauses. We have rung up and received the best advice. They have always offered to come and see us. I believe that Peter Green himself has come to talk to the Cross-Benchers. He has come to talk to other groups with whom I have been concerned, to explain to us in simple language why they wanted this or that included in the Bill. I am sure that it has been wholly helpful and I think that we owe them a debt.

Secondly, I think that we owe a debt to the noble Lord, Lord Windlesham, who has, in his usual painstaking manner, introduced this Bill so effectively. Thirdly, I think that we should all like to congratulate the noble Lord, Lord Strathalmond, on his maiden speech. It was one of the best that I have heard for many a year.

My noble friend Lord Saint Oswald was worried about Clause 3. I also had some anxieties about that provision. Is it all right that 16 working members should he matched by eight external members and three nominated members? Are they going to be first-and second-class citizens? As a non-executive director one is in a very difficult position being an outsider when there is a group of people working on the inside, as it were, tackling the day-to-day problems to finance cash flow, the market, research and development and all the other operations one needs in an effective and progressive industrial company. But when I began to look at the situation, I came to the conclusion that the Bill had taken care of this point, because it lays down that the Act requires that certain decisions, such as by-law making and delegation of powers, can only be made if there are separate majorities within the working members and separate majorities within the external and nominated members. So the working members can never out-vote with their 16 the sum of 11 of the external and nominated members. I think that that, to some extent, relieves the point.

Secondly, I should like to underline the point made by many others that the eight external members, and perhaps particularly the three nominated members from the Bank of England, are not going to be people of straw. If that were so they would not get there or be given this responsibility. They will not be rubber stamps and they will not be pushed around. If they want to know the facts, then I am sure that the council will make sure that they know the facts. So, to some extent, I think that my noble friend may not have to be too worried.

The other clause that I was disturbed about and which I think many others chewed over and discussed, was the one which dealt with immunity. Personally, having blown this way and that way as I have argued the point in my own mind and with people who have been kind enough and patient enough to advise me, I have come down, as the Fisher Report did, to the view that Lloyd's needs this immunity. My noble friends Lord Napier and Ettrick and Lord Fortescue made the point that they somehow felt that this was totally wrong. In fact, I think that my noble friend Lord Napier and Ettrick overstated the case to some extent when he said that this place is all members entirely above the law. That just is not true. They are not above the law. When they began to get worried about the losses building up, the members of the Sasse syndicate were free at any stage to sue the underwriting agents or to sue the brokers. Of course, they were men of not great substance, so I do not think that their litigation would have been very effective.

Understandably they then turned to whether they could claim on Lloyds—much more powerful with much more in the way of resources behind it. Of course, with the holding up of the audit certificate there was, not purposely—I am not suggesting that my noble friends would do that—but in effect, blackmail by litigation, because here was Lloyd's unable to get these certificates, unable to proceed with their business with competitors overseas saying, "Lloyd's, are tied up and cannot act. Come to us and we shall give you good terms", in danger of losing the business, in danger of disintegrating in places overseas where they were particularly making progress, and so they took it on. But under this new Act they will still be free to sue the underwriting agent or their broker. It is up to the Council of Lloyd's from now on to make sure that they are not men of straw: that they are men of substance, whom you can sue and take to court and from whom you can claim some of your losses.

I hope that my noble friends will take a chance. It is a desperate position when you suddenly discover that your underwriting syndicate has lost, I think it was, £15 million in 1976 and then £6½ million. These are enormous sums and when they are divided down to the people who have trusted their brokers and trusted their agents, it is a devastating thing to happen to any family. I well understand it. But, if they think that too great an immunity is being given, I hope that they will take the opportunity to give evidence.

This is the whole point of the Select Committee. I very much agree with my noble friend who introduced the Bill. I do not think that we, who are not experts, are the right people to persuade and to argue the case, I think that the right people are Lloyd's themselves because they have years of knowledge behind them. They are the people to put the case for immunity—either stronger immunity or perhaps less strong immunity—to the Select Committee.

It is unusual to congratulate the Opposition, but the noble Lord, Lord Mishcon, made as good a speech as I have heard from those Benches. It was in moderate terms and foresaw exactly how right this Bill is. Therefore, in all parts of the House—from the Cross-Benches, the Liberal Benches (with personal reservations), the Labour Benches to these Benches, this Bill has our blessing, and I hope that it will have a speedy passage, because immunity is wanted and time is a factor—you cannot wait for lengthy stretched-out litigation when you are in a competitive and world market.

My Lords, I should like to say a few words in support of the Bill, and especially to congratulate the noble Lord, Lord Strathalmond, on his maiden speech. I join him as a person who works at Lloyd's and I must declare three interests: as an underwriting member, as chairman of an independent underwriting agency and as a non-executive director of a broking company, with minority shareholdings in both companies.

I also wonder what, in days gone by, would have been said about one of the earlier references before Parliament to insurance when Sir Nicholas Bacon asked this question in Queen Elizabeth's first Parliament in 1559:

"Is there any think you, so mad that, having a range of houses in peril of fire, would not gladly pluck down part to have the rest preserved and saved?"

How life has moved on! Self-regulation is very much the foundation on which the Lloyd's market is built, as has been said on several occasions.

I should like to add just a few words on divestment, where it is only fair to say that any conflict of interest has been more apparent than real, except in a few isolated cases. In theory, conflicts of interest frequently exist in all forms of commercial life, perhaps not only between a managing agent and a broker. However, I support the provision, because we live in an era when it is essential to be seen to be pure. No one, whatever his opinions, can be sure what the ultimate effect will he when the sales take place within the five years which have been designated under the Bill.

It also needs emphasising that Lloyd's brokers will be retaining a very considerable commercial interest with the Lloyd's market through the ownership of members' agencies. Here I cannot actually agree with my noble friend in his maiden speech, when I think he advocated that members' agencies should be treated in the same manner as managing agencies. This is not the time to go into the whys and wherefores of that. In the other place, when divestment was debated, this particular point did not actually receive the emphasis it deserved. I think that there has been quite a lot of confusion in speeches that I have heard, both on Second Reading and in Committee in another place, about the different terms that we use in Lloyd's. I am not sure that your Lordships' House fully understands some of the terms which are used as common place everyday terms. I think that it is essential that the Select Committee takes particular care in ensuring that it understands our terminology.

Turning briefly to immunities, it is well known that Lloyd's is seeking from Parliament a legal immunity which would protect the new ruling council. I recognise that it requires considerable political courage to withdraw immunities in one instance and grant them in another, however different the circumstances are. But, as has been said before, Lloyd's is a unique institution, and I think that some of the criticisms have treated the society as if it were an entirely separate body. I think that I detected one or two remarks today which suggested that. However, in fact, the society and its members are in reality the same.

The purpose of the restraint upon the suit or immunity clause was very well described in a letter to The Times. It is to protect the society from individual members seeking to mitigate their own commercial losses by transferring the cost of these to all members. This would be inconsistent with the spirit of the market, where we each take risks for our part and not one for another. However, there is no restriction of suit for damages from clerical error attributable to the Society of Lloyd's, for instance, where there is a prima facie case of the market systems being at fault and where the duties do not involve the exercise of discretion. Increasingly, in the world in which we live, where an individual sustains serious loss, there is a growing tendency to look for someone else to sue. What has not been sufficiently emphasised is that the commercial relationship between a member of Lloyd's and Lloyd's is not with the committee but with his underwriting agent or possibly a Lloyd's broker, who are the obvious defendants in these cases.

