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

My Lords, the latest CSO press notice, dated 13th July 1982, shows that industrial and manufacturing production was, in the latest three-month period, some 3 per cent. higher than at the low point in the spring of last year.

My Lords, does the Minister think that that is an adequate Answer—just one industry? Perhaps in order to measure the progress of the Government we should ask a shoemaker or handyman to tell us what is happening. Is the noble Lord not aware that the margin of error in these matters is much greater in the end result, and that experience shows that?

My Lords, the noble Lord asked me for the source of our information and I gave it to him. The document to which I referred is quite comprehensive. It is, I inderstand, available in the Library, but I should be pleased to send the noble Lord a copy.

My Lords, does the figure which the Minister has just given in respect of manufacturing industry include the production of oil and fuels, or is it in respect of real manufacturing industry as we understand it?

My Lords, I would have to check whether oil production was included in the figure to which I referred. I believe it was, but if I am wrong I will write to the noble Lord.

My Lords, can the Minister say whether the statistical information he has given to the House has reduced the number of unemployed? Or are we to understand that one can make economic progress and still maintain unemployment at a level over 3 million?

I am afraid it is an historical fact, my Lords, that an improvement in the unemployment position will lag some way behind the improvement in our economic performance generally. I have to tell the noble Lord what I suspect he already knows, which is that the unemployment figures have not significantly improved of late.

My Lords, is my noble friend aware that the construction industry has shown a very marked upturn on performance in recent years, in the public and the private sectors and in general construction, and that this is wholly satisfactory? The figures are not 3 per cent. but nearer 30 per cent. up on what was occurring last year.

Yes, my Lords, I am aware that the construction industry has shown a remarkable improvement in recent months, somewhat in line with the figures to which my noble friend referred.

My Lords, will the Minister pay tribute to the workers in that industry for their undoubted ability?

Indeed, with pleasure, my Lords.

My Lords, do the resources to which the noble Lord referred which give him and his Government optimism include today's Gazette, published by the Department of Employment, which shows that in April and May the number of dismissals in manufacturing industry rose from an average of 19,000 per month in the first quarter to 35,000 in April and 30,000 in May?

My Lords, I am aware, as I said in answer to the noble Lord, Lord Shinwell, that the unemployment situation is far from satisfactory and is of course a tragedy for the individual people concerned. The general trend in unemployment, however, is one where the rate of increase at least is not as high as it was; so perhaps there is a little bit of hope, even in that field.

The Minister has not answered my question, my Lords, I asked whether he included in his resources the Gazette published today by the Department of Employment, which shows that the rate of redundancies in manufacturing industry was almost double in April and May compared with the first quarter of this year.

Frankly, my Lords, I heard the noble Lord's supplementary on the first occasion he asked it. I understand the point he is trying to make, and I attempted to answer it by saying that we accept that the position in terms of unemployment is far from satisfactory. I do not attempt to explain it away or apologise for it, but it is not a feature of the document to which I referred.

My Lords, is the Minister aware that the statistical material in the possession of the Federation of British Industries and the Associated British Chambers of Commerce has indicated to them, and they have expressed it publicly, in the Financial Times and elsewhere, that recovery is not on the way and that in fact a further downturn can be expected?

I would not accept that, my Lords. I gave the figures in my original Answer relating to the increase in productivity for the quarter March, April and May of this year. I accept that we are probably now on something of a plateau. I certainly do not accept that productivity is likely to decline. The important thing is to keep inflation under control and to notice the drops in interest rates, for example, which have occurred over roughly the same period.

My Lords, would my noble friend agree that you cannot have a great increase in productivity if you have overmanning?

My noble friend is quite right, my Lords, but it is fair to say also that there has been a very substantial improvement in productivity in British industry in recent months.

My Lords, does the Minister realise that productivity can increase in some of the least productive areas, even with factories closing, and that that has nothing to do with an increase in general economic growth? Does the noble Lord also realise that his friends at the Stock Exchange take a different view from him?

My Lords, I am aware that the noble Lord has views which differ from those of the Government. I am afraid that I just do not agree with him.

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

My Lords, my right honourable friend the Home Secretary has made it clear in another place that no Falkland islander, whether he has the right of abode or not, will have any difficulty over admission to this country. For this reason we see no immediate need to introduce amending legislation.

My Lords, is my noble friend aware that when a group of wealthy Argentines during the recent conflict took advertising space in the press, they attached considerable weight to the allegation that under the British Nationality Act the Falklanders were not given the fullest rights of citizenship? Would it not be a very proper acknowledgement of the loyalty and devotion of these people under desperately trying conditions for Parliament now to confer this on them?

My Lords, while I always have the highest regard for what my noble friend suggests, I do not think that it is proper to use legislation as an instrument of propaganda warfare.

Oh!

My Lords, is the noble Lord aware that the House gave a First Reading to a Bill to amend the Nationality Act in order to accomplish the exact purposes which his noble friend Lord Boyd-Carpenter has in mind? Will the noble Lord make quite sure that the Bill receives a speedy passage through the House?

My Lords, it will be for the House to decide on the speed of its passage. I think that it is already placed on the timetable.

My Lords, ought not the noble Lord to be influenced by the fact that when we were discussing the British Nationality Act the noble Lord, Lord Boyd-Carpenter, took a contrary view? Should there not be more joy over his repentance, than over all the just persons who voted the right way in the first place?

My Lords, I can never regard my noble friend without joy, whatever his opinions.

My Lords, would not my noble friend agree that the Falkland islanders have been of pure British descent for generations, whereas citizens of Gibraltar, with due respect to them, are not?—or at least very few of them are.

My Lords, that is largely why about 1,500 of the Falkland islanders, which is the vast majority of the population, will automatically become British citizens at the beginning of next year. We are talking of a balance of about 400 who will have direct access to British soil should they wish to have it, and who will be able to take up residence here. My noble friend also referred to Gibraltar. The distinction between the two is of course that the Gibraltarians will be within the bounds of the European Economic Community, and as such are technically already with us in nationality.

My Lords, did the Minister say that it would be for the House to decide on the proposal of the noble Lord, Lord Boyd-Carpenter, and will the Government make sure that the House does have an opportunity of deciding on the matter? Is he aware that when the proposal was put to your Lordships by the noble Baroness, Lady Vickers, it was lost by only a very narrow margin, and that if it were now put again, with the support of so many noble Lords sitting behind the Minister, it is certain that it would be accepted?

My Lords, I understand that the noble Lord's Bill is down on the timetable for a Second Reading, and your Lordships will make up your minds about it when it reaches that stage.

My Lords, will my noble friend reconsider his suggestion that to legislate in honour of people who have fought loyally by our side is not really accurately or properly described as propaganda warfare?

My Lords, I am much obliged to my noble friend for enabling me to correct an impression that I wrongly gave. I understood that he was asking whether it was not appropriate to bring in legislation in response to an advertisement taken by wealthy Argentinians, and it was to that point that I was answering. The remainder of the case must rest on its merits, and that I hope is the basis on which I dealt with it.

My Lords, may we now take it that the noble Lord agrees that it is not just propaganda to suggest that people who have suffered gross injury as a result of the negligence of Her Majesty's Government, resulting in the resignation of the Foreign Secretary, should be treated in the same way as the Gibraltarians, who have suffered no similar injury from the negligence of Her Majesty's Government?

My Lords, I should not wish to be drawn on issues of responsibility. I have already said that I do not think that this is a matter of propaganda warfare, except in the terms to which my noble friend referred at the beginning of our exchanges. I think that I have made the case that every citizen of the Falkland Islands will either become a British citizen automatically on 1st January next year, or have the opportunity so to do if they wish.

My Lords, does my noble friend recollect that during the last war the island of Malta was awarded for its valour with the George Cross, and would not some similar recognition, either by grant of special citizenship, or in some other way, be well deserving in the case of the people of the Falkland Islands?

My Lords, it would be difficult to promote the people of the Falkland Islands higher in the esteem or the sympathy of either this House or the country.

My Lords, will my noble friend agree that recent events could hardly have left the 400 Falkland islanders in any doubt of the love, esteem, and care that we show for them? We could have done no more had they been living in Westminster.

My Lords, I am greatly obliged to my noble friend. We sometimes tend to forget that side of the argument.

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

My Lords, I am well aware of the concern which doctors have expressed about the effects of the industrial action. We have consistently urged the trade unions to call off the action, which can only be harmful to patients, and to return to the negotiating table.

My Lords, in thanking my noble friend the Minister for his reply, may I ask for his opinion on the hold-up of sterile supplies, which impedes the work of doctors, requires operations to be postponed, and causes anguish to patients? Is he further aware that diagnosis of emergency cases by the picket line is farcical and unacceptable to ill people?

My Lords, of course I deplore the effects of the industrial action, however it may be manifested, but in particular in the case of sterile supplies, in regard to which in a number of cases departments have been reduced to issuing supplies for emergency purposes only. As for the determination of emergencies, that is of course a matter for the doctors concerned and not for the medically unqualified personnel; and I believe that the unions appreciate that.

My Lords, may I ask the noble Lord the Minister whether he would be good enough to inform his noble friend who has asked the Question that a good many ordinary people were inconvenienced and had their operations postponed when medical consultants went on strike not all that long ago?

My Lords, that is a rather different matter. But, of course, I deplore industrial action whenever it takes place in the Health Service, and we have made our views clear on that point.

My Lords, does the noble Lord accept that this very regrettable strike is by no means the only factor that is having an adverse effect on the work of National Health Service general practitioners? Has the noble Lord been made aware of the report of the Social Services Committee in another place, which draws attention to the very serious effects which the University Grants Committee cuts are having on university clinical staff, upon whom many general practitioners' patients are dependent for their clinical care? In other words, would it not be a little unfair if we laid all that is wrong at the moment with National Health Service general practice at the door of the present striking health service workers?

My Lords, I think that the noble Lord is referring to something slightly different. My noble friend was referring in particular to the hospital service within the health service. With regard to the effect on general practitioners' patients, I should say that in some parts of the country some GPs, indeed many GPs, I think, are having difficulties as a result of restrictions on non-emergency admissions and disruption of out-patient clinics. I believe that there is some evidence of difficulties in arranging diagnostic tests and in the delivering and testing of specimens.

My Lords, while the noble Lord may deplore the effects of industrial unrest, is he not aware that it would do both him and the Government well to deplore the cause of it all? Further, I would ask the noble Lord whether he agrees that, if in fact the National Health Service workers are so vital to the health of patients, it is not time that the Government gave them the same priority as they have given to firemen and police in pay deals? If the country has to pay, then we should pay.

My Lords, we have indeed made a very substantial offer to the workers in the health service. Your Lordships will be familiar with the percentages, but the total sum of money at present on offer is in excess of £400 million—a quite enormous figure.

My Lords, is the noble Lord aware that though there may have been increases from the Government, when it comes to a showdown the workers will be very little better off, and in some cases involving nurses, worse off?

No, I do not accept that for a moment, my Lords. As the noble Lord will know, the increases, spread across the various grades of worker, range from 6 per cent. to 7½ per cent.—and are even higher in some of the grades within the particular Whitley Councils. I think the offers which have been made in global terms are entirely fair and reasonable, but the individual distribution of those sums is for the Whitley Council.