Therefore, it has been provided or insisted upon by the Committee of Lloyd's that underwriting agents and Lloyd's brokers are compelled to carry a realistic level of professional negligence insurance. It is a matter of opinion what is a reasonable level, but can assure your Lordships that it has been very substantially increased in recent years. Therefore, it can be deduced that an instance is very unlikely to arise where a suit against Lloyd's represented an individual's only chance to obtain redress for loss occasioned by breach of duty.

The Lloyd's Bill is of vital importance to the London insurance market, and so is its contribution to our invisible export earnings, which has already been emphasised. Lastly, I should like to thank my noble friend Lord Windlesham for the clear way that he expounded an intricate Bill when he had no previous knowledge of the subject.

My Lords, I should like to join with many of your Lord- ships who have gone before me in congratulating the chairman and committee of Lloyd's on their courage and on the amount of work they have put in in bringing this provision to this length. I should also like on behalf of the Department of Trade to thank them for the way in which they have helped that department to appreciate their proposals. I should also like to join those of your Lordships who have thanked my noble friend Lord Windlesham for the clear way in which he has introduced this Bill and guided us in our deliberations on it. Finally, I should also like to join with those of your Lordships who have congratulated the noble Lord, Lord Strathalmond, on his maiden speech. I am sure we are all very glad that he has not followed the reticent example of his father and his grandfather.

The Bill before us is a Private Bill, as has been pointed out. There can however have been few Private Bills of such general importance and interest. Lloyd's is a private institution, but it is no contradiction to say that it is also a national institution. By the length of its historical tradition, its worldwide reputation as a byword for reliability, and its continuing contribution to the national economy, Lloyd's is a most important part of our national heritage.

I shall not speak at length on the unique historic record of Lloyd's and its contribution to the economy. These have been ably described already by my noble friend Lord Windlesham, and others of your Lordships. I should just like to join my noble friend Lord Glenkinglas in drawing attention to one aspect of Lloyd's that strikes me most strongly: its ability to combine tradition—a continuity of experience and regulation over some 300 years—with innovation. We can still proudly claim that the London insurance market leads the world, and this is in large part due to the continuing vigour and adaptability of Lloyd's.

Lloyd's contribution to the national economy is not confined to the immediate employment it provides and the foreign currency it earns, important though these are. We should not forget the integral and essential part played by Lloyd's in the London insurance market and the British insurance industry as a whole. Viewed in this light, it is even clearer that there must be a considerable national interest in the continued health and success of Lloyd's.

Any threat to the viability and reputation of Lloyd's must therefore be of concern to us all. The greatest danger perhaps would be complacency. How tempting it would be for Lloyd's to rest on its laurels. Lloyd's after all continues to meet its obligations, it continues to show an overall profit, and to attract new business and new members. Why, then, attempt to make radical changes in a system that has worked so well?

I am convinced that it would be a mistake, perhaps a disastrous mistake, to yield to the temptation of complacency. The world does not stand still. The character of Lloyd's itself has inevitably changed, and many noble Lords have drawn attention to this. The size of the membership has enormously increased in the hundred years or so since the existing constitution of Lloyd's was devised—and particularly so in the last decade. So has the complexity of international insurance business. It is remarkable that Lloyd's has managed to continue for so long without major changes in its institutional framework. But this has only been possible through the widespread acceptance of informal methods of regulation within the market.

In recent years there have been clear signs of strain in the system. It has not broken down, but it has shown signs of weakness. I do not want to make too much of particular incidents, but they cannot be ignored. Lloyd's was quick to accept this. The Working Party under Sir Henry Fisher, and the Bill that is before us now, represent Lloyd's response to that challenge. The authorities at Lloyd's, and the overwhelming majority of the members, accept the need for change. I should like here to join the tributes that have been paid to the distinguished work done by the working party under Sir Henry Fisher.

I have said that Lloyd's is a national as well as a private institution. There is therefore a public interest in this Bill. It is therefore proper that on behalf of the Government I should state a view on the public interest as we presently see it. It is recognised by Governments and legislators throughout the world, whatever their political complexion, that the public interest requires the business of insurance to be carefully supervised. In the United Kingdom, insurance companies are subject to supervision by the Department of Trade; supervision going considerably beyond the general provisions of company law. The Secretary of State has wide powers to require information and to intervene when necessary in insurance company affairs. Indeed, it is not possible for a company to enter the industry without the authorisation of the Secretary of State, who has to be satisfied that those in charge are fit to be so.

Lloyd's has traditionally been exempted from many of the regulatory provisions applicable to the insurance industry in general, and my noble friend referred to that during his experience at the Board of Trade. Such exemption can be justified only if the institutions of Lloyd's continue, and are seen to continue, to regulate the conduct of the Lloyd's market effectively. The basic principle of this Bill is the preservation of effective self-regulation of Lloyd's. The Government support that objective. Provided the institutions of Lloyd's show the will and the ability to regulate their own affairs by making and enforcing their own rules it is preferable that they should do so. The business of Lloyd's is very complex. The market is a close-knit community depending on mutual trust and understanding based on personal experience.

This makes possible a remarkable degree of flexibility and informality. That flexibility is one of the secrets of Lloyd's success. But it means that the task of regulating such a market is difficult, and calls for intimate knowledge, firmness and consistency of purpose and sound practical judgment on the part of the regulators. The Bill provides, in our view, the right framework for such a system. The council and committee must adopt the necessary by-laws and provide for their enforcement promptly and fairly. The Government support the Bill in the confidence that this will be done. My noble friend Lord Windlesham has laid before your Lordships ample basis for this confidence. The present authorities and membership of Lloyd's have given evidence of their determination by promoting this Bill with vigour and persistence. We are sure that the new institutions will be no less committed to these objectives.

One of the functions of the authorities will be to maintain standards of conduct and integrity in the market. This task would be more difficult if fundamental conflicts of interest and duty were ever-present in the background. Such a conflict may arise where the agent for the purchaser of insurance—in this case, a Lloyd's broker—has a financial connection with the underwriter. There has been an increasing trend for Lloyd's brokers and the managing agents of syndicates at Lloyd's to come under common ownership. The conflict of interest which thus arises—and this is not disputed—presents a potential detriment both to the policyholder and to the members of syndicates.

The Bill as it stands removes this danger by requiring that, after a period of five years, a broker may not trade at Lloyd's if it, or any parent company, has a major interest in a managing agency. Similarly, a managing agency may not operate at Lloyd's if it has an interest in a broker. It is likely that in order to comply with this rule many brokers will divest themselves of shares or assets in managing agencies; hence the shorthand term of "divestment" for these provisions. I would mention in passing that there may be some cases where a capital reorganisation would suffice—a so-called "demerger"—of the kind this Government facilitated in the 1980 Finance Act. In other cases this may not produce the result required by the divestment clauses.

These provisions of the Bill—the "divestment" provisions—have attracted controversy. Petitions have been laid before this House relating to them. We should consider the matter in this light. This Bill will not meet its objectives if it fails to reassure the Lloyd's community and the world at large that the Lloyd's market is under proper control. There would, I believe, be serious doubt that that had been achieved if fundamental conflicts of interest or duty were untouched by the Bill. It is argued that common ownership of brokers and managing agencies constitutes such a fundaments conflict. The majority of the Fisher working party, including those with close practical experience of Lloyd's, concluded that a separation of ownership was the only satisfactory solution. A committee in another place, after hearing extensive evidence, confirmed that conclusion, and required, moreover, that the relevant provisions should be contained in the body of the Bill and not in by-laws, thus indicating their consideration of the importance of the matter.

I do not want to prejudice the evidence that may yet be heard. But on the evidence that has so far been presented, I am convinced that divestment is an essential component of the Bill. The promoters of the Bill themselves, backed by a large majority of their membership, have accepted the strong views expressed in another place. I do not think we can lightly envisage reversing or indeed modifying the clear-cut and clearly right decision that has been taken, and in that matter we, for our own part, share the sentiments so discreetly expressed by my noble friend Lord Windlesham in relation to the Instruction which was spoken to by the noble Lord, Lord Wigoder.

Petitions have also been presented dealing with other matters. I will mention only one. Clause 14 of the Bill restrains members and senior managers within the Lloyd's community from bringing actions for damages against Lloyd's and its officers where, in good faith, they have exercised their functions under the Bill. I have emphasised that Lloyd's is a self-governing community. I am sure it would wish to remain so, and that would certainly be the wish of the Government. Traditionally, the community has been prepared to accept the authority and judgment of the Lloyd's Committee and in particular, that of the chairman. The Bill may to some extent be regarded as formalising that which has hitherto been accepted on an informal basis.

Authority is given to the elected council and committee, subject in the case of disciplinary proceedings to review by an appeal tribunal under independent chairmanship. I do not think it is in principle unreasonable that those who voluntarily engage in business at Lloyd's as members or senior managers should accept that in matters requiring judgment and discretion over the operation of the Lloyd's market, the decisions of the Lloyd's authorities should be final. The very basis of self-regulation—which is accepted by all in the community—is that Lloyd's own institutions are best equipped to reach such decisions.

It has been pointed out that that is a very different matter from preventing other people, not members of the Lloyd's community as defined in the Bill, from taking court action; for example, policyholders are in no way affected by Clause 14. At the same time, it is right that the authorities' interpretation of their statutory functions should be open to scrutiny by the courts. Judicial review will be available as a remedy for oppressive or unfair acts, and nothing in the Bill affects that. Compliance with all the requirements of natural justice will be necessary. In our view of the matter, it is quite wrong to suggest that the Bill would put Lloyd's above the law. As we see it, Lloyd's will not be placed above the law.

I therefore do not think it unreasonable that the finality of Lloyd's decisions should have the limited degree of protection provided in the Bill, and your Lordships will notice—this perhaps in relation to the way in which the point was put by the noble Lord, Lord Airedale—that the protection of Clause 14 relates to the exercise of powers conferred by the statutory constitution. In other words, if one looks at the package as a whole, the duties as well as the protection are imposed as part of a single package.

Moreover, I see important practical benefits in that protection. Lloyd's will have a difficult path to tread in exercising their powers of disciplinary control. If they take action, they may be resisted by those affected by the action. If they do not take action, they may be attacked by others, perhaps external members, whose interests may be affected. It is not easy to take the right regulatory decision every time, and even less easy to take it precisely at the right moment. A judgment has to be made between excessive intervention in commercial decisions and the maintenance of proper standards. If the principle of self-regulation is to be maintained, the regulators may reasonably expect a degree of protection in taking these judgments. They are likely to make better decisions if they are free from the risk of an action for damages.

It is also likely that the exclusion of such actions will be in the interest of Lloyd's as a whole. Lloyd's operates worldwide, as has been pointed out, and its cover may remain in force for years. At the same time, its constitution is not always fully understood, particularly overseas. It is not in the interest of the whole institution that there should be litigation for damages between the society and its members on regulatory matters. The benefits to individuals are much outweighed by the interests of the community. It is reasonable that all should be protected from unfair regulatory decisions, but it is also reasonable that those who profit from their membership of Lloyd's or the Lloyd's community should forego certain rights to maintain litigation which may greatly affect the public reputation of the institution. Few things would be more deleterious to the world reputation of Lloyd's than a stream of such actions.

I think, therefore, that there is a strong case for a measure of exemption. It is entirely proper that any proposal for a statutory limitation of normal legal rights should be carefully scrutinised. The scope of any such limitation should be no greater than is strictly necessary. I believe that the scope of the exemption in the Bill as it stands has already been carefully circumscribed, but it is open to further examination. Accordingly, it is entirely right that this matter should be specially examined, as it will be, by the committee of your Lordships' House to whom opposed Private Bills are committed.

My Lords, the Bill is important. It affects the livelihood of many thousands of people and the future of one of this country's most remarkable and successful institutions. The need for reform is recognised. The Bill, whatever its controversial aspects, has been firmly endorsed by the membership of Lloyd's and by honourable Members in another place. I believe that in its present form we should now give it our strong support. In closing, I should like also to echo the thought from the editorial of the Financial Times, to which the noble Lord, Lord Mishcon, referred.

My Lords, it might be for the convenience of the House, even at this late hour, if—acting on behalf of my noble friend the Chairman of Committees—I were to comment on the procedural aspects of the two Instructions which will be moved if your Lordships think fit to give the Bill a Second Reading.

I see no procedural objection to the acceptance by the House of either of those Instructions, as in both cases they do no more than reinforce points which are made by petitioners in the petitions they have deposited against the Bill. Three petitions object to the exemptions—or immunity, as most of your Lordships have referred to it during the debate—conferred on the society by Clause 14, which is the subject of the Instruction proposed to be moved by the noble Lord, Lord Lloyd of Kilgerran; and two petitions object to the compulsory divestment provided for in Clauses 10, 11 and 12, the subject of the Instruction of the noble Lord, Lord Wigoder.

Instructions, which are an accepted part of Private Bill procedure, though they cover matters already raised in petitions against a Bill, serve a useful purpose because they draw the attention of the House to the effect of specific provisions in a Bill, and the Hansard report of any debate, such as the report of all the speeches which your Lordships have made in today's debate, will be before the Select Committee for its perusal and consideration.

Moreover, Select Committees on Private Bills in this House do not normally set out in their report to the House the considerations and reasons which have led them to their decisions. But in cases where an Instruction to the Select Committee has been passed by the House, it is the practice for the committee to make and publish a special report dealing with the points raised in the Instruction. I have every reason to suppose that this procedure would be followed by the Select Committee on this Bill.

My Lords, I am sure it would be the wish of the whole House that I should thank the noble Earl who is acting as Chairman of Committees for the advice he has given on the procedure to be followed should the Bill receive a Second Reading. I made rather a long speech in introducing the Bill and I ought to make up for it by being extremely brief now. But I do not want to deprive myself of the opportunity to add my congratulations to the noble Lord, Lord Strathalmond, on his eloquent and well-informed maiden speech.

The three controversial proposals in the Bill have been fully debated, the issues are now clear, and there is no point in repeating the arguments. However, there is one fact relevant to the debate on the exemption of the Society of Lloyd's which has not been mentioned, but which I should like to put on record, since it refers to the exchange between my noble friends Lord Hacking and Lord Lindsey and Abingdon. This concerned the acceptance by the membership of Lloyd's as a whole of the immunity provisions at the Wharncliffe meeting. The noble Lord, Lord Airedale, who spoke after this exchange, said that, in voting so overwhelmingly in favour of the Bill, the members of Lloyd's were voting for a package, and that some of them may have had reservations about the immunity provisions which were then wider than those which are contained in Clause 14 of the Bill.

It is important to note the fact that, before the Wharncliffe meeting, the chairman of Lloyd's sent a questionnaire to the membership concerning the Bill and the meeting. In the circular he specifically asked for further comments beyond the proposal to form a council and the transfer of powers to it. A large number of replies were received. Some 600 were in favour of a long-stop measure; 180 comments were in favour of divestment, 136 comments were against divestment, but no comments at all were recorded on the immunity issue. Further, when Lloyd's brokers were consulted at three meetings, again held in advance of the Wharncliffe meeting in the autumn of 1980, no comments were raised on the matter of immunity. These are relevant facts to have on record.