My Lords, is the noble Lord aware that many fair-minded people believe that the nurses are not being treated generously? But, notwithstanding that, is he aware that the action being taken by some pickets to impede the flow of the mail into hospitals is causing great concern in the medical profession? May I ask him whether he is aware that, in the terms of the 1953 Post Office Act, it is an offence to impede the free flow of the mail; and, if that is indeed so, what action is his department taking with the general administration of the National Health Service to draw this matter to the attention of the appropriate authorities?

My Lords, if the mail is being impeded, then it is a matter for the local police, who would presumably act upon information received from the district health authority. The legal position is not quite as simple as the noble Lord describes it, because in some cases the problem has simply been that postmen are unwilling to cross picket lines.

My Lords, may I ask my noble friend the Minister whether, if there have to be picket lines in the NHS dispute, he does not think that, in fairness, they should be manned only by those who have themselves experienced serious illness and hospitalisation?

My Lords, I do not think there should be any picket lines at all.

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

My Lords, consideration of the issues arising out of my honourable friend's review of aviation security was not complete when the noble Baroness asked her Question yesterday. It was clearly therefore impossible for me to give any real information in reply to her Question. For this reason I suggested to her, in advance, that she should table a Question for Written Answer today, which would enable me to give her the information she required at the earliest possible moment and in as comprehensive a form as possible. I felt it only right, in view of the interest she had shown in this matter, that the Statement should be made in reply to a Question she asked.

This is not a matter which permits an Answer in a few lines. Indeed, I felt it would not do justice to the matter to attempt to do so. As, therefore, the Statement is a long one, I would hope that your Lordships will agree that I should circulate it in the Official Report. In brief, however, the position is that the Government have made it clear on many occasions that the cost of airport security should be paid by the users and not by the general taxpayer. The inquiry was therefore limited, primarily, to considering the best way of financing security measures.

The most important conclusion, which I have accepted, is that the present Aviation Security Fund should be wound up. This would mean that in general the costs would be met directly by the airport authorities who would then recover the costs from the airlines in whatever way they thought was appropriate. This in fact is what the airlines have asked for.

The Statement referred to is as follows:

"On 22nd February my honourable friend the Parliamentary, Under-Secretary of State for Trade announced that a review would be undertaken of the way that aviation security is organised and financed in the United Kingdom and particularly whether the present Aviation Security Fund system remains the best way to finance the necessary aviation security measures.

"That review has now been completed. The results are set out below.

"It was made clear that the review could not cover the present standards of security at United Kingdom airports. The Government had also made it clear that they were not prepared to change the principle under which the costs of security were borne by the aviation industry and the users rather than by the general body of taxpayers.

"Consultations were extensive and embraced not only airlines and airport operators but also the British Airline Pilots Association, the Transport and General Workers Union, the Air Transport Users Committee, the Association of British Travel Agents and International Air Transport Association.

"Representations were received from a large number of individuals and bodies. Many of these dealt with matters outside the scope of the review. Others simply proposed the abolition of the levy without facing up to the problem of how the costs should then be financed. But the more detailed representations tended, not unnaturally, to concentrate on the Aviation Security Fund

"Airlines represented by the British Civil Aviation Standing Conference and the International Air Transport Association, as well as United States carriers, contended that the fund should be wound up on the grounds that it removed any financial incentive for those who carried out security measures to do so economically. They also emphasised their dislike of the cross-subsidisation inherent in the system between lower cost airports and more expensive ones. The British Airports Authority also took the view that the fund should be wound up, on the ground that it involved the Department of Trade in what they regarded as unnecessarily close scrutiny of their security operations, and management decisions. In general, however, the regional airports supported retention of the fund on the grounds that airport security should be viewed as a national service and this justified recovery of cost on the basis of a flat-rate levy. They also argued that security costs per passenger tended to be higher at smaller airports, not because of lower efficiency, but because of lower traffic and that abolition of the fund would put them at a competitive disadvantage compared with the much busier London airports. A wide range of views were expressed by other interested parties.

"As background to the review, the Department of Trade undertook research into the ways in which countries overseas organised and financed airport security measures. The research showed that in continental Europe, with certain exceptions, airport security duties were generally carried out by national and local police and as a rule were not directly funded by revenue from airport operations. In contrast the research also showed that in the United States, Canada, Australia, New Zealand, Japan and Switzerland, searching was paid for by airlines, and that in the United States and Canada all other aspects of airport security were also, in the end, paid for by the airlines. No other country operated a fund system along the lines of the United Kingdom model. Apart from this, the inquiry indicated no more than that many important countries followed the same broad approach as the United Kingdom in ensuring that the cost of security was ultimately met by airlines and their passengers: while other important countries regarded the cost as part of the ordinary cost of policing. In short, there was no universal pattern.

"The arguments put forward by the industry for and against the fund have been weighted very carefully. The department's ability to ensure that security measures would be quickly and properly implemented if the financial sanction hitherto afforded by the fund ceased to exist has been an important consideration. The balance of the arguments is a fine one. But I have concluded that the financing of security would be more straightforward, unnecessary and complex procedures would be avoided, incentives to carry out security measures efficiently would be increased, and cross-subsidisation eliminated, if the fund were wound up and airports and airlines financed security costs in the same way as their other operating expenditure. Accordingly I have decided that the fund should be wound up with effect from 31st March next. Detailed arrangements will be announced as soon as possible.

"The department will continue to set and monitor security standards at airports in the United Kingdom, and I am confident that we may continue to count on the co-operation of airports and airlines in the implementation of recommended measures. But if the need arose I would be prepared to use the powers conferred by the Protection of Aircraft Act 1973, to ensure that proper standards are maintained.

"Consideraton was also given during the review to the question of responsibility for, and organisation of, passenger searching. The airlines however were chiefly concerned that the searching arrangements at each airport should be efficient rather than with who was responsible for their execution. I agree with this view. Accordingly no change will be made in the present position under which the responsibility normally falls on the airport authority concerned. My department will continue to monitor the arrangements to ensure that standards of security are maintained and that improvements are made wherever possible".

My Lords, obviously, I must thank the Minister for giving us much more information than he did yesterday, but, without reopening old wounds, may I ask him whether he is aware that we all feel it would have been better if the Statement which he has prepared for today could have been given orally today?

If I may move on from that, may I ask him three short questions which I think should be on the record: First, is he aware that the British Civil Aviation Standing Conference has placed on record with his department their belief that aviation security costs should be met by central Government, and that this is also the wish of the airlines? Secondly, may I ask him whether he is aware that this is not a private "hunt" of mine but is an important financial matter concerning the civil aviation industry? Lastly, may I ask him whether he realises what effect his words of yesterday are likely to have on the civil aviation industry when they read that the noble Lord feels that this matter—that is, the cost of security—is not of such overriding public interest as to merit an oral Statement in your Lordships' House?

My Lords, the decision that the cost of security should be borne by the user and not by the general body of taxpayers was taken in December 1976 by the previous Administration and incorporated in legislation passed in 1978 under that Administration. The present Government have abided by the same principle. It has been made clear throughout that the Government did not propose changing that principle. The inquiry that was conducted by my noble friend, to which the Question asked by the noble Baroness relates, did not, therefore, cover that issue of principle, and this was made clear in a letter sent by my noble friend to the noble Baroness on 17th March of this year. Of course I accept that the people who at present pay the costs would prefer not to. That is a very understandable attitude.

Secondly, I did not say, and certainly had no intention to convey the suggestion, that I thought that security measures as such, or indeed the cost of them, were not a matter of great importance. The point that I was making was that the precise mechanism through which you carried out a policy which had been established by the previous Government and confirmed by the present Government, was not of the order of importance that usually justifies a separate oral Statement.

My Lords, I do not wish to prolong this issue because the House has been very kind, but is the noble Lord aware that I cannot resist the invitation (although he did not intend it as such) in his opening remarks? Concerning 1978, when the previous Government were in power—a Government of which I was then a Back-Bench member—does he recall that we almost defeated that Government on this issue? We lost by only two votes; and the votes I collected were mostly from the Conservative Party, among whom I had some most distinguished supporters.

My Lords, I am most glad to note that the noble Baroness pursued an independent line when the party of which she was then a member was in Government, as she pursues an independent line today.

My Lords, may I ask the noble Lord whether he can clarify, in a sense, his Statement today? As I understand it—and perhaps the noble Lord will confirm this—the cost is still being paid by the users, searching will still be carried out centrally and the effect of his Statement really is only that the method of payment by the users will be altered?

Essentially, my Lords, that is a fair summary of the situation. There had been considerable criticism of what was felt to be the cumbersome procedure involved in having a fund. The airlines were anxious to get rid of the fund, and this is in fact what we propose doing.

My Lords, is the noble Lord aware that I heard with some astonishment that a previous Government had agreed that the air users should have to pay for their security? Is he aware—I think I am quoting correctly from international law—that the conditions on which a Government are entitled to recognition are their capacity and will to provide for the security of their citizens? The idea that a Government abdicate their capacity to provide for the security of their citizens and charges them for the performance of that elementary duty is somewhat curious.

My Lords, there are very long, ancient and honourable precedents for the user paying. For example, the railway police, who have been in existence for a very long time, are paid for by the railways.

My Lords, it may be for the convenience of the House if I announce that dinner will be available at the usual time this evening. With the leave of the House, I should like to announce at the earliest possible opportunity that it is now clear that the House need not sit on Tuesday next, 3rd August. The House will now rise for the Summer Recess on Monday next, 2nd August. The House will sit at 2.30 p.m. on Monday and dinner will definitely be available. It is hoped that the progress of business on that day will be such that the House will be in a position to rise by about 10 p.m.

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

moved Amendment No. 1:

Page 2, line 2, after ("power") insert ("for the purpose of reducing the Bus Company's capital debt").

My Lords, I appreciate the argument which the noble Viscount has put forward, particularly as it could be read into his amendment as being only one reason why there should be disposal of any part of the National Bus Company. My interpretation of the amendment would mean that the bus company has power to dispose, provided that it is for this purpose and this purpose only. That would appear to be the completely wrong reason. The last thing that we on this side of the House would want would be that we dispose of any part of the National Bus Company merely because that would help to reduce the capital debt of the company.

That seems to be a completely wrong reason. One might reduce the capital debt and completely impair the services. That will be a matter that we shall be dealing with in later amendments. When I look at the annual report for 1981 of the National Bus Company, I find that the bus company itself makes the comment that part of the problem is—and these are their words—that a number of local authorities do not accept that it is right to reimburse the National Bus Company's operating companies for their share of any interest liability. The National Bus Company has very heavy liabilities for the original capital debt, so much so that, again in the annual report for 1981, the National Bus Company draws attention to two reports of the House of Commons Select Committee on Nationalised Industries which urge a restructuring of the debt of the National Bus Company with relation to the conversion of original and and subsequent debts.

Those are matters which have been pressed upon the Government. It seems that that is the way to handle the capital debts. But it should not be a reason for the disposal of any part of the National Bus Company's operating units.

My Lords, I appreciate my noble friend's arguments and I shall try and set his mind at rest; and, while so doing, obviously walk a tight rope between the noble Lord, Lord Underhill, and my noble friend Lord Ridley.