I want to say to the noble Viscount, Lord Caldecote, that the point he has raised is a new one to me. It is, as I hope he will accept, a detailed matter which calls for consideraton by the promoters of the Bill. I can give him an assurance that consideration will take place without delay and that Lloyd's, as the promoters, will be in touch with him direct in the first instance.

My Lords, I am very grateful to the noble Lord.

Finally, my Lords, I should record my thanks to both Front Benches for their support for the Bill—robust support, that is not too strong a word. The Department of Trade, for which the Lord Advocate has been speaking, has kept in close touch with the proceedings on the Bill. The Minister has stressed the importance that both the Government and the Department of Trade officials attach to effective self-regulation by Lloyd's. As the noble and learned Lord, Lord Mackay of Clashfern, said, in the view of the Government, which is shared by many noble Lords on this side of the House, it is preferable that this form of control should continue, rather than to proceed by way of general legislation, which would be the only alternative.

The noble Lord, Lord Mishcon, made a remarkable intervention from the Opposition Front Bench. should like to thank him warmly, and to say that all those who heard him were greatly impressed by what he had to say, and by the manner in which he said it.

I commend the Bill to the House. There has been a broad measure of agreement that the Bill should receive a Second Reading and that it should now go to a Select Committee, which will give thorough and careful consideration to its content. As I said in moving the Second Reading at the start of the debate, if the Instructions which appear on the Order Paper are now moved formally, I recommend the House not to oppose them.

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

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

moved Amendment No. 1:

My Lords, I should like very briefly to thank the noble Lord for the amendment, and to thank him most warmly for many further amendments that appear in his name on the Marshalled List. I also wish equally to thank the noble Earl, Lord Mansfield, for going such a long way in the amendments that are now before us to meet points that I made at the Committee stage. To save the time of the House I shall not get up on each occasion and thank noble Lords. I hope that both noble Lords to whom I have referred will accept this as an omnibus word of very warm appreciation for the steps that they have taken to meet me on so many amendments. If we can this evening reach similar agreement about the measures to tighten up against poaching, I think we shall have virtually a totally agreed Bill. I again thank the noble Lords and repeat that I shall not intervene each time to do so.

My Lords, I am most grateful to the noble Lord for his kind remarks.

My Lords, I should like to associate myself with the remarks made by the noble Lord, Lord Northfield, since I have been one of the strong critics of the Bill in the past. I am grateful for the very agreeable way in which my noble friend Lord Glenarthur has progressed.

moved Amendment No. 2:

moved Amendment No. 3:

moved Amendment No. 4:

My Lords, it might be helpful if I reminded the House of the general circumstances in which action under Section 6A will take place. The commission will have come in under the existing Section 6 to deal with a red deer problem. They then find that among the red deer—or sikas, as it will now be—there are also pockets of roe or some other deer which are also causing some damage. But they need the power which Section 6A will give them if they are lawfully to shoot deer of these other species.

The commission will certainly be on the land with the knowledge of the occupier, and in 99 cases out of a hundred they will in fact be there at his request. The commission's stalkers will have a written authority from the commission itself given under Section 6: and under the terms of Section 6A the Commission, in turn, will have had to have got the consent of the occupier before their stalkers could shoot the other species. Thus, the stalkers will already have full written authority from the commission, and the occupier will be fully in the picture.

To add to all this the requirement that the occupier must give his consent in writing seems to me to be unnecessary, and could indeed cause some delay in dealing with a problem which requires quick action. This being the case, which I hope explains the situation to the noble Lord, Lord Northfield, I trust he will see fit to withdraw his amendment.

My Lords, I am not entirely satisfied but I see the point that the occupier will already have invited the people on to his land. At this stage, therefore, I beg leave to withdraw the amendment.

moved Amendment No. 5:

My Lords, the Red Deer Commission stalkers already have a dispensation under Section 33(2) of the 1959 Act, which was amended by the 1967 Act, to shoot at night when they are operating under Section 6 of the Act or under a control scheme. Section 6, however, and the control scheme provisions, which are found in Section 7 and following, apply only to red deer or, as it will be under this Bill, red and sika. Thus, Section 33(2) confers no exemption in respect of other species, and the special exemption for night shooting under Section 6A, which is Clause 4 of my Bill, is therefore required if it is intended that Section 6A should operate in parallel with Section 6.

This is fairly tortuous, but I hope the noble Lord, Lord Northfield, will feel that he is satisfied by it and that we should not make the further amendment that he proposes, but that he will withdraw it. Perhaps I may also say that it makes it perfectly clear, I think, that the individual stalkers will in fact be individually authorised.

My Lords, it would seem rather a charade to ask the deer commission stalkers to seek authoristation when they are already on the spot dealing with a case, because in fact the people from whom they would be seeking the authorisation would be administrators not familiar with what is happening on the ground. The normal procedure is that, if the Deer Commission wants advice on whether to authorise something to happen, they send their stalkers to look at the situation and the stalkers are the people who report back. If they have then to report back and have their report okayed, it seems to me to be rather a charade. I think that in this case it would be helpful if the noble Lord, Lord Northfield, were to withdraw his amendment.

My Lords, as the noble Lord, Lord Glenarthur, said, his explanation is very tortuous. Frankly, I have not followed it, and I shall have to read it in Hansard to see whether it is worth pursuing the point any further. Meanwhile, I have to withdraw the amendment.

moved Amendment No. 6:

My Lords, perhaps I may respond to the noble Lord because this is a matter which goes rather further than the actual subject of this Bill. I say by way of preface that I am at one with the noble Lord when he expresses his detestation of poaching and the cruelty which frequently accompanies it. I appreciate the fact that what he is seeking to do by this amendment is to stiffen Section 52 of the 1959 Act. But I would hope to show him that, in at least one instance, what he seeks to do is unnecessary; in another it may be desirable but is something to be decided at a later stage of this Bill; and that, in the third instance, what he seeks to do is otiose according to Scottish law and the way in which we in Scotland comport ourselves. I shall come to all those.

What the noble Lord seeks to do in effect in subsection (1) is to make it an offence to be on land with the intention of poaching. I am using baby language but I hope that the House will forgive me. Secondly, he makes it an offence to remove the carcase of a deer without authority and, thirdly, he, as it were, makes it an offence (in subsection (3)) to decline to meet a challenge by virtue of his presence when he is challenged by a constable or any authorised person. So far as subsection (1) is concerned, it has little or nothing that is new. A person who is acting as described in subsection (1)—that is to say, being on land with intent to take, kill, or injure deer, to have what used to be called a felonious intent towards deer—is already covered by Section 26 of the 1959 Act where it refers to acts preparatory to an offence which are punishable as if they were the offence itself.

Furthermore, I would draw the attention of the noble Lord to Section 20 of the Firearms Act 1968 which applies to Scotland and which makes it an offence to enter or be on any land with a firearm as a trespasser without reasonable excuse—and the proof of that latter phrase lies on the accused. Conviction of an offence under Section 20 allows the court to order forfeiture or disposal of firearms and ammunition found in the offender's possession and to cancel his firearm or shotgun certificate. The maximum penalties on summary convition are a £200 fine and/or three months' imprisonment. So far as subsection (1) is concerned, nothing is achieved that is not already contained in the law as it stands.

My Lords, does not the 1959 Act refer only to killing? This amendment would extend it under subsection (1) to taking, killing or injuring, so is it not to some extent the case that these provisions are not covered by existing legislation?

My Lords, I disagree with the noble Lord. If injuring a deer is not an act preparatory to taking it, I do not know what is. Coming now to subsection (2), that does very little but re-enact what we have already in the existing Section 22. I agree that the noble Lord has a point here. There is one particular difference which, in effect, is the offence of removal of the carcass of a deer without authority. The noble Lord will be conversant with the case of Miln v. Maher, with which I will not weary the House. I agree that the noble Lord has a point here. I should like to look at it further. I would hope, if I dare to suggest it, that we need not return to it at Third Reading; but this is a matter which the Government would like to look at. I think this is something which might be considered by another place. The legal position is that the interpretation of taking a deer is not clear. It should be the subject of research, and I am grateful to the noble Lord for bringing up this part of the Bill.

Now I come to subsection (3). That would require a trespasser on land to give his name and address to a constable or an authorised person and to remove himself from the land forthwith, and if he did not he would be committing a criminal offence and would be liable to a penalty. Under the Criminal Justice (Scotland) Act which the House discussed in 1980, a constable already has the power to demand the name and address of a suspect and to detain him where necessary while it is verified. This is part of the general law of Scotland and relates to any offence and not merely to those which have to do with deer or poaching. So we have that. That applies to a constable.

Now we come to what I regard as the difficult part of the noble Lord's amendment—and I am trying to be fair—the business of the authorised person. Such persons, according to this amendment, would be receiving a power, if not to arrest a poacher, to challenge him in circumstances which could and might be extremely tense. I would not want to take it upon myself to import such a power into the law of Scotland. It may be that we have in Scotland rather different ways of going about things than in England but in general people tend to walk about in Scotland on other people's land and, although there are certain rather shaming exceptions to the rule, basically landowners accept the position nowadays and we do not have more friction than we need. I think that to have presumably gamekeepers or owners or their agents challenging people in this way, which means that if, for instance, the accused person or the challenged person refuses to comply, he is guilty of a criminal offence, is entirely wrong.

The other matter is that I have had a lot to do with the law in Scotland and in England, although, I hasten to say, always at a fairly humble level. But I deprecate the making of law which if not complied with makes the law look an ass. In those circumstances, if the challenged person says that he will not give his name and address to the authorised person nor intends to quit the land, what happens? That is a recipe for violence or, at least, a breach of the peace. I am grateful to the noble Lord for his second suggestion, subsection (2), which I undertake to look at with sympathy; but, for the reasons that I gave, I cannot accept the first two heads of his new clause.

My Lords, again the noble Earl has been helpful. I am glad to be put right about the matters and powers which exist in other Acts and in connection with subsection (1). I beg to withdraw the amendment on the understanding that the noble Earl will look at subsection (2).

moved Amendment No. 7:

My Lords, as my noble friend Lord Mansfield said earlier, a court would probably be able to deal with a case of wilful injury in an attempt to kill, as Section 26 of the 1959 Act makes clear. However, I accept—to put the matter beyond doubt—that to deal with any cases that might arise this amendment should be made. Accordingly, I accept it.

moved Amendment No. 8:

My Lords, first of all, may I say that I am very grateful to the noble Lord, Lord Northfield, for removing the detail to do with shooting from vehicles which was in his original amendment? Referring to this amendment, it certainly has points of interest and some merit in certain places. I start with paragraph (b): the noble Lord probably has a very good case for saying that it can be cruel to shoot at deer from helicopters. I saw part of the film to which the noble Lord referred.

I have little doubt that at the very least a deer could be exhausted and therefore the practice could be considered exceedingly cruel. I am not entirely satisfied with what he feels about paragraph (c), about it being cruel to "undersling"—as we call it in the trade—a deer in a net beneath an aircraft. I entirely agree with what he says about suspending an animal by its hocks. He might like to know that it would be very difficult in many respects to carry a deer inside an aircraft. The animal would have to be suitably and correctly "anaesthetised"—for want of a better word—and strapped down to prevent any damage should it start to move around in the aircraft. I think with nets it is an acceptable procedure and one used for the rescue of animals which have been stuck in bogs. I know that the Army in Northern Ireland has done this on several occasions and it has not been too terrifying provided the animal is suitably drugged.

I think that what I have to say on the first point really covers all three: there is a great deal here which is not really suitable to put in an amendment to be made to primary legislation and it might be better left to another method. Perhaps I might refer particularly to Amendment No. 9. The equipment detailed there is the sort of equipment which could be affected by this amendment. I should like to make one other point. In paragraph (a) when the noble Lord attempts to prevent—

"… any mechanically propelled vehicle for the purpose of driving deer on any unenclosed land or unenclosed woodland",

I accept the point that the noble Lord is trying to make, but I must point out to him that, as he may recall, there was a great deal of discussion at Committee stage on the question of an occupier being allowed to shoot a deer he found on his land. It seems to me that what the noble Lord is achieving, probably accidentally, here is, first, saying that he does not like the idea of having to shoot it and, secondly, if he sees a deer about to come off unenclosed land on to enclosed land he may not even go out with a Land-Rover to frighten it off, because effectively he would be driving deer. So I hope that I may have satisfied the noble Lord to some extent, particuarly on the point of detail which we would be going into in primary legislation. I hope that, having heard those remarks, he will see fit to withdraw his amendment.

Before the noble Lord sits down and before the noble Lord, Lord Burton, speaks, do I understand him to say that if we withdraw this amendment the words "other equipment" in Amendment No. 9 will be specifically used to bring in some provision about the use of motorised vehicles?

My Lords, I will come on to Amendment No. 9 in a moment, but the point about "other equipment" which is mentioned there is that it is a very wide device indeed and, in my view and in the view of others who have given advice, it could accommodate the use of helicopters, which the noble Lord has in mind.

Although appreciating the situation on Amendment No. 9, I am a little worried that paragraph (a) could not be covered by this. There are now modern vehicles such as Argocats and other things which you can run about in on the hills, and there have been at least two cases where they have even been used to drive deer: probably, there are more cases. I wonder perhaps whether this paragraph might not be improved by adding words similar to—

"for the purpose of killing or taking deer".

Clearly it would be beneficial to use those vehicles to chase the deer out if they are coming in and doing damage on the ground, so I think it would be useful to have something along these lines. Perhaps my noble friend would look at this again and bring it back on Third Reading.

My Lords, I think that the noble Lord, Lord Northfield, has got something here in respect of his desire to try to stop this cruelty in relation to transportation. Personally, I do not see how it is going to fit in just with the question of equipment. It is really a method of dealing with it in circumstances in which I think most people would agree, with an aircraft or helicopter being used. How are you going to limit that just by "equipment"? If the Government are satisfied that they can in some way cover this, certainly I would be reasonably well pleased with it; but at the moment I cannot see that Amendment No. 9 is adequate to cover the point, and I think that most of your Lordships would want this to be covered.

My Lords, perhaps I could satisfy the House on this point. "Other equipment"—though I do not want to trespass on Amendment No. 9 more than I have to—is a very wide phrase and has been specifically used to take account of developments which perhaps we do not foresee at the moment. As I have said, it gives very wide powers. The one matter which I do not think it would satisfy is paragraph (a), but I hope that my noble friend has convinced the noble Lord, Lord Northfield, that that part of his amendment, although I entirely sympathise with its objects, is so drafted that it would have the opposite effect to the one he hoped to achieve: in other words, somebody would have to wait until the deer came on to enclosed land before anything could be done about it—unless they got out of the vehicle and advanced to the deer waving their arms!