My noble friend's amendment would require the bus company to use the proceeds of disposals under Clause 1 for the purpose of reducing their debt. The Government would not be opposed to the bus company using the proceeds in this way. It would reduce their call upon the taxpayers' credit, and it would reduce the interest burden which they are obliged to pass on to their customers including in some cases the local authorities. But we do not believe that the amendment is necessary in order to enable the bus company to discharge debt from the proceeds of sale; and the Government believe that it would be unwise to force them to do so.

Let me be clear that the proceeds of disposals would in the first instance flow to the bus company. The Government would regard the sum involved as one of the company's sources of external finance. Subject to that, however, the Government believes that it should be for the board to weigh the arguments for reducing the debt against their other financing requirements. Although reduction of debt may well be the preferred course, it is possible to envisage circumstances in which use of the proceeds for other purposes, such as investment, might be to the overall financial advantage of the bus company (and therefore of their customers, including the county councils). For example, it may be that the element of the board's debt to be repaid bore a relatively low fixed rate of interest, in which case it might be sensible for the bus company to keep the loan. By analogy, if a homeowner has a mortgage of £15,000 and suddenly inherits or wins £15,000, it does not follow that his best course is to pay off the mortgage. It might be better to use his legacy for home improvements which would otherwise have to be financed by an expensive bank loan.

I hope I have said enough to make it clear that, although the Government are opposed to the inflexibility of this amendment, they are by no means opposed to the bus company using the proceeds of sale to reduce their debts if that is the course which the board believe would be in the best interests of the company and their customers.

I should like to draw the attention of noble Lords to the fact that my right honourable friend has published today a summary of the report by Touche Ross and Company on the funding of NBC's capital debt. This report was commissioned jointly by the company and the Department of Transport. Copies are available in the Library.

The consultants say that the overall size of NBC's debt is not excessive, inasmuch as it is fully backed by operating assets. They propose a new method of allocating interest between subsidiary companies, which they believe would provide NBC with a better framework for their future operations. The implications of these recommendations are wide-ranging and the Government will give them careful consideration in the light of discussions with the company. I hope that I have said enough to set my noble friend's mind at rest so that he may feel able to withdraw his amendment.

My Lords, I have no intention of pressing this amendment. I hope that my noble friend in the Department of the Environment, when he sees the plight of some county councils when faced with an expanding bill for services (which are getting more and more uneconomic), will be sympathetic in dealing with the transport with the transport supplementary grant. I beg leave to withdraw the amendment.

moved Amendment No. 2:

Page 2, line 9, at end insert—

("( ) In exercising their powers under subsection (1) above the Bus Company shall retain after all such disposals securities controlling not less than 26 per cent. of the voting rights of any such subsidiary.").

My Lords, I hope the House will forgive me if I reply to this amendment, but perhaps it might be refreshing to have a new voice on the word "significant". First, I do not believe that the difference here is very great. The noble Lord mentioned Lord Simon and the great basic difference, and the noble Lord, Lord Harris of Greenwich, and the substantial ideological issue. I do not put those arguments forward at all. There is a very small point at issue and I will try to put the Government's point of view. I recognise that in moving the amendment the noble Lord, Lord Mishcon, is concerned basically to exclude the possibility that a former NBC subsidiary might be taken over by shareholders intent, perhaps, on closing the business down and getting what they can for the assets, or putting the company into voluntary liquidation; and he has today given us more examples of what could happen if we were to go below the 26 per cent. figure.

I must point out that there are in the Bill two safeguards which we believe make that outcome extremely unlikely. First, in the normal course of events, it will be the bus company itself which will be in the lead in arranging disposals; and it seems to me highly improbable that the bus company would deliberately set out to dispose of a subsidiary in the way described. Secondly, any disposal of shares requires the Secretary of State's consent. Again, I do not believe that any Secretary of State would actively seek a sale resulting in closure of a business; and the risk of this happening as a result of subsequent transactions is one of the factors which a Secretary of State no doubt would wish to take into account in deciding what level of shareholding the bus company should retain.

This amendment is well intentioned, but I believe, and it is our case, that it would be or could be restrictive It would require that the bus company's holding should never fall below 26 per cent. Consider how this constraint might operate in practice if, instead of a pessimistic prophecy, the privatised business were profitable and wished to expand. Surely, it would be a pity if, as a precondition of any expansion involving the raising of new equity capital, the bus company had to borrow money from the taxpayer to maintain a minimum share. Of course, in some circumstances it might be sensible to do just that; but it might equally put an unnecessary strain on public resources at a time when private investors were ready and willing to put up the money. It is that really narrow issue which I believe is between us.

My noble friend Lord Bellwin said in the course of our Committee debates that the Government thought it unwise to put a firm figure on the size of NBC's retained shareholding in any former subsidiaries, although my noble friend indicated that the proportion would certainly be less than 51 per cent. and probably, though not essentially, more than 20 per cent. I believe that if the House considers carefully the implications of the amendment before us it would like to see the wisdom of the Government's point of view and the slightly additional flexibility that it would give. It is on that that the Government rest their case.

My Lords, I welcome the introduction into a House that governs the United Kingdom of the phrase "I rest my case", which I can quite honestly say I have heard on television and in various films, but never realised I would hear it from the Government Front Bench. Obviously, we were very much interested in hearing the noble Earl's answer. It was a different voice but it was the same theme, and it is not very convincing when we come to look at it. Your Lordships are told that there is very little difference between the spirit and, I suppose, the letter of the amendment that I have ventured to move and the Government's position. That is a very healthy start for anyone who is hoping to get the amendment passed.

Then your Lordships are told that the real reason for not putting it into the Bill (although this would be a safeguard, and it is admitted) would be the following. First of all, obviously the National Bus Company would be very careful into whose hands the shareholdings went. I have not the slighest doubt that that is right. But what happens after the shareholdings go into the very responsible hands into which the National Bus Company has seen that they go? There is no possible control by the National Bus Company as to where those shareholdings find their eventual end; therefore there is no answer in that point. Then we are told that flexibility might be required if the company is prosperous. Obviously, it would then be the wish of those in control of the company to see that money was raised, and there might be a difficulty if the Government had to keep up this 26 per cent.

What an extraordinary situation, my Lords, if the Government and the taxpayer are supposed to invest only in industries and enterprises which are failing, in order to support them, but cannot possibly be envisaged as participating in industries and enterprises by means of a shareholding where private capital is very happy to invest because that enterprise is so prosperous. But the Government dare not and cannot invest by virtue of the fact, presumably, that that industry is prosperous. Those two arguments really do not hold up at all. Therefore, with some amount of confidence, I wish to test the opinion of the House.

moved Amendment No. 3:

Page 2, line 11, after ("above") insert (", and under subsection (i)(b) above with the exception of the disposal of any assets which are surplus to the Company's operational needs,").

My Lords, the Government have considered carefully whether they could accept an amendment along these lines, which is a refinement of Amendment No. 3 which was moved in Committee. I have to say that we have concluded that we cannot, but before I explain why, perhaps I could say that I recognise and am grateful for the efforts which the noble Lord, Lord Underhill, has made to meet the objections which I raised to his earlier amendment in Committee.

My difficulty, however, is that our principal objection remains. Under the terms of this amendment, the bus company would need to decide, before disposing of any asset, whether or not it was surplus to their requirements. Suppose, my Lords, that they were considering, for example, a bus garage, which they wished to sell to the privatised coach company as a maintenance facility. The bus company might reasonably conclude that the garage was surplus to their requirements, if, for example, they planned to transfer work on stage carriage vehicles to a larger garage nearby. They might therefore decide that the Secretary of State's consent to the disposal was not strictly required. But might they not also be conscious that someone could challenge the disposal in the courts, relying on this amendment to argue that the Secretary of State's consent should first have been obtained, because the garage was not genuinely surplus?

I put it to your Lordships, that, faced with this possibility—and I do not think the situation I have described is at all unrealistic—the bus company's natural reaction would be to obtain the Secretary of State's consent beforehand, just in case. And so the Secretary of State would become a party to a series of decisions on matters which are well within the competence—and indeed, which ought to be the preserve—of the bus company's management.

It may be that noble Lords opposite recognise the truth of this, but feel that the risk of unnecessary interference is worth taking, in order to avoid the possibility that the bus company might one day take it into its head to adopt a policy of disposing of operating subsidiaries against the wishes of the Secretary of State. It would achieve this, presumably, by selling off the major assets of the subsidiaries, rather than the shares in the subsidiaries, thereby avoiding the need to ask the Secreatry of State for his consent. I find it difficult to envisage circumstances in which the bus company would want to adopt such a remarkable policy.

It seems to me that those who point to this remote possibility ought to look with favour on Clause 3 of this Bill—to which several noble Lords opposite have objected—and not on this amendment. Clause 3 provides the Secretary of State with a power to direct the bus company,

"to exercise their powers under sections 1 and 2 … for such purposes and in such manner as may be specified in the directions".

So here we already have a vehicle—and, if I may say so, a more suitable one than is proposed in this amendment—for ensuring that the Secretary of State could act if the bus company were planning to use their power of disposal in an unacceptable way. I hope that in the light of what I have said the noble Lord will feel able to withdraw his amendment. It seems that there is a misinterpretation, and I hope that the noble Lord will see why we do not agree with the amendment.

My Lords, I want to acquit the noble Lord the Minister of any desire to resist an amendment merely for the sake of resisting it, and I am sure that, when he says that he has considered the matter very carefully, he has done so. Having said that, I must confess that I completely fail to understand the reasoning behind his reply. The Minister asks us to rely upon Clause 3. Clause 3 is written in terms which mean—and will be interpreted as so meaning—that it is a clause which tells the board of the bus company that what they must do is to exercise their powers and dispose. It takes an extraordinary reading of Clause 3 to say that it is meant to be the power for the Secretary of State to tell the bus company not to exercise their powers by disposing.

Having said that, I turn to the first point that the noble Lord the Minister made with his usual lucidity, but without any strength in the argument whatsoever. We are asked to envisage a situation. He did not quote the words of the amendment. Very carefully, I thought, he avoided them. The words of the amendment are "operational needs". There can be no doubt about what those words mean: "Do you or do you not need this to be able to operate?" It is not a question of "surplus to requirements" or anything like that, which could be a vague phrase. It is "operational needs". To argue that if you put that in somebody may come forward and say that the National Bus Company acted ultra vires in selling off a garage because it was supposed to be surplus to operational needs though it was not so thought by the National Bus Company, is laughable. All that would have to happen in those circumstances, in order to stop any such argument at the very start, would be for the Minister to write a short letter saying, "In spite of the fact that I do not think my powers are necessary to be exercised at all, I confirm that in my view the National Bus Company did sell something which was surplus to operational needs", and the argument would immediately cease. It would cease within 24 hours of such a letter being written.

I hope that the Government are not just seeking reasons—I tried to acquit the Minister of this at the very commencement of my address to your Lordships—for not agreeing to perfectly sensible amendments. The noble Lord the Minister saw the purpose of this amendment and saw that it had advantages. His answer to the plea of my noble friend Lord Underhill that your Lordships should include this amendment in the Bill has no substance to it.