My Lords, this has been an interesting discussion and I think we shall have to consider putting down on Third Reading an amendment which limits the provisions to an improved version of paragraph (a), namely:

"using any mechanically propelled vehicle for the purposes of killing a deer",

or something on those lines. That would meet the point about using a vehicle simply to frighten deer when they are attempting to come on to your land. That is the poachers' real use of vehicles and that is the one I am trying to prevent by this provision. I see the point about aircraft, and I am grateful to my noble friend for taking issue as to whether "equipment" covers aircraft. But as the noble Earl is so clear in his mind—and he has better legal advice than we have—that the word "equipment" could cover aircraft and other things not yet thought of, I suppose the proper course at this stage would be to accept the criticism of the amendment and return to paragraph (a) on Third Reading, which I shall do. I beg leave to withdraw the amendment.

moved Amendment No. 9:

Page 3, line 41, leave out from ("firearms") to end of line 44 and insert (", ammunition, sights and other equipment which may lawfully be used in connection with killing or taking deer, and the circumstances in which any class of firearms, ammunition, sights or other equipment may be so used.").

I understand there is also a misprint in Amendment No. 10. It should refer to page 4, line 8.

moved Amendment No. 10:

My Lords, I accept the amendment.

moved Amendment No. 11:

My Lords, I think I should point out that this amendment was prompted by my noble friend Lord Burton. I undertook to consider the matter of affirmative resolutions. Governments, of whatever complexion, do not like affirmative resolutions very much, because they take up parliamentary time. It is much easier, from the point of view of the Executive, if somebody wanting to challenge subordinate legislation has to move a prayer. But, in the circumstances, it was thought that your Lordships might well want to debate an order made under this section, without the necessity of having to pray against it, and I felt, all things considered, that the affirmative procedure would be appropriate.

My Lords, I thank my noble friend.

moved Amendment No. 12:

My Lords, I should like to support my noble friend Lord Northfield in this amendment. This is really one of the troublesome parts of the Bill. Of course, I listened to the debates on this subject at the earlier stages of the Bill. We have to make up our minds that public opinion on cruelty, on the treatment of animals—domestic pets and wildlife—is changing. If one looks back 100 years, one realises that things were done then which would not be tolerated today. For example, in the slaughter of animals for food, there was a time when the most disgraceful conditions obtained in our slaughterhouses. If you look back over the debates on the slaughterhouses legislation of different kinds since 1928, you see that the most horrible descriptions of conditions and methods used in slaughterhouses came before the House at different times. That was part of the business at that time, but now it is not. We now have humane slaughter, humane treatment and humane societies, all in relation to animals throughout the world.

Even though a forward date might have to be thought of in this connection, those who want to kill animals must, to do so, acquire the equipment which is regarded as acceptable today. It is no good saying, "All I have got is an old-fashioned pole-axe in my cupboard and I propose to use that to slaughter animals". There is better equipment available today than a shotgun for shooting mammals of this size and temperament, and position in the sentimental and emotional life of the country. These are animals which people regard with affection.

I know that a marauding deer is a most tiresome animal to have around the place. We have heard a good deal about marauding deer, and I have dealt with the philosophical aspects of putting a label of guilt upon an animal before you shoot it. That gives some kind of moral justification for what you are about to do. But it may not be marauding; it may be just eating, like any deer might do. So I feel very strongly about this amendment and I am sticking here at the moment to deal with it and to support it. I will stay all night to do it and will keep your Lordships here all night to do it. Some accommodation has to be reached on this, if we are to give this Bill final approval.

My Lords, if we proceed with this Bill, as it appears we might, and we are to have a code of what is required for night shooting, that will require suitable equipment. Therefore, if there has to be suitable equipment I do not see why this amendment cannot be accepted, because, clearly, a shotgun is not a suitable part of the equipment.

My Lords, may I just say one or two words about roe deer, which have been mentioned in connection with this amendment? Roe deer are very widespread throughout the lowlands of Scotland, both in the north and in the south. They are much more widespread than red deer and, for preference, they live in young woodlands. They are far more prolific breeders than red deer, and they have increased so dramatically in the past 20 years that they now occupy very much the same position as a forest and agricultural pest that the rabbit had before myxomatosis. No one ever suggested that the rabbit should not be shot at all times, without the inconvenience of the person shooting requiring authority from the Deer Commission. We all hope that people shooting roe deer will have suitable firearms for doing that, and I think that the schedules which are proposed to be introduced by the Secretary of State should help to cover this.

But I want to emphasise the importance of being able to control roe deer without a great deal of trouble and difficulty and, preferably, without the person shooting needing authority from the Deer Commission, because sometimes we are approaching the point where we have to choose between having roe deer unlimited and having trees or crops. Matters are getting to that point. If any noble Lord is in any doubt as to the truth of this, perhaps he would care to read an article entitled "Too many deer for the trees", which was published by the New Scientist on 18th March. I believe that the Forestry Commission have sent a copy to those who took part in the Committee stage debate and it is very interesting.

My Lords, the House will recollect that we had quite a full debate on this matter in Committee. I sympathised then with the noble Lord, Lord Northfield, in his desire to curtail the use of the shotgun. I still do not think there is anything—or if anything, nothing very much—between us. No responsible body of opinion maintains that a shotgun is a suitable weapon for sporting use against deer. That is for sure. But I think I can claim, from the way he has put down and tabled his amendment and the phraseology which he has used, that the noble Lord reluctantly concedes, as I do—as we all have to—that it continues to be a disagreeable necessity, for the purposes of crop protection.

If we start from that base line, where do we get to? I am slightly disappointed that after the debate which we had the noble Lord has come back to this matter. I have read what I said in Hansard and, may I say, approved it. I had thought that what I undertook to do was this: that if the noble Lord conceded the principle that regulation of firearms should be relegated to subordinate instruments—and he did concede that—then I would take the very greatest trouble to be quite sure, first, that we should have consultation. I gave various undertakings about who would be consulted, and the various interested parties. Secondly, that we would press ahead with it as soon as this particular piece of legislation reached the statute book. Third, that we should go into those consultations with a strong presumption that the use of the shotgun is to be restricted to certain bores and to certain types of shot. And, fourth, that its use should be restricted to certain circumstances which would be well defined and which would be in connection with crop protection.

Having given all those undertakings, I then look at my list of amendments, as they come from the printer, and back comes the noble Lord to the same old subject. He drafts an amendment which in fact is designed, I know, with the very best motivation but which in fact is looser than the original one in Committee, and for this reason: that if the noble Lord will look at subsection (6) it has the curious effect, which I am sure the noble Lord would not want, or certainly would not intend, of making it impossible subsequently to prohibit the use of smaller bores and smaller shot. That, I am sure, is not in the noble Lord's mind. It would be the Government's intention that guns and shot below a certain size would be absolutely banned. That is one avenue in which the amendment is deficient: to the extent that it would, by being primary legislation, stop the Secretary of State from doing what we all want him to do as soon as he has had the consultations. That, I suggest, would be a very foolish procedure.

The same provisions as to damage appear in this amendment as we debated at length in Committee. We are going to deal with other damage provisions later on in our proceedings, but I think the House knows very well my views about damage. I myself and also, I think, my noble friend Lord Dulverton—who I regret to see is not with us—and the House agreed reluctantly that some night shooting is necessary for crop protection and that the shotgun should be permitted for that purpose. Therefore, there is logic in permitting their use in those circumstances. But the nuts and bolts of the regulations will be pursued during the consultations before the regulations are laid, and as we have now adopted the affirmative procedure they will be subject to debate in your Lordships' House when they come forward for approval under the affirmative procedure.

For all those reasons, if the noble Lord thinks that in some way the Government are going to be "got at", if I may use the phrase, so that they will renege on the undertakings and the, I hope, really fulsome promises which I have now given to the House on two occasions, I can assure him that we shall not. I think we agreed on the last occasion in Committee that we had got the right way of going about this. We had a little debate in which the noble Lord, Lord Ross of Marnock, took part as to the essentially Scottish nature of this legislation and the way in which we leave it to the Secretary of State to lay orders as he may be advised—and properly advised. In those circumstances, I can only hope that the noble Lord, Lord Northfield, and, indeed, the noble Lord, Lord Houghton of Sowerby, whose concern I share so far as the cruelty aspect is concerned, and the House, will see the wisdom of what it is that the Government have been consistently suggesting is the right course to be pursued.

My Lords, I am very grateful to the noble Earl the Minister, but I would say three things to him. I am not sure about his interpretation of subsection (6) because it refers back to subsection (5). Subsection (5) is carefully prefaced by the words, "Without prejudice to the provisions of this section". I would chance my arm in saying that if the Secretary of State wished to vary subsection (6) he could do so under the earlier powers in the Bill because subsections (5) and (6) are without prejudice to the powers of variation which he has, anyway. Until the noble Earl can convince me of it, I am not really penitent on that point.

My second point, if the noble Earl will accept it from me—I hope he will, and then he will not be so discomfited that I have come back to it a second time—is that it is important that we should get clear what the minimum is that we shall be looking for in the orders which the noble Earl will eventually be bringing to the House. The purpose of this amendment, as I said in introducing it, is to get clear the understanding that we have, and what I have not yet had from the noble Earl—which is important to me and, I guess, to my noble friend Lord Houghton of Sowerby—are any remarks about restrictng the use of the shotgun to daylight hours. That is of great importance in outlawing the shotgun. With great respect, I have to say to the noble Earl that I do not think he said anything about this at Committee, and he has not said anything about it tonight. So he cannot really blame me for coming back to state what our minimum is.

The third point I want to make is this. I hope the noble Earl will give us credit for trying to help this Bill through another place. As I have made clear on previous occasions, there are two kinds of people who might stop this Bill: first, the pro-farming lobby and, secondly, the animal welfare lobby. If we are getting the noble Earl to state and restate for the benefit of the animal welfare lobby the energetic use which he is prepared to make of his powers to issue orders about weapons, it is some way of assuring the animal welfare lobby that they should not need to object to this Bill at four o'clock on a Friday when it goes to the House of Commons.

I hope that the noble Earl's discomfiture—his displeasure, almost—at this amendment being brought again will be withdrawn when he realises that we, too, are trying to be helpful. The animal welfare lobby is already in touch with people like me, saying, "Are you satisfied? Is this Bill making enough progress? Is there enough protection against cruelty in the Bill? Or should we arrange with our supporter Members of Parliament to block it?" Therefore, I am trying to get the noble Earl to state as often as he can the reasons why they might not need to block it on one of the issues about which they feel most strongly.

I have given three reasons why I have come back to the issue. I am disappointed that I still have not had an answer as to whether in fact there will be some assurance on the point that the restriction of the shotgun to daylight use will be included in the affirmative order. If the noble Earl could help me on that point I should be very grateful. I am sure that he would have the permission of the House to make another short intervention.

My Lords, with the leave of the House, perhaps I should just say something for the benefit of those members of the animal welfare lobby who do not read Hansard.

I will make sure that they do, my Lords.

Well, if they do block this in the other place at four o'clock on a Friday afternoon, we shall just go back to the 1959 Act, and the very real concessions which are being made by the farming lobby will be lost. I say no more.

With regard to the undertakings I have given, have really gone as far as I can before the Secretary of State undertakes due consideration. I believe it is generally agreed that some shooting at night is necessary for crop protection. I believe it is also agreed, reluctantly, that for the purposes of crop protection shotguns sometimes have to be used. I am not going to say whether the two marry up for these purposes because I do not believe that such a matter should be decided—or rather, that I should pronounce on such a matter—before the necessary consultations are undertaken. It would be quite wrong of me to say "Yea" or "Nay" on what I know the noble Lord would like me to deal with.

I have now said on two occasions that the Government are entirely with the view expressed and that we are all concerned to ban so far as we possible can, where necessary invoking criminal law so to do, any cruelty in the control of deer. It is therefore of the utmost importance that this Bill proceeds along its way to another place. One hopes, as I said on Second Reading, that the consensus which I feel is emerging so far as this Bill is concerned is allowed to flower and that we get a really worthwhile measure.

My Lords, I have probably pushed the noble Earl as far as he should go. I greatly respect his assurances. As long as we have an understanding that the issue of daylight use is at least considered, then I must be "happy"—although obviously I am slightly unhappy at the same time. I beg leave to withdraw the amendment.

moved Amendment No. 13:

My Lords, as the noble Lord, Lord Northfield, has said, this amendment is very similar to that which he moved in Committee. He now has an ambition to extend the relaxation to offences under Part III of the 1959 Act—that is to say, covering the poaching, killing at night and unlawful killing of deer. I vigorously opposed the noble Lord at Committee stage—and I had the support of the noble Lord, Lord Ross of Marnock—and I vigorously oppose him now. I do so even more vigorously because I have looked up what occurred at Committee stage when the 1959 Act was going through. There was one and a half hours of heated debate in another place. I hope that I am not being too rude when I say that sometimes they conduct their debates like the Mad Hatter's tea party. At one moment, rather like the dormouse, somebody accused the honourable Member for Kilmarnock of being asleep; an allegation which, I may say, he rapidly refuted. However, when they finished with the points of order and actually got down to the debate, there was a consensus on all sides, led by the Lord Advocate, an ex-Lord Advocate and all the Front Bench speakers on both sides—and I may say that in those days the Opposition was united against subsection (4)—that only in very rare circumstances indeed could the law of Scotland permit an exception such as this. The matter was debated for one and a half hours. It went to a vote and the Government of the day won.

It is a fact that, under Scottish criminal law, the facts which establish guilt must be proved by the direct evidence of two witnesses or two or more evidential facts spoken to by separate witnesses from which the facts can be inferred, or a combination of direct evidence of one witness and of one or more evidential facts spoken to by other witnesses which support it, unless the crime is covered by a statutory exception to this rule. That is a fundamental principle of Scottish law. The noble Lord, Lord Northfield, said, quite rightly, that they have passed statutory exceptions, but there are very few. The view has been taken consistently that the fundamental principle should be departed from only in exceptional cases and for the most compelling of reasons.

The debate in 1959 involved a protracted argument over the unlawful possession of deer and firearms in circumstances which afford reasonable grounds for suspecting that an offence has been committed under Part III of the 1959 Act. This relaxation was quite wide enough to secure the effective enforcement of the provisions of the Act, and I really do not think it is necessary or desirable that we should extend the relaxation to the other offences in Part III. I can go into the details of the arguments in the other place in 1959, but I really do not think it is desirable that I should. I have to say to the noble Lord that the Government are totally opposed to him on this occasion.

My Lords, I am very sorry about this, because I think the noble Earl will regret it. I think poaching will go on increasing in Scotland. All the signs are in that direction. It will be increasingly difficult to convict. The noble Earl will regret that he did not think the situation was as urgent as it was in the 1832, 1862 and 1868 days of increasing poaching. I think he will find he will be back with that situation before this decade is out and will regret that he has not got this piece of ammunition against the poacher.