My Lords, may I add one or two words to what my noble friend Lord Mishcon has said. The noble Lord, Lord Bellwin, said that the National Bus Company would have to decide whether or not any particular item or items were surplus to their requirements. My noble friend explained that the amendment says quite clearly "operational needs of the company". On previous occasions the noble Lord, Lord Bellwin, has stressed that we can leave matters of this kind to the good sense and the commercial sense of the National Bus Company. Surely the commercial sense and the good sense of the National Bus Company is not going to make them get rid of something which is not surplus to their requirements. The two things do not hang together.

My other point is that I have heard nothing in the arguments put forward against the amendment about the anomaly which we have endeavoured to show: that the Secretary of State will be compelled by the Bill to give consent where there is disposal of any shares or securities but that where there is a disposal of the whole of any subsidiary his consent will not be necessary. We have attempted to meet the argument of the Government about the disposal of odd items, but the Government have not dealt at all with the other matter. Having said that, we are very tempted to divide the House on this issue, but we shall not do so. However, we shall not withdraw the amendment.

moved Amendment No. 4:

Page 2, line 12, at end insert—

("( ) The Secretary of State shall not give his consent to any disposal under subsection (1) above unless he is satisfied that such action would not impair the integration of services available to the travelling public.").

My Lords, this amendment highlights a difference of philosophy between the Government and the noble Lords opposite. For a very long time the Labour Party has regarded integration as the be-all and end-all of public transport policy, and their approach is embodied in this amendment. Its iniention, I take it, is that if a change produces more integration it should go ahead, but that if it produces less it should not. We on this side of the House see things rather differently. Of course we are in favour of integration where it leads to better services for the travelling public. We accept that integration is a very important concept at the local level. My noble friend Lord Ridley has pointed out that the county councils have a vital role in securing a co-ordinated and efficient service. But although we believe in integration, we also believe in freedom of choice, and choice means competition—which in some ways, I suppose, is the antithesis of integration. Nowhere has the need for competition been more successfully demonstrated than in the express coach market. I have made it clear on a number of occasions that this is one of the principal areas of the National Bus Company's activities where we wish to see private capital introduced.

In deciding whether to agree to a particular proposal in this area, the Secretary of State would wish to take into account a good deal more than integration. He would wish to take account, above all, of the interests of the travelling public. It may well be that they would be happy to have a little less integration if only they could have a little more choice. If the bus company were of their own volition to come up with proposals for disposing of a stage carriage company, then the Secretary of State might well wish to give more weight to the concept of integration. But I submit that we should not tie his hands in this Bill by laying down that integration should be the paramount consideration.

In considering the merits of possible disposals, the Secretary of State has to form an overall judgment of where the public interest lies. This amendment, by giving, in my view, overriding importance to the concept of integration, over-simplifies that judgment to the point where the Secretary of State could be forced by the wording of the Act possibly to come to the wrong conclusion. This is really an area of philosophy and I hope that the noble Lord, Lord Underhill, will be prepared to accept it as such and perhaps leave it at that.

My Lords, the noble Lord, Lord Bellwin, is quite right in saying that there is some difference of philosophy between us, but one can argue that about every subject that comes before this House or before another place. I would ask the noble Lord seriously to consider that it is not merely a principle of philosophy or, if one could accept it, a philosophy of the constitution of these Parliaments.

I am sure your Lordships would agree that it does happen from time to time—and, if I may say so, this is one of the great assets of our democracy—that Ministers see to it that they write into a Bill which they expect will be enacted that they will not have certain powers; that it is made transparently clear that they will not have certain powers. Equally, in many Bills, before they are enacted, it is made transparently clear that the Ministers will have certain responsibilities. One would have though that on this question of integration there might from time to time be disputes and arguments between various sectors and various parts of the country. The arena where these arguments are joined in the end must be Parliament. The means whereby these arguments may be discussed could be, for example, a statutory instrument. I believe that might be acceptable in this case.

I cannot totally accept the submission of the noble Lord the Minister that great freedom of choice is here for the travelling public. We heard that load of rubbish before the nationalisation of the railways. Do your Lordships really believe that if someone wanted to go from London to Cardiff he would go by Southern Railway or LNER? Of course not. It is precisely the same thing today, except that under public ownership there has been much more integration. I should have thought that this example would enamour itself to the Government.

It is not solely a question of difference of philsophy, although there is bound to be an element of that. There is another element which ought to unite us, irrespective of our philosophies, and that is the element of efficiency and practicality, and those decisions will not necessaruly be taken by a dictatorial edict of the Minister. We have the ways and means in this Parliament whereby these issues can be discussed in various ways—such as on a statutory instrument, as I have indicated—and I believe that this would be a worthwhile safeguard which I hope would unite both sides of this Chamber.

My Lords, I should like to support the noble Lord, Lord Underhill, in the way that he presented his amendment and on the content of it. The only worry I have is whether it is necessary at all. I am equally worried that the noble Lord the Minister talks about philosophy. It is surely common sense for all sides of the House and for the travelling public to have an integrated transport system. I do not see any philosophical problems in incorporating the word "integration" and the implications of it in the Bill. I stand to be corrected by the knowledge which the noble Lord the Minister has on this matter, but surely the history of the bus and rail companies shows that it was their very rivalry which forced the bus stations and the railway stations to segregate, so to speak, because they were looking at the future of the travelling public as their profits. They did not want integration because of their competition and rivalry.

I am hopeful that if integration is incorporated as a general philosophy to help the travelling public, when it comes to property this rivalry will stop. British Rail have been put under pressure to sell their properties to solve some of their very great financial problems. The operators of the bus companies may look at it simply within the narrow confines of their financial problems and profitability. Integration and the interests of the travelling public are, I believe, going to lose their priority, as they have done in the past.

This is a very harmless amendment and I do not see any philosophical problems of a political nature in it. I should like to support it simply on the grounds of common sense and as a reminder to the operators of all travel companies—nationalised or non-nationalised—that they have the interests of the travelling public to serve first. Obviously they have to make profits, but there is a golden mean between them, and that comes under the term "integration".

My Lords, with the leave of the House, I will respond to the noble Lord, Lord Molloy. Quite clearly he does not see this as a difference of philosophy and I do. We shall probably have to disagree on that point. The thrust of our objection to this amendment is that if it were approved it would mean that,

"The Secretary of State shall not give his consent to any disposal under subsection (1) above unless he is satisfied that such action would not impair the integration of services available to the travelling public."

Immediately one can see the challenge open in all kinds of situations. All else apart, in practical terms, there is a problem straight away if one accepts the amendment. When I was referring to the philosophies, what perhaps I failed to put over was that the purpose of the amendment is in effect to prevent disposals by the bus company which would, in the Secretary of State's opinion, impair the integration of services available to the travelling public.

Taken to its extreme, the concept of integration, I suppose, would lead to the end of competition between coaches and the railways. I am quite sure that is not what the noble Lord, Lord Underhill, means by his amendment, but that is the projected implication of the amendment. It would mean that there would be no competition at all and that one would have to say that an integrated service means one bus, one coach, one railway—one whole transportation network. Some might think that that is a good thing. In fact, the noble Lord, Lord Underhill, probably thinks that it is a good thing, but in practical terms I do not think it is, and I do not believe that it is what most people would want to see. Certainly we do not believe that we should go along with this, and that is the basic reason why we do not go with the amendment.

My Lords, before the noble Lord the Minister sits down, will he just compare this with the practice in the PTEs with which he is familiar and in which there is not necessarily an exclusion of one form of transport to the advantage of another but where the services are integrated and complementary? Is this not the general philosophy contained in this amendment?

My Lords, if I may speak yet again and for the last time may I say that, no, I do not think it is. It may be that that is what the noble Lord, Lord Underhill, intends, but I am concerned with what the amendment would mean in practice. When I said that it could lead to challenges in the courts I am sure that it could and would, if some people wanted to make it so. This is a very real difficulty as I see it.

My Lords, I am very disappointed at the Minister's reply to the arguments in this case. Of course there are differences of philosophy between the Opposition and the Government on the merits and demerits of private sector passenger transport and public passenger transport, but that is not the issue in this amendment. I should have thought that far from being an argument civet philosophy the amendment was a constructive transport policy and a logical transport policy, which is what is proposed in the Bill. I am certain the Minister would not wish it to go on record that the Government are opposed to an integrated policy on transport, but that is what his argument has led to. As has been pointed out by the noble Lord, Lord Tanlaw, and the noble Lord, Lord Taylor, whose support I very much appreciate, integration is a commonsense thing which is essential, and it is a complementary system we are after.

The noble Lord said that the Secretary of State may wish to take in other factors. This amendment does not prevent his taking in other factors. What we are saying is that this is one factor he must consider and he must satisfy himself—nobody is twisting his arm—that this will not impair integration of services available to the public. It is service to the public that we are really concerned about. As with the last amendment, it is not our purpose to divide the House on this issue, but we shall read very carefully what the Minister has said, because there may be yet another way to bring forward this important principle at Third Reading. We regard it as one that is essential for the travelling public.

My Lords, before the noble Lord sits down may I point out to him that if his only concern is—and of course it is a very worthy concern—that it will not impair transport services to the public, all you need to say is: "if the Minister is quite sure it will not impair the transport services to the public." Then you would not have to include integration. The noble Lord said the important thing is not to impair transport services to the public. You do not have to include integration. There is no guarantee that integration will improve services to the public.

My Lords, before the debate on this amendment comes to a conclusion, may I say that the noble Lord says he is not going to divide the House. I am rather sorry that he is not. Having listened right the way through to all sorts of arguments on the point of integration, I think that if there is no integration in some services—and the noble Lord has not been specific—perhaps the point is well worth another amendment on Third Reading. If you do not have integrated services in some rural areas you will end up by having no services at all, and that will be dreadful. I do not think that that point has been spelled out. I hope the noble Lord will reconsider it today, or we should have another go at this at Third Reading, because I do not think anybody in any part of the House is very satisfied.

My Lords, as both noble Lords started by saying "before the noble Lord sits down", I beg leave to speak again. I appreciate the points the two noble Lords have made. Although the importance of this amendment is such that we would have liked to insist upon it, there are other matters ahead. In view of the pressure and the importance of this matter I think we should not wait for Third Reading, as I suggested, but ask the House to decide upon it now.

moved Amendment No. 5:

Page 2, line 12, at end insert—

("( ) Before exercising their powers under subsection (1) above in relation to any of their subsidiaries, the Bus Company shall consult with every county council in whose area area that subsidiary provides bus services.").

My Lords, Amendment No. 5: Page 2, line 12, at end insert the words on the Marshalled List. Your Lordships will note the printing error in the penultimate line.

My Lords, I was about to make way for the noble Lord, Lord Bellwin, because I thought that he might wish to accept the amendment, but perhaps I had better speak just in case I am wrong. I should like to support the noble Viscount in this amendment for the particular reasons that he has stressed. First, in Clause 3 there is the provision that, before the Secretary of State gives a direction to the bus company, he must consult the county council in which the National Bus Company may have services which will be affected by the decision. That is already in the Bill. Therefore, it would seem to me to be absolutely logical that where, under Clause 1, there is any suggestion of the National Bus Company itself disposing of property, or any of its equipment or assets, there should be again the opportunity of consultation with the county council which may be affected by the services.

As the noble Viscount has said, county councils play a large part in the financial assistance to the various subsidiaries of the bus company through the transport supplementary grant which the Government give, and I should have thought that it was in the Government's own interests that there should be consultation with the county council concerned. I hope that the Government will accept this particular amendment because it seems to be absolutely illogical not to do so.

My Lords, there certainly is no difference of philosophy between my noble friend and myself and, for that matter, between the noble Lord, Lord Underhill, and myself on this particular subject. I entirely understand the concern that has been expressed about the possible implication of certain disposals for county councils, although I think that they are unfounded. Perhaps I should make it clear that the Government are certainly not against consultation with the county councils in all relevant cases. Indeed, they believe that such consultation will, from time to time—although perhaps not always—be absolutely essential. Our doubt about the amendment is not that it is misdirected, but only that it would add an unnecessary extra layer of statutory consultation.

National Bus Company subsidiaries and county councils are already under a legal duty to co-operate with one another in the exercise and performance of their respective functions. It follows, I believe, that the bus company would be duty bound to consult any county council whose policy or financial interests would be materially affected, before exercising their powers under Clause 1 of the Bill. That argument was, I think, accepted in another place. It was pointed out that it might not hold good in the unlikely event that the bus company were proceeding under a direction from the Secretary of State. The Government, therefore, agreed to amend the Bill to provide specifically for consultation with county councils in such cases. Subsection (2)(b) of the present Clause 3 is the result.

In making that addition to the Bill I think that the Government have shown that they do take seriously the importance of the county councils in NBC's affairs and the degree of financial commitment which many counties have to NBC's stage carriage subsidiaries. Despite the fact that our plans are directed at the commercial, express and holiday operations and not at the stage carriage companies, we have tried to meet the points that have been made.

I believe that, having regard, as I have said, to the existing statutory requirements and Clause 3 of the Bill, we now have adequate provisions for taking account of the interests of the county councils. My only concern—and it is the only one that have in this connection—is about adding another unnecessary layer of bureaucracy. Apart from that I am in agreement with what my noble friend is trying to achieve here. I cannot accept the amendment. However, what I would like to do is perhaps to think about the point again and to look into all that might be required by way of consultation and what it would mean. If my noble friend would withdraw his amendment knowing, as I am sure he does, that I cannot give him an undertaking by any means to come back with something that would accept this amendment, nevertheless I do promise him that we would talk about it again and make absolutely sure, if necessary in discussion with him, that we were completely satisfied as to the point we were taking.

My Lords, I beg of the noble Viscount to do no such thing. We are in a late stage of the Bill. The noble Lord the Minister and those advising him have had opportunity after opportunity extending over a very long period to deal with the question of consultation, and one would have thought that in any event this amendment, which if I remember correctly has been down for a few days, would certainly have given that period of time. What your Lordships have heard today is something that astounds me. I am hoping to find another word in the vocabulary for "astound", because I find myself using that word much too often in the course of this Bill. I had better move next time to saying that it is a question of amazement. But I shall leave it at being astounded on this occasion.

The Minister knows perfectly well when he addresses your Lordships that when he refers to Clause 3 he is referring to a completely different situation. That is where the Secretary of State issues a direction to the bus company to tell the bus company that they should exercise their powers either under Clause 1 or Clause 2. When he does that he has, first—before issuing the direction—to consult with the county council that may be concerned. The Minister knows perfectly well that under Clause 1 the bus company is empowered to act on its own accord and, therefore, need not have the direction of the Secretary of State, and that is where something could go wrong. One obviously assumes that the Secretary of State—with all his responsibilities and all his knowledge of his duty to the nation and, indeed, to local authorities—would not issue a direction which makes the bus company part with assets and so on before consulting with the local authority concerned. That is safeguarded in this Bill, as the Minister says.

But there is a much greater danger of the bus company, as against a Minister, exercising these powers without properly having consulted the local authority. I am particularly amazed at the noble Lord the Minister, who has earned the affection and respect of this House ever since he has been here. But he came here with a reputation made for him, which he has enhanced. His reputation was as the champion of local authority rights. To see him so beguiled by his ministerial responsibilities as to forget his old loyalties and his old speeches when he represented local authority associations and addressed Ministers on their behalf, is indeed to see a metamorphosis, which I really regret and which I know your Lordships regret with me.

So if we can return the noble Lord the Minister to the right views and opinions which he held when he was a local authority man, he will know as well as your Lordships do that if it is necessary to tell a Secretary of State to consult before using these powers, it must be necessary to tell the bus company that that is what it has to do. It is only asked to consult, nothing more. This needs no further reflection; this needs no argument about philosophies; this merely needs a little bit of common sense; and this amendment ought to be accepted. If it is not, the House ought to tell the Minister where he stands now, which is where he stood many years ago.

My Lords, with friends like these, who needs enemies? As I said earlier, I must apologise to the House that this amendment has not been before your Lordships as long as it should have been. That is entirely due to another nationalised industry—the Post Office—but never mind that. It has not been on the Marshalled List long enough for me to feel it would be right to force it. However, I do grasp at the straw that my noble friend has given about looking at it before Third Reading, because by now he must be well aware that there is a serious point here, and that it is a serious worry that the bus company could act before—and the word I would emphasise is "before" —exercising their powers and not afterwards. I have had experience of negotiating with subsidiaries of the bus company, and they are very apt to tell you what they have done and not what they will do. So this is a serious point. Although I realise that my noble friend can give no such assurance, I am sure that the benign sunshine of Leeds will put him in such a rewarding frame of mind after the Recess that he will accept a similar amendment at Third Reading. I beg leave to withdraw the amendment.

moved Amendment No. 6:

Page 2, line 25, at end insert—

("(5) In exercising their powers under subsection (1) above, the Bus Company shall compensate adequately a county council which has contributed to the provision of the asset which is the subject of disposal.").

My Lords, once again, we have thought carefully about the amendment in the time available. Perhaps it would help if I very briefly repeat what the Bill is about. It does not confer requisitioning powers; it simply extends the circumstances in which the bus company may dispose of what is legally theirs in the course of normal commercial transactions. There is no question of the bus company being able to use their powers under subsection (1) to dispose of the property of county councils; nor could the Secretary of State direct them to do so.

Frankly, the Government see no need to supplement the existing legal framework within which sales are conducted in order to give special protection to county councils. Where the NBC propose to sell an asset which includes an element of infrastructure paid for by the county council, the question of repayment will depend on whether or not the county council retains a legal interest in the asset, on the terms on which financial assistance was given, and on the nature of any other relevant contract that may exist between the county council and the bus company.

I cannot believe that a prudent county council, in giving financial aid to a bus operator, would not have considered the possibility that the operator might one day wish to dispose of its interests in the site in question—as it would be fully entitled to do even before this Bill if, for example, it decided that the site was no longer required for the purpose of its business.

In the same way, the Department of Transport has for many years paid new bus grant on new vehicles acquired by bus operators, including NBC subsidiaries, for use on stage carriage services. The conditions of grant stipulate that if the grant vehicle is disposed of within a certain number of years, then grant is repayable to the Secretary of State, in whole or in part. That seems to me to be a sensible way in which to proceed. I cannot believe that my noble friend would argue that local authorities have less foresight in this respect than a Whitehall department.

The law governing the sale of assets is clearly understood and generally regarded as fair. This Bill does not alter in any way—and this is what I ought to stress—the terms on which sales by the bus company would be conducted, and this is why the Government see no need for an amendment along the lines proposed.

I understand what my noble friend seeks to do with this amendment and, on the face of it, it makes very good sense. But I am suggesting to him that in practice there will not be the kind of problem situation arising that he fears. Perhaps just as I undertook last time that I would think carefully and consider the point he raised, he, with this amendment, may feel inclined to do the same and consider what I have said on this point.

My Lords, I am always trying to insist that we should put things into Bills to be certain, so there is no dubiety whatever. Everthing that the noble Lord, Lord Bellwin, has said justifies to the hilt why the previous amendment should have been carried and accepted; that is, the need for consultation on these matters.

My Lords, I think that my case would be far stronger if I produced examples of what I fear may happen if bus stations could be sold and a large element of taxpayers' money never recovered. It is difficult for me to do that here and now in view of the fact that I have not been able to put this amendment down for very long. I may come back at Third Reading, or possibly not, and I should like to withdraw the amendment at this stage.

moved Amendment No. 8:

Page 4, line 2, at end insert—

("( ) Should any direction given by the Secretary of State under this section not be acceptable to the Bus Company, such direction shall not have effect unless approved by a resolution of each House of Parliament.").

My Lords, we return with this amendment to the important question of parliamentary accountability. The amendment would provide that, where the bus company disagreed with a proposed direction, it should not take effect until approved by a resolution of each House of Parliament. Before turning to the basic question of the respective roles of the legislature and the executive, may I say that I find it rather odd that the bus company should be the ones to decide whether or not a proposed direction does or does not need to be considered by Parliament. The amendment presupposes the sort of fundamental conflict between the board and the Secretary of State which would normally end in resignations or dismissals—not in a sort of appeal to Parliament to resolve the dispute.

Be that as it may, the basic question we are considering is how far is it appropriate for Parliament to be involved in the implementation of a policy, once it has been debated and approved by the passage of a Bill. I am clear in my own mind that in this case the answer is that implementation should be left to the bus company and to the Secretary of State. That does not mean the end of accountability to Parliament: the Secretary of State is answerable for all his actions at the Dispatch Box in another place. But it does mean that Parliament would be saying: "Very well, we have listened to the exposition of your policy, and we agree that it should go ahead. Now get on with it".

We have made clear in many hours of debate, in this House and in another place, what our policy objectives are. We plan to introduce private capital into National Express, National Holidays, and NBC's property portfolio. We plan to proceed by agreement, but we ask Parliament for a reserve power of direction. Once this Bill is enacted, it should be left to the Secretary of State and the Bus Company to give effect to the policy I have described and to achieve the modest objectives to which I have referred.

I recognise that this line of argument may not appeal to noble Lords opposite, basically because they do not like the policy and do not share the objectives. But that reflects a basic difference of approach, not an argument about parliamentary accountability. I wonder if we would have heard the same views had we been talking of a Bill which was dealing with nationalisation and not privatisation. One thing is certain: it would be wrong to leave it to the bus company to decide whether a direction should be subject to the affirmative resolution procedure. We should decide now, and I hope the House will agree with me that the matter should be left to the executive.

My Lords, we have had a lot of discussion about philosophy this afternoon. The philosophy that we have just heard expounded is the following: where there are national assets—not where there are assets in private hands, and the query is whether or not they should be passed into the possession of the nation—the philosophy expressed by the noble Lord the Minister is that the Secretary of State for the time being should have the power, in spite of the objections of those who have the responsibility of carrying out an essential national service with those assets, to direct the national industry so concerned (not necessarily just transport), and even though that company, knowing its responsibilities, says that it differs from the Secretary of State, there is no appeal to the voice of the people. That is what that means.

I want the noble Lord the Minister to know—and I say this with all sincerity—that even if he could come up with examples of where nationalised industries were concerned and the Secretary of State in that case had powers that did not require him to come back to Parliament, even if there was a difference of opinion with some vital national group, I would fight for what I am speaking for now with exactly the same zeal.

There comes a time when Parliament itself must consider whether or not it has an ultimate voice in the people's affairs and in the nation's assets; or whether it puts into an Act of Parliament—regardless, of the form of government there may be in the future regardless of their nature and regardless of the capabilities and philosophies (I see that word again) of a Secretary of State—the power to ride roughshod over those who have been given the duty of looking after national assets and essential national services.

Your Lordships may disagree with me and say that is a power you want vested—that you want Parliament divested of the last word—and if you agree with the Ministers' philosophy on this, then you will be against the amendment. But if your Lordships do not feel that—I say this because the Minister referred to the views of the Opposition as though this were a view which would be taken only because the Minister's party happens to be in power—then I repeat, at the risk of boring the House, that the principle which my noble friend and I are trying to enunciate is that, regardless of party and regardless of the nature of the national assets, you must not (I say this with every deliberation) give too much power to the executive and rob this and another House of the right to say, before those national assets are disposed of—it is not just a question of a Statement being made in Parliament by the Minister concerned; it may be after the direction has been given and everything has been done, so that he must justify himself—that where there is such a difference of opinion, ought not the opinions of the elected representatives of Parliament in another place, and the reviewing body which your Lordships' House is, have an opportunity of deciding what ought to happen to those national assets?

This is not a frivolous amendment. It goes to the principle of our constitution. It is a safeguard for the future, whichever party happens to be in power. I say with respect that, when the Minister limits his argument on philosophy, I am led to tell him that there are more things in heaven and earth that are dreamt of in his interpretation of philosophy in this instance. It is not such a narrow field; it is a wider field, and I say in all humility that your Lordships should dwell on it, and so should the Minister, before refusing the amendment.

My Lords, I need not add much following those remarks by my noble friend Lord Mishcon. The Government have said time and again that these are reserve powers. I remind the House again that they are in the Bill not as reserve powers; they are there to enable any Secretary of State to give directions as he thinks fit. That is the important principle, and we have throughout these debates spoken of the wide-ranging powers given to the Secretary of State by the clause. In view of the adamant attitude of the Minister, however, the best thing we can do is to look at the issue again, bearing in mind that there will be one final opportunity to raise it. We must be concerned with this exceptional case, the irreconcilable care to which the Minister referred. Perhaps, having examined the matter again, we shall by Third Reading have a satisfactory form of words which the Minister will be able to accept. In the meantime, I beg leave to withdraw the amendment.

moved Amendment No. 9:

Page 4, line 3, leave out subsection (3) and insert—

("(3) In exercising the power to give directions under subsection (1) above the Secretary of State shall have regard to the duties placed upon the Bus Company by section 24(2) and (3) of the Transport Act 1968.").

My Lords, Clause 3 provides, as has been made clear at earlier stages, a reserve power of direction. Subsection (3), which would be deleted by the amendment, provides that the bus company should be under a legal duty to give effect to any direction which the Secretary of State might find it necessary to give under this power. Thus, the amendment would remove from the clause the means by which ministerial directions are made statutorily binding on the recipient. We would be left with the legal nonsense that the Secretary of State could give directions to the bus company, but it would be up to the bus company to decide whether to give effect to them.

I take it, however, that that is not the main purpose of the noble Lord's amendment. He remains concerned about the words in brackets in subsection (3), which would provide for the bus company's duty to give effect to privatisation directions to override their duties under Sections 24(2) and 24(3) of the 1968 Act. These sections of the 1968 Act imposed duties on NBC to co-operate with certain other transport operators in the provision of services.

It may help the House if I said something about the background to this. The 1968 White Paper, Public Transport and Traffic, set out proposals, later embodied in the Transport Act 1968, for the establishment of passenger transport authorities and executives in our major cities. The White Paper explained that NBC would be under a statutory duty to co-operate with the executives within their areas, and that this could involve transfers of bus services between an executive and NBC. It was made clear that working agreements would be needed between NBC and the PTEs in order to achieve co-ordinated service provision. Such agreements between NBC and the PTEs have already been concluded, so that NBC has in effect already fulfilled its duty under Section 24(2). Nothing in this Bill could override the provisions of those agreements, which are, I understand, legally binding.

The White Paper envisaged something less specific in relation to co-operation between NBC and other operators, including British Rail and London Transport. It referred to,

"co-operation to ensure the provision of services in as efficient a manner as possible",

In practice the main points of that co-operation have been in liaison through Standing Committees and, in some instances, the provision of rail replacement bus services. It is no part of the Government's intention to disturb those arrangements.

I hope that I might have persuaded the House that the prospect of a major clash of duties is remote. We nevertheless thought it right to include in the Bill a provision which made it clear which duty would take precedence in the event of such a clash occurring. It is in no one's interest for the law to be ambiguous. Indeed, I am somewhat surprised that the noble Lords' amendment would require the Secretary of State merely to "have regard" to the 1968 Act duties when exercising his power of direction. It was argued strongly by the Opposition in another place that it would be a grave mistake to leave it to the executive to decide whether or not to override a duty imposed by Parliament. I must say that I have some sympathy with that point of view, which is why I am in favour of the clarity provided by the present wording of subsection (3).

I hope that the noble Lord, Lord Underhill, has followed the point that I am trying to make, since here we are entering into matters of legal interpretations and definitions. If, as I am sure is the case, he has followed my point, I hope that he will not want to press the amendment.

My Lords, the noble Lord the Minister said that he was surprised by the wording of our amendment. Well, I would point out that it has been so worded because he would not accept the wording of the amendment on the previous occasion. The wording on the last occasion corresponded with what the Minister has now said we should be proposing. On the last occasion we proposed that "no direction shall be given", which conflicted with the duties. Now we have modified that wording, since the Minister would not accept it, and it was regarded almost as an instruction. In the present amendment we propose that in exercising his powers,

"the Secretary of State shall have regard".

So we have endeavoured to be completely conciliatory and understanding in order to meet the objections of the Minister. That is one of the points in having a Report stage. If one cannot get one's way at the Committee stage, one does one's best at the next stage; and I am certain that the Minister recognises that.

It is not a question of the National Bus Company deciding whether it will accept a decision. That has nothing to do with the present amendment. The position of the National Bus Company is not mentioned at all. The amendment states that

"the Secretary of State shall have regard to the duties",

before he gives a direction. That is what he will consider, and, as was said previously, when the Minister gives a direction the National Bus Company must accept the decision. All that is involved is the Secretary of State having regard to the duties. I am sorry that my noble friend Lord Mishcon has had to leave the Chamber for a short while, since I am certain that he would have taken up the legal points. However, we shall reflect very carefully on what the Minister has said. I still believe that the principle of the amendment is correct. In the meantime, I beg leave to withdraw the amendment.

moved Amendment No. 10:

Page 4, line 30, at end insert ("and shall not give his consent to any disposal by the bus company under the provisions of section 1 of this Act unless he is satisfied that arrangements will be made for a pension scheme which will not worsen the position of employees of the bus company who would be transferred to the new company").

My Lords, the amendment seeks to do two things, one of which I believe is unwise and the other of which may well be impossible. First, it seeks to involve the Secretary of State in deciding whether the pension arrangements devised for employees of a private company are, or are not, satisfactory. The Government are opposed in principle to that kind of specific statutory interference. There is a general legislative framework with which all pension schemes have to conform, and the rules of all contracted-out schemes must be approved by the Occupational Pensions Board. Subject to that, pension arrangements are a matter for negotiation between employers and employees; indeed they are often at the centre of such negotiations, as regards both the level of contributions and the level of benefits. The Government believe that it would be in the highest degree unwise to intervene in that process, where over the years trade union representatives have shown that they are well able to look after their members' interests.

Secondly, in my respectful submission, the amendment seeks to do the impossible. It asks the Secretary of State to satisfy himself that the new pension scheme will not worsen the position of employees. No Secretary of State could give such a guarantee in relation to a private sector pension scheme unless he was prepared to back it with the taxpayers' money. As the noble Lord, Lord Underhill, reminded us, that is the point that was so ably made by the noble Lord, Lord Byers, during our debate in Committee. But I have to remind the noble Lord, Lord Underhill, that the noble Lord, Lord Byers, said not only that the amendment was laudable; he also said, at col. 594, that the Government were right to resist it. Lord Byers reminded us that the only real safeguard for future pensions was the prosperity of the business. It is that prosperity which our whole policy of introducing private capital is designed to secure. We cannot legislate for prosperity; we can only legislate to provide the conditions for enterprise and growth. I understand what the noble Lord is seeking to achieve here, and I also understand his concern; but I really feel that the point I have made is the practical point, the reality of what it is like in the real world of this situation, and I hope that on consideration he will perhaps accept that and not pursue this amendment.

My Lords, I can understand the arguments being put forward by the Minister, but what it boils down to is that, on a disposal, everything of a commercial nature can be taken into account when considering whether the transfer is satisfactory, but not the interests of the workers being transferred. Even if the wording of our amendment is not right, even if certain powers do not reside in the Minister, in these days, when we are talking about improved industrial relations, that seems to me a nonsense. It should be possible, in discussing terms for a possible disposal, for the Secretary of State to ask, "Is it possible for your company to come to a decent arrangement in relation to a pension scheme? " We ought to be able to do that; and that, I suggest, is good industrial relations.

It may be that the wording of our amendment is wrong, and I would have been satisfied if the Minister had said, "While we cannot make this a statutory duty it will be a matter which will be discussed". But we have not even got that assurance from the Government. It seems as if the position of the workers to be transferred is just incidental; it is the prosperity of the business, the noble Lord the Minister says, which matters. On this side of the House we do not accept that position, but we will not divide the House because of the possible defects in the wording of our amendment. But I believe the principle is right. I beg leave to withdraw the amendment.

My Lords, in calling Amendment No. 11, I understand that Nos. 11 and 12 are alternatives, and they will no doubt be discussed together.

moved Amendment No. 11:

Page 6, line 34, leave out ("any person") and insert ("a single non-profit making organisation").

My Lords, I think it might be helpful to my noble friend if I intervened at this stage. May I thank him for a number of letters following conversations on this matter. Most of these letters have proved to be very helpful. However, I still remain somewhat worried and the main worry is that although the Government's intention and Lloyd's intentions are quite clear and, in the absence of anything better and in the face of the Government's determination (which I can understand) to return the testing system to the private sector there remains, I believe, a considerable amount of doubt.

Lloyd's, as I understand it, is still an embryonic company and still there are a number of matters to be ironed out. My noble friend's letter to me suggests that he at least does not think that these difficulties are going to be insurmountable; nevertheless, throughout our earlier discussions we have heard the Minister speak of alternatives that might be necessary at another time. The Lloyd's system is to be set up in 1983. It may be, for example, that by 1985 it is found to be unsatisfactory and they would wish to rid themselves of perhaps part of the scheme, part of the 91 stations which it is proposed that they take over.

In that event, the Secretary of State would have to find an alternative. I think that it is here that we would like to see closer control by virtue of one or other of these amendments (of another one to which I shall speak shortly) to ensure that there is uniformity, that there is no undue commercial pressure brought to bear in the testing situation. In the correspondence, my noble friend says that all these fears are understood and, in fact, they are taken care of in Clause 8 in a number of subsections, notably subsections (9) and (10). He rests on the fact that the ultimate proposals shall have to be brought before Parliament and shall have to be passed by resolution of both Houses. We have asked for this on a number of occasions, particularly in road safety matters where regulations are concerned. These are regulations that involve discussions with other bodies and a final decision from the Minister.

In this case, much negotiation with commercial bodies will have to take place before any of those proposals could be laid before Parliament to be approved. It would then be commercially suicidal for either House of Parliament to say, "No, we do not like these proposals. Start all over again!" It is for this reason that I give some measure of support to what the noble Lord, Lord Underhill, is aiming to achieve by virtue of one or other of these amendments.

My Lords, there is certainly no difference in intention, no difference in our wanting to be at the same place at the end of the day in this whole matter. As those noble Lords know who took part in the Committee stage of this Bill, the Government share the aim behind this amendment. We have every intention of doing what the noble Lords opposite and my noble friend are seeking, through this amendment, to require us to do; that is to authorise as the approved testing authority one respected and impartial organisation which will carry out testing to the highest standards.

I do not believe that it would be wise to amend the Bill in the way proposed. We have, it is true, decided that on balance the best course would be to transfer the testing system to Lloyd's Register Vehicle Testing Authority. We believe this is a proposal which will maintain the high safety standards and impartiality to which everyone in the industry and in this House rightly attaches great importance; and that it will improve the service given to vehicle operators. But this is not to say that transfer of testing to Lloyd's is the only option for the future of the system. Testing must be carried out impartially, thoroughly, consistently, and to the proper standards: but that does not imply that the system must be organised in one particular way.

We fully expect that our negotiations with Lloyd's Register will be successful, and a testing system operated by Lloyd's Register Vehicle Testing Authority will undoubtedly be an excellent one. But are competence and honesty really in such short supply that no other arrangement could work? And are we so wise that we can be confident of having found the one true answer to the practical questions about how to run a testing system, not just now, but for ever?

I am sure it would be a mistake to seek to embody in primary legislation one particular solution to the question of how best to arrange for the routine testing of lorries and buses. Surely we ought to leave room for flexibility, for development, for natural growth and change. I am not asking for the Government to be given carte blanche. I would remind the House of the provisions in this clause which require the Secretary of State to gain the approval of Parliament for any proposal to authorise an approved testing authority. These guarantee that no proposal can be implemented unless Parliament is satisfied with it: they guarantee that any proposal will be judged on its merits, in the light of full information, and that Parliament will have every opportunity to assess how well we have achieved the essential objectives in terms of safety and integrity.

On those grounds, I think it would be wrong in principle to seek to amend the Bill as proposed. But there are also more technical reasons why it might well prove to be a mistake. Let me give an example. At this stage we do not have a final blueprint for the new authority, and the details of its constitution and operation are subject to further discussion. As the House knows, the constitution of Lloyd's Register itself prohibits the distribution of profits to members, and it is certainly intended that the new authority will follow that model. But if its income in any year exceeds its expenditure, would it satisfy the description "non-profit-making"? I believe that if we write into the Bill some description of the kind of organisation we have in mind, we risk imposing a straitjacket on the practical business of working out the arrangements which will best serve our aims.

To add an extra provision at this stage, writing in some specific description of the new authority, could well prove to be a mistake which we would come to regret. We could find that we had unintentionally closed off some sensible option for the structure or organisation of the new system—one with which your Lordships would have been entirely content, when you had the opportunity to consider the proposal in context. In the Government's view the right approach is to leave some practical freedom now, but with a requirement for parliamentary approval when we have a complete and detailed proposal to lay before you. That is what the Bill provides.

The noble Lord, Lord Underhill, reminds me, not for the first time and I hope—God willing—not for the last time, that it is not what Ministers say, it is not the good intentions expressed, however honestly, it is what is in the Bill. I accept that. I know it well enough; I have been familiar with these matters now for long enough to know that that is so. We, too, wish to see testing put into the safest possible hands. We mean to ensure that that is what happens. We do not believe that the amendment will be helpful. I hope for the reasons that I have expressed that the noble Lord will accept what I say and will not proceed with the amendment.

My Lords, we, too, should like to support the noble Lord, Lord Underhill, in the principle behind this amendment, which was covered well in Committee, It expresses the doubts and concerns which the industry and many of us have about the possibility of the format of the testing organisation not being one single body but with testing offices in different parts of the country. The Government's position here is somewhat strange. It needs clarification. By all means, let this matter come before Parliament; but we do not have anything before Parliament. There is no blue print, as the Minister has said. How can you expect Lloyd's Register Vehicle Testing Authority to come into a contract with Government when they do not even have a blue print of what the testing authority is to be?

I may have misunderstood the noble Lord; but if I have not done so I believe that it is essential that something like the suggestion of the noble Lord, Lord Underhill, should be put in the Bill as an insurance policy. We are being asked to pass this Bill without any idea of whether Lloyd's Register Vehicle Testing Authority is going to take on the contract of this job. Also, we have no idea what the blue print is to be for these testing stations. If, as the noble Lord the Minister suggests, Parliament is the final arbiter of this system of testing, I am afraid that I am a little vague as to what Parliament has been asked to do. I should like to see this amendment accepted for the reason that I have given. The industry itself would like a little more detail.

My Lords, will the noble Lord allow me to explain? If I have not made this clear, perhaps I should have done so. The blue print—if I may call it that—has to be brought before Parliament to be approved in due course.

My Lords, I did not realise that. The point I was making was: how can Lloyd's Register Vehicle Testing Authority give any indication that they are prepared to take on this job if they have not been given sight of the blue print? If Lloyd's have not been given a blue print, and we have not been given a blue print, when is such a blue print going to be put forward? What is the timescale that the noble Lord is expecting? Are we talking about one year or two years? There is a lot which has not been put before us. I am supporting the noble Lord, Lord Underhill, here because I feel that this Bill at this stage needs an insurance policy and his amendment gives it one.

My Lords, I should like to support my noble friend. He gave a thorough understanding of the points which the noble Lord, Lord Underhill, advanced and which I share. He seemed to me to give us all the reassurances that we wanted. The Government's thinking seems to be in line with what we want. Any proposals will have to come before Parliament, and I should have thought that that was really enough. Underlining within the major legislation in the way that this amendment and the subsequent one would require, is unnecessarily restricting in view of the possible developments that might happen in the future. The great safeguard is that the proposals have to come before Parliament for approval.

My Lords, if the House will permit me to do so before I indicate what attitude I wish to take on this amendment, may I ask the Minister, as he rejects the position—as I think he does—of the nonprofit-making organisation, as in Amendment No. 11, what his view is regarding Amendment No. 12? We agreed they should be taken together.

My Lords, I understand the point that the noble Lord is seeking to make regarding Amendment No. 12. I have already considered the arguments for and against restricting the Secretary of State to the authorisation of one single body. I do not believe that this amendment would achieve what the noble Lord intends. I am advised that to alter the reference from "any person" to "a person or company or group of companies" would not have the effect of preventing the Secretary of State from authorising more than one such person or company. It might make the provisions of Clause 8 less clear. It would not rule out what I believe the noble Lord wishes to see ruled out. I hope that the noble Lord will agree with me, if he follows the point that I am trying to make.

While still on my feet, speaking again by leave of the House, may I respond to the point made by the the noble Lord, Lord Tanlaw? He was anxious that we did not have before us the blue print in question. He wondered how Lloyd's Register Vehicle Testing Authority could be considering this. Lloyd's are looking at a blue print. I think I said during Committee stage that they have approved the outline of a scheme and they are now looking at—if I may put it this way—the nuts and bolts, the details. Would that we had been able to be here today and say that this has been agreed. I entirely take what the noble Lord, Lord Underhill, said about that. It has not been agreed and it would be wrong of me to imply that it has. That is why I have tried to make the further point that even in the unlikely event that it should not be, then I have made my other points. The important point is that Parliament would still have to approve. Even when they have seen and agreed the scheme it still has to be approved by Parliament. That is surely where the safeguard lies.

My Lords, the noble Lord has been very helpful in his last observations that he has been given legal advice that Amendment No. 12 will not achieve what I want it to achieve. What we wanted in the amendment was to have a single organisation, which is what the operators want: either a single company or group of companies. As the noble Lord, Lord Bellwin, said that his legal advice is that it would not achieve that, I must bear that in mind and take a careful look at it.

In the other points that the noble Lord makes, he says that there is every intention—and I accept what he says—providing everything goes well with Lloyd's to do what we are requesting in this amendment. But the noble Lord goes on to say "Although this is our intention, why should we commit ourselves now to one set form?". At the moment, the Government have committed themselves to one single organisation which they hope will be Lloyd's. I accept the argument of the noble Lord, Lord Tanlaw, that there must be some form of insurance. In case Lloyd's fails or in case it is subsequently found that it is not a good set up. I appreciate also the support of the noble Lord, Lord Lucas.

It is clear that the Government do not like Amendment No. 11. I am very tempted to divide the House on Amendment No. 12; but in view of the legal advice which has been given to us I propose to take a careful look at it. If the Government accept the principle of a single organisation, then I should like to see them come forward with an amendment based on all the legal advice that the department can get, which might be better than ours. In the meantime, I beg leave to withdraw the amendment. But I will definitely come back to this subject on Third Reading with an amendment which I hope will meet the Government's point. It would be helpful, however, if the Government were to say they recognise the point and will bring forward their own amendment, with all the legal advice they have on it.

moved Amendment No. 13:

Page 7, line 6, at end insert—

("or

(c) engaged in the manufacture, sale or repair of motor vehicles;").

The noble Lord, said: My lords, in discussing Amendment No. 13 we return to points that I raised during the Committee stage in relation to who shall be a testing authority or even part of a testing authority. I do not want to go over all the ground again but there are three points that I should make. The first is that in the discussion that I have had with my noble friend he has made it quite clear that, while the Government are looking at the Lloyd's Register arrangement, which has advantage, the Government nevertheless preferred not to rule out the possibility of organising testing differently at some stage in the future. I assure noble Lords that this is not a rehearsal of what we have just been through.

My Lords, I wish to say a few words in support of the amendment of the noble Lord, Lord Lucas of Chilworth, for two reasons. First, as I mentioned on the previous amendment, the Minister made quite clear at the Committee stage that the Government are not contemplating the authorisation of any organisation with commercial interests. That is what the noble Lord's amendment wishes to make absolutely clear. Therefore, this amendment is perfectly in line with what the Minister said at the Committee stage, of which I reminded your Lordships when we discussed the previous amendment.

The other point is that in the discussion on the whole question of transfer of testing of heavy goods vehicles and passenger service vehicles I have been keen to listen to what the operators say. I am not talking now merely about those operators who are in public hands, publicly owned, but about all operators, privately owned and others. They all say that, as well as wanting one organisation, what they wish to avoid having anything at all to do with in the new testing organisation is any possibility of commercial interests being involved as well in repairs to vehicles. That is their view. They want to avoid that, and I believe on those grounds alone the Government would be well advised to accept this amendment.

If they do not like the actual wording perhaps they could accept something along the same lines, bearing in mind that already they have seen fit, very rightly, to insert two provisos in the Bill that no heavy goods vehicle operator or no public service vehicle operator can be an authorised testing station. The Government obviously see the dangers that could arise in that connection. The views of the operators should be taken into account and this amendment should be supported.

My Lords, I also should like to support this amendment, for the reasons given by the noble Lord, Lord Underhill, and also for a couple of other reasons. In Clause 8(2) the Bill says this:

"The Secretary of State may not under subsection (1) above authorise any person …".

I should like to ask the noble Lord the Minister: What about that person's brother? This is the problem. The noble Lord, Lord Lucas of Chilworth, has brought in the manufacturers, but, once various members of a family become involved, I believe you are then getting into the realm of what the Inland Revenue call, "connected persons", and that is why the whole industry are not keen on this section of the Bill. They are worried about the difference between fair competition and unfair competition.

If the Government reject this amendment—the implication which the noble Lord gave is quite clear to me—the implication is that there is a possibility at some future date of independent testing stations; there may be one, two or three different bodies could be running them, and the Government want a free hand to choose this. Therefore, all the problems and doubts of the industry come back to this: Is there going to be unfair competition, in that so-and-so is connected with a testing station in one form or another, be it through the industry or through a blood relative? The full force of the argument comes into these last three amendments we have discussed.

The noble Lord, Lord Lucas, is attempting to bring in some safeguards for the industry. I do not really think he has gone far enough. I think you have to go right the way on down to what the Inland Revenue calls "a connected person", and once you start doing that you might as well put testing stations to where they are at the moment, in the public sector. Then everyone would be much happier.

My Lords, may I say I understand from the Bill who is not going to be allowed to do the testing, but at the same time may I ask the noble Lord the Minister who the Government have in mind as doing the testing?

My Lords, on the latter point, just to dispose of it straight away, clearly the expectation is that Lloyd's Register will be concerned with this, although, as I said earlier, the arrangement with them is not yet concluded. We fully expect that it will be, but I readily concede that until it is concluded it is not a fact. But I also went on to say that, if it should turn out not to be so, an alternative in the same basic form—that is, one organisation—would still apply.

Apart from the fact that the amendment, as worded, we believe is technically deficient in that the words are very vague and, if interpreted widely, could well catch bodies whose connection with the commercial side of the industry were very remote. In other words, it might be more restrictive than my noble friend Lord Lucas imagines. However, he has once again described very clearly the concern behind his amendment. I said in Committee that the Government recognised the very great importance of making sure that vehicle testing is not run by anyone with commercial interests which might influence his business. I must say once again that there is a great deal of common ground between us. But, as I said in my recent letter to my noble friend, I do not believe that there is any need to make an amendment to the Bill to deal with these concerns, and indeed, I think it would be unwise to do so.

To put what I am about to say into context—as I hope I did in writing to my noble friend—I must emphasise that when we consider the possibility of a person with commercial interests becoming involved in this activity we are not talking about a very likely event. We are, as I have said, encouraged by our discussions with Lloyd's Register and confident that our agreement in principle will be put into practice. We have nevertheless preferred not to rule out the possibility of organising testing differently, and it is obviously right that we should have proper provision for these other cases. We do not believe that the involvement of commercial interests, under proper control, would be impractical. We naturally accept that there would need to be a number of safeguards. But I would say that the Bill already provides a formidable array of these, which we have included to make sure that the possibility—and it is no more than that—of a commercial company becoming involved could be catered for.

It might help the House, as this matter obviously has caused some concern, if I were to explain these safeguards in some detail. I hope my noble friend will hear with me if I point once again to the provisions which I honestly believe should meet his concern, which I fully understand. First, the power to attach conditions to authorisations under Clause 8 of the Bill gives us a very powerful tool. Incidentally, I hope that, when I make these remarks, your Lordships will consider them carefully and not with minds perhaps already closed on this issue—because I rather suspect that many of your Lordships may have come to a conclusion—and that is why I am going to the trouble of explaining why we have the safeguards which cover my noble friend's anxieties on this matter. So I say again that first there is the power to attach conditions to authorisations under Clause 8 of the Bill, which gives us a very powerful tool. If the approved testing authority or authorities had any commercial interests we would insist on a complete separation of management between the testing business and those other interests, probably taking the form of a separate subsidiary company. We would make sure, using our powers in Clause 8, that the management of the testing side was responsible directly to the highest level in the group and to no one else.

Secondly, we would insist that any testing authority should devote reasonable resources to an effective system of standards control, and we should require the results of these in-house checks to be made available to the Secretary of State. We would also, however, have our own very thorough system of supervision as a double check on this. Civil servants would continue to carry out standards-control checks on behalf of the Secretary of State; and their routine examination of vehicles in the course, for example, of roadside checks would also provide valuable information about the condition of the vehicle population. All this will be an effective check on how individual stations are performing. And, my Lords, this is all in addition to the computer analysis of test results, which will continue and which would quickly reveal any abnormal pattern of results which might indicate an improper influence on testing standards.

This is a comprehensive system of control. The way in which it is used will of course depend on the circumstances. A single testing authority is likely to be much easier to supervise than a system divided between several different companies. But, whatever the system, we will make sure that it functions properly, and we will devote whatever resources may be necessary to the task of supervision and control.

I hope I have reassured the House, including my noble friend Lord Lucas—I suspect not; but I hope so—that, while we are not in fact intending to involve commercial companies in this area, we do believe it would be feasible, with the controls in this Bill, so to do. I hope that I have managed to convey the practical way in which the testing system will be controlled. I would once again, however, point to Clause 8(9) and (10) of these if there remains any disquiet. These require the approval of both Houses of Parliament before the Secretary of State can implement any proposals for the authorisation of a testing authority. Both Houses need to be satisfied that nothing which is proposed would endanger the high standards of testing, which we all regard as so important. If at that stage there is still concern, then it will be within Parliament's power if necessary to reject the proposals.

Parliament itself will be the judge of whether we have devised a system which will truly provide integrity in testing and a good service to the industry, and Parliament will make that decision, not on the basis of hypothetical discussions and abstract principles, but on a specific proposal and in the light of full information about what the Government intend. Surely, that is the right way to exercise control. Amending the Bill now, I would suggest with every respect to my noble friend—and he knows that for his considerable knowledge and experience in this field I have every respect—is not the right way and, in the light of what I have said about the safeguards which already exist, and which would in fact apply, I hope that he will feel able not to press the amendment.

My Lords, I wonder whether the noble Lord the Minister would deal with the central point which I believe is worrying noble Lords. That point is not whether there are safeguards in the Bill, in regard to the respectability of an authority that may be put before either House. That disquiet is not, indeed, in regard to the safeguards of which the noble Lord the Minister has been good enough to remind the House. The safeguard that is wanted is something which is very well known in commercial and professional life. It is to avoid a conflict of interest, and operators are anxious to see that there is no possible conflict of interest. A conflict of interest is possible where somebody is engaged in the motor trade, and essentially somebody who is engaged in the repair side of the motor trade, because the operators feel—and it may be a fault that will eventually not worry them, but the principle is there; or, if I may copy the Minister's favourite word, the "philosophy" is there, from the point of view of the operator—that the Act of Parliament which will face them should be one which shows a manifestly fair, proper, impartial and disinterested authority, and it is the disinterested part, in regard to the exclusion of the motor trade industry, the repair industry, that has to be shown upon the face of this statute to be there.

That is the safeguard that is wanted and, if I may say so with respect to the Minister, he did what he usually does, which is to take the House fully into his confidence by explaining the provisions of the Bill which he thinks are safeguards. But the noble Lord failed to deal with the central point, quite apart from the fact that, quite unintentionally, he misquoted the amendment when he spoke of a technical objection to it. But I have an idea that, as it is his amendment, the noble Lord, Lord Lucas, will want to deal with whether or not he was correctly quoted, and it would be an impertinence for me to go on with that point.

My Lords, I wonder whether, by leave of the House, I might make a brief comment on what the noble Lord, Lord Mishcon, has just said. Of course, I entirely agree with him as to the desirability—indeed, the essentiality—of there being a no-conflict situation. That is as fundamental to the Government in their thinking in this matter as it is to the principle which he enunciated. But surely the very fact—and this must be the answer to that point—that, at the end of the day, it is Parliament (and we cannot belittle the importance of that) which will have a say as to whether or not the organisation brought forward for approval has the kind of impartiality that it would require to see, is the greatest test of all; and that is there. That is the answer to the point which the noble Lord made.

My Lords, may I say that the system described by the noble Lord the Minister sounded to me very like the present system—

My Lords, I think that this is the second time that the noble Viscount has spoken on this amendment, and he should ask for the leave of the House.

My Lords, with the leave of the House, may I just say that the system described by the noble Lord the Minister sounded to me very like the present system, which I believe works very well, and it would be a very great pity to change it. It is very important to have an impartial authority, something similar to the people who do the weights and measures, and as the present system is run by such an authority it would be a great pity to change that part of it.

My Lords, I am most grateful to my noble friend the Minister for giving a very full explanation of the proposals. To start at the beginning, the Minister said he thought that my amendment was defective and was too widely drawn. He said that excluding people concerned with the industry drew too wide a net. Perhaps my noble friend misread me, or perhaps I misled him when I said what my previous amendment was concerned with. This amendment uses the words "engaged in", which is a much narrower net. But it is not for me in this matter to be at all satisfied. It so happens that I am not, but it is not for my noble friend to satisfy me. He has to satisfy the industry or, to put it in another way, we in Parliament have to satisfy the industry— I would not put it solely upon my noble friend's shoulders—and we have not done so up to this moment.

I do not disagree at all about the controls, the levels of expertise to be engaged in testing, the supervision, the roadside checks and the monitoring. Neither do I dispute that any competent well-trained motor vehicle engineer could do this work. I am concerned with the grey area. If I had been a pupil of the noble Lord, Lord Mishcon, instead of an engineering apprentice in my younger days, I could have put it better.

I shall be quite blunt about this. Some years ago I was the manager of a garage who had the responsibility of examining taxicabs on behalf of the local watch committee. There were pressures brought to bear well outside the competence of the inspection, and it was bluntly put, "I am sure we are going to buy a new taxicab next year, if you could just see us through this year". That is the grey area and that is the conflict of interest. I have said before that it is not unknown for garage mechanics engaged in the testing of motor-cars, who happen to be paid on a time-saved bonus system, to increase the ardour with which they express their opinions on certain testing matters, which may reflect itself in the work in an idle workshop. Those are the grey areas. You can apply conditions, such as that Mr. X, who will be a testing authority at some time in the future, shall not do this, that or the other. But it does not remove the grey area, if he has a garage up the road, or if, as the noble Lord, Lord Tanlaw, said, his brother has one, and the distancing of a subsidiary company is a delicate matter.

So I very much regret that I am not reassured. There is this area which the industry will be unhappy about, having enjoyed the confidence and the good reputation of the Government scheme. This is not at all to imply that Lloyd's Register cannot do the job. But we have to satisfy those who are going to pay—the customers. They want to be absolutely satisfied that the interests which obtain with a commercial vehicle are as far removed from the testing as is humanly possible. I believe that your Lordships will agree with me. In fact, I am going to ask your Lordships so to do.