Perhaps the best thing to do would be to try it in the other place when the Bill goes there, and see if this time we can have it sent back from the other place as a legitimate provision and see whether the noble Earl will then accept it once the House of Commons has changed its mind. Meanwhile, I see no point in pursuing it, as the noble Earl is so adamant. I beg leave to withdraw the amendment.

My Lords, if Amendment No. 14 is agreed to, I cannot call Amendment No. 15.

moved Amendment No. 14:

My Lords, as this is in substitution for my following amendment, perhaps I may say a word about what the noble Lord has just said. Here again, we are quite obviously looking for assurances. If we take out the directions to the Secretary of State as to what shall be included in the form, we are clearly looking for undertakings about how he will use the power he will have to set up the form. Here I am pointing at three issues which I think must be included: first, the place where the deer was killed. I cannot see any possible argument against that, because this is one of the crucial things in determining poaching. Secondly, the registration number of the vehicle delivering the venison. How can there possibly be any disagreement about the need for this? One of the most important ways of frightening off poachers turning up with one animal in an odd vehicle is that they may be traced through their vehicle registration. They can, of course, give a false name themselves, but they cannot get away with giving a false registration number to the vehicle when the venison dealer can look out of the window and see what it is. Thirdly, it is helpful if we can have an assurance that there will be some record of the manner of killing, where that is possible, and the type of firearm, especially if certain firearms are going to be outlawed under the Bill. I should have thought I was justified in asking the noble Earl to give us a few indications of how far he is prepared to go in using the powers under this part of the Bill if we leave it entirely to his discretion.

The requirement to include the means of killing is also a very good deterrent if the poachers have set a snare or killed by lurchers. Not that a crooked dealer would always put it down; nevertheless, all this adds to the pressure on the poacher. I should be grateful if the noble Earl could give us some guidance as to whether he thinks the points that are in my amendment will be considered for the form.

My Lords, I should like to support the noble Lord, Lord Northfield, on this amendment. One of the reasons why we would like it written into the Bill is that, if I remember rightly, in Committee my noble friend on the Front Bench strongly resisted having put in the schedule the question of how the deer was killed. It is quite easy to see when an animal is hanging up in a game dealer's premises whether it has had a snare around its neck. If he has put it in his records as having been shot, then clearly he is committing an offence. I think that this must be written into the Bill. Indeed, although I agree with my noble friend Lord Glenarthur that we do not want more in than is necessary, in view of the resistance that there was in Committee, I think that the noble Lord, Lord Northfield, is quite correct in asking for an assurance at this stage.

My Lords, I apologise for hesitation on my part because I really had thought that on the last occasion that your Lordships debated this matter in Committee, I had given a good and useful undertaking of what the Government were prepared to do. I do not want to say anything which is at variance with what I said on that occasion, which was carefully considered and which I had hoped and, indeed, from the reaction of the Committee I had concluded, was going to be satisfactory.

The only matter that I was rather doubtful about was the registration number of the vehicle delivering the venison. I am still doubtful about that. We have not had the time for consultation between stages of the Bill. For reasons which the noble Lord, Lord Northfield, knows better than anybody else, the stages of this Bill have not exactly dragged and I simply have not been able to have consultations. But certainly I think that the police were doubtful as to whether this should be included in a register in the form in which the noble Lord wants it.

I can only repeat what I said previously, that we shall pay close attention to the noble Lord's draft form in Committee, that we shall have consultation with all the interested parties after this Bill becomes an Act and, subject to the reservations of the police—I think it was the police who were worried—I have no doubt that a form of register will be produced which will commend itself to the noble Lord.

I am sorry not to be able to dot the i's and cross the t's in primary legislation which I know the noble Lord, with his tidy mind, dearly wishes me to do. I am simply not in a position to do it.

My Lords, before the noble Earl sits down may I say that the point which was worrying me concerned the vehicle. I have not yet understood from the noble Earl the problem about recording the registration number of the vehicle.

My Lords, I do not know either. What I assume it to be is that the vehicle which eventually turns up at the dealers premises may not necessarily bear any relation to the vehicle which was actually used either in connection with the killing of the deer, or in its transporation. Therefore, the details in such form might well be misleading and certainly not very helpful.

moved Amendment No. 16.

moved Amendment No. 17:

moved Amendment No. 18:

Page 6, line 14, at end insert ("or he has purchased the venison from a licensed venison dealer.").

moved Amendment No. 19:

Page 6, line 43, leave out ("£50") and insert ("£200").

moved Amendment No. 20:

Page 6, line 45, leave out ("this section") and insert ("Part III or IIIA of this Act").

My Lords, no, I do not intend to.

My Lords, in that case, I beg to move.

moved Amendment No. 21:

Page 7, line 28, leave out from ("deer") to end of line 31.

My Lords, if Amendment No. 22 is agreed to, I cannot call Amendments Nos. 23 or 24.

moved Amendment No. 22:

Page 7, line 32, leave out subsection (2)

moved Amendment No. 25:

My Lords, there is considerable sympathy for what the noble Lord is trying to achieve. There is inconsistency in the face of the statute. Therefore, it follows that the powers under Section 27 should be extended to cover all offences of poaching and unlawful killing under Part III of the 1959 Act. The drafting of the noble Lord's amendment is not altogether happy, and I do not think he intends to press it tonight. Therefore, I am not going to weary him with all the details.

We should take advantage of the opportunity to include a subsection making an offence of obstructing a police constable in the exercise of his powers. I think that would be helpful. If the noble Lord is agreeable, I intend to look carefully at Section 27 and at the noble Lord's amendment and what he seeks to do. I think when this Bill gets to another place the Government will bring forward a revised Section 27 for consideration in Committee in another place, and when the Bill returns to your Lordships' House—always assuming that it does—then it will be for your Lordships to consider what has been done.

My Lords, that is helpful and I am grateful for what the noble Earl has said. I beg leave to withdraw the amendment.

moved Amendments Nos. 26 and 27:

Page 8, line 5, leave out ("or agents") and insert ("in his ordinary service").

line 9, leave out ("normally employed") and insert ("in his ordinary service").

moved Amendment No. 28:

Page 8, line 13, after ("approved") insert ("in writing").

My Lords, I am quite happy to accept this amendment.

moved Amendment No. 29:

moved Amendment No. 30 as an amendment to the Amendment No. 29:

Line 1, leave out ("reason to believe") and insert ("reasonable grounds for believing").

My Lords, a philosopher could probably tell us whether there was any difference between a reason to believe and a reasonable ground for belief. I suspect that in this case one would get as good an answer by tossing a coin. The noble Lord, Lord Northfield, seems to have reason to believe that his is the better formula, and as I have no reasonable grounds for resisting, I accept his amendment.

moved Amendment No. 31 as an amendment to Amendment No. 29:

Line 2, after ("caused") insert ("by deer of the same species").

I am not really convinced that this amendment to the amendment is necessary, my Lords. An occupier cannot lawfully act unless he has good reason to believe that damage will follow in some form or other. I would go so far as to say that a good reason is a good reason and that should be sufficient. In any case, there seems to be some repetition in what the amendment would achieve. The deer found, so to speak, will in fact be the same species, as the noble Lord will see if he looks at the provision to which it refers.

My Lords, as this is concerned with a small point, I am happy to withdraw it on the basis that I shall consider the matter between now and Third Reading.

moved Amendment No. 32: