Lords Sitting of 3 March 1987

Preamble
The House met at half-past two of the clock: The LORD CHANCELLOR on the Woolsack.
Prayers—Read by the Lord Bishop of Sheffield.
Lord Harlech—Sat first in Parliament after the death of his father.

SDI Research Implications
Lord Kennet: My Lords, I beg leave to ask the Question standing in my name on the Order Paper.
The Question was as follows:
To ask Her Majesty's Government whether, in the light of the Foreign Secretary's speech on 27th January to the International Institute for Strategic Studies, in which he referred to the strategic and political implications of the strategic defence initiative, they will now initiate an open discussion of these implications, lest "research may acquire an unstoppable momentum of its own" and "political decisions are …. pre-empted by the march of technology". (Speech by Sir Geoffrey Howe, 15th March 1985).
The Minister of State, Foreign and Commonwealth Office (Baroness Young): My Lords, the debate on the implications of SDI has already been in progress for a considerable period, not least in this House.
Lord Kennet: My Lords, will the noble Baroness's department take care that the Ministry of Defence does not conclude the debate prematurely in the wrong direction? Did the Government notice in The Times last week an interview with Dr. Stanley Orman, director-general of the SDI Participation Office in the Ministry of Defence? The report concluded—
Noble Lords: Reading!
Lord Kennet: Yes, I am quoting something which is germane to the Question. It concluded,
"the work now under way is not going to be abandoned just because of political sensitivities over the 'correct interpretation' of the ABM treaty".
That is the evidence which lies behind my Question, and I hope the House will agree that I was right to quote it.
Baroness Young: My Lords, I am happy to assure the noble Lord that the debate which my right honourable and learned friend foreshadowed two years ago and which the noble Lord mentioned in his Question has been in progress since that time and is continuing and that political decisions have not been pre-empted by the march of technology. The political parameters were set out at Camp David in December 1984.
Lord Cledwyn of Penrhos: My Lords, do the noble Baroness and her right honourable and learned friend accept the narrow or the broad interpretation of the ABM treaty on SDI? It would be very interesting to know that. To what extent does she think the situation has been changed by Mr. Gorbachev's recent initiative?
Baroness Young: My Lords, the Government do not interpret the ABM treaty and have never done so. We welcomed the conduct of the SDI research programme within the restricted interpretation. The United States is consulting its allies on the implications of a move to a broad interpretation which it as signatory to the treaty believes is fully justified. We hope that the two signatories will discuss any difficulties through the established mechanisms.
Lord Gladwyn: My Lords, will the Government at least agree that any proposals in connection with SDI for nuclear tests in space would, in the absence of agreement with the Russians, be a clear violation of the ABM treaty of 1972?
Baroness Young: My Lords, that is a hypothetical question which I cannot answer.
Lord Chalfont: My Lords, now that Mr. Gorbachev has belatedly conceded that the strategic defence initiative does not stand in the way of future arms control negotiations, does the noble Baroness agree that it might be as well for us to accept it too and concentrate on the business of achieving serious arms control agreements?
Baroness YoungYes, my Lords, I agree with the noble Lord. What we should all like to see is serious negotiation on lower levels of arms.
Lord Jenkins of Putney: My Lords, would it not be a considerable contribution to achieving satisfactory arms control if the Americans were to decide to help the proceedings by accepting the rather strict interpretation of the ABM treaty which the noble Baroness and the Government accept? Then perhaps we could have a little more harmony in the West.
Baroness Young: My Lords, I made the Government's position quite plain and I indicated what view we take.
Lord Molloy: My Lords, will the noble Baroness tell us precisely what is the Government's attitude towards SDI? There appear to be a number of interpretations. The British Foreign Secretary has advised caution with prudence. Is that the official policy?
Baroness Young: My Lords, the Government's position on SDI is that we are supporting the research programme.
Lord Kennet: My Lords, will the noble Baroness think again before endorsing the mistaken belief of the noble Lord, Lord Chalfont, that Mr. Gorbachev has said that SDI is not relevant to meaningful progress on arms control, given that he said only that it is not relevant to meaningful progress on INF negotiations, which is not a large part of arms control?
Baroness Young: My Lords, if the noble Lord looks to see what I said in answer to a Question yesterday from the noble Lord, Lord Molloy, I am quite sure that he will know exactly what the Government's position is on what Mr. Gorbachev said two days ago.

Iran-Iraq War: Peace Initiatives
2.42 p.m.
Lord Molloy: My Lords, I beg leave to ask the Question standing in my name on the Order Paper.
The Question was as follows:
To ask Her Majesty's Government what responses they have received to their endeavours to bring about a ceasefire in the Iran-Iraq war.
Baroness Young: My Lords, we regret that the initiatives that we have supported in the United Nations, European Community and other fora have not brought about a ceasefire or a negotiated settlement.
Lord Molloy: My Lords, I am grateful to the noble Baroness for that reply. Is she aware that many people approve of the endeavours undertaken by the British Government in general at the United Nations and indeed by the British Foreign Secretary? Is she further aware that this is an horrendous war which on the Iranian side involves child soldiers? Will she give an assurance that the British Government will not give up their endeavours to bring both sides together and to try to bring about a ceasefire?
Baroness Young: Yes, my Lords, we wish to see an end to this wasteful and destabilising conflict. Discussions continue between the UN Secretary-General and the UN Security Council aimed at achieving a negotiated end to the conflict.
Lord Mellish: My Lords, may we have an assurance that, whatever the British Government do or do not do in trying to end this war, it is such a crazy war we will keep out of it?
Baroness Young: My Lords, it is certainly not the wish of the British Government to be drawn into the war at all.
Lord Cledwyn of Penrhos: My Lords, can the noble Baroness confirm that International Military Services, which is an agency of the Ministry of Defence, still retains a facility in Tehran? Will she further confirm that the Iranian office in London—at 4 Victoria Street, I believe—organises 80 per cent. of Iran's arms imports? To what extent is that known to Her Majesty's Government? Given the clear statement of Her Majesty's Government that they wish to see this tragic war ended as soon as possible, is it not wrong for us to give any facility whatsoever?
Baroness Young: My Lords, we are aware of the allegations concerning the activities of the Iranian military procurement offices in London. Our understanding is that the organisation from Britain of arms sales to Iran is not illegal unless the goods
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concerned are imported into or exported from the United Kingdom in breach of British law. We have no firm evidence of that. If we obtain evidence of illegal activities, suitable steps will be taken by the appropriate authorities.
Lord Gladwyn: My Lords, do the Government feel that the recent substantial quantity of arms provided by the American Administration to the Government of the Ayatollah Khomeini will have any noticeable result on the outcome of this unfortunate war?
Baroness Young: My Lords, I do not think it would be right for me to comment on the policy of the American Government with regard to their sale of arms or any of the subsequent consequences.
Lord Molloy: My Lords, is not the noble Baroness aware that it would appear it is not the policy of the United States Government? That is why they have had an inquiry into people who, without any authority whatever, carried on this trade in death'and destruction by delivering armaments to Iran in return for the release of Americans who may be held there. The American Government and Congress say that it was done without consent. Therefore, is it not right and proper that we should tell the Americans that we are in the difficult situation where we are trying to end the war and they are unofficially exacerbating it?
Baroness Young: My Lords, our view on arms supplies to Iran and doing deals with those holding hostages is well known. I do not think it is right for me to comment on any other aspects of the American Government's policies.
Lord Cledwyn of Penrhos: My Lords, is not the noble Baroness aware that her noble friend Lord Trefgarne recently stated quite clearly in the House that 'arms from Britain are sold to the Iranians, the excuse being that they are non-lethal? Is the noble Baroness further aware that Mr. Colin Chandler of the Ministry of Defence recently made a speech in which he laid something with which most people would agree—that there is no such thing as non-lethal armaments?
Baroness Young: My Lords, our policy on defence sales to Iran is well known, and as part of our scrupulously maintained impartiality in the conflict we refuse to sell to either side defence equipment which will significantly enhance the capability to prolong or exacerbate the conflict.

Tax Offices: Computerisation
2.47 p.m.
Lord Campbell of Croy: My Lords, I beg leave to ask the Question standing in my name on the Order Paper.
The Question was as follows:
To ask Her Majesty's Government when they expect the necessary computerisation of the national network of offices of inspectors of taxes to be completed.
The Secretary of State for Employment (Lord Young of Graffham): My Lords, the Inland Revenue is carrying out a number of major computerisation projects. The computerisation of the entire PAYE and Schedule D systems will be completed as planned by the end of 1988. This will be followed by projects in local offices covering making of assessments for corporation tax. Collection offices are also being provided with an on-line computer system. These projects should all have been completed by the early 1990s.
Lord Campbell of Croy: My Lords, I am grateful to my noble friend for his reply. Is he aware that local offices are still writing to businessmen asking for basic information which has already been supplied and is normally supplied to another office? Is not this the kind of unnecessary form-filling which my noble friend himself is very rightly trying to eliminate to assist the British economy?
Lord Young of Graffham: My Lords, I am grateful to my noble friend. It is true that some local offices are still writing to businessmen asking for basic information, but that is because these offices are in the process of setting up their computerised record systems and there may well be occasions when duplicate information is necessary and is requested. I hope that this is very much a problem of transition.
Lord Bruce of Donington: My Lords, will the noble Lord clarify that reply a little? One can understand PAYE in its totality being computerised, and likewise Schedule D. However, does not the noble Lord agree that what is important is the degree of intercommunication computerised facilities that avoid the issue of oceans of paper from different offices to the same person? It would be very much simpler to have the paper issued from one office only. Can the noble Lord give some indication on progress in that respect?
Lord Young of Graffham: My Lords, it is important to put the whole programme into perspective. After all, it is the biggest on-line system in Europe. It started in 1980, was due for completion in 1987 and was completed on time. It involved building 11 computer centres, 600 local offices and installing 28,000 VDUs. It entails the computerisation of 28,000 taxpayer records, 1.1 million employer records and 34 million Schedule D records. When all that is completed I hope that we shall be able to see an elimination of unnecessary paper—but not, I hope, a diminution in the amount of taxes collected where they are correctly collected from people.
Lord Diamond: My Lords, with regard to any of the figures, can the Minister give us some idea of the estimated cost of computerisation and the estimated saving in labour that will follow from it?
Lord Young of Graffham: My Lords, when the present programme is completed, some 4,600 people will be released from Inland Revenue work and I hope that we shall achieve a better service. I shall be very happy to put a note in the Library about the total cost of the project which spans the best part of a decade.
Lord Bruce of Donington: My Lords, I am sorry to press the Minister, but are we to gather from his answers that there will be no major upheaval in the country's direct taxation network which would necessitate very considerable reprogramming of the computerised system as it might then exist?
Lord Young of Graffham: My Lords, if the noble Lord is trying to obtain some indication of what may or may not happen later this month, alas, he is unfortunate; but I know of no reason to cause any major upheaval.
Lord Leatherland: My Lords, may I ask the Minister whether this work in the tax inspectors' offices will mean any delay in sending out tax demands to taxpayers?
Lord Young of Graffham: My Lords, computerisation is there for the express purpose of eliminating delays.

AIDS Information Campaign
2.50 p.m.
Lord Rodney: My Lords, I beg leave to ask the Question standing in my name on the Order Paper.
The Question was as follows:
To ask Her Majesty's Government what effect they believe the AIDS leaflet and advertising campaign has had.
Lord Hesketh: My Lords, the objective of the Government's public education campaign is to create a general awareness of the facts about AIDS, how the disease is transmitted and how the spread of infection can be controlled. The results of the latest Gallup Poll survey commissioned by the department are most encouraging and show that these objectives are being met. There is evidence too that the campaign is helping to dispel some of the groundless fears of infection and that fewer people now appear to be worried about catching AIDS through normal social contact. The Government will continue to monitor the effectiveness of the campaign and will of course take account of findings in the development of future strategy.
Lord Rodney: My Lords, I thank my noble friend for that very comprehensive reply. In view of the very considerable coverage given on both television channels recently and which will be continuing for another week, will the noble Lord say whether the DHSS is monitoring these programmes? Very different information has recently been given by two such programmes which I think will have confused anybody who watched both of them.
Lord Hesketh: My Lords, I thank the noble Lord for his supplementary question. We are undertaking direct research with regard to teenagers both before and after the programmes currently being broadcast this week.
Lord Orr-Ewing: My Lords, does the noble Lord agree that it is very encouraging that the two broadcasting and television organisations should co-operate in getting the message across? However, is it not a little disastrous that they should include "Spitting Image" which introduces political characters into what is a very serious and sensible effort to inform the electorate.
Lord Hesketh: My Lords, I am grateful for the noble Lord's question. Unfortunately, I did not see the programme to which he referred.
Lord Ennals: My Lords, the noble Lord missed a very amusing episode, I must say. Will the noble Lord confirm that in their continuing educational campaign, which I very much commend, the Government will reflect on two points: first, that some genuine, warm human relations are endangered by unjustified fears; and, secondly, that at the other extreme there are still some irresponsible youngsters who say that they just do not give a damn?
Lord Hesketh: My Lords, I accept those two points; but I am not sure that there is very much that the Government can do about that attitude.
The Earl of Halsbury: My Lords, will the noble Lord be encouraged to learn that a teenager of my acquaintance, on being accosted and importuned on the way home from school by a man who asked her to come home and have a good time, replied, "Yes, if you wish to play Russian roulette. I'm an AIDS carrier"? Thereafter the man was not visible for dust.
Lord Hesketh: My Lords, as always, the noble Earl provides fascinating information.
Lord Chalfont: My Lords, does the noble Lord have any sympathy at all with the somewhat old-fashioned view that some of the publicity and advertising connected with the campaign is distasteful, insensitive and in some cases downright offensive? Will the Government use their influence to persuade some of the more imaginative advertising agencies to control their more esoteric exercises in appealing to what seems to be the worst instincts of the general public?
Lord Hesketh: My Lords, there are really two parts to that question. With regard to the Government's own directly commissioned activities, such as the AIDS leaflet and the television campaign, there were 20 million leaflets sent out and we have received 41 letters of complaint so I feel that we have got it just about right. With regard to television advertisements, the noble Lord, Lord Chalfont, is probably referring to a series of advertisements that were commissioned by Marketing Week, which of course do not have anything to do with the Government.
Baroness Masham of Ilton: My Lords, is the noble Lord aware that some young people do not think that the campaign is explicit and straightforward enough; and that the campaign does not take into consideration the fact that some young people have high moral standards?
Lord Hesketh: My Lords, it is always rather difficult to strike a happy medium. Clearly, it is important that we should communicate in language that young people understand and use themselves. The campaign will continue to be direct and will pull no punches; but being explicit does not necessarily have to mean using four letter words, which can stand in the way of communication.

Business
2.56 p.m.
Lord Denham: My Lords, at a convenient moment after 3.30 this afternoon my noble friend Lord Caithness will, with the leave of the House, repeat a Statement that is being made in another place on asylum seekers. This will be followed by my noble friend Lady Trumpington who will, again with the leave of the House, repeat a Statement on the community programme and unemployment benefit.

Business of the House: Debates, 11th March
The Lord President of the Council (Viscount Whitelaw): My Lords, I beg to move the first Motion standing in my name on the Order Paper.
Moved, That the debate on the Motion in the name of the Lord Cledwyn of Penrhos set down for 11 th March shall be limited to 5 hours and that Standing Order 35 and paragraphs 10 to 13 of the Rules for the Conduct of Short Debates shall apply to the debate with the substitution of "5 hours" for "24 hours" and "25 minutes" for "20 minutes".—(Viscount Whitelaw.)
On Question, Motion agreed to.

Business of the House: Debates, 18th March
Viscount Whitelaw: My Lords, I beg to move the second Motion standing in my name on the Order Paper.
Moved, That the debates on the Motions in the names of the Lord Swann and the Lord Hacking set down for 18th March shall each be limited to 24 hours and that Standing Order 35 and paragraphs 10 to 13 of the Rules for the Conduct of Short Debates shall apply to each debate.—(Viscount Whitelaw.)
On Question, Motion agreed to.

Ministry of Defence Police Bill [H.L.]
3 p.m.
The Minister of State for Defence Procurement (Lord Trefgarne): My Lords, I beg to move that the Commons amendments be now considered.
Moved, That the Commons amendments be now considered.—(Lord Trefgarne.)
On Question, Motion agreed to.

Ministry of Defence Police Bill [H.L.]

  COMMONS AMENDMENTS
  [References are to [Bill 49] as first printed for the Commons]
  1 Clause 3, page 4, line 31, leave out ("and") and insert ("affecting individuals, except as provided by subsection (2A) below, and questions of').
  2 Page 4, line 31, at end insert—
  ("2A) The Federation may represent a member of the Ministry of Defence Police at any disciplinary proceedings or on an appeal from any such proceedings.
  (2B) Except on an appeal to the Secretary of State or as provided by section [Representation at disciplinary proceedings] below, a member of the Ministry of Defence Police may only be represented under subsection (2A) above by another member of that force.").
  3 Page 4, line 31, at end insert—
  ("(2C) The Federation shall act through branches and regional and national committees; and the Federation and every branch and committee thereof shall be entirely independent of and unassociated with, any body or person outside the police service, but may employ persons outside the police service in an administrative or advisory capacity.").
  4 Page 4. line 34, after ("Federation") insert ("or authorise the Federation to make rules concerning such matters relating to their constitution and proceedings as may be specified in the regulations").
  5 Page 4, line 34, leave out ("such regulations may, in particular, make provisions with respect to") and insert (", without prejudice to the generality of that power. regulations under this subsection may make provision—").
  6 Page 4. line 36, before first ("the") insert ("with respect to").
  7 Page 4, line 37, before first ("the") insert ("with respect to").
  8 Page 4. line 37, leave out ("voluntary").
  9 Page 4, line 40, before first ("the") insert ("with respect to").
  10 After Clause 3, insert the following new clause:
  (Representation at disciplinary proceedings.)
  (" .—(1) On the hearing of a disciplinary charge against a member of the Ministry of Defence Police of the rank of chief superintendent or below the punishment of dismissal, requirement to resign or reduction in rank may not be awarded unless he has been given an opportunity to elect to be legally represented at the hearing.
  (2) Where a member of the Ministry of Defence Police so elects, he may he represented at the hearing, at his option, either by counsel or by a solicitor.
  (3) Except in a case where a member has been given an opportunity to elect to be legally represented and has so elected, he may only be represented at the hearing of a disciplinary charge by another member of the force.
  (4) The Secretary of State shall by regulations specify—

  (a) a procedure for notifying a member of the Ministry of Defence Police of the effect of subsections (I) to (3) above;

  (b) when he is to be so notified and when he is to give notice whether or not he wishes to be legally represented at the hearing.

  (5) Regulations under subsection (4) above shall be made by statutory instruments and a statutory instrument containing any such regulations shall be subject to annulment in pursuance of a resolution of either House of Parliament.
  (6) If a member of the Ministry of Defence Police—

  (a) fails without reasonable cause to give notice in accordance with the regulations that he wishes to be legally represented; or

  (b) gives notice in accordance with the regulations that he does not wish to be legally represented,

  any such punishment as is mentioned in subsection (1) above may be awarded without his being legally represented.
  (7) If a member of the Ministry of Defence Police has given notice in accordance with the regulations that he wishes to be legally represented, the case against him may be presented by counsel or a solicitor whether or not he is actually so represented.").
  The noble Lord said: My Lords, I beg to move that this House do agree with the Commons in their Amendment No.1. I should like, with your Lordships' permission, to move Amendments Nos. 1 to 10 enbloc. These amendments were brought forward in another place to make provision in Clause 3 for members of the Defence Police Federation to represent its members at disciplinary proceedings. New Clause 4 allows them to obtain legal representation in such cases. These provisions give members of the Defence Police Federation the same privileges as members of the Home Department Police Federation under the Police Act 1964, as amended by the Police and Criminal Evidence Act 1985, and have the full support of the Defence Police Federation.
  I should add that I understand there is an omission in the Commons Amendments as printed on the Marshalled List. Amendment No. 10 should have a sub-heading, "Representation at disciplinary proceedings". I beg to move.
  Moved, That this House do agree with the Commons in the said amendments.—(Lord Trefgarne)
  On Question, Motion agreed to.

Banking Bill
3.2 p.m.
Lord Beaverbrook: My Lords, I beg to move that this Bill be now read a second time.
The purpose of the Bill is to bring up to date and improve the statutory framework for the supervision of deposit-taking institutions in the United Kingdom. When enacted, the Bill will replace the existing system of supervision provided by the Banking Act 1979. It is an important though not controversial measure. The Bill has been welcomed and given broad support in another place, and has been given swift passage to your Lordships' House.
The banking and financial sector is of great importance to the United Kingdom's economy. In 1985, the year in which the Government's proposals for this legislation were first published, the City's foreign earnings amounted to £7.6 billion, and the income of the financial and business services sector accounts for a total of some 14 per cent. of GDP. That sector employs 2 million people. Banking lies at the very heart of the financial sector.
There are about 300 recognised banks and just over 300 licensed deposit-taking institutions in the United Kingdom. Most of the world's major banking enterprises are represented here, as are many smaller overseas institutions. London has a leading position among the world financial centres. The banking industry itself is becoming increasingly international, with a continuous market round the world, aided by complex electronic methods of communication and trading.
It is a fast-moving and fast-changing market place. The relevant legislation must endeavour to keep pace. This Bill deals with the authorisation and supervision of banks and with the protection of their depositors. It is the third major strand of government legislation on financial supervision, following the enactment last

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year of the Financial Services Act and the Building Societies Act.
Banks have been subject to some degree of prudential regulation by the Bank of England at least since the 19th century. The Banking Act 1979 was however the first introduction of a comprehensive statutory framework for the authorisation and supervision of deposit-taking institutions. In the eight years since that legislation was formulated much has changed in the banking world and much has been learnt of the task of supervision; and 1987 is not too soon to reflect the lessons of experience in a new system.
The Bill also draws on the lessons learnt from the near collapse in 1984 of Johnson Matthey Bankers. Following those events, my right honourable friend the Chancellor of the Exchequer established a committee under the chairmanship of the governor of the Bank of England, and including representatives of the Treasury and the commercial banking sector, to review the operation of the 1979 Act and to make recommendations.
That committee reported in June 1985, and in December of that year the Government published a White Paper, the proposals of which are now reflected in the Bill. Experience has shown the need to strengthen the powers of the supervisors and to impose more exacting duties on the institutions they supervise. Those are major objectives of the Bill. At the same time, the statutory framework needs to remain sufficiently flexible to avoid unnecessarily rigid rules and regulations that will only hamper British institution with no supervisory benefit.
As under the 1979 Act, the Bill places the task of supervision on the Bank of England. To assist in that task, a new Board of Banking Supervision is created to advise the Bank of England on the exercise of functions under the legislation. The Government believe that the board will be of great value to the bank in providing a source of skilled and independent advice at the highest level. The supervisory powers of the Bank of England itself are being strengthened and improved. And the existing two-tier system of authorisation and supervision is to be abolished so that the obligations of authorised institutions and the powers of the supervisors will apply equally to all institutions.
New requirements are introduced to regulate the ownership and control of authorised institutions. Improvements are made to the provisions for obtaining information about the business of authorised institutions and also for the communication of information between supervisory authorities and between the supervisors and banks' auditors, who have an important role to play.
Many of the provisions of the 1979 Act are however retained, either unchanged or with only modest technical improvements. The arrangements for appeals against decisions of the supervisors are retained in much the same form, as are the detailed arrangements for the Deposit Protection Board and the compensation scheme that it administers. As your Lordships may be aware, the maximum level of protection provided by the Bill under these arrange-
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ments has however been doubled—from a maximum protected deposit of £10,000 to one of £20,000—as a result of amendments brought forward by the Government in another place.
I will not describe all the provisions of the Bill in detail but I will say a few more words about some of the main provisions in the Bill. I have referred to the new Board of Banking Supervision and its important role in advising on the exercise of the Bank of England's supervisory functions. The key element of the board is of course the presence of a majority of independent, expert members with the duty to provide advice to the board's ex officio members, comprising the governor of the Bank of England, as chairman, and also the deputy governor and the director of the bank responsible for supervision. This will enhance the depth of experience available to the bank both in formulating broad policy and in dealing with individual cases.
The significance of the board is reflected in the changes brought about in another place, which further strengthen the independent role of the board by bringing the total number of its independent members to six, out of a total board of nine members, and by providing safeguards to ensure that the voice of independent members will be heard.
I have mentioned the fast-changing financial markets that are the background to this Bill. Like the 1979 Act, the new Bill is based on regulation of the activity of deposit-taking. The definitions of "deposit" and of a "deposit-taking business" are broadly as in the existing Act. But in order to enable the statutory framework to adjust to the changing market place, provision is made for these definitions to be amended by statutory instrument if it proves necessary to do so.
The characteristic feature of the system of authorisation and supervision under the 1979 Act was the so called two-tier system of recognised banks and licensed deposit-taking institutions. For largely historical reasons, it was thought appropriate to distinguish the authorisation of more traditional banks from that of other deposit-taking institutions and to apply to them a more informal system of supervision; so that, for example, not all of the statutory powers and obligations under the 1979 Act were applied to what was often thought of as the senior category. At the same time, in order to qualify for recognition as a bank, subjective tests such as a high reputation and standing in the financial community had to be met, involving difficult questions of judgment that did not lend themselves to a consistent application of policy.
Experience has shown that this two-tier system is not suited to our times. Johnson Matthey Bankers was a recognised bank. The Bill eliminates the distinctions and provides for all institutions to be subject to the same statutory powers and requirements. There is wide support for the introduction of this single system of supervision. The Government have, however, been aware of concern that a single system of supervision should not result in the elimination of all former restrictions on the use of banking names, the use of such names being previously confined to recognised banks. The Bill therefore includes a new objective test for the use of banking names based on a minimum capital requirement. The test provides reasonable

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assurance against the possibility that members of the public will be misled.
At the same time, and as a result of concern expressed during proceedings in another place, the Bill now contains provisions to put right the injustice created by the 1979 Act in depriving small, reputable institutions of their existing names, and also provides transitional arrangements for the retention of banking names currently in use.
The Bill breaks new ground in providing explicitly for an appropriate number of non-executive directors to be included on the board of directors of authorised institutions. The Government believe that where appropriate the presence of non-executive directors can make a substantial contribution to the proper running of a banking business. The provisions, which form part of the criteria for authorisation under the Bill, are novel and have been added during the course of proceedings in another place. The Government are, however, satisfied that in their present form they are workable and a welcome addition to the statutory framework.
The supervisory process depends crucially on the supply of relevant, accurate and timely information that is available to the supervisors. Although most such information will continue to be supplied on a voluntary basis, the Bill now enables the bank, if necessary, to obtain information under statutory powers from all authorised institutions, with criminal penalties for non-compliance. The supervisors will also have a right of entry to obtain such information on the spot where a request to provide it has not been complied with or in exceptional cases if it is suspected that papers might be tampered with or destroyed. Particular attention is paid to the question of large exposures—in simple terms the lending of proportionately large sums to a single person or group of connected persons.
Risk-taking is inseparable from the business of banking. But experience has shown that large exposures are a characteristic feature of banking problems. The Bill therefore contains new proposals requiring exposures above 10 per cent. of an institution's capital base to be reported to the supervisors and for the supervisors to be notified in advance where an exposure exceeding 25 per cent. of the capital base is undertaken. Criminal sanctions will attach to deliberate non-compliance with these provisions. In addition, there is to be a new criminal offence of knowingly or recklessly providing any information to the supervisors which is false or misleading in a material particular.
The provisions of the Bill that apply to the acquisition of controlling shareholdings in authorised institutions have been the subject of extensive debate in another place. I believe that the Bill now before this House is substantially improved as a result of that debate.
Anyone proposing to acquire, or substantially increase, a controlling interest in a deposit-taking business will have to give adequate notice to the Bank of England, which will then have the power to object to the transaction if the intended controller does not meet its prudential standards. Failure to notify the bank under such circumstances will be a criminal
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offence, and powers are included in the Bill for restrictions to be applied to the shares in question if these procedures are contravened. The same powers will be exercisable where any controller of an authorised institution is found to be unfit to hold that position.
In addition, the Bill now builds upon the reciprocity provisions incorporated in the Financial Services Act to make them applicable to cases where the acquisition of control of a UK bank would be objectionable on reciprocity grounds; that is, where the controlling interest would be acquired by an institution whose country of origin did not allow reciprocal access to its own financial markets.
The Government have also responded to concern that the Bill as originally drafted did not deal adequately with the acquisition of shareholdings which, while not amounting to "control", as defined—that is, a holding of 15 per cent. or more of voting rights—might nevertheless provide significant influence. In future it will be necessary for any shareholding of 5 per cent. or more to be notified to the supervisors, who will be empowered to obtain information from, or investigate, such a shareholder.
I have mentioned the contribution to the work of the supervisors that can be made by the auditors of banks. The provisions in the Bill concerning auditors are parallel to those contained in the Building Societies and Financial Service Acts. Auditors and reporting accountants will be entitled to communicate information about their client company to the Bank of England without breaching any obligation of confidentiality or loyalty that they would otherwise owe to their clients. The accountancy profession is undertaking the task of formulating guidance to specify the circumstances in which such information should be communicated. The Bill also contains a reserve power for the Treasury, if necessary, to bring forward regulations for such a system in the event that professional guidelines are not forthcoming.
In his introduction to the Government's White Paper which foreshadowed this Bill, my right honourable friend the Chancellor of the Exchequer said:
."An effective system of banking supervision is as important as the banking system itself. For without it there will not be the confidence on which sound banking depends—from the confidence of the individual depositor that his money is safe, to confidence in Britain as one of the foremost financial centres in the world".
This Bill seeks to provide such a system. I believe that it is a good Bill. I commend it to your Lordships.
Moved, That the Bill be now read a second time.—(Lord Beaverbrook.)
3.17 p.m.
Lord Bruce of Donington: My Lords, I am grateful to the noble Lord for having taken us briefly through the Bill. I am pleased to inform him that, provided the noble Lord, Lord Young of Graffham, extends to us his usual flexibility when dealing on their merits with the questions asked and with possible amendments that may be put down, we for our part will be pleased to smooth the passage of the Bill through the House. In general terms, and subject to those qualifications, which I am quite sure the noble Lord, Lord Young of Graffham, will understand, we welcome the Bill.

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As the noble Lord, Lord Beaverbrook, said, the Bank of England is pivotal to the whole financial structure of the country. It has more immediate control because of the applications of immediate sanctions if its will is not obeyed. It has fairly good control of the joint stock banks themselves—control which I am happy to observe in at least one case has not prevented the profits of one leading institution exceeding for the first time £1 billion. The control therefore of the remainder of the City becomes translated down through the banking system.
Noble Lords will be aware that in the banking statistics published in the Financial Times some 10 days ago the indebtedness to the banks of this country had reached some £208,000 million, of which £197.000 million was in sterling. Much of that, although by no means all, went to building societies, investments in unit trusts, insurance, leasing and property companies. Therefore, through the joint stock banks the ultimate control and prestige of the Bank of England becomes all pervasive.
In the old days what the Bank of England wanted, by a series of nods and winks, good practice and association in the then coffee houses, could speedily be translated by the joint stock banks, the acceptance houses, the merchant banks and so on further down. Matters have progressed a little since those days. More and more institutions—although, 1 hasten to add, certainly not the majority—have seen fit to try and kick over the traces, much to the detriment of the good reputation of the City of London generally. I was therefore pleased to note from today's Guardian newspaper that the Bank of England is leaning severely on some City brokers who, in the Bank's view, have been party to deceiving certain local authorities. That is a very proper attitude for the Bank to take.
Therefore, subject to some observations concerning enforcement which I may venture to lay before your Lordships at a later stage—and that is a very important question—we think that it is wise that the Bill, in its generality and subject to certain detailed criticisms which we may make, should be brought before us.
The Bill also raises the question of the status of the Bank of England relative to the Government. Over recent years, particularly the past six or seven years, the Bank of England has sometimes given the impression that it is a law unto itself. I seek to make no party point about the matter; but perhaps that situation has been encouraged by the general hands off attitude of the Government towards free enterprise generally. The Government have very largely disclaimed responsibility for the conduct and guidance of the economy by saying that all it needs to do is create the climate and the rest is up to free enterprise and free competition. Beyond that the Government are not powerful enough—and they do not wish to be powerful enough—to do anything.
That situation arises in respect of two matters in the Bill to which I shall refer briefly in the hope that the noble Lord will respond. Clause 1(3) states:
"The Bank shall, as soon as practicable after the end of each of its financial years, make to the Chancellor of the Exchequer and publish in such a manner as it thinks appropriate a report on its activities under this Act in that year; and the Chancellor of the Exchequer shall lay copies of every such report before Parliament".
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When I was in another place I liked to feel that I was a good servant of the other place. Now that I am here I like to feel that I am a good servant of your Lordships' House; and, above all, a servant of Parliament. I do not like the idea of the Bank being required to make a report to the government, which may vary from time to time in its political complexion. We do not yet know who that government may be, and the noble Lord, with all his party-political broadcasts, cannot be absolutely certain. I do not like the idea that any subordinate institution should report to the Government as it thinks appropriate. I do not much care for that proposal.
Although we on these Benches welcome the establishment of a Board of Banking Supervision, your Lordships will note that at Clause 2(2)(b) it refers to:
"Six independent members, that is to say, members appointed jointly by the Chancellor of the Exchequer and the Governor, being persons having no executive responsibility in the Bank".
I do not like the phrase "appointed jointly". In effect it means that that body has a veto over any appointment that the Chancellor of the Exchequer. in his wisdom, might make. For this purpose he might belong to any political party or to none. I do not care for that proposal.
I should like to draw your Lordships' attention to the provisions of the Bank of England Act 1946 under which the Bank of England was placed under national ownership and control. How the Bank of England has remained in that position I do not know because the party opposite believe only in nationalising institutions that make considerable profits. I marvel at the fact that the Bank has so far escaped their notice, but it is a nationalised institution. Clause 4 of the Bank of England Act 1946 states:
"The Treasury may from time to time give such directions to the Bank as, after consultation with the Governor of the Bank, they think necessary in the public interest".
On checking the matter, I found that that clause has not been repealed by any subsequent enactment and that still remains the position. I am therefore a little curious as to why the two particular matters to which I have referred seem to derogate from the authority of the government of the day. Further evidence of that (of which the noble Lord, Lord Young of Graf/ham, is well aware) came to light at time of the Johnson Matthey affair. As noble Lords will recall, the Chancellor of the Exchequer was very annoyed—and he expressed his annoyance—that the Bank of England bailed out Johnson Matthey to the tune of £100 million without even notifying him of its intention to do so. I should not wish to call it arrogance because that expression would be entirely inappropriate; but it indicates a degree of self-consciousness of superior status which regards the Government with some indulgence as governments come and governments go.
I consider that those matters, although very marginal, should be corrected by the Government. At Committee I shall be tabling an amendment to the particular subsection to which I have referred in order that we can ventilate the matter. I am hopeful that the Government, on reflection, will wish to re-assert, however mildly, the authority which any government of the United Kingdom ought to have over any of those institutions.

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Turning to another part of the Bill, we welcome the provision requiring qualifications in order to become an authorised institution. We have no particular comment to offer between the differentiation of the provision of £5 million capital in order to qualify as an official bank and the lower qualification of £1 million to become an authorised institution. There are very few matters of detail that need concern us here.
However, one is a little concerned—perhaps unnecessarily—although I should not wish to register any contentious point at this stage. We are a little worried about the possible ability of overseas interests to establish themselves in the United Kingdom as either banks or authorised institutions without adequate safeguards. For example, we know that Clause 9(3) states:
"In the case of an application by an applicant whose principal place of business is in a country or territory outside the United Kingdom the Bank may regard itself as satisfied that the criteria specified … are fulfilled if'.
We wonder whether that is sufficiently comprehensive. In particular we are doubtful about the provision of subsection (3)(b):
"the bank is satisfied as to the nature and scope of the supervision exercised",
by the overseas authority in which the actual company is domiciled.
I should like to put a leading question to the noble Lord which he may not be able to answer. If, for example, one has a character in a place like the Netherlands Antilles who owns a majority shareholding in a company in Geneva which in its turn establishes a front company in the United Kingdom headed by a perfectly reputable person, well known and respected in the City, but who nevertheless may not necessarily be what the Bank would at a later stage in the Bill describe as a fit and proper person; how is the Bank going to be able to monitor matters of that kind'?
I should also like to ask the noble Lord whether he would agree on the basis of his present information that the authority in the Netherlands Antilles should be regarded as a proper supervising authority for the purpose of this Bill. Similar observations may be passed about a number of other tax havens; I am merely mentioning the Netherlands Antilles by way of illustration.
We also welcome the investment regulation proposals in Clause 32 and the provisions in a later clause relating to unsolicited calls, as well as those regarding fraudulent inducement in Clause 35. The takeover situation that was described by the noble Lord in the course of earlier remarks where he referred to the 15 per cent. limit has given some cause for query in the City. I understand from the Financial Times of 9th February that there is a desire—the noble Lord may be familiar with this—that there should be given to the Bank of England powers to act in the national interest irrespective of the 5 and 15 per cent. provisions that are in the Bill itself. The noble Lord has probably had some opportunity of reflecting on that since the Financial Times of 9th February was brought to his attention, as it must have been, and I should like to have his observations on that.
In general terms we also approve of the deposit protection scheme. There may be certain
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modifications which we may suggest and which may be of further assistance, but in general terms we support it.
I should now like to draw your Lordships' attention to Clause 94 of the Bill, which relates to enforcement. We have found in the whole series of Acts of Parliament that have come through another place and this House over the past 20 or 30 years that Acts of Parliament and their criminal enforcement provisions are one thing but enforcement is very often another.
Clause 94(5) indicates that,
"no proceedings for an offence under this Act shall be instituted in England and Wales, except by or with the consent of the Director of Public Prosecutions or the Bank".
These cases, as well as those that may be brought in under the Financial Services Act itself, tend to be rather complex. We shall be required to be satisfied that there is a real will to enforcement behind this. The contrary impression has been heightened by some remarks that fell from the lips of the noble and learned Lord on the Woolsack yesterday in answer to a question of mine relating to the possible institution of proceedings against those involved in the Minet affair; alleged offences have been revealed—and they have certainly not been challenged—in the report of the inspector, and also in the report from the council of Lloyd's, on particular individuals who were specifically accused by the council of the misappropriation of funds. Those of your Lordships who may have been present yesterday will recall that the noble and learned Lord the Lord Chancellor said this in answer to me:
"In order to show the kind of resources involved in these cases"
and he was referring to the cases of the type which are likely to be involved—
"the House will perhaps be interested to learn of a fact which, I must say, surprised me when 1 read of it this morning. In the civil proceedings arising out of one of these cases the defendant engaged 15 solicitors, working full time in-house, and no less than 30 counsel were briefed. That shows the kind of work that is involved. We do not yet have anything like those numbers at our disposal".—[Official Report, 2/3/87; col. 439.]
It is fair to say that the noble and learned Lord did indicate at the same time that steps were being taken to reinforce the Fraud Squad, and, as I understand it, also to reinforce the investigation departments in the Department of Trade and Industry.
The question which I must ask the noble Lord and to which I hope he may be able to give some preliminary reply—though it would be unfair to ask him to reply in detail—is this. On the assumption, which regrettably these days appears to be quite likely however much one may deplore it, that there will be offences against one or other of the provisions of this very necessary Bill, is the noble Lord satisfied that there are adequate means to enforce it, and, if necessary, will the Director of Public Prosecutions be reinforced, and will the other departments of state involved also have suitable reinforcements to enable action to be taken in the event of infringements taking place? We all know that infringements of the Companies Acts take place day by day without anybody even bothering to enforce their provisions. For example, the insider dealings provisions under the Companies Acts are very difficult to enforce, and I am not yet satisfied that proper endeavours are made or resources provided in order that this may be done.

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I have one final point only, and it arises from a Bank of England press notice that was issued on 8th January last, on the question of the convergence of capital adequacy in the United Kingdom and the United States. Apparently some alteration is envisaged, although no proposals have yet been made, to some bank accounting standards in the United States and in the United Kingdom.
There is, I am afraid, a considerable difference in present practice. We all know the state of the international indebtedness of the third world, and particularly South America, at the present time, and we know of the possibilities of non-performing loans and, yes, even default which will imperil the banking structure unless they are very firmly dealt with. We are aware that accounting standards in terms of the accounting treatment for P and L and balance sheet purposes of non-performing loans is a little different from that operating in the United Kingdom, where, I am happy to say, we adopt the most conservative standards. I should not like to think that the Bank itself would be prepared to agree to any relaxation of the guidelines that we have in the United Kingdom. If they are constrained to agree with the United States at banking level, I should like the noble Lord's assurance that, before any such agreement is reached, the Government themselves will have been informed and will have concurred in any arrangement that the Bank desires to bring into operation, and that the House itself is informed about these matters before vital questions of that kind are dealt with lower down.
Having said that, on this side of the House we wish the Bill well. At a later stage of the Bill I shall be fortunate in being assisted by my distinguished noble friend Lord Williams of Elvel, who is a banker. I hope that this will be for the assistance of the House. It will certainly be of very great benefit to me.
3.41 p.m.
Lord Boardman: My Lords, I start by declaring an interest as chairman of one of the clearing banks. I am always happy to follow the noble Lord, Lord Bruce of Donington, particularly when I know that the points which he has raised will be so ably responded to by my noble friend Lord Young of Graffham. In his closing remarks the noble Lord touched on one point to which I should like to refer; that is, convergence. I think the noble Lord has misunderstood the position in regard to the American and British attempts to converge at an understanding on the essential capital ratios. That is extremely healthy for international banking and for the safeguarding of funds in banks here which will also benefit the United States.
As I understand it, there is no intention to lower standards in any way or to have any reduction in the ratios which may be required. My wish is that this convergence could spread much wider than between the United States and Great Britain, and that it should extend to Japan in particular, and to many other countries. I am sure that when the noble Lord studies the papers in full he will come to a somewhat different conclusion.
I support the Bill very strongly. It brings up to date measures which have been overtaken by developments
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and under the Bill procedures are updated, which I welcome. As has been said, banking is very much a matter of confidence and any measure that adds to the confidence can only be valuable. As my noble friend Lord Beaverbrook said in his opening speech, this Bill has been brought about in part by the somewhat sensational presentation of the case of Johnson Matthey Bankers. There were many criticisms raised at that time as to why the trouble was not spotted earlier, why things were going wrong, and as to the way matters were then handled. It is easy to be wise after the event and to make those criticisms with the benefit of hindsight.
I do not think anyone should overlook the way in which the Bank of England, on discovering the situation, dealt with and covered it overnight—I mean literally overnight: during the early hours of the morning—and rallied the support of the major banks and financial institutions so that that bank could open its doors again the next morning. Had it not done so, the potential knock-on effects could have been very serious. It says much for the influence and the skills of the bank and the senior officers—the governor, the deputy governor and those who were concerned—that they managed to achieve that result. It also says much for the responsible support of the banking system which was supplied by the City in effecting that rescue operation.
The Bill contains a number of relatively minor points which will be raised in Committee. As a marker, perhaps I should refer to three points very briefly. I do not ask my noble friend to respond to them. First, I think that it will be a matter of some concern as to how the non-authorised subsidiaries are to be treated in reporting large exposures, but there is some concern, particularly among merchant banks, as to whether non-executive directors of subsidiaries, which are themselves authorised institutions, must be directors of those subsidiaries or whether they may be directors of the parent bank. There is also some concern about the use of the name "bank" being extended to a threshold as low as £5 million, which seems very low against the volume of turnover. Those are Committee points and I shall not detain your Lordships on them.
The most controversial issue raised in discussion of the Bill, and in another place, concerns the change of control. As chairman of one of those banks it would be quite improper of me to seek to deny shareholders of my bank the right to receive bids from any quarter. I should be sorry if they had them; I believe it would be unfortunate because I do not think anyone can run that bank quite as well as the present management. However, I do not think it is right for me on their behalf to seek legislative protection from such an event. Having said that, I am somewhat surprised that the Government themselves are not far more concerned at the possible consequences that could flow from takeover of one of the major clearing banks by a foreign bank or foreign institution.
The present proposals give an element of protection. They have the reporting limits of 5 per cent. and 15 per cent. There is a right to object if the acquirer or potential acquirer is not a fit and proper person, or on grounds of prudence. There is the question of lack of

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reciprocity, to which I will return later. There is also the possible reference under the monopolies and mergers legislation. I am sure that those provisions will keep out those who are obviously undesirable. However, from the Government's point of view I wonder whether the provisions go far enough. I can visualise a major foreign institution which is in every respect fit and proper and which is certainly prudent, whose country of origin grants the necessary reciprocity, seeking to acquire one of our major banks. The only answer, delaying tactic or anything else that the Government could apply, or the Bank of England could apply, would be to refer the matter to the monopolies and mergers legislation, as happened in the case of the Royal Bank of Scotland.
I query whether that would give the protection that the Government may wish they had. The monopolies and mergers policy changes frequently. Since the days of the Royal Bank of Scotland there has been emphasis on competition. At one time that was said to be the sole criterion as to whether a matter should be referred or a bid should be rejected. If that is so, then it would be quite improper and impossible to use that to reject such a takeover. Perhaps my noble friend will be able to say—at this stage he may not—whether the public interest element in the monoplies and mergers legislation extends beyond competition, and whether it extends as widely as it did when the Royal Bank of Scotland case occurred some years ago. If it was felt unnecessary or perhaps improper, or that there was no power for that bid for one of the big British banks to be stopped and it went through, then it would inevitably whet the appetites of other foreign banks, either from the same or from different countries, to acquire other clearing banks. I believe that very soon one could find a major part of the British banking system in foreign hands. This would be unfortunate.
I think that the priorities would be different. Whatever critics say of British banks—and there are a number of them always—they are massive supporters, by inclination and by interest, of the British economy. I wonder whether that same emphasis would be available if the ownership were overseas.
Can my noble friend say with confidence today that, on the basis of the restraints in the monopolies and mergers legislation, he is confident that in a year or two years' time a number of the British clearing banks—in which I include the Scottish clearing banks—may not be in foreign hands? If he says that he feels confident of that, I would ask him how he reckons that under the provisions that exist today this would be achieved.
I said that I should return briefly to the question of reciprocity. There are various shades of reciprocity. I am sure that my noble friend will say—I shall certainly agree with him if he does—that the most open market for acqusitions is the United States of America. No doubt the United States would conform with the criteria in the Bill regarding the country of origin of a potential acquirer.
There are significant differences which would apply as between the United States banking system and ours and which would be relevant in such a case. The United States has some 14,000 banks. There are severe restrictions upon them and upon foreign banks that are operating there concerning expansion over
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state boundaries and certain product lines. It would be quite impossible for any British bank, or, indeed, any other foreign bank, to acquire a share in the United States banking market comparable with the share of the UK market possessed by any one of the major clearing banks.
If one turns to the Common Market, I am sure that within the Community it must be said that there is reciprocity. Perhaps I may tell my noble friend of a conversation that I had with a distinguished French diplomat recently. I asked him in connection with the privatisation of the French banks—I refer to the question of Paribas—whether France contained within its legislation any prohibition or anything else that would make it difficult for a foreign bank to acquire control. His answer to me was, "But we have a golden share—of course". As a distinguished banker who was present on that occasion said to me afterwards, the fascinating words were "of course". The question of reciprocity in regard to some of these other countries is perhaps not as easy to apply as we might like.
I have raised the question of change of control with considerable diffidence. I must make it clear that I am not seeking protection for the sake of the shareholders of my own bank and of banks in a similar position against fair competition. We live with it, and I like to believe that we also thrive on it. I refer here to my short experience many years ago as a Treasury Minister. Incidentally, this was at a time when the banking system was being heavily used for the recycling of petrodollars, which have found their way into Latin America. But that is another story. I had experience there of the banking system, with the liaison that was necessary between the Treasury and the banks and with the Bank of England, and now I have experience as a commercial banker who works, I hope, closely with, and in support of, the aims and ambitions of the government of the day and of course of the Bank.
Because of the experience that I had there, I urge my noble friend to exercise a little caution in looking at the problem. It is their problem; it is a question of whether the Government feel that they are safely protected against something that could indeed be damaging to the economy of the country.
Having said that, I say, as I did when I started, that I support the Bill, which is right, is helpful and I am sure will be generally welcomed.

Asylum Seekers
3.55 p.m.
The Minister of State, Home Office (The Earl of Caithness): My Lords, with the leave of the House, I shall now repeat a Statement about asylum seekers which has been made in another place by my right honourable friend the Home Secretary. The Statement is as follows:
"Many Western countries, have become increasingly concerned in recent years at the large number of people who seek entry with forged or fabricated passports, or visas, or without any documents at all. Very often they, or the organisers of their journeys, know that they have no legitimate claim to entry but hope the absence of documents will hinder the immigration authorities in securing

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their return. At the same time large numbers of people who aim to find a more secure or prosperous life in Western countries have been abusing asylum procedures as a means of evading immigration controls. Last year during the UK Presidency the Ministers of the Interior of the European Community set work in hand on these problems. Last week I sent a message to the Belgian Presidency expressing the Government's hope that this work will be pressed forward urgently.
"In December and January 600 people arrived and sought asylum, the large majority of whom did not have the right documents. It is only recently that members of the public and of this House have become generally aware of the problems facing us. The Government have been considering what action to take to prevent evasion of visa requirements and the abuse of asylum claims as a means of securing entry.
"The Government have decided to introduce legislation tomorrow to give power to impose a charge on carriers who bring to this country people who require leave to enter the United Kingdom but who carry no valid passport or other identity document and those who have no valid visa where one is required by the immigration rules. The charge would he £1,000 for each passenger without valid documents and would he applied from midnight tomorrow. The carrier would not be liable to pay if he could show that the passenger had the necessary valid documents when he boarded the ship or aircraft or, in the case of forged documents or visas, that the forgery was not reasonably apparent. Payment would be enforceable, if necessary, by civil action in much the same way as detention and removal costs can already be recovered from carriers.
"This change in the law would reinforce the messages already given to airlines and other carriers that they have a responsibility for ensuring that those who wish to travel here have obtained the necessary papers before they do so. A similar provision already operates in many other countries, including Canada, Australia, New Zealand, the United States and, more recently, West Germany and Denmark
"In the cases of the Tamils who have last week been given leave to move for judicial review, I have to take account of the passage of time—more than two weeks—since their arrival and of the fact that the litigation is likely to take further time to resolve given rights of appeal on either side. Morever, I understand that UKIAS has already been able to interview many of the applicants. In these circumstances and in the light of the outcome of last week's court proceedings, I have decided that the most sensible way forward is to refer to UKIAS each of the 64 cases and thereafter to reach fresh individual decisions in the light of all the relevant facts, including any representations UKIAS may wish to make. In doing so, I shall of course take account of any other representations I receive, including those from honourable members. In the circumstances, I should expect to receive representations by
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Wednesday 18th March and to take decisions after that. My willingness to proceed in this way has been conveyed to the applicants' solicitors and UKIAS.
"For the future, however, we need to change our procedures to ensure that we are protected against immigration rackets which take advantage of our generous procedures. In particular, we must not allow procedures intended originally as safeguards to become the vehicle by which those who have no entitlement to come here, whether as refugees or whatever other capacity, obtain their ends.
"Accordingly, the present arrangements under which my department refers cases to UKIAS will be revised and I shall be inviting UKIAS to participate in discussions to that end. I should stress, however, that the present arrangement does not involve the reference of all cases, and for the avoidance of doubt I must place it on record that in future there will be cases which will not be referred to UKIAS, and that therefore applicants for asylum can have no expectation that as a result of the arrangement arrived at in 1983 or otherwise there will in their cases be such a reference. Similarly, there will be instances where early removal is necessary in the interests of immigration control, and it will not be right for me to defer removal on an MP seeking to put a stop on the case. It follows also that those who seek to challenge in the courts decisions to refuse asylum cannot expect that they will automatically be allowed to stay here until proceedings are completed.
"The Government remain fully committed to their obligations under the United Nations 1951 convention to genuine refugees as defined in that convention. The decisions which I make as Home Secretary on individual cases will respect that obligation. But we have to find the right means of preventing abuse of the asylum provisions and preventing evasion of the visa requirements which Parliament has endorsed. The policies which I have announced aim to strike that balance."
My Lords, that concludes the text of the Statement.
4 p.m.
Lord Mishcon: My Lords, I ask the House to accept that the whole background of my response to this Statement from these Benches is based upon the great desire, which I believe your Lordships share, that, whatever national standards have for one reason or another to drop, our great tradition of political and other asylum will not be spoilt. I say that also stressing that I hope no one in this House—I certainly would not from this Dispatch Box—would ever defend any forgery or fabrication of documents done without good faith and done without good cause. I use those words on purpose.
What is the panic for a measure to be introduced tomorrow, to be effective from midnight tomorrow? What is the urgency of the matter? We are told in-the Statement that there are 600 people who, in December and January, sought refuge here by way of asylum, the large majority of whom did not have the right documents. Why were we not told—and I ask it now—how many of those people had forged or

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fabricated passports? That is what we are dealing with, not people who may not have had their documents in order.
What too is the panic when there is already a statutory provision? It is in Schedule 2 to the Immigration Act 1971. Airlines can be required under that statute to pay for the return flight and the cost of any detention up to two months. They were reminded of that when we had the visa regulations which were required of certain countries—and your Lordships will remember that—when those requirements did not previously exist. All the airlines were reminded of that provision when this occurred.
Quite apart from that, as the Statement itself says, we as a government have co-operated with other European countries to investigate this evil where it is an evil, and have said to those governments—and there has been a reminder recently to the Belgian Government—"Please can we co-operate in regulations to deal with that internationally?" Why have we not waited for the result of that reminder? I have a shrewd suspicion that the thing is completely ineffective anyway. Are aircrews of all airlines now to be trained in the art of detecting forgeries and fabricated passports? Are airlines now to be scared of taking passengers, even genuine ones who are refugees and seeking asylum? It is much safer not to, because there might be a fine at the end of the journey if for some reason or other the documents are fabricated or forged, and somebody can prove that reasonable conduct would have detected the forgery or the fabrication.
Is this because of the Tamils who arrived a week or so ago? I have such a high regard for the Home Secretary, as have my noble friends, but is it that application, which was successful, for a judicial review and a change of mind which has made him now feel that there ought to be proper representations available for Members of Parliament, and that there ought to be proper consultation with UKIAS where it is needed? That would be such an unworthy source of something which is such a breach of our traditions.
It is unnecessary because of the statutory provision about which I have spoken, and it may well mean that some people whom all your Lordships can remember and who have been refugees in this country (which has always had such a magnificent place in world history in that context) may have to forge documents or fabricate papers in the state of the world as it now exists. Some did it before, from 1933 to 1939. They were understood. My Lords, what is this panic measure?
Lord Avebury: My Lords, is the Minister aware that we are grateful to him for repeating the Statement made in another place, but that we see this as a chickening out by the Home Office from the court action which would otherwise have taken place, while continuing to make totally unfounded allegations about the 64 Tamils who arrived here seeking asylum under the cloak of parliamentary privilege, and that we consider this to be absolutely disgraceful?
The majority of the people so far interviewed had suffered actual physical assaults, in some cases amounting to torture. Is the Minister aware that a
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doctor who recently went to see patients at Foston Hall, where the Tamils were detained, examined six of them and found that five had actual physical signs that were consistent with the beatings or tortures they described; and that in the sixth case although there were not any signs remaining of the tortures which he claimed were inflicted on him the doctor said that she would not have expected to find any physical marks arising from the kind of ill-treatment that he described?
Did not the Minister, Mr. David Waddington, assure me in a letter dated 1st August 1985 that cases would normally be referred to the UK Immigrants Advisory Service refugee unit except for two examples? Those were seamen who left their ships and were manifestly unqualified for asylum and cases where it was not possible to contact the UKIAS refugee unit. Has this not subsequently been covered by a letter from the UKIAS refugee unit giving the Home Office telephone numbers where they can be contacted 24 hours a day, seven days a week?
Did not Mr. S. Handley of the Home Office, also in a letter to the head of the UKIAS refugee unit, dated 3rd February 1986, say:
"We will continue to refer to you the cases of Tamils coming here without a visa who have previously been in third countries"?
Was not that statement a completely unqualified one? Was there not an absence of any exception to this undertaking by Mr. S. Handley? How do the Government reconcile those undertakings from the Minister and from an official in his department with the behaviour of the Government in the case of the 64 Tamils who arrived here without proper documentation?
Turning to the question of documentation, is it not in the nature of things that refugees will not have been given passports by the governments which persecute them? How many of the 600 who arrived here in December and January and who were referred to by the noble Lord, Lord Mishcon, have subsequently turned out to be genuine refugees? Can the Minister give us that figure and can he tell us how many of those 600 are still under review, so that we can see whether it was correct of him to give this example to justify the action he has now taken?
How many Iranians who arrived here during 1986 had proper documentation yet were genuine refugees? How many people arrived from South Africa? Does the Ayatollah give passports to Baha'is? Does Mr. Botha give passports to black dissidents? Does General Jaruzelski give passports to people who wish to escape the tyranny in Poland? Do any of the Eastern European countries dish out passports to dissidents so that they can freely leave the country?
Is it not quite incorrect for the Home Secretary to talk about rackets, abuse and evasion when people are escaping from that kind of tyranny? Is not the hysteria whipped up by the Government on completely bogus grounds against the 64 people (many of whom I venture to suggest will turn out to be genuine refugees) being used to justify totally incorrect legislation. to penalise the airlines and to stop them from bringing here people who are manifestly genuine? Finally, will the Minister give an assurance that the changes in the rules which he has threatened against UKIAS will not

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be implemented until this matter has been thoroughly discussed in both Houses of Parliament.
The Earl of Caithness: My Lords, I must make it clear, to support the words of the noble Lord, Lord Mishcon, that our good reputation for political asylum in this country must not be spoilt. That is the reason we have had to bring in the measures, because it is solely what has been happening in the very recent past at an increasing rate that has caused an unprecedented situation that had not been foreseen. That is the reason that my right honourable friend has had to take the action that he has, and that accounts for the urgency of the legislation.
I am unable to give either the noble Lord, Lord Mishcon, or the noble Lord, Lord Avebury, exactly the breakdown of the 600 that they requested, bat most of the inadequate documentation has come from missing passports, usually old ones that have been thrown away, in order to destroy evidence of the itinerary, which is important, and the identity. There have been a number of forged visas and also mutilated passports, again destroying evidence of itineraries.
Lord Mishcon: Before the noble Earl proceeds with this matter, I wonder whether he would forgive my intervention. This subject is so vital to the House. Can he be a little less vague? Roughly how many forged or fabricated documents were used by the 600 in December and January?
The Earl of Caithness: My Lords, I do not want to mislead the House and therefore I cannot give a precise answer. All I can say to the noble Lord and to the House is that a great many were used.
With regard to the existing statutory provisions under the Immigration Act that the noble Lord, Lord Mishcon read out, of course it is true to say that the flight back and detention are already covered, but we believe that it is necessary—as others in Western Europe and the Western hemisphere have thought—to give the carriers a further reminder of their responsibilities. The carriers are familiar with the requirements for passports, visas and other documents. We would expect them to be able to examine the papers and to identify forgeries without too much difficulty. The immigration service is always ready to advise them on what to look for. But no penalty would arise if the carrier showed that any forgery was not reasonably apparent. As the noble Lord, Lord Mishcon, will be aware, this matter is dealt with in paragraph 19(2) of Schedule 2 to the Immigration Act.
The noble Lord, Lord Avebury, if I heard him correctly, accused me of making further allegations against the 64 Tamils. I made no such accusation against the 64 Tamils. What I said was that we were considering their cases again to reach fresh individual decisions.
Lord Avebury: My Lords, by inference the Secretary of State has made unfounded allegations against them of coming here with a manifestly poor case, because he has agreed that anybody with a reasonable case or a prima facie case would be referred to the UKIAS
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refugee unit. Therefore his first intention of not referring them means that he did not think that they had a starting case.
The Earl of Caithness: My Lords, I thought the noble Lord had accused me of saying something in the Statement, which I was repeating. The examples that my honourable friend Mr. Waddington gave—
Lord Avebury: Right honourable.
The Earl of Caithness: My Lords, he was honourable at the time he gave two examples—it was not on 1st August 1985, but I believe that I am right in saying it was on 1st August 1983—but these were not the only two examples, as I understand the situation. The noble Lord, Lord Avebury, wanted some examples at the time and he was given two. But he cannot say that those are not the only two that the Government must be tied to. Most of the 600 who have arrived over the past couple of months, of whom not all are Tamils, are still under review. I conclude at this stage by saying that this measure is not an hysterical answer. It is solely to protect our integrity and reputation for political asylum, which has been abused, that we have taken the steps we took today.
4.15 p.m.
Lord Boyd-Carpenter: My Lords, is my noble friend aware that many of us will echo his last words and that the good, very high reputation of this country for accepting genuine political refugees will not be able to be sustained if a flood of illegal immigrants arrive who do not come within that category, but who simply want to enter this country for one reason or another?
Is my noble friend also aware of the fact that some of us perhaps have less sympathy than the noble Lord, Lord Mishcon, with those who deliberately forged passports, documents or visas showing a premeditated intention to defraud our immigration arrangements? Is he aware that a genuine refugee does not do that and in the nature of things is someone who wishes to be an unlawful immigrant, and that he and his department have a great deal of support in keeping them out?
The Earl of Caithness: My Lords, I am very grateful to my noble friend, who, as is always the case, put his finger on the very salient point that our reputation is being threatened by people taking action to countervail the visa requirements that have been working very well up to recently. When a loophole such as this exploited it does considerable harm to this country.
Lord Chitnis: My Lords, rather than rushing through any changes in refugee procedure when the furore about a particular case is at its height, would it not be better if the dust were allowed to settle on this case and for there then to be calm and considered discussions with the agencies concerned with refugees, not only about fines and airlines but also about referrals to UKIAS? Were not such specialised agencies given an assurance that this was how the Government intended to proceed?
The Earl of Caithness: My Lords, the situation is much wider than the particular case which the noble Lord raised. As I said in the Statement, the figure is

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600 people in the past two months. That is a considerable increase on anything that we have had before and poses, as I have said, a major threat to this country's reputation for the very good work that has been done in the past.
Lord Tordoff: My Lords, will the noble Earl perhaps answer the other questions that my noble friend put to him? How are genuine refugees supposed to get valid documents? For example, looking back into history and to the people to whom the noble Lord, Lord Mishcon, referred, how would refugees from Germany before the war have obtained valid documents from Adolf Hitler?
The Earl of Caithness: My Lords, I think I should concentrate on the present. I am sure that the noble Lord would be the first to agree with me that the great majority of refugees would not be affected in any way by what my right honourable friend proposes. Until the recent increase in the number of applications made from abroad, most applications for asylum had been made in this country by people who were already here, and genuine refugees do not generally have to travel far in order to obtain immediate safety. Refuge can often be found in neighbouring countries.
Lord Teviot: My Lords, will my noble friend please appreciate the valuable job done by immigration officers in very difficult circumstances? They are Crown servants and have to operate the laws under the Act. The situation, as he said, has not just gone on in the last six months but for many years. People come over on cross-Channel ferries in the middle of the night and so on, and the immigration officers often have to operate in very difficult circumstances. They have charge of people's lives. They have people coming from other countries who consider this country to be a mixture of Eldorado and Utopia. The officers discharge their duty with impunity.
The Earl of Caithness: My Lords, I am extremely grateful to my noble friend for his remarks. We all sometimes tend to underestimate the good work that is done by civil servants in this country.
Lord Mishcon: My Lords, will the noble Earl and the House accept from these Benches that we also feel for the difficult task that immigration officers, mostly with great courtesy, perform? However, before the debate on the Statement finishes, will he kindly deal with the point that was raised by the noble Lord, Lord Boyd-Carpenter? It is this. Does he feel, as was mentioned before, that refugees from Iran and from many of the other troubled spots of the world at this moment can leave their shores without forged documents? Does he not know that to be a fact? Also, will he accept from me that I have personal reason for gratitude to the Secretary of State for the great consideration and mercy he has shown to many Iranians whose cases I have put to him and to whose pleas he has responded with the utmost generosity?
The Earl of Caithness: My Lords, where there is a genuine case I am sure that my right honourable friend will continue to carry out the good work on that front.
Lord Boyd-Carpenter: My Lords, on the question put by the noble Lord, Lord Mishcon, is my noble friend aware that many of us see all the difference in the world between a refugee who uses forged documents to escape from a country where he is being persecuted and one who tries to use forged documents to enter this country, which has done him no wrong and which indeed is trying to help him? We have much less sympathy with the latter.
The Earl of Caithness: My Lords, I agree with my noble friend that there is a great difference between the genuine refugee or asylum seeker and somebody who wishes to seek a better life in the West.
Lord Avebury: My Lords, the Minister admitted in answer to the noble Lord, Lord Mishcon, that a person escaping from Iran must of necessity do so on forged documents and that while he is outside Iran he is unlikely to be given genuine documents by the agents of the Ayatollah in third countries. Therefore must he not ipso facto arrive here on forged documentation? In future the airlines will refuse to carry him, and many of the people of whom the noble Lord, Lord Mishcon, speaks, who have in the past been admitted by the Home Secretary, will not even be able to get on the 'plane.
The Earl of Caithness: My Lords, I do not think I made that admission. In any case, a person from Iran is not required to come here to seek asylum. That can be done in a neighbouring country.

Community Programme and Unemployment Benefit
4.24 p.m.
The Parliamentary Under-Secretary of State, Department of Health and Social Security (Baroness Trumpington): My Lords, with the leave of the House, I should like to repeat a Statement which has been made by my honourable friend in another place. The Statement is as follows:
"With permission, Mr. Speaker, I wish to make a Statement on the benefit position of participants in the Community Programme following a recent decision by the Social Security Commissioners.
"As the House will know, it is a fundamental principle of benefit law that people who work part time and do so regularly are not entitled also to unemployment benefit for those days on which they would not normally work. This principle is not novel and has been applied consistently under successive administrations since 1948. It has not been a source of contention. The point is currently covered in the Social Security (Unemployment, Sickness and Invalidity Benefit) Regulations 1983 and was previously covered by the corresponding regulations made in 1975. It is frequently referred to as the full extent normal, or FEN, rule.
"The Community Programme provides temporary work, normally for people who have been unemployed for 12 months, or six months if under 25, and a substantial proportion of those

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employed in the programme work part time. Until now the adjudicating authorities have held that the full extent normal rule applies. This approach has hitherto been supported by the Social Security Commissioners and was also endorsed by a Court of Appeal decision in 1985.
"However, in the case of Mr. Brunt a tribunal of commissioners has now decided that participating in the Community Programme on a part-time basis will not normally bring the full extent normal rule into operation. This decision was promulgated last week to the Chief Adjudication Officer, who is of course independent of the Government, and I understand that he proposes to apply for leave to appeal against it.
"The result of the commissioners' decision, if it were sustained upon appeal and applied generally, would be a significant change in current well established and understood benefit procedure. It would also cause a rise in benefit expenditure of around £2 million a week. This expenditure would be directed to people participating voluntarily in a programme from which the overwhelming majority receive earnings significantly higher then any unemployment benefit entitlement. The Government regard this as a quite unacceptable use of resources. We do not believe that CP earnings and unemployment benefit should both be payable. Moreover, the adjudicating authorities will be uncertain of the law pending the conclusion of any appeal proceedings, which could be lengthy. This too is unsatisfactory.
"I am therefore laying regulations today under the urgency procedure to provide that people receiving earnings from the Community Programme are not entitled also to unemployment benefit. These regulations do not affect any supplementary benefit entitlement because that benefit is not affected by the full extent normal rule.
"I would emphasise that these regulations are intended to establish beyond doubt the position that had until now generally been understood and applied. The regulations will take effect immediately."
That, my Lords, concludes the Statement.
Baroness Jeger: My Lords, I thank the noble Baroness for repeating the Statement. It is one which I regard as very serious indeed. It seems to call into question the whole status of the commissioners and above all the independent status of the Chief Adjudication Officer. It seems to set aside the appeal procedure which has been embodied in the social security legislation.
I must ask the Minister whether the Statement means that the Government are going to pre-empt any appeal which they fear they might lose by rushing in regulations between the commissioners' decision and the appeal to the Chief Adjudication Officer instead of letting the semi-judicial proceedings go on in the usual way.
Why is the appeal not being allowed to go forward and what is this urgency procedure? Is there any statutory basis for it? Is it a parliamentary procedure
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or is it a departmental procedure? Can any Minister bring in anything under something called the urgency procedure? These are very serious questions, because they imply changes in the appeal procedures which have been built into the legislation. I must ask whether the real reason is that the noble Lord, Lord Young, is anxious to keep 190,000 people who are on community service off the unemployment list.
The appeal made with the help of his union by Mr. Brunt refers to this man who works two-and-a-half days a week on a community service programme and to the very many others in that position. It seems that some hope was given to them by the decision of the Social Security Commissioners to whom they have a right to look when they have a grievance. I must ask the noble Baroness the Minister to try to make a little clearer the reason for this interruption of the normal course of appeal and to explain to the House something about the urgency procedure.
4.30 p.m.
Baroness Seear: My Lords, I should also like to thank the noble Baroness for repeating the Statement, but to say that like the noble Baroness, Lady Jeger, we are deeply concerned that the Government should immediately leap in to override a decision of a commissioner. The decision of a commissioner should surely be regarded as an independent judgment made by the commissioner, and we are moving into a very dangerous situation indeed in which either legal or quasi-legal procedures in this country can be overruled by the executive, with very little time intervening between the decision of the commissioner and the Government's action. It is a well-established principle in this country that judicial or quasi-judicial decisions are independent of government, and if they are not independent of government they lose a very great deal of their benefit.
But apart from that, there is surely a great deal to be said for the decision given by the commissioner. People on the community programme are not on that programme because they wish to be part-time. They would welcome being full-time, but they are not able to be full-time because of the financial limits imposed on the amount that can be paid to any one person during the course of the community programme. They are forced onto a part-time basis because of these financial provisions; not from any wish of their own.
If they were working full-time—as they would wish to be, in a great many cases, if they were not prevented from so doing—they would be in the position in which a very large number of full-time employees have been who have been put onto short time and who, by a long established pattern which both employers and the trade unions have supported, have worked their short-time on such a basis that they have been eligible for unemployment pay. Therefore, if it is possible to do this when you are a full-time employee, why should you not be allowed to do it when you are wishing to be a full-time employee but are forced into being a part-time employee because of government requirements?
Further, it seems that this would provide an extremely good opportunity to get more people onto the community programme. If people who are on the community programme and working, say, two days a

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week were also able to draw unemployment pay, then more people could be brought onto the programme, more people would get experience of working and more people would get an opportunity, because of their experience of working on the community programme, to get back into full-time employment. This would meet a variety of objectives, not least the objective of the noble Lord the Secretary of State to get the unemployment figures down by getting more people back into full-time employment.
Baroness Trumpington: My Lords, this scheme aims to improve the long-term employment prospects of the participants and to provide something of direct and tangible benefit to the community. Some 300,000 people participate in the programme in a full year and the average stay on the programme is nine months. Of former participants, 30 per cent. go straight into work or training and 54 per cent. go into a job within 10 months after leaving the community programme. So this is a really worthwhile programme which we are most anxious to promote.
There is no question at all of calling into question the independent status of commissioners and of the chief adjudication officer. As I explained originally, the tribunal's decision has reversed the line taken previously by commissioners and the legal position is confused. We wish to clarify our policy as quickly as possible because of the substantial number of claimants involved and because of the financial implications of the tribunal's decision.
Section 61(1)(a) of the Social Security Act 1986 allows for regulations to be made without reference to SSAC where there are reasons for urgency as in the present situation. The regulations will now be referred to the committee in accordance with Section 61(2) of theAct, unless the committee agree that they need not be formally referred. We are making the regulations today to restore the position to what it was before the tribunal announced their decision. There will therefore be no significant change in the number of benefit claimants in the future.
At the start of the CP scheme, we intended and expected that claimants who started a part-time job which was expected to last for 12 months would be precluded from receiving unemployment benefit for the days when they did not work by virtue of the operation of the FEN rule. These people were regarded as normally working part-time, and were in fact doing so. A number of Social Security Commissioners' decisions have been given over the past four years which have borne this out. It is only the recent tribunal's decision which takes a different line and has caused us to introduce regulations to make our position quite clear.
The noble Baroness, Lady Jeger, asked: what is the urgency procedure? I think I have fully answered that point. As regards the extra figures which the noble Baroness, Lady Jeger, mentioned, what she said is not at all the case. One cannot say how many would stand to gain unemployment benefit if we lost the appeal because some who are on the programme would not be entitled; for example, if they are on it full-time or if their title to unemployment benefit is extinguished. The real point is that the full extent normal rule has
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existed for many years and we are doing no more than reaffirming existing principles. As I said, we are making the regulations today and there will be no significant change in the number of benefit claimants in the future.
Baroness Seear: My Lords, how can the noble Baroness say that the Government are not interfering with the commissioners if in the next breath she says that they are laying regulations tonight, tomorrow or whenever it is in order to do precisely that?
Baroness Trumpington: My Lords, I also explained that there is a need to do so in order to clarify the position as we see it, and indeed as the Appeal Court saw it. This is a most unusual decision that has taken place in view of the fact that the tribunals have agreed with the ruling up until the present.
Baroness Jeger: My Lords, I apologise for asking one last small question. Did the Minister say that the regulations would be referred to the Social Security Advisory Committee? As the regulations are taking effect immediately. I do not see what value their advice will be.
Baroness Trumpington: My Lords, the noble Baroness will know the urgency procedure. I understand that the usual pattern of events is that they are referred to the committee in accordance with Section 61(2) of the Act unless the committee agree that they need not be formally referred. But the committee have the opportunity to present their views if they so wish.
Lord Kilmarnock: My Lords, may I ask the noble Baroness whether the adjudication officer will still seek leave to appeal once the Government have already overturned the decision of the commissioners?.
Baroness Trumpington: My Lords, I said that the adjudication officer is not a government officer and he has the right to decide whether or not to appeal.
Lord Kilmarnock: My Lords, would it not be better to wait for the result of that appeal?
Baroness Trumpington: No, my Lords.

Banking Bill
4.40 p.m.
Second Reading debate resumed.
Lord Elton: My Lords, it appears to be opportune to return to the Banking Bill. It is a very short speaking list and that reflects the fact that the Bill is not only necessary but broadly welcome, though possibly less welcome on the Benches opposite than on this side of the House. That remains to be seen. I am anxious to preserve amity at this stage at least and it was my intention in any case to make only the briefest of interventions. Since I formed that intention almost everything I intended to say has been said already, concisely and rather better than I could have said it.

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Most of what I have to say remains merely a matter of endorsing what has been said before.
The first area of interest to which I hope my noble friend the Secretary of State will be able to refer in his concluding remarks today, or perhaps he can expand on it in Committee, is the question of the criteria for resisting the takeover of British banks by foreign banks. The case has been ably put by my noble friend Lord Boardman. I would subscribe to his views and offer to support them at a later stage with enthusiasm, for one reason if for no other. It is because of the inhibitions latent upon him in what he said by way of disclaimer at the beginning of his remarks on the subject. The head of any organisation in the present financial climate who seeks to protect it from a hostile takeover bid is in danger of the criticism that he is denying his shareholders something which he would prefer they did not want. It may be that those in the banking profession such as my noble friend and his colleagues will be less than enthusiastic in pursuing this point. If it is useful, I shall ask my noble friend on the Front Bench to pursue it nonetheless at a later stage.
The other matters I had in mind to bring before your Lordships are relatively minor. The first area deserves attention and concerns the significant shareholders, defined in Clause 37 as those,
"entitled to exercise, or control the exercise of, 5 per cent. or more but less than 15 per cent. of the voting power",
of an institution. The Bill is clear about the need to identify those shareholders, about the consequent need for declarations to be made about them and about the power which the bank should be able to exercise over the admissions of new significant shareholders to the register if they are not already on it. On the control of the quality of new significant shareholders the Bill is explicit, but on the treatment of existing significant shareholders it appears to be silent. If the Bill is silent they may be covered elsewhere in the statute, but if not I should be grateful if either now or at a later stage my noble friend could tell us whether this is by design. If it is, what provisions are already in place to ensure that no unfit significant shareholders already exist; and what other provision is there to deal with the contingency of an existing fit and proper significant shareholder becoming, for instance, by a takeover or some other means, unfit within the intention of the Act after it becomes law?
While looking at that area of concern I hope that my noble friend will look also at another small but significant aspect of Clause 39 and in particular subsections (1) and (3). They appear to enable a bank to require information from the authorised institution only. Clause 39(10), at a first reading at least, does not appear to authorise the requirement of information from the significant shareholder himself. If that is an anomaly, perhaps it should be addressed at Committee stage.
I hope that my noble friend will also take the opportunity to take us through some of the aspects of the provisions of Clause 35, which deals with large exposures. The clause creates a criminal offence of failure to report certain developments. It permits failure to report to be excused on the grounds of
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ignorance of the events to which the failure relates, which is only to be expected. Clarification would be useful from my noble friend at some stage as to what is the correlation between the duty of a bank—and I refer to "bank" with a small "b" as opposed to the "Bank" which throughout the Bill means the Bank of England—to manage its affairs properly and the availability of this plea of ignorance. Where a bank has three, four or five score subsidiaries or branches in foreign countries and where there may be dozens of agents trading on behalf of scores of principals, a large exposure may be accumulated by an aggregation of small exposures, which may never become apparent until it is too late for the purposes of the Bill. What then would be the liability to prosecution of the individuals responsible under the Bill?
I do not guarantee not to raise other points. I find the characteristic of all legislation is that as soon as one starts reading it one discovers what one believes to be anomalies in the drafting. While I shall deny myself the pleasure of trying to improve drafting for its own sake, where I think the implications of it are unintentional I shall with great courtesy ask my noble friend to put me right, as I am sure I shall be wrong.
4.46 p.m.
Viscount Chandos: My Lords, I apologise to your Lordships' House and in particular to the noble Lord, Lord Young, for arriving too late to hear the opening of this Second Reading debate, not, I should add, because of the crush of people outside welcoming the newest Member of the House of Commons but because I was detained unexpectedly on the practice of banking as opposed to the theory. I should like to thank your Lordships for agreeing to my speaking out of scheduled order. It it does nothing else I hope it will encourage the Government Front Bench to press the Prime Minister for fairer nomination of Alliance working peers to allow the non-working peers to pursue their non-work.
I welcome this much needed updating of the laws covering the authorisation and supervision of banks in this country. Following the passing last year of the Financial Services Act and the Building Societies Act, there was an inevitable need for a measure to bring banking and deposit-taking into the same relatively co-ordinated framework of authorisation, even if the unhappy saga of Johnson Matthey had not occurred. As many of your Lordships will know, the financial markets are becoming rapidly internationalised. Even within the previously clear distinctions between one market or financial service and another, between the money markets and the securities markets, between banking and securities, dealing boundaries are rapidly being eroded.
All those noble Lords who devoted so much time last year to the Committee and Report stages of the Financial Services Bill will probably agree with me that the Bill aimed to cover a sufficiently broad definition of financial services so that any enlargement would have been both unwelcome and unworkable. Nonetheless, in view of developments in the financial markets, a theoretical case could certainly have been made for a single Bill covering the operations of banks, building societies and other financial institutions, including, if this is not to reopen old arguments, the

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Lloyd's insurance markets. But that would have been an indigestible and mammoth Bill to say the least.
I shall not quibble therefore with the way it has ended up, although we must clearly be careful to ensure that there is consistency among the three different key Acts covering the financial markets (or four Acts including the Lloyd's Act) in all cases. As it is, I should like to welcome the slimness of the Bill we are considering today, standing like the winner of a weight-watchers' competition alongside the Sumo wrestler-like bulk of the Financial Services Act.
The power and weight of the Sumo wrestler is perhaps a reasonable symbol of the strength of Japanese financial institutions, to which many Members of the House of Commons have already referred in discussing this Bill. Although there are many important new provisions in the Bill they are largely regarded by the general public as being technical, with public concern being most concentrated, as the noble Lord, Lord Boardman, said, on the level of protection which should be given to British banks and their independence, against the background of foreign banks and financial institutions having developed disparate capital and other resources. Inevitably, I should like to return to this point later in my speech and also during the Committee and Report stages.
First. I hope your Lordships will think it appropriate if I try briefly to identify the unique aspect of the banking industry, on which most of its special treatment by the Government has been based over the years. I should have already declared my interest as a director of a British owned bank which is active, though it is not a clearing bank, to some degree in retail deposit-taking and lending as well as in the wholesale commercial end of the business.
The British clearing banks and building societies have long represented the most important haven for individuals' savings as well as increasingly the most effective means of managing the other financial aspects of day to day life. It should be said that the British public have been slower to embrace personal banking than has been the case in many other developed countries. The record of the clearing banks in particular, and of British financial institutions generally, in widening the use of bank services has perhaps not been distinguished. Much of the pioneering work has often been done by foreign owned banks or consumer credit companies, developing business with customers who have not previously had a bank account of any sort.
The Government's campaign through their privatisation programme, whether or not well conceived, to increase the number of individual shareholders in this country is inevitably at the marginal expense of the banks' and building societies' deposit base. However, even if this campaign is crowned with success, the importance of the banks as a haven for savings will remain vital.
On the other side of the balance sheet the banks are providers of credit both to individuals and to companies and other bodies, as well as a variety of other financial services more or less closely related to lending, such as foreign exchange. The rapid development in the securities and other markets to which I have already referred has inevitably directed
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many banks into these markets too as securities and securities-related transactiions have taken over many of the functions previously provided by traditional banking. The provision of credit is nonetheless likely at the very least to remain central to the largest UK banks; and for individuals as much as for companies this is an essential service for the achievement and maintenance of any degree of orderly economic growth.
Finally, through the central role played by the major banks in the financial markets and as creators of credit, they are a vital part of the mechanism by which the Government, through the Bank of England, regulate the money supply, control credit and the pace at which it grows and dictate monetary policy. Even those of us who do not believe that it is, or ever can be, the sole method of regulating the economy and controlling prices and inflation, nonetheless believe it is of critical importance.
While the banks, through conscious diversification as well as the unstoppable widening of markets generally, provide a number of other services I suggest that the three functions I have mentioned represent their central role, with an importance to industry and the rest of the community which justifies a degree of support and protection from the Government even in the eyes of those with widely differing political persuasions. Although the Government, often through the Bank of England, have provided support directly to, and co-ordinated financial support for, industrial companies this is clearly of a different nature and to a different degree from the support that has been extended even to small banks in the past and is assumed to be available, at least to the largest banks, in the future.
In return for these privileges and support it is clearly equitable that the banks provide the essential services I have listed, and to do so with the same degree of commitment to the national interest as the banks expect and receive support from the national interest. The noble Lord, Lord Boardman, in his speech maintained vehemently that the major British banks massively support the British public and that it was questionable whether an overseas controlled bank would maintain such a commitment to the national interest. I must add a word of partial dissent from that claim. If the support has been massive there are legitimate concerns outside the financial community—and to some extent within it—that it has not been massive enough.
There is a conflict between the priorities and objectives implicit in the maintenance of London as an international financial centre and those appropriate for a banking industry whose foremost aim is to serve national industry, the community and the national interest. That is absolutely not to say that it is wrong for British financial institutions to seek to strengthen their international business and operations; but if they expect abnormal support in the last resort from the Government, abnormal commitment to the national interest must be returned. Too often, compared to the nature and scale of support given, for example by French, German or Japanese banks to their industrial customers and even allowing for the different financial systems prevailing in the respective countries, British banks have not been sufficiently committed.

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I believe that is central to the question of whether there should be any extension of protection afforded to major banks from unwanted changes of control beyond those already included in the Bill. Although I am instinctively uncomfortable with the banking industry being afforded greater protection than their industrial customers (particularly in view of the role the banks have played in arranging and financing contested industrial takeovers) there is nonetheless an undeniable national interest in maintaining a British owned, British controlled major component of the banking and financial industry. However, the quid pro quo for that must be a commitment by the major banks to industry and the rest of the community which is absolutely beyond question.
Therefore I look forward to the opportunity during the Committee stage of bringing forward or supporting amendments which will give the necessary reserve powers to the Bank of England and/or the Government directly to ensure that, when it is deserved, the independence of the major British banks can be protected from unwarranted or unhelpful changes in control brought about by the unchecked workings of the markets. Although the Monopolies and Mergers Commission has in the past considered wider aspects than simple competition in its reviews of proposed banking mergers, such as national or regional considerations, in a changing and uncertain world I believe there would be no harm—and some reassurance—in providing additional and specific protection under the terms of this Bill.
The question of reciprocity is of course related, for it would be unfortunate if such reserve powers inhibited the modest expansion of British banks in other countries and their markets. I do not believe that they need it but, even if they did, the certain protection of our own banking system would be preferable—more than just the lesser of two evils—to the greater freedom to expand internationally. However, as the noble Lord, Lord Boardman, said, the overseas acquisitions and expansion of the UK banks are never likely to represent a dominant market share in another country's market; or if they did, we should respect the legitimate desires of that country's authorities to examine and potentially prevent it.
As the noble Lord, Lord Boardman, said, this is the area of greatest public concern. I believe, therefore, that it was right to highlight it in this Second Reading debate. The other, perhaps more technical, measures which we will be discussing in detail in Committee are designed—in most cases they seem to succeed—to strengthen and toughen the regulatory regime, which with the events since your Lordships' House finished considering the Financial Services Act must be seen to be just, as well as being effective and practicable.
For that reason, the role of the non-executive directors and the precise definition of their responsibilities, both generally and within an audit committee, are of paramount importance. The Board of Banking Supervision and the independent representation on it is likewise a critical component in the Bill as there is unease (not just because of Johnson Matthey) both within the financial community and outside that the resources, the power and the authority
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of the Bank of England need to be enhanced as its task becomes ever greater.
An independent banking commission has been proposed. Your Lordships can imagine the concern that that proposal gives to the Bank of England, but a fiercely effective and independent board of banking supervision would be the best defence against that. The statutory requirement to report large exposures, about which the noble Lord, Lord Elton, has spoken, is perhaps another of the most significant new features of the Bill and stems directly from the extraordinary breaches of prudent practice perpetrated by Johnson Matthey which was unchecked by the Bank of England. These measures are therefore to be supported and applied with vigour, while acknowledging the difficulty in always being able to quantify all forms of exposure that a bank may have on a particular Name in areas beyond simple lending. I commend the Bill to this House.
5 p.m.
Lord Williams of Elvel: My Lords, first I have to declare an interest. I am a member of the national committee of the board of a Spanish bank. I hope that that admission does not disqualify me from talking about this Bill. I am very grateful to the noble Lord, Lord Young, for granting me permission to continue.
As the noble Lord, Lord Beaverbrook, pointed out, this Bill is the third in a series of Bills, of which two have become Acts, updating regulations and introducing new ones in the financial markets. When considering this Bill we have to reflect, as some of us certainly have done (in fact, some noble Lords have referred to the other two Acts), on the difference between banking as expressed in the Banking Bill and building societies and financial services as expressed in the Building Societies Act and the Financial Services Act.
I was slightly taken aback by the belligerent attitude, if I may put it that way, of the noble Lord, Lord Elton, in thinking that these Benches would oppose this piece of legislation. We fully supported both the Building Societies Bill and the Financial Services Bill in their passage through Parliament, and indeed the 1979 Banking Act was partially on the stocks when we were in government. Therefore I do not think it can properly be said that we would oppose regulation of this sort. Certainly we do not, and we wish this Bill well.
Lord Elton: My Lords, the noble Lord reads a little too much into my cautious acceptance of his welcome of the Bill. I intended nothing more than to say that I did not wish to be disappointed.
Lord Williams of Elvel: It gives me an opportunity, my Lords, to correct a statement that I made during the debate on polarisation that we had in your Lordships' House the other day. In response to an intervention I was unwise enough to say that the latest information that I possessed was that a minority of the adult population had current accounts in banks. The noble Lord, Lord Boardman, picked up this point and was kind enough to write to me. I am therefore very happy to correct the statement that I made and to

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repeat the figures that he gave me; namely, that about 68 per cent. of the adult population now have a bank current account and, if deposit accounts are added in, the figure is nearly 80 per cent. I am quoting from the letter that he sent to me.
In that letter he goes on to say:
"We believe that somewhere between 55 and 60 per cent. have a building society account and, perhaps more relevant to the point we were debating"—
and this is the point that, I should like to bring out—
"well over 90 per cent. of the population have an account of some kind with either a bank or a building society".
The first major point that I wish to make is that I do not believe we can separate the legislation on banking that is before us from the legislation on building societies that we passed. The two have to be looked at together.
There was a full discussion of this Bill in another place, and the Government conceded a number of amendments which were welcome to us. We were sorry that in one case the Government felt unable to go as far as we should have liked, and in another case, to which I shall come later and which concerns the foreign control of banks, the Government felt unable to go as far as a number of their friends would have liked them to go. As the noble Lord, Lord Boardman, pointed out, like the building societies system (if I may refer to it as such) the banking system depends on trust. It depends on confidence. The greater the speed of money transmission and information technology the greater the trust has to be. The Continental Illinois could practically go bankrupt in about 20 seconds. That is a measure of the problem involved in regulating banks.
At the same time, the banking business, like the building society business as it has now become after the Building Societies Act, is very diverse. There are large banks, small banks, merchant banks and specialised banks. It is. extremely difficult to devise a Bill that regulates all these institutions in one fell swoop. I believe that the Government have succeeded well in their task, building on the experience of the 1979 Act. I believe that the Government are right to abolish the distinction between licensed deposit-taking institutions and recognised banks and to have only one category.
However, I should like to raise four fundamental questions, three of which are of a rather technical nature. The first question concerns the Bank of England. I do not want to go over what my noble friend Lord Bruce of Donington said in his opening speech, but it is clear from the Bill that is before us that the Bank of England has a very great responsibility not only for the regulation of banks but for being seen to be the regulator of banks. In other words, the Bank of England is obliged under Sections 16 and 17 to publish in its report a list of those banks that it has authorised so that the whole world will know which banks are authorised by the Bank of England and which banks are regulated and supervised by the Bank of England.
The question that arises—it is a question which bothered me when I was a practising banker, and perhaps it bothers the noble Lord, Lord Boardman, but I do not know—is this. If a bank is authorised by the Bank of England and is under the supervisory
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authority of the Bank of England, does the Bank of England thereby stand behind the Bank of England as a lender of last resort? No doubt the noble Lord, Lord Young, will correct me if I am wrong, but I seem to remember that if one went and asked the bank whether a clearing bank was undoubted, the Bank of England would say, yes. If one asked the bank whether an accepting house was undoubted, the Bank of England would say, yes. If one asked the bank about a bank that was neither a clearing bank nor an accepting house, the Bank of England would say yes and no and perhaps, and there were certain qualifications. I have never seen a clear statement that the Bank of England, both as the supervisory authority and as central bank, stood behind as lender of last resort. I should like to have this matter cleared up. Presumably it can be cleared up very simply by the Minister when he comes to wind up the debate.
The second fundamental question that I ask regarding this Bill has to do with the Board of Banking Supervision. If one turns to the Building Societies Act one sees that the Building Societies Commission is a wholly separate body, which is not required to advise its members on their actions. On the other hand, the Board of Banking Supervision has independent members who are required to advise the ex officio members on how to run their business, if I may use that rather brief expression. The question is whether that will really help and enable the Bank of England to draw on advice from the independent members and adhere to it, or whether it is something which will just be some kind of camouflage and not have any residual effect.
The problem is aggravated by the provision in the Bill which allows independent members of the board to make representations or report to the Chancellor if the ex officio members ignore their advice. The circumstances under which such a report may be made are unclear and need some kind of clarification, specifying exactly what they can do and how they can do it. Even when their advice is partially accepted, partially ignored or perhaps twisted in one way or another, are they still allowed access to the Chancellor, and if not should that not be the case?
The third fundamental question which has been asked by many noble Lords relates to the foreign control of British banks. I am sorry that the Government did not feel able to accept amendments that were put forward by both sides in another place and which will be echoed by the amendments that the noble Lord, Lord Elton, and perhaps the noble Lord, Lord Boardman, if he allows himself that freedom, will put down in Committee.
I do not believe that the Monopolies and Mergers Commission criteria under the Fair Trading Act are the proper criteria on which to decide the ownership of banks. I believe that the Hong Kong and Shanghai Bank-Royal Bank of Scotland affair demonstrated—it was all a bit of a fudge—that the only way that operation could be prevented was by referring it to the MMC, which has to operate under the Fair Trading Act criteria. They are wide in their application and were devised for industrial companies.
I am afraid that I cannot follow the noble Viscount, Lord Chandos, in saying that those banks which

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deserve to remain British should be allowed to remain British and those which do not deserve to remain British should be taken over by foreigners. I find that a rather abstruse formulation, and, if I were the government, I should have great difficulty in putting that into any kind of language in law. I do not see how it could be defended; nevertheless, I look forward to seeing the noble Viscount's efforts in Committee.
The Opposition would agree with the noble Lords, Lord Elton and Lord Boardman, that the Government must move just a little bit further than they moved in another place. When the Government see the strength of feeling in your Lordships' House, I believe they may take that last step. I believe that there must be a national interest criterion in the ownership of banks as there must be with building societies. I would go as far as that.
The fourth problem relates to large exposures. That has been referred to by a number of noble Lords. My worry is whether Clause 38 is sufficient to enable the Bank of England to cope with the international debt problem. There has been some comment that sovereign risk will be excluded from Clause 38. I shall be grateful if the noble Lord, Lord Young, when he winds up will assure us that lending on sovereign risk will be included in large exposures. It seems to be an area where there is risk of heavy exposure by the major banks and some of the minor banks in this country. After the Brazil experience, the Mexican experience of a few months ago and the continuing problems in the underdeveloped world, it seems to me that we must look carefully to see how the major banks can be helped with their problems and yet can be supervised in their problems.
Added to that, we must look at the problem from the borrowers' point of view to see whether the supervisory arrangements which the Bill proposes will help those countries which are poor and becoming poorer and which have to transfer massive sums of money each year to the banks in the Western world, which depletes their exchange reserves.
I do not want to detain your Lordships too long, but the technical questions fall into three categories. The first is the role of auditors. Auditors were given a strengthened role in the Financial Services Act and the Building Societies Act. The noble Lord, Lord Beaverbrook, referred to that in his introduction to the Bill. I hope that the noble Lord, Lord Young, will confirm the assurance that was given on Report in another place that the Treasury rules, to which the noble Lord, Lord Beaverbrook, referred as a last resort, will be introduced under the affirmative procedure and not under the negative procedure. That was an amendment which failed for technical reasons to get through on Report in another place.
There is the problem of control systems. Under the Building Societies Act, auditors have a role to ensure that the control systems of building societies are adequate. I remember moving an amendment to require auditors to ensure that the control systems of building societies were adequate, not just for their existing business but for any future business they may get into as a result of developments which would take place under that Act. There is an area there where
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there is a dissimilarity between this Bill and the Building Societies Act.
Lastly, we should like to see—this applies not only to auditors but generally—the same immunity extended to agents of the Bank of England engaged in investigation as is accorded to the Bank of England. It seems hard that the Bank of England has total immunity in its investigations under the Bill and yet when it employs an accountant to do investigations for it that accountant does not have immunity and is liable to civil action. An agent of the Bank of England in a Bank of England investigation should have some kind of immunity.
The second technical problem relates to overseas institutions and jurisdiction. We have had a number of problems in the operation of the 1979 Act. Foreign banks with branches in London are uncertain, and the Bank of England appears to be somewhat uncertain, as to who finally is responsible for their supervision. In a number of cases, it has been the central bank of the country concerned—that is, where the parent bank is established—and the Bank of England has tried on occasions to assert its rights to control British banking institutions. There must be some clear definition of where the jurisdiction lies for branches of foreign banks in London.
The disclosure of banking information has always been a vexed question because bankers have always taken the view, in my view rightly, that unless there is a court order, banking information is secret between bank and client. We have recently elicited the Government's view on the Consumer Protection Bill that misleading price indication includes banks. It somewhat surprised me when it came out that a bank, when it quotes to a consumer an interest rate, an arrangement fee or whatever it may be, will be subject to the Consumer Protection Bill, when it is enacted. If it is misleading in any sense, that is a criminal offence. Again, there is a question of disclosure of information. What can properly be disclosed by banks?
Finally, I shall refer to Schedule 3, which relates to the minimum criteria for authorisation. I note that some detailed criteria for authorisation are set out, and I welcome them. But the question I ask is: what will happen if the institutions which are at present banks or deposit-taking institutions and which receive automatic authorisation under the Bill do not conform to the criteria for authorisation?
Those are the points that I wish to raise on Second Reading, merely to alert the Government that we shall be concentrating on those matters and also looking rather closely at the amendments that the Government move in response to debates in Committee in another place, and hence perhaps have not had the full and detailed attention that they would have in another place. Having said that, and having taken'up too much of your Lordships' time, I give the Bill a hearty welcome. The Opposition will try to expedite the Bill. We wish it to be enacted. Subject to the usual scrutiny that the Opposition are required to give any Bill that comes before your Lordships, we shall ensure that it goes through as quickly as possible.
5.19 p.m.
Lord Young of Graf ham: My Lords, I am greatly heartened by the support which has been given to the

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Bill on all sides of the House. Both I and my noble friend Lord Beaverbrook hope for a somewhat easier time with it in Committee than is sometimes the case when lengthy and complex legislation is subjected to your Lordships' well-informed scrutiny. May I declare an interest of a sort? Until recently, my passport described me as "banker", though my practical experience ended just before the 1979 Act came into being.
The few speeches that we have had have not prevented us from having an interesting debate. Issues have been raised which not only merit further debate in Committee but will receive further debate in Committee. I do not think I should be serving the purpose of all the Members of your Lordships' House if I were to seek to address them all. Indeed, I look forward to debating many of these matters in Committee. After all, your Lordships' House is particularly well qualified to consider this Bill. We number among our ranks no fewer than four former Governors of the Bank of England and that alone will add a certain quality to our deliberations.
The main provisions of the Bill were first published as proposals in the Government's White Paper in December 1985. Considerable thought and consultation have been involved both before and since its publication. As has been remarked, the Bill should not be regarded as standing on its own. It completes a trilogy of Government legislation on financial supervision: the Building Societies Act, the Financial Services Act of last year and now the Banking Bill. This has not happened overnight. It has been the result of several years' work. It is appropriate that these new measures should be on the statute book at a time when the changing financial markets bring not only new opportunities but new risks as well.
I do not think that I have to remind anyone in your Lordships' House this afternoon of the significance of the City as an employer and of the contribution it makes to our foreign earnings and our economy generally. My noble friend Lord Beaverbrook referred to the City's record in this area. The number of banks operating in the United Kingdom has increased rapidly over the past decade. There are now some 600 institutions authorised under the 1979 Act. At the same time the output of the banking and finance sector has increased by over two thirds since 1979. With United Kingdom-based bank lending to British companies now over £100 billion, compared with some £39 billion in 1979, I suspect that we shall find that British banks are playing their role in the economy. Indeed, there has been an increase of one third in the sector's contribution to our gross domestic product.
We are dealing with an important and growing sector of the economy. In formulating its policy on banking supervision the Government have therefore consulted with and paid close attention to the views of all interested parties and have listened carefully to constructive suggestions from all sides. Improvements to the Bill have been introduced by amendments in another place. I believe that it is now in good shape. The Government are grateful to all who have contributed. However, that does not mean that we are not sensible to the contributions and the suggestions made this afternoon.
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The noble Lord, Lord Bruce of Donington, raised the matter of the reporting procedure of the Bank to Parliament. Clause 2 of the Bill, which refers to the Board of Banking Supervision and makes provision for appointments by the Chancellor and the Governor, is perfectly proper. It is the same formula as used in the Financial Services Act for appointments to the Securities and Investment Board. I believe that it is important in this matter to have a certain amount of consistency among similar types of institutions.
The noble Lord, Lord Bruce, and other noble Lords also raised the question of the Bank's supervisory responsibility for overseas banks. It is established international practice that the supervision of international banks has to be a shared responsibility—shared between the supervisors in the countries in which the bank operates.
Perhaps I may say that my time as a banker was with an American bank. I am well aware of that joint and shared role between the Bank of England and the New York Federal Reserve. however, the prime responsibility falls on the supervisor where the bank has its head office. The 1979 Act was drafted to reflect this. Subsection (3) re-enacts the provision unchanged. This enables the Bank to allow, in the judgment of an overseas supervisory authority, with regard to the major prudential criteria set out in Schedule 3 in respect of an overseas bank, the establishing of a branch in the United Kingdom. The Bank can rely on that judgment only if it is satisfied about the nature and scope of the supervision exercised by the overseas supervisory authority. The Bank may require additional insurances if it so wishes, and has invariably done so, in particular in relation to the policies, operations and staff of the United Kingdom operation. In this respect the Bank's supervision of an overseas bank is similar to that of a United Kingdom incorporation institution. I hope that that brings some comfort to the noble Lord, Lord Williams.
Other matters were raised by the noble Lord, Lord Bruce, which perhaps can be dealt with more closely and more carefully at the Committee stage. However, he asked whether there will be adequate enforcement procedures. He will find that the Bank will have the satisfactory ability to enforce whatever is required under the Act. I hope that I can give him more assurance on that at a later stage if he still has doubts.
I was grateful to my noble friend Lord Boardman. I listened carefully to what he had to say. He raised three matters to which I hope to return in due course. I hope that we can discuss them at Committee stage if he feels at that time that they should be raised. He asked how non-authorised subsidiaries were to be treated and how directors of those subsidiaries were to be treated. He queried the level of a capital value of £5 million. There are always demarcation disputes whatever level one sets. I have no doubt that to him £5 million appears to be a very small capital. There are other institutions to which I suspect that a capital of £5 million may not appear quite so small. It is a matter that he is perfectly at liberty to raise later. But there has to be a level of some kind, and we can all see some dispute whatever level is set.
I listened carefully to what my noble friend had to say on change of control. It was a matter mentioned by

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many this afternoon. The whole question of reciprocity was raised. He asked whether, if an American bank were to take over a UK financial institution—not, I hasten to add, the institution with which he is concerned—the United States' financial institution would have a much larger share of the United Kingdom market than we should have if his bank were to take over, say, an equivalent American bank. The answer is, of course not. There are relative differences in scale between the two countries.
My noble friend drew attention to the way in which the French Government, he claimed, had a peculiarly French solution to the matter. We shall have to see. I hope that noble Lords will accept the assurance that the procedures are in place today just as they were at the time when the Bank of Scotland matter arose. They will find in future that a similar outcome will prevail. But it is perfectly open to anyone in your Lordships' House to raise these matters should they so wish at a later stage in the Bill.
There was a matter which concerned my noble friend Lord Elton, who now enjoys considerable liberty—I shall not say licence—in looking at legislation with a totally free and untrammelled mind. He can remember only too clearly, I suspect, being in my role. He knows full well that we are subject to some constraints; I put it no higher than that. I listened carefully to what he had to say, in particular about significant shareholders and the anomalies in Clause 39(1) and (3). These are matters to which we can return at the Committee stage.
There is one matter that I should raise because it is important to put it on the record this afternoon. My noble friend Lord Elton and other noble Lords raised the question of large exposures. Clause 38(1) and (9) provides a defence where the institution did not know of the facts by which the exposure became reportable. Provided that a report is made within seven days of discovering the facts, that will give the necessary defence. It is impossible to report the knowledge of a large exposure until the knowledge of it becomes available.
Lord Elton: My Lords, perhaps my noble friend will forgive me since he wishes to put this on the record now. The issue to which I was addressing myself was this. Can it be a matter of dispute whether the bank should have known of the matter and did not? Is that covered by this clause? I have not given notice to my noble friend and no doubt he will wish to write or deal with the matter at Committee stage.
Lord Young of Graffham: My Lords, I am grateful to my noble friend. The Bank also has a discretion regarding whether or not to prosecute in particular circumstances, depending on the defence. I think that in those circumstances it is something which the bank would take into account. I believe that these are matters which we can discuss in further detail when we look at the minutiae of the Bill. It is an important matter; but, for reasons which noble Lords will understand, not one on which I should like to go into detail this afternoon.
In response to the question asked by the noble Lord, Lord Williams of Elvel, I should say that Clause 39 of
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the Bill will allow for the reporting of sovereign debt amounting to large exposures. The details of that are to be worked out and published by the Bank under the Bill in due course, but the clause will allow for those particular matters.
I am grateful to the noble Viscount, Lord Chandos, for his general welcome to the Bill. I am a little concerned that he considers that British banks are not sufficiently committed to United Kingdom interests. I disagree with the noble Viscount on that matter. I believe that it is dangerous to appear to be a "little Englander"—if I may put it that way—about the banking industry when London has become established as a financial centre of the world and when that establishment is growing. I believe that it is possible to have a regime in which the health of London as a financial centre and the demands of commerce and industry can be adequately met, not only by our banking industry but by foreign banks which come to this country.
There can be little doubt that competition is good. In all these matters we must ensure that the competition is fair and reasonable, and where necessary we must also look at the national interest. However, it is dangerous for a nation such as ours, which today has the second largest net overseas investments of any country, to become too cautious about overseas investments in the United Kingdom. On the last occasion that I saw the figure quoted we had some £80 billion of overseas investments. We should look carefully at the response given by other countries when our companies and banks invest on their soil.
I was glad of the welcome given to the Bill by the noble Lord, Lord Williams of Elvel. The noble Lord drew attention to the real danger in the world today; namely, the effect of technology. I was involved in the banking world in the early 1970s when the effect of technology on foreign exchange dealing first came to the fore. I saw the great sense of shock displayed by banks when they suddenly realised how quickly they could become committed on various matters. I believe that technology has been harnessed to considerable value by overseas banks. Banking will always be based upon trust, and trust will be the foundation of any good banking system. I hope that the Bill will reinforce that sense of trust because without it I do not believe that any system will work.
I found the four fundamental questions put to me by the noble Lord, Lord Williams of Elvel, deceptively simple. The more that I thought about them, the more concerned I became. I should like to answer the first question which was: is the Bank of England a bank of last resort? No, my Lords, it is not. The Bank of England will deal with matters on a case by case basis. I do not believe that any national bank can ever say, in all circumstances, that it can be a bank of last resort.
Secondly, the noble Lord asked how the Board of Banking Supervision will work and in particular how the access to the Chancellor will work. The access to the Chancellor will occur if the advice is not followed. In the course of a debate, of this nature it is difficult to assess all the various permutations as regards when it will or will not work. I believe that it is a system which must be made to work. I have no doubt that if any

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individual member wishes to have access to the Chancellor, he has only to ask and I have no doubt that he will do so. However, we must yet work out the details of that matter.
The noble Lord also raised the question of foreign control and he says that there must be a national interest criteria in that regard. I have no doubt that noble Lords will return to that matter when we deal with that part of the Bill. I was able to answer in some measure the noble Lord's fourth question concerning lending on sovereign risks.
I am able to satisfy noble Lords of one other matter. When it comes to auditors, yes, there will be an affirmative resolution. I am happy to give that undertaking. Many other matters have arisen, and I have been able to deal with some of them in this debate—if only superficially. I have no doubt there are further matters which we shall deal with in great detail at a later stage. I hope that the Bill will pass speedily through this House. I believe that we shall see your Lordships' House working at its best, and, as a reforming Chamber, looking at a piece of serious legislation on which Members have considerable expertise.
On Question, Bill read a second time, and committed to a Committee of the Whole House.

Fire Safety and Safety of Places of Sport Bill [H.L.]
5.36 p.m.
Report received.
Clause 1 [Power to exempt from requirement to have fire certificate.]:
Lord Mishcon Lord Mishcon moved Amendment No. 1:
Page I. line 8, leave out ("subsection") and insert ("subsections").
The noble Lord said: My Lords, with the permission of the House, I should also like to speak to Amendments Nos. 2 and 3.
Your Lordships may remember that at the Committee stage we expressed some concern about the passing of a clause which dealt with exemption certificates, and doing so without the benefit of the guidance which was to be issued by the Home Office. With the usual courtesy that one expects from the noble Earl, the Minister, I received a promise that the matter as regards when guidance was likely to emanate from the Home Office would be considered whether it was to be before the Bill left your Lordships' House or not. In accordance with that usual courtesy, I received a letter from the Minister and I am sure that I have his permission to quote from it. He says:
"In the context of discussion on Amendment No. 1"—
it has the same numbering at Report stage as at Commttee—
"you asked when the guidance which we propose to issue to fire authorities on the use of their exemption powers, would be available. The kind of factors which would be included in such guidance were set out in Annexe C".
I need not carry on with that sentence, but I continue with the following one:
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"These categories will be defined in the designation order for the premises, and although we indicated in paragraph 1.17 of the consultative document provisional criteria for these categories, these have yet to be subject to consultations with the local authority associations, the fire service representative organisations and other interested parties. We hope to begin this process before the Bill reaches the Statute Book, but in advance of conclusions, it would be premature to go too firm on the details of the guidance".
The anxiety still exists in the quarters where fire safety is a matter of duty carried out day by day. I am referring, for example, to the London Fire Authority, the London Fire Brigade and the fire brigade unions. The fear is that exemptions will be much too vague and that there will be too many. I believe that at this stage I should say this to the House and to the Minister: in regard to the consultations that are to take place, and which will include the important matter of guidance on exemptions, will the Minister give an assurance that any guidance to be issued by the Home Office will be done following consultations with the joint fire prevention committee of the Central Fire Brigade's Advisory Council?
If I may remind your Lordships—I am sure I do not have to remind the Minister—that council was set up under the Fire Services Act of 1947 to advise the Secretary of State on all matters relating to the fire service. On that body there sit the local authority associations, fire service representative organisations and other technical bodies. It is most appropriate that a council set up for this purpose should be there for full consultation on these guidelines, including the matter of guidance on exemption certificates.
If the Minister will be good enough to give me that assurance, I believe that the proper course for me to take will be to ask your Lordships' leave to withdraw this amendment, at least in the knowledge that consultation is going to take place with a very appropriate body.
The Earl of Caithness: My Lords, the noble Lord, Lord Mishcon, has quoted quite a lot of what I was going to be able to tell the House from the letter that I wrote to him following the Committee stage with regard to his specific request. Of course that body, the committee of the CFBAC, will be one of the organisations that we shall consult. As I happen to chair the bi-annual meeting of that committee held at the Home Office, I think that I am now cast very firmly in the role of fulfilling that obligation. I would also say to the noble Lord, Lord Mishcon, that of course there are the designation orders which have to come before Parliament under the negative resolution procedure. At that time we intend that the guidance will also be available to your Lordships. With that, I hope that the noble Lord may be able to withdraw his amendment.
Lord Mishcon: My Lords, I am most grateful to the noble Earl and I ask for the House's permission to withdraw the amendment in these circumstances.
Amendment, by leave, withdrawn.
[Amendments Nos. 2 and 3 not moved.]
5.45 p.m.
Lord Mishcon Lord Mishcon moved Amendment No. 4:
Page 2, line 33, after ("but") insert ("subject to subsection (4A) below").
The noble Lord said: My Lords, I ask leave to speak also to Amendment No. 5. We are still on the subject of exemption certificates, and the purpose of this amendment is, as your Lordships will see, to make absolutely sure that in respect of premises for which special provision is made—it should read: "in Schedule 2" and not "in Schedule 1"—
"an inspection of the relevant building to be carried out".
The purpose of this amendment is to get rid of a very proper and understandable fear that exists among certain groups of industrial workers. I am talking in particular about the National Union of Tailors and Garment Workers, which has expressed the gravest of concern that exemption certificates will be granted without any inspection where clothing factories are concerned.
This is particularly the case—and that is what I am asking for—where there is multiple occupancy, and the sort of places that I am thinking of, and that they are thinking of, are in inner city areas. There is no doubt that in outer city areas this risk to clothing workers is not so great, but where you have premises in multi-occupation, then there is a very serious risk, as we have heard from the past history which I dealt with at Committee stage—and I do not intend to weary your Lordships with any repetition—and there have been pretty serious incidents in places of this kind.
Your Lordships may feel that there will certainly be inspection and that the situation at the moment is perfectly all right. Unfortunately this is not the history nor the situation that has been described to me.
The other difficulty that one can envisage is this. If you have a general exemption of clothing factories, for example, because it is decided that is a designation where exemption is going to be almost automatic, your Lordships will realise what will happen in the courts when a certificate ought to have been applied for has not been applied for. There will be two results. The first is that the defence will immediately try to put before the courts a hypothetical situation and say that the defendants would have applied for exemption. If you see the guidelines that are issued by the Home Office, you will find that the defence will say to the court, "We probably or almost definitely would have been granted exemption, so it is only a technical offence that we did not apply for a fire certificate". If that defence does not succeed, there will be a plea in mitigation in regard to penalty, that really the defendant thought it was only an automatic matter that he would be granted exemption—"See these broad lines of designation of exemption 3"—and the court will be asked to make it a nominal penalty only.
There ought to be no exemption granted unless there is an inspection: that is consistent with the sort of safety that we are after in this legislation, and it is the sort of consideration we ought to give to workers who are at risk. I beg to move.
Lord Dean of Beswick: My Lords, I rise fairly briefly in support of what has been so eloquently said by my friend and collegue on the Front Bench, Lord Mishcon. I did touch on this particular aspect of the subject during the passage of the Wages Bill last year.
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There is documentation in support of what Lord Mishcon has said regarding the dangers people face if the Government do not handle this properly. It has already been illustrated by the Mile End fire of October 1983 in which five women, Punjabi clothing workers, died. During the passage of the Wages Bill I cited a particularly nasty case. One can say that it was worse than the very horrendous one I have just mentioned. It took place in Manchester during the 1970s, when I believe 10 women sewing workers lost their lives in very small premises within perhaps 200 or 300 yards of Piccadilly Station in the main centre of Manchester, Piccadilly. These were women working in very poor conditions, who had very little control over where they were working, and I am sure that the Government would not want to place any workers in that particular situation again.
I will not detain your Lordships any longer, but I believe the point has been made quite correctly by Lord Mishcon. This type of worker needs the protection of the law because they are not organised in the same way as many other people who work in factories. On that basis I hope the Minister will give extremely sympathetic consideration, and a considered answer to the amendment as moved by my noble friend Lord Mishcon.
The Earl of Caithness: My Lords, I appreciate the concern of the noble Lord, Lord Mishcon, which was echoed by the noble Lord Lord, Lord Dean of Beswick, that Clause 5A(4) might lead to the fire authority granting an exemption in circumstances which did not merit it because an inspection had not been carried out. I can assure both noble Lords that this is not the intention of the provision and I am confident that fire authorities will not act in that way.
We are proposing to allow this discretion to the fire authority so that it is not required to carry out inspections in what we envisage will be a limited range of circumstances. Where the fire authority has recent first-hand knowledge of premises, acquired for example through involvement at the construction stage under the building regulations, there seems little point in requiring a further inspection. Similarly, where the fire authority is confident that an application for a fire certificate is in respect of premises of a very simple layout and for a use posing a very low risk, it should be free to exempt without inspection.
By their very nature, premises in multi-occupation or plural ownership, such as those mentioned by the noble Lord, Lord Mishcon, are unlikely to be so simple, and the fire authority may be less likely to exempt on the basis of information given in an application alone. There may, though, still be cases where recent involvement with the premises provides an adequate basis for exemption.
In the general guidance which will be issued to fire authorities before the provisions of the Bill are brought into force it will be suggested that in most cases they should inspect premises prior to granting an exemption. Only when there is good reason to do so should fire authorities follow the alternative course.
The noble Lord, Lord Mishcon, raised in particular the question of the clothing industry, which he also raised earlier at the Committee stage. I should like to

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reassure the noble Lord that fire authorities are very unlikely to exempt many such premises from certification, even if they fall into the exempt category specified in the designation order, because quantities of flammable textiles which are usually used in such circumstances would not constitute a low risk. This is part of the flexibility that we are incorporating. Not only must the fire authority consider the design of the premises but it must consider also the use to which the premises are being put.
Perhaps I may quote the noble Lord when he moved the first amendment, I think he said that fire safety is a matter of duty to bodies such as the LFCDA and other fire authorities. I believe that that duty is very real. From my inspections of fire authorities round the country I have found them to be extremely reliable on such matters. They will not lightly exempt premises which they feel may constitute a risk. As a result, a fire is one thing which they wish to avoid.
The noble Lord, Lord Dean of Beswick, mentioned two fires. am afraid that I do not know the circumstances. However, they sound as though they are exactly the type of premises at which we wish our fire inspectors to spend more time, which can be achieved by having exemption certificates for low-risk premises. Indeed, I hope that the next amendment, Amendment No. 6, will go a long way to satisfy some of the anxieties of the noble Lord, Lord Dean of Beswick. It will enable fire authorities to act in a much quicker way than they have been able to do in the past. 1 think it is right that we should give the fire authority the limited flexibility provided by the Bill by not tying its hands too greatly. However, I can assure the House that the authority will be very conscious of any premises or the use of any premises which could give rise to an exceptional fire risk.
Lord Mishcon: My Lords, I am most disappointed with the Minister's reply. If the House had been listening before the Popplewell Inquiry was set up and we had been talking in terms of sports stadia and the likelihood of incidents such as he inquired into, I can imagine that with the good faith with which the Minister has spoken this afternoon we would have been told by a Government Minister, of whatever party, "Do not worry, you can rely upon the sense of responsibility of people who are housing thousands in a sports stadium. You can rely on the fire authority not just inspecting but making sure that not only would the results of their inspection reach the responsible people but those responsible people would be made to carry out all the safeguards that would prevent a disaster".
We would have been told that fire authorities and local authorities—everybody—act with responsibility when concerned with buildings of this kind. However, we are talking about multi-occupied buildings. Noble Lords know the sense of responsibility of some of the people who own and occupy premises of that kind in various parts of inner city areas. We are dealing with legislation following upon the Popplewell Inquiry to make sure that disasters do not occur.
I am sure that the noble Earl says in good faith and with a good heart, "If there is guidance that in most cases the local authority should inspect and that the
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fire authorities will inspect, surely you can rely upon things happening in the proper way". We have a responsibility. We are dealing with legislation following upon a disaster and following upon a report which we considered with great care. I think that if we carry out our duties we are entitled to say—indeed, we must say—that in the case of the premises to which I have referred, and to which my noble friend Lord Dean of Beswick has also referred, at least there must be an inspection. I do not mind if it is a short inspection, but at least there must be an inspection before exemption is granted. If the Minister cannot concede that point I must take the opinion of the House.
The Earl of Caithness: My Lords, before the noble Lord sits down, can he clarify one statement that he made? Is the amendment related purely to multi-occupation and plural ownership premises, or does it apply to all premises within Schedule 2 to the Act, being Schedule 1 to the Bill?
Lord Mishcon: My Lords, because of the concern of a certain trade union I have accentuated multi-occupied premises. I hoped that I had made that point clear. But in my amendment I am dealing with those premises which are mentioned in Schedule 2 to the Bill.
5.57 p.m.
On Question, Whether the said amendment (No. 4) shall be agreed to?
Their Lordships divided: Contents, 74; Not-Contents, 76

DIVISION NO.1

CONTENTS

Ailesbury, M.

Hanworth, V.

Airedale, L.

Hatch of Lusby, L.

Allenby of Megiddo. V.

Houghton of Sowerby, L.

Amherst, E.

Hughes, L.

Attlee, E.

Hylton-Foster, B.

Birk, B.

Jeger, B.

Blease, L.

John-Mackie, L.

Blyth. L.

Kilbracken, L.

Blyton, L.

Kilmarnock, L.

Brockway, L.

Kirkhill, L.

Brooks of Tremorfa, L.

Llewelyn-Davies of Hastoe, B.

Bruce of Donington, L.

Lloyd of Kilgerran, L.

Carmichael of Kelvingrove, L.

Lockwood, B.

Chitnis, L.

Longford, E.

Cledwyn of Penrhos, L.

Mackie of Benshie, L.

Craigavon, V.

McNair, L.

David, B.

Manchester, D.

Davies of Penrhys, L.

Mishcon, L.

Dean of Beswick, L.

Mulley, L.

Diamond, L.

Munster, E.

Donoughue, L.

Nicol, B.

Elwyn-Jones, L.

Phillips, B.

Ennals, L.

Pitt of Hampstead, L.

Erroll, E.

Prys-Davies, L.

Ewart-Biggs, B.

Rea, L.

Ezra, L.

Ritchie of Dundee, L.

Gallacher, L. [Teller.]

Rochester, L.

Galpern, L.

Ross of Marnock, L.

Graham of Edmonton, L. [Teller.]

Seear, B.

Shackleton, L.

Gregson, L.

Silkin of Dulwich, L.

Halsbury, E.

Somers, L.

Hampton, L.

Taylor of Blackburn, L.

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Tordoff, L.

Winchilsea and Nottingham, E.

Underhill, L.

Whaddon, L.

Winstanley, L.

Wigoder, L.

Winterbottom, L.

Williams of Elvel, L.

Ypres, E.

NOT-CONTENTS

Allerton, L.

Holderness, L.

Alport, L.

Hooper, B.

Ashbourne, L.

Kinnaird, L.

Beaverbrook, L.

Kinnoull, E.

Belhaven and Stenton, L.

Lane-Fox, B.

Bellwin, L.

Lauderdale, E.

Belstead, L.

Lawrence, L.

Birdwood, L.

Layton, L.

Boardman, L.

Long, V.

Boyd-Carpenter, L.

Lyell, L.

Brabazon of Tara, L.

Margadale, L.

Brougham and Vaux, L.

Marley, L.

Butterworth, L.

Merrivale, L.

Caithness, E.

Mersey, V.

Cameron of Lochbroom, L,

Monckton of Brenchley, V

Campbell of Alloway, L.

Mottistone, L.

Campbell of Croy, L.

Moyne, L.

Cork and Orrery, E.

Murton of Lindisfarne, L.

Craigmyle, L.

Nugent of Guildford, L.

Cullen of Ashbourne, L.

Orr-Ewing, L.

Davidson V. [Teller.]

Pender, L.

De La Warr, E.

Portland, D.

Denham, L. [Teller.]

Rankeillour, L.

Derwent, L.

Reay, L.

Dundee, E.

Renton, L.

Elles, B.

Rochdale, V.

Elton, L.

Rodney, L.

Faithfull, B.

St. Aldwyn, E.

Fraser of Kilmorack, L.

St. Davids, V.

Glenarthur. L.

Skelmersdale, L.

Gray of Contin, L.

Strange, B.

Greenway, L.

Swinton, E.

Hailsham of Saint Marylebone, L.

Teynham, L.

Trumpington, B.

Harlech, L.'

Ullswater, V.

Harmar-Nicholls, L.

Whitelaw, V.

Henley, L.

Windlesham, L.

Hesketh. L.

Wise, L.

Hives, L.

Resolved in the negative, and amendment disagreed to accordingly.
6.5 p.m.
[Amendment No. 5 not moved.]
Clause 9 [Relevant matters for order prohibiting or restricting use of premises]:
The Earl of Caithness The Earl of Caithness moved Amendment No. 6:
Leave out Clause 9 and insert the following new clause:
"Special procedure in case of serious risk; prohibition notices.
9.—(1) For section 10 of the principal Act (court's power to prohibit or restrict use of certain premises until excessive risk to persons in case of fire is reduced) there shall be substituted the following section—
"Special procedure in case of serious risk: prohibition notices.
10.— (1) This section applies to—
(a) any premises which are being or are proposed to be put to a use (whether designated or not) which falls within at least one of the classes of use mentioned in section 1(2) of this Act, other than premises of the description given in section 2 of this Act; and
(b) any premises to which section 3 of this Act for the time being applies.
(2) If as regards any premises to which this section applies the fife authority are of the opinion that use of the premises involves or will involve a risk to persons on the premises in case of fire so serious that use of the premises ought to be prohibited or restricted, the
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authority may serve on the occupier of the premises a notice (in this Act referred to as "a prohibition notice").
(3) The matters relevant to the assessment by the fire authority, for the purposes of subsection (2) above, of the risk to persons in case of fire include anything affecting their escape from the premises in that event.
(4) A prohibition notice shall—

(a) state that the fire authority are of the opinion referred to in subsection (2) above;

(b) specify the matters which in their opinion give or, as the case may be, will give rise to that risk; and

(c) direct that the use to which the prohibition notice relates is prohibited or restricted to such extent as may be specified in the notice until the specified matters have been remedied.

(5) A prohibition notice may include directions as to the steps which will have to be taken to remedy the matters specified in the notice.
(6) A prohibition or restriction contained in a prohibition notice in pursuance of subsection (4)(c) above shall take effect immediately it is served if the authority are of the opinion, and so state in the notice, that the risk of serious personal injury is or, as the case may be, will be imminent, and in any other case shall take effect at the end of a period specified in the prohibition notice.
(7) Where a prohibition notice has been served under subsection (2) above the fire authority may withdraw the notice at any time.".
(2) After the section 10 of the principal Act substituted by subsection (1) above there shall be inserted the following sections—
Rights of appeal against prohibition notices
10A.—(1) A person on whom a prohibition notice is served may, within twenty-one days from the date on which the prohibition notice is served, appeal to the court.
(2) On an appeal under this section, the court may either cancel or affirm the notice, and, if it affirms it, may do so either in its original form or with such modifications as the court may in the circumstances think fit.
(3) Where an appeal is brought under this section against a prohibition notice, the bringing of the appeal shall not have the effect of suspending the operation of the notice, unless, on the application of the appellant, the court so directs (and then only from the giving of the direction).
Provision as to offences.
10B.—(1) It shall be an offence for any person to contravene any prohibition or restriction imposed by a prohibition notice.
(2)In any proceedings for an offence under subsection (I) above where the person charged is a person other than the person on whom the prohibition notice was served, it shall be a defence for that person to prove that he did not know and had no reason to believe the notice had been served.
(3) Any person guilty of an offence under subsection (I) above shall be liable—

(a) on summary conviction, to a fine not exceeding the statutory maximum;

(b)on conviction on indictment, to a fine, or imprisonment for a term not exceeding two years, or both."

(3) In section 43(1) of the principal Act (interpretation), after the definition of "prescribed" there shall be inserted the following definition—
" "prohibition notice" has the meaning assigned by section 10(2) of this Act;".").
The noble Earl said: My Lords, with the leave of the House, in moving Amendment No. 6, I shall speak to Amendments Nos. 7, 8, 9, 25 and 26.
The amendments reflect the outcome of my discussion with my right honourable friend the Home Secretary following the very strong arguments that the noble Lord, Lord Mishcon, with the full support of my

569
noble friend Lord Boyd-Carpenter, put forward in Committee in favour of introducing a system of prohibition notices into the 1971 Act.
The new clause provides for the fire authority to issue a notice prohibiting or restricting the use of premises where it is of the opinion that there is a serious risk to persons in case of fire. It will be an offence to contravene such a prohibition or restriction. This means that until the fire authority is satisfied that the matters specified in the notice have been remedied, the occupier is constrained in his use of the premises. There is of course a right of appeal to the courts against the issue or terms of such a notice, but the notice remains in force unless and until the court directs that its operation be suspended. Your Lordships will be aware that provision is already made for the issue of prohibition notices of the Safety of Sports Grounds Act 1975 by Clause 22 of the Bill. The other amendments in the group are consequential on new Clause 9 of the Bill.
This is the amendment to which I referred on Amendment No. 4. I hope that it will go a long way to solving some of the problems mentioned by the noble Lord, Lord Dean of Beswick. I beg to move.
Lord Mishcon: My Lords, your Lordships' House has once again shown by its wisdom that a Bill can be altered in a vital respect if only there is the combined wisdom of two Benches, expressed in this case from my point of view, and I am sure with ineptitude; and expressed by the noble Lord, Lord Boyd-Carpenter, with his usual facility of language.
On that occasion he asked the Chamber to beware of some guile that I am supposed to have possessed. At all events, the Secretary of State did not think that there was any guile behind the amendments, I am sure because of the arguments that the noble Earl, Lord Caithness, presented to him as being a faithful version of what the Committee had thought, and decided to concede what is a very important amendment.
It means that, in regard to dangerous premises, prohibition notices concerning the use of the whole or of the part until certain works have been carried out can be served with great expedition by the fire authority with the full right of appeal so that justice is being done, but expedition, which is so important in matters of this kind, will now be able to be enforced. I thank the Minister for the gracious way in which he dealt with the amendment and for what he said today.
I wonder whether I can ask the Minister a question. If he cannot answer immediately, I shall well understand because I did not have an opportunity to give him notice of the question. Will the new Clause 9 allow for the fire authority to be able to issue prohibition notices under the revised Section 10 of the Fire Precautions Act 1971 in respect of sports grounds and regulated stands—and in special circumstances? I have in mind an event at a venue that is not subject to the safety certification procedure.
I am speaking with deliberate slowness in the hope that possibly inspiration may come from a certain part of your Lordships' House and become instilled into the very active mind of the Minister. Whether that will happen, despite the fact that I have elongated my remarks, I am not quite sure. The noble Earl will say
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either that he can answer the question or, as I quite understand, that he will give me an answer which will enable me to be enlightened at least before Third Reading.
Lord Winstanley: My Lords, on behalf of my noble friends on these Benches who took an interest in this matter at Committee stage I too thank the noble Earl for the new clause which has come forward and which I am sure will be warmly welcomed by my noble friends. This is Report stage and as we are not going to get an opportunity to look further at the Bill in detail, and as the procedures are not going to enable the noble Earl to speak on each further clause of the Bill, I hope that while he is looking into the point raised by the noble Lord, Lord Mishcon, I may raise one other matter about which my noble friends and I on these Benches still have some anxiety and which is perhaps related to the new clause but does not come strictly within it.
It is possible that the noble Earl may be able to answer my point later. Disclosure of information in relation to inspections is covered in Clause 11 of the Bill. He is also aware that Section 21 of the Fire Precautions Act 1971 makes it an offence for a fire officer to disclose information obtained in any premises entered during the course of a fire safety inspection.
Members of the public have expressed certain anxieties. They have been formulated in particular by the Consumers' Association. Where inspections are carried out, information which is of interest and of critical importance to members of the public ought to be made available to members of the public in general. I realise that this is not covered in the new clause, but we are not going to be debating Clause 11 because there are no amendments to it, and I wonder whether the noble Earl could say something more about this matter.
The new clause deals with prohibition notices. It is clear that once the notice is put out it takes effect irrespective of the 21 days for appeal. It is probable that before such a draconian step is taken the fire officers may have made a number of preliminary inspections. If at any time those who inspect such premises come across things which it would be useful for members of the public to know about, I should like to think that no constraint will be laid upon them making that information widely known.
This point has been raised by the Consumers' Association, and I hope that, if not at this stage, at least at some later stage and perhaps even in another place, that could be looked at. We all hope that none of the disasters that we have experienced in recent years will be repeated. One way of avoiding that is not merely to enable fire officers, but perhaps to require them, to make public information which could be vital to members of the public about escape routes, precautions, and special risks which may exist in special places.
The noble Earl may say, and he would be perfectly right in doing so, that that is not contained within his new clause. But in his response to my welcome for his new clause perhaps he will say a few brief words about the anxieties which have been expressed by the Consumers' Association.
Lord Boyd-Carpenter: My Lords, I also should like to welcome this new clause and express my gratitude to the noble Earl for introducing it. I am happy that a major factor in producing it was the guile of the noble Lord, Lord Mishcon. He seemed to think that the word "guile" had a pejorative sense. Perhaps sometimes it does, but when one is on the same side as somebody, one likes that person to have plenty of guile. If I may translate that into terms of legal advocacy, one hopes one's opponents may have no guile and one's lawyer a lot. It was in that sense that I addressed the comment to the noble Lord whose skill in debate he knows I very much admire. I am delighted that this improvement should be made in the Bill. It is quite a good example of the way in which the House works.
6.15 p.m.
Lord Graham of Edmonton: My Lords, I join in the general congratulations to the Minister on bringing forward a much improved way of dealing with this matter, particularly as I have learned from listening in this past 10 minutes the genesis of it and also the genuine attempt to meet queries. Will the Minister allow me to raise one other point? He may say that this is not the appropriate place, but I believe it needs to be raised.
When one looks at the grounds upon which the prohibition notice will be served one glances in particular at the top of page 2, where it says:
"the risk to persons in case of fire include anything affecting their escape from the premises in that event".
Let me raise the issue of emergency lighting. The noble Earl will understand that, however a tragedy occurs and in whatever form, it must be horrendous. One needs to be conscious that all the provisions for safety that need to be present in the building—and that is why the inspectors are there—are present. But over and above that one needs to make sure that the proper and safe way of leaving the place is adequate. In many instances that will mean adequate lighting.
The legislation that precedes this in a general sense, applying to a number of situations, specifically includes reference to "emergency lighting". For instance, when we look at hotels and boarding houses, guidance is issued which says:
"Emergency lighting. Some form of emergency lighting should be provided in all premises and whatever is provided for this purpose must be capable of illuminating all stairways".
Then:
"In ballrooms, conference rooms and other rooms where large numbers of persons assemble and in all associated escape routes the emergency lighting must be kept on at all times".
When we look at factories we have specific reference to "emergency lighting". It says:
"In most factory buildings it will not be necessary to provide emergency lighting for the purpose of means of escape in case of fire".
Then offices and shops:
"Emergency lighting should be provided".
I and a great many others outside the House who have an interest in the lighting industry—I represented Edmonton and live in Enfield, and am well aware of the Thorn lighting nexus in the area—would be interested to know to what extent the legislation is
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going either to lay responsibility on, or provide general guidance for, the various places—not only sports grounds but others—which are tangential to what we are talking about and which need to have adequate emergency lighting.
As other Members have said, and the noble Lord, Lord Winstanley, in particular, this is late in the timing of the passage of the Bill through this House. It may be that in another place more time will be given either to arguments or explanations. But perhaps the Minister can in general say that lighting is covered, in which case that is the end of it, or that it is not covered and there are reasons why. Alternatively he may say that it may not have been given sufficient attention and undertake to pass on to his right honourable friend that it ought to be looked at in another place.
Baroness Phillips: My Lords, I also should like to take advantage of this debate to raise another matter to which I do not expect the Minister to reply, as I agree with the amendment. It has often concerned me that in this House and in the other place we are always passing Acts of Parliament for safety which deal with various kinds of premises, whereas we work in premises which have Crown immunity.
As I know, there is no notice posted anywhere in this building telling us what we should do in the event of a fire. On the occasion of the State Opening we are locked in here so that if we burn we shall certainly burn rather splendidly in our robes, and there is no way in which we can immediately get out.
I am sure that all these things are adequately provided for, but it has often concerned me that in this House we discuss so many prohibitions and rules that we legislate for in other connections—my noble friend has just mentioned places of entertainment where the public foregather (the public certainly foregather in this building)—but I am unaware of any rules and regulations that cover a building of this kind. I know we have Crown immunity. No doubt the Almighty also knows, and we have not been confronted by these kinds of situations. I hope that at some stage we can have a sensible debate on why a building such as the Palace of Westminster does not have to conform to some of the statutory requirements imposed on other buildings of its size and use.
The Earl of Caithness: My Lords, we have ranged considerably wider than prohibition notices. We have moved almost into a Second Reading debate on this matter. I say first to the noble Lord, Lord Mishcon, and to my noble friend Lord Boyd-Carpenter specifically on the prohibition notice side that I am grateful for their welcome. Indeed, they put forward solid arguments and my right honourable friend thought that the right thing to do was to bring forward an amendment at this stage. I am grateful for their work on this matter. I have had a lot of inspiration since the noble Lord, Lord Mishcon, asked me that question but I have not had quite enough to be able to answer him at the moment. Perhaps I may write to him in the usual form and put a copy in the Library.
The noble Lord, Lord Winstanley, asked about the Consumers' Association. Yes, we have been in discussion with the association and have written to it. I am sure the noble Lord will be the first to recognise

573
that some of the things he mentioned are the duty of the owner or occupier of the premises. I remember from the time I was involved in building the requirement to put fire exits and signs at appropriate places.
Much of what the noble Lord was talking about will be covered by other legislation. It is right that that knowledge is available to workers, but some of the matters that he wanted to be made available would create a difficult situation because many of them are in confidence to the fire authorities, who have built up a tremendous rapport with the owners and occupiers of premises. They have a right to go into such premises and it is correct that confidentiality should be respected so that they have a full and frank answer from the owners or occupiers. So we have a difficulty on that matter.
I do not think we can go too far down the line of rights of disclosure without impinging on the work that the fire authorities have done and continue to do to build up good liaison with business premises. As the noble Lord will know from his reading of the Bill, there is much that one is able to disclose to the Health and Safety Executive so many of his worries are already covered.
The noble Lord, Lord Graham, mentioned emergency lighting. Yes, this is covered quite rightly in other legislation. It is one of the factors that a fire authority will look at when it goes into premises. If there is not adequate emergency lighting where it is thought to be appropriate, such as in a hotel or a building in multi-occupancy, it might be one of the factors where it might be said, "This is where we can put a prohibition notice on to part or all of the premises" so that that defect is remedied. It is not specifically covered as I read the Bill at the moment because it is covered so well in other legislation. On the prohibition notice it will be one of the factors taken into account.
Lord Graham of Edmonton: My Lords, the noble Earl has clarified the issue, which is what I wanted rather than an opinion on whether it was desirable. I am grateful. But what worries me from the Minister's perfectly fair answer is that there is no obligation in other legislation. It is all very much a question of "may" rather than "shall". What I think the Minister needs to understand is that in view of the horrific accidents which have been mentioned here and which are the genesis of this Bill, I am absolutely certain that it is right and proper to consider seriously that an adequate emergency lighting provision must be one of the stable ingredients of a building which escapes a prohibition notice. I thank the Minister for what he has said so far.
The Earl of Caithness: My Lords, there is no difference between the noble Lord and the Government on that point.
The noble Baroness, Lady Phillips, took us wider into Crown immunity. She will be pleased to know that Crown premises put to uses designated under the Fire Precautions Act 1971 are generally required to have a fire certificate. The Government consider that the arrangements for securing the necessary standards of fire safety in Crown premises are satisfactory and these are kept under review by the departments
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concerned. As she rightly points out, the Bill does not affect the application of existing fire precaution legislation to Crown premises, but provides that the new provisions are applied on a similar basis. I hope she will rest assured and that we shall see her more often than before in this Chamber.
I am grateful for the reception that your Lordships have given to this amendment. I beg to move.
On Question, amendment agreed to.
Clause 13 [Removal of exemption 'Or premises used for public religious worship]:
The Earl of Caithness The Earl of Caithness moved Amendment No. 7:
Page II, line 19, leave out from beginning to ("and") in line 21.
On Question, amendment agreed to.
Clause 18. [Application to Crown etc.]:
The Earl of Caithness The Earl of Caithness moved Amendments Nos. 8 and 9:
Page 12, line 24, leave out ("and").
Page 12, line 24, at end insert ("and after "10", there shall be inserted "10B," ").
On Question, amendments agreed to.
The Earl of Caithness The Earl of Caithness moved Amendment No. 10:
After Clause 20, insert the following new clause:
("Safety certificates: police presence.
In section 2 of the principal Act (contents of safety certificates), after subsection (2), there shall be inserted the following subsection—
"(2A) No condition of a safety certificate shall require the provision of the services at the ground of any members of a police force unless the extent of the provision of their services is reserved for the determination of the chief officer of police of the force." ").
The noble Earl said: My Lords, with the leave of the House I shall speak also to Amendment No. 15. These amendments require that where the local authority includes in a safety certificate a provision which requires the holder to secure the presence of the police, the determination of the number of police present on any particular occasion must be left to the chief officer of police. These amendments will not in practice introduce any new restrictions on the local authority. It is already the practice where a safety certificate requires the holder to secure the presence of the police for the chief officer of police to determine the extent of the police presence. I beg to move.
On Question, amendment agreed to.
Clause 21 [Safety certificates.. appeals]:
The Earl of Caithness The Earl of Caithness moved Amendment No. 11:
Page 14, line 21, after ("(1)") insert ("for the words from "person" to the end of paragraph (b) there shall be substituted the words "applicant for a safety certificate, he shall be deemed to have withdrawn his application" and").
The noble Earl said: My Lords, with the leave of the House I shall speak also to Amendments Nos. 12, 19, 20 and 21. These amendments revise Section 7(1) of the 1975 Act and Clause 29(9) of the Bill to take account of the fact that neither the Act nor the Bill gives the local authority a continuing responsibility to determine whether or not a holder of a safety

575
certificate remains a qualified person. As amended, Section 7(1) and Clause 29(9) will provide that, should the local authority determine that an applicant is not qualified for the issue of a certificate, the application shall be deemed to be withdrawn. Section 7(1)(b) and Clause 29(9)(b), which misleadingly imply that there was a similar provision for the deemed surrender of a certificate by the holder, are deleted. I beg to move.
On Question, amendment agreed to.
The Earl of Caithness The Earl of Caithness moved Amendment No 12:
Page 14, line 30, leave out ("or surrendered his certificate").
On Question, amendment agreed to.
Clause 22 [Special procedure in case of serious risk: prohibition notices]:
The Earl of Caithness The Earl of Caithness moved Amendment No. 13:
Page 15, line 9, leave out ("matters giving rise to the risk") and insert ("specified matters").
The noble Earl said: My Lords, this amendment is made following consideration of the drafting of the new Clause 9 and reflects the fact that a prohibition notice issued under the Safety of Sports Grounds Act 1975 may have regard to prospective as well as existing risks to persons. There is parallel provision in the new Section 10(4)(c) inserted by Clause 9 in respect of the 1971 Act.
On Question, amendment agreed to.
6.30 p.m.
Clause 24 [Enforcement: inspections and offence of obstruction]:
Lord Mishcon Lord Mishcon moved Amendment No. 14:
Page 18, line 13, at end insert—
("(3) For the purposes of subsection (1) above, "periodical" means at least once in every twelve months.").
The noble Lord said: My Lords, I trust the Minister will recollect that there went through the Division Lobby on a previous amendment dealing with concern about the safety of premises and the need for inspection 72 Members of your Lordships' House, as against 74. That amendment was unfortunately lost. I am sure I know the noble Earl well enough to know that the narrowness of that vote will be conveyed to the Secretary of State so that at least the matter is seriously considered again, your Lordships having spoken with a certain voice even though the certain voice was not a successful one.
I mention this because of the analogous arguments that I would put forward in support of this amendment. I remind your Lordships that the whole of this Bill, as I have said previously, owes its origin to the disasters that occurred, following upon which the Popplewell Inquiry took place. This Bill therefore, in dealing with designated sports grounds, is of course dealing with the very matter that Mr. Justice Popplewell enquired into with the greatest of care. One of his recommendations—and I cannot emphasise this sufficiently—was that in respect of all designated sports grounds there must be at least annual inspections.
I raised this at Committee stage, and I have had a disastrous sequel. I say that it is disastrous for this reason. At col. 158 of Hansard during our deliberations in Committee on 3rd February, the noble Lord, Lord Beaverbrook—who I am glad to see in his rightful place—gave an answer in the following terms. I am quoting from the last sentence of his remarks in the Official Report at col. 158:
"1 doubt in particular whether annual inspection will always be appropriate for some of the smaller designated grounds. For that reason, I invite the noble Lord to see whether he can withdraw his amendment".
I did not withdraw the amendment upon that ground; I did indeed withdraw it because I hoped that the matter would be looked into further, that a letter would reach me from the Minister and that on reconsideration Popplewell would be followed. What is the point of having Mr. Justice Popplewell dealing with these particular matters and then not following his deliberate advice?
A letter followed, and this is an excerpt from that courteous letter which was sent to me by the noble Earl. He said:
"As you know, the Government is anxious that the best use should be made of the local authority resources available for carrying out this duty and whilst I do not rule out annual inspection for all designated grounds I think it would be wrong to be committed to in all cases in advance of consultation with the local authority associations. I can assure you, however, that we expect the guidance to require annual inspection of the international grounds, and the Football League, Rugby League and Test cricket grounds. I am reluctant to go further than that at present, and I hope that you will appreciate my concern to preserve in the Bill the flexibility to ensure that it permits the most effective use of local authority resources when it comes to imposing a duty to inspect the less well-frequented grounds, such as many of those used for non-league football and rugby union".
In other words, local authority resources seem to be the only reason for not following a deliberate Popplewell recommendation that there must at least be annual inspections. As somebody who once had the privilege for some seven years of being chairman of the London Fire Brigade, I am proud to tell your Lordships that the fire prevention branch of the London Fire Brigade tell me without any doubt at all that they very definitely carry out annual inspections of all designated grounds. Indeed they also make up to four inspections per year during performances, when fire-related items of public safety are reviewed while events are in progress.
However, they also point out to me—and I am therefore quoting from the London Fire Brigade (the Fire Prevention Branch of that great brigade)—that,
"Unfortunately risk from fire is often greater at smaller premises than larger where the amount of time and resources shown by owners to ensure safe situations is not as much as that in the larger premises".
They go on to tell me how necessary it is that all fire authorities see that annual inspections take place.
It has also been pointed out to me by those who know that very often it is not the Rugby League, the chief cricket events and the Test matches that have to be watched but very many of matches on the smaller grounds. Some of the smaller grounds are often used for greater events where pitches are not available elsewhere for some reason or another.
We are not asking here for the strange recommendation of those who feel, with ultra care, that

577
amendments should be put into this Bill to ensure safety. This amendment follows Popplewell. The Government opposition to it, so far, is against Popplewell. Some of the important fire authorities are in favour of an enactment which says there must be at least an annual inspection of the very type of ground that caused your Lordships, and the whole nation, such dismay when the tragic events occurred to which we have referred so often in this Bill. From that of course the Popplewell Report was born. We would be lacking in duty—and if I may say so with respect the Government would be so wrong—if this amendment is opposed.
Lord Beaverbrook: My Lords, the noble Lord has recalled that at Committee stage I undertook to look at this matter again. As he has stated, my noble friend Lord Caithness wrote on this matter to say that we do not rule out annual inspection for all designated grounds. My noble friend gave an assurance—and I reiterate it—that we expect the guidance to require the annual inspection of the international grounds, all Football League grounds and the Rugby League and Test cricket grounds.
However, as previously stated, in advance of consultations with the local authority associations, we believe it would be premature to go firm on the frequency of inspection for other grounds which are likely to be very much less frequented and where inspection at a frequency greater than 12 months may well be perfectly satisfactory. We think it is right to preserve flexibility in this area, at least until we have taken on board the views of the representatives of local authorities from whose resources these inspections will have to be met. Your Lordships will appreciate that resources are an important matter.
I, therefore, ask the noble Lord to accept that we intend that all major designated grounds will be inspected at least once a year, but that we should not in the Bill impose an inflexible obligation on local authorities to inspect all designated sports grounds annually. However, the whole point of consulting the local authority associations is to seek their views, and I assure your Lordships that, if their clear view was that all designated grounds should be inspected annually, we should be strongly disposed to suggest this in the guidance. I had intended to invite the noble Lord to withdraw his amendment at this point but in the light of his comments on the likelihood of risk at smaller grounds I should like to consider the matter further. Perhaps he will still agree to withdraw his amendment at this point.
Lord Mishcon: My Lords, in the ordinary way I should be delighted to accept what the noble Lord, Lord Beaverbrook, has said, but this is postponing the matter to the Third Reading. I shall have very little opportunity of taking the opinion of the House on that occasion in the way that I should want. If I may say so, I am surprised that, having heard all the arguments and knowing that this was Popplewell's recommendation, the Government have not made up their minds with certainty. I think that it is Parliament and not local authorities which has to make up its minds whether or not to follow Mr. Justice Popplewell. I would have asked for the opinion of the House to be
578
taken at this stage were it not that the noble Lord, Lord Winstanley, has asked to speak.
Lord Winstanley: My Lords, I am most grateful to the noble Lord for allowing me to intervene very briefly. I have listened most carefully to the words of the noble Lord, Lord Beaverbrook. I understood him to say that if, following consultations with the local authority associations, there was agreement on this provision as outlined by the noble Lord, Lord Mishcon, then arrangements would be made for it to be carried out. My only purpose in intervening was to ask whether the noble Lord, Lord Beaverbrook, could say anything further about the timing of those consultations. Are they likely to be concluded before this House says goodbye to this Bill, or can the noble Lord ensure that they will, in fact, be concluded in time for some further statement to be made before matters are over?
Lord Beaverbrook: My Lords, the answer to that specific question is, no. These negotiations and discussions would not be concluded prior to this Bill leaving your Lordships' House. Indeed the guidance that is to be issued will of course be as a result of this Bill becoming an Act. But I should like to emphasise that we wish to look at this matter very seriously and I put that to the noble Lord. However, if he feels that he must take the opinion of the House, then that is- a course open to him.
Lord Mishcon: My Lords, I do not want to be unfair to the noble Lord the Minister—I never would be—and I am merely asking this question, to which he need not reply if he does not wish to do so. Can the House be assured, having heard the discussion on this amendment today, that there will be a recommendation from the Minister that there should be an annual inspection provision inserted in accordance with this amendment? If he cannot tell the House that there will be that recommendation from the Minister, then I think the House must speak at Report stage and follow Popplewell.
Lord Beaverbrook: My Lords, I said to the noble Lord, Lord Mishcon, that we should like to look at this matter again and for that very reason I cannot give the undertaking he is seeking. I have to say that that could only come as a result of looking at it again.
6.44 p.m.
On Question, Whether the said amendment (No. 14) shall be agreed to?
Their Lordships divided: Contents, 64; Not-Contents, 59.

DIVISION NO. 2

CONTENTS

Airedale, L.

Brooks of Tremorfa, L.

Allenby of Megiddo, V.

Brougham and Vaux, L.

Attlee, E.

Carmichael of Kelvingrove, L.

Auckland, L.

Craigavon, V.

Blease, L.

Darcy (de Knayth), B.

Blyth, L.

David, B.

Blyton, L.

Davies of Penrhys, L.

Broadbridge, L.

Dean of Beswick, L.

579

Diamond, L.

McNair, L.

Elwyn-Jones, L.

Mishcon, L.

Ennals, L.

Mountevans, L.

Erroll, E.

Mulley, L.

Ewart-Biggs, B.

Munster, E.

Gallacher, L. [Teller.]

Murray of Epping Forest, L.

Galpern, L.

Nicol, B.

Graham of Edmonton, L. [Teller.]

Perry of Walton, L.

Phillips, B.

Halsbury, E.

Prys-Davies, L.

Hampton, L.

Rea, L.

Hanworth, V.

Ritchie of Dundee, L.

Hatch of Lusby, L.

Ross of Marnock, L.

Houghton of Sowerby, L.

Seear, B.

Hylton-Foster, B.

Shackleton, L.

Jeger, B.

Silkin of Dulwich, L.

John-Mackie, L.

Stoddart of Swindon, L.

Kagan, L.

Taylor of Blackburn, L.

Kilbracken, L.

Tordoff, L.

Lawrence, L.

Whaddon, L.

Llewelyn-Davies of Hastoe, B.

Winchilsea and Nottingham, E.

Lloyd of Kilgerran, L.

Lockwood, B.

Winstanley, L.

Longford, E.

Winterbottom, L.

Mackie of Benshie, L.

Ypres, E.

NOT-CONTENTS

Allerton, L.

Hesketh, L.

Beaverbrook, L.

Hives, L.

Bellwin, L.

Hooper, B.

Belstead, L.

Lane-Fox, B.

Boardman, L.

Lauderdale, E.

Boyd-Carpenter, L.

Liverpool, E.

Brabazon of Tara, L.

Long, V.

Butterworth, L.

Lyell, L.

Caithness, E.

Margadale, L.

Cameron of Lochbroom, L.

Merrivale, L.

Campbell of Alloway, L.

Mersey, V.

Chelwood, L.

Monckton of Brenchley, V

Colville of Culross, V.

Mottistone, L.

Colwyn, L.

Moyne, L.

Craigmyle, L.

Murton of Lindisfarne, L.

Davidson V. [Teller.]

Orr-Ewing, L.

De La Warr, E.

Pender, L.

Denham, L. [Teller.]

Rankeillour, L.

Dundee, E.

Renton, L.

Elles, B.

Rochdale, V.

Elton, L.

Rodney, L.

Enniskillen, E.

St. Aldwyn, E.

Faithfull, B.

St. Davids, V.

Fraser of Kilmorack, L.

Skelmersdale, L.

Glenarthur, L.

Swinton, E.

Greenway, L.

Trefgarne, L.

Hailsham of Saint Marylebone, L.

Trumpington, B.

Tryon, L.

Harmar-Nicholls, L.

Whitelaw, V.

Henley, L.

Windlesham, L.

Resolved in the affirmative, and amendment agreed to accordingly.
6.52 p.m.
Clause 26 [Contents of safety certificates for stands]:
The Earl of Caithness The Earl of Caithness moved Amendment No. 15:
Page 19, line 29, at end insert—
("(2A) No condition of a safety certificate shall require the provision of the services in or in the vicinity of the stand of any members of a police force unless the extent of the provision of their services is reserved for the determination of the chief officer of police of the force.").
On Question, amendment agreed to.
Clause 29 [Appeals]:
The Earl of Caithness The Earl of Caithness moved Amendment No. 16:
Page 22, line 18, leave out ("An applicant for") and insert ("Any person who, on an application for the issue or transfer to him of").
The noble Earl said: My Lords, with the leave of the House, I should like to speak also to Amendments Nos. 17 and 18.
Clause 29(2) gives a right of appeal to an applicant who is determined by the local authority not to qualify for the issue of a safety certificate for a regulated stand. It does not give a similar right of appeal to an applicant who it is determined does not qualify to have a certificate transferred to him. These amendments make Clause 29(2) apply in respect of the transfer as well as the issue of a certificate. I beg to move.
On Question, amendment agreed to.
The Earl of Caithness The Earl of Caithness moved Amendment No. 17:
Page 22, line 19, leave out ("who").
On Question, amendment agreed to.
The Earl of Caithness The Earl of Caithness moved Amendment No. 18:
Page 22, line 20, after ("not") insert ("or, in the case of an application for a transfer, would not").
On Question, amendment agreed to.
The Earl of Caithness The Earl of Caithness moved Amendment No. 19:
Page 22, line 49, leave out ("person") and insert ("applicant for a safety certificate").
On Question, amendment agreed to.
The Earl of Caithness The Earl of Caithness moved Amendment No. 20:
Page 22, line 50, leave out from ("of') to end of line 4 on page 23 and insert ("the certificate, he shall be deemed to have withdrawn his application").
On Question, amendment agreed to.
The Earl of Caithness The Earl of Caithness moved Amendment No. 21:
Page 23, line 10, leave out from ("application") to ("on") in line 11.
On Question, amendment agreed to.
Clause 30 [Regulations]:
Lord Beaverbrook Lord Beaverbrook moved Amendment No. 22:
Page 23, line 37, after first ("of") insert ("applications for").
The noble Lord said: My Lords, with the leave of the House perhaps I may speak to Amendments Nos. 22 and 23 together. Amendment No. 22 remedies a technical defect in the drafting of Clause 30. It links the charges which may be made under regulations made under Part III of the Bill to an application for the issue, amendment, replacement or transfer of a certificate, rather than to the issue, Amendment, replacement or transfer itself. This brings Part III into line with the 1975 Act.
Amendment No. 23 makes provision to charge for work done by the local authority following an application by the holder of a certificate for cancellation of the certificate on the grounds that the stand has ceased to be a regulated stand. I beg to move.
On Question, amendment agreed to.
Lord Beaverbrook Lord Beaverbrook moved Amendment No. 23:
Page 23, line 38, after ("certificates") insert ("or in respect of applications for the cancellation of safety certificates for stands which have ceased to be regulated stands").
On Question, amendment agreed to.
Clause 45 [Luminous tube signs: England and Wales]:
Lord Beaverbrook Lord Beaverbrook moved Amendment No. 24:
Page 32, leave out lines 23 to 31 and insert ("1000 volts A.C. or 1500 volts D.C. if measured between any two conductors or 600 volts A.C. or 900 volts D.C. if measured between any conductor and earth").
The noble Lord said: My Lords, this amendment remedies a technical error concerning a matter of electrical engineering. I am confident that the clause as amended will now have the desired effect of updating the description of electrical voltages of luminous tube signs needing a fireman's switch in the Local Government (Miscellaneous Provisions) Act 1982. I beg to move.
On Question, amendment agreed to.
Schedule 4 [Repeals]:
The Earl of Caithness The Earl of Caithness moved Amendment No. 25:
Page 39, column 3, leave out lines 28 and 29.
On Question, amendment agreed to.
Schedule 5 [Transitional and saving provisions]:
The Earl of Caithness The Earl of Caithness moved Amendment No. 26:
Page 40, line 28, at end insert—
("Fire safety: emergency orders
3A. The substitution effected by section 9 of this Act of section 10 of the 1971 Act shall not affect any order of the court in force under that section when that substitution comes into force and any such order may be enforced, or an appeal made against it, accordingly.").
On Question, amendment agreed to.

Audit (Northern Ireland) Order 1987
6.57 p.m.
The Parliamentary Under-Secretary of State, Northern Ireland Office (Lord Lyell)The Parliamentary Under-Secretary of State, Northern Ireland Office (Lord Lyell) rose to move, That the draft order laid before the House on 10th February be approved.
The noble Lord said: My Lords, I beg to move that the draft Audit (Northern Ireland) Order 1987 be approved. The draft order deals with the role of the Comptroller and Auditor General for Northern Ireland and the principle of accountability in the use of public funds. The effect of the draft order would be to restore the traditional position which, until the introduction of the National Audit Act 1983, meant that the principles governing public accountability in Great Britain applied equally to Northern Ireland.
At present the main Northern Ireland audit legislation is the Exchequer and Audit (Northern Ireland) Act 1921 which is modelled on Westminster statutes, in particular the Exchequer and Audit Departments Acts of 1886 and 1921. In restoring the traditional legislative link between the two parts of the United Kingdom we are simply acknowledging that the roles of the two Comptrollers and Auditors General, and the work undertaken by their respective staffs, is identical in all major respects.
The order has three main purposes. First, it will establish a Northern Ireland Audit Office along the lines of the National Audit Office, headed by the Comptroller and Auditor General and staffed by personnel who are not civil servants. This new audit office will assume all the functions presently exercised by the Exchequer and Audit Department. Secondly, the order will provide statutory authority for those economy, efficiency and effectiveness audits which the Comptroller and Auditor General presently undertakes on an extra statutory basis. The order will also give him complete discretion, subject to any other statutory requirements, in carrying out his duties and in particular in regard to these value for money examinations. Thirdly, the order makes new arrangements for determining the Comptroller and Auditor General's salary.
While these measures go a long way towards bringing Northern Ireland into line with Great Britain, there are a number of provisions in the National Audit Act which cannot be replicated in Northern Ireland by means of an Order in Council. They deal with the Public Accounts Commission and the Committee of Public Accounts and relate to the appointment and role of the Comptroller and Auditor General, the approval of the estimates of the National Audit Office and the appointment of its accounting officer and auditor: Finally, they relate to the role of the Public Accounts Committee in advising the Comptroller and Auditor General on his conduct of value for money audits.
To apply these provisions to Northern Ireland would require primary legislation to amend the Northern Ireland Constitution Act 1973. The draft order mirrors the National Audit Act as far as possible but at the same time it leaves open the opportunity for a future Assembly, with devolved authority, to exercise control over its own audit arrangements.
I now turn to the articles contained in Part II of the draft order. Article 3 gives the Comptroller and Auditor General complete discretion in carrying out his duties, particularly in regard to the audits he conducts under Part III. Article 4 makes provision for the salary and pension to be paid to the Comptroller and Auditor General. This reflects the equivalent provision for Great Britain in Section I of the Exchequer and Audit Departments Act 1957. I am able to inform your Lordships that this 1957 Act is amended by Section 6 of the Parliamentary and Other Pensions and Salaries Act 1976. All this provides for the Comptroller and Auditor General to be paid a salary linked to that of the permanent secretaries of the Northern Ireland departments whose accounts he audits.
Article 5 establishes the Northern Ireland Audit Office and with Schedule I provides for the terms and conditions for staff appointed to the Audit Office. Article 6 provides for the financing of the office and its estimates and, with Schedule 2, for the auditing of its accounts. Article 7 allows the Comptroller and Auditor General in certain circumstances to charge a fee for his services.
Article 8, under Part III of the order, deals with economy, efficiency and effectiveness examinations. Article 8 gives the Comptroller and Auditor General

583
power to carry out such examinations in those authorities whose accounts he presently examines under statute or, alternatively, under the terms of an agreement between the authority and a department in Northern Ireland. This will regulate the present position in which the comptroller has to carry out the examinations on an extra statutory basis. In line with the National Audit Act, however, the comptroller would not be entitled to question the merits of the policy objectives of any body whose accounts he audits under this part of the order.
Article 9 extends the conduct of efficiency audits to other bodies which the comptroller considers have received more than half their income in any financial year from public funds. I draw your Lordships' attention to paragraph (4) of Article 9 which exempts certain bodies from the terms of this article. This is parallel to those excluded by Schedule 4 of the National Audit Act. Article 10 allows the Comptroller access to whatever documents he requires to carry out his examinations under Articles 8 and 9. Article 11 is permissive, allowing the comptroller to report the results of his audits to another place or, where appropriate, the Northern Ireland Assembly.
Part IV makes some technical and consequential changes. These changes remove from the Department of Finance and Personnel its power to prescribe the form of the appropriation accounts and to direct the comptroller on how to undertake his duties. These technical and consequential changes allow the department to continue to require the audit of certain accounts, but only by statutory rule.
The Government wish to place the Northern Ireland Comptroller and Auditor General in a situation analogous to that of his counterpart in Great Britain. We have therefore agreed with the Public Accounts Committee and the Public Accounts Commission certain non-statutory arrangements to complement the proposed order. The Northern Ireland Comptroller and Auditor General will still be appointed by Her Majesty under Section 36 of the Northern Ireland Constitution Act 1973. Within this constitutional process, however, the chairman of the Committee of Public Accounts will have a role similar to that which he exercises under Section 1 of the National Audit Act. The appointments of accounting officer and auditor to the new audit office will be made formally by the Department of Finance and Personnel on the nomination of the Public Accounts Commission.
The commission has also been assured that the Estimates of the Northern Ireland Audit Office when laid by the Secretary of State will be laid as approved by the commission without any government amendments. Government advice on the Estimates will be submitted to the commission at an earlier stage, together with any advice of the Committee of Public Accounts. That is found under Section 4 of the 1983 Act. The comptroller himself has undertaken to the Public Accounts Committee that when he exercises his discretion in relation to value for money audits he will be mindful of any proposals made to him by that committee.
All of those who have been most closely involved in these matters now before us have been fully consulted on the provisions contained in this order. The draft before us this evening, together with the non-statutory arrangements I have outlined, represent a widely agreed approach to re-establishing uniformity of audit principle and practice throughout the United Kingdom. With that, I commend the order to the House. I beg to move.
Moved, That the draft order laid before the House on 10th February be approved.—(Lord Lyell.)
Lord Prys-Davies: My Lords, as the noble Lord has just explained, this is yet another draft order which seeks to approximate the law in Northern Ireland more closely with the law in Great Britain. It makes sense that there should be uniformity of audit principles, though not necessarily of audit arrangements, between Northern Ireland and Great Britain. Although the order is modelled on the National Audit Act 1983, which set up the National Audit Office, its provisions in a number of respects are not identical with those contained in the 1983 Act. Indeed, the Minister has already referred to the differences.
The Minister also explained that whether there should be full integration with the Great Britain arrangements is a matter which the Government have decided should be left to a future Assembly with devolved authority. From that we conclude that the Government still consider that an effective Assembly with devolved authority may yet be established in the foreseeable future. That is encouraging news.
Therefore, the order will establish the Northern Ireland Audit Office which will take over the functions of the existing Exchequer and Audit Department. I understand that about 95 people are employed within the existing department and that many, but not all, are members of the Northern Ireland Civil Service. However, we have been told by the Minister that the staff of the new audit office will be non-civil servants. Does this mean that the existing staff could lose their status? If that is so, the effect of the order could be unsettling for some or all of the staff currently employed in the Exchequer and Audit Department. Therefore from these Benches we must ask the Minister to assure the House that the interests of the staff who will be affected by this order are being properly safeguarded.
The Minister told the House that the staff or their union had been fully consulted. The union representing staff employed in the Exchequer and Audit Department is the Northern Ireland Public Services Alliance. We know that the union was worried about the proposals in their original form as published at the end of last year and I understand that some amendments were made to meet the objections that were then voiced by the union. I should be grateful if the Minister will confirm whether the order that is now before the House is acceptable to the union or whether outstanding issues remain. If there are issues which have not yet been resolved I should be grateful if the Minister will identify them.
Some of the staff currently employed will be entitled under Paragraph 5(2)(b) of the schedule to request—and I underline the word "request"—within

585
a period of three years from the appointed day that the Comptroller and Auditor General shall transfer them back to the Northern Ireland Civil Service. It is possible that in the light of their experience in the new Audit Office some may wish to avail themselves of that facility, but on the face of the order it is not clear that the staff to whom the paragraph is addressed will have a legally enforceable right to return to the Northern Ireland Civil Service. That is a matter of some concern. The right is merely a right to request the Comptroller and Auditor General to seek to make arrangements for their return.
The key words therefore are "to request" and "to seek to make arrangements". Nowhere in the order have I seen a correlative duty placed on the Northern Ireland Civil Service to find the applicant a place within the Civil Service. If it were intended to give the staff concerned the legal right to be transferred to the Civil Service, surely that should have been spelt out in the order and a correlative duty placed upon the Northern Ireland Civil Service.
Of course it is too late to redraw the order. Therefore I ask the Minister, if the intention is that they should have the right to be transferred to the Civil Service, how will that transfer be dealt with? Will it be covered by another administrative arrangement? Or is it the case that it was never intended that they should have the right to transfer to the Northern Ireland Civil Service?
There is one other point to which I should like to refer. Three years after the appointed day the Audit Office staff will become non-civil servants. They will be isolated from the Northern Ireland Civil Service. They will number no more than 95, whereas I understand that the national Audit Office in Great Britain employs about 1,000 staff. Will the Northern Ireland Audit Office on its own, standing apart from the Northern Ireland office, be capable of providing an adequate career and promotion structure for its staff? Will the Minister give the House a reassuring reply to that question? I should be grateful if the Minister could answer the few questions that I have addressed to the Government, but the order as a whole receives our support.
Lord Hampton: My Lords, I should like to say quite briefly that we support this order. As the Minister said, the intention is largely to bring the situation in Northern Ireland into line with that in the rest of the United Kingdom. He also mentioned that he hoped that the situation would be dealt with further by a future Northern Ireland Assembly. We are very glad to hear that there is such talk, as the noble Lord, Lord Prys-Davies, mentioned.
7.15 p.m.
Lord Blease: My Lords, I support this order and welcome the constitutional principles and the structure upon which the order is based; namely, the 1974 Northern Ireland Act, which has already been mentioned by my noble friend on the Front Bench Lord Prys-Davies. I consider that the proposed legislation is timely and in keeping with current developments as well as the objectives and standards of performance set by public service management.
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Those objectives and standards seek to achieve efficiency and effectiveness in the use of resources as well as probity and accountability in the use of public funds.
Having set out those principles, I think it is important to bear in mind that, while the principles are enshrined in the general objectives, they must be carried into effect by expert personnel in the appointed Audit Office. With that thought in mind I reinforce (if that is the proper word to use) or support the views and the concern expressed from these Benches by my noble friend Lord Prys-Davies. We are aware of the anxiety suffered by some of the staff, as put forward in document form and in negotiations by the union which represents them, the Northern Ireland Public Service Alliance. My noble friend Lord Prys-Davies has covered that issue in detail and has asked very pertinent questions that require precise and detailed answers.
We are aware that during negotiations there was an acknowledgment by the department that six members of staff in the Exchequer and Audit Department were not covered appropriately, and a declaration was drawn up by the Comptroller and Auditor General, Mr. Calvert, and the Permanent Secretary to the Department of Finance, Dr. Quigley. These are two very honourable men who are noted for their ideals in respect of industrial relations in Northern Ireland. Certainly I consider that document will be honoured to the hilt. The point is that there are perhaps 25 others apart from those six members of staff who are not covered by such a declaration.
Finally in my closing remarks perhaps I may just mention that the whole concept of audit has changed considerably in the public mind and so indeed has the expertise required in dealing with public management, public funds and public service work. I feel that it would be wrong for the Northern Ireland Audit Office to become isolated from the general public service arrangements throughout Northern Ireland or to lose the opportunities for staff to exchange between national and local government, because in operating with local government and with other agencies throughout the Province and throughout the United Kingdom expertise and understanding can be gleaned about what motivates, what activates and what are the general objectives in social and economic and perhaps also in political terms.
Therefore I hope that in setting up its staff and becoming a separate entity within the Northern Ireland context, the Audit Office will not isolate itself from an exchange of management and staff moving into other forms of operation. I hope that Northern Ireland civil servants will have the opportunity freely to move to and from the Audit Office.
When the national Audit Office was established, it found it necessary to publish a pamphlet outlining its mode of operation and objectives. A new office is being set up in Northern Ireland which will have an impact on the general business world and public service problems in the Province. I invite the Minister to consider suggesting to his colleagues that there is a need soon to produce a pamphlet or some public document to explain the aims and structure of this public office. I understand that the national Audit

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Office can trace its history to 1314. In Northern Ireland, the Comptroller and Auditor General can be traced back to legislation passed in 1921. From a historical point of view and to give information and promote understanding of what the Audit Office seeks to achieve, it is important that such a leaflet should be published soon.
Lord Lyell: My Lords, I am sure that we are all grateful to the three noble Lords who have spoken and who have studied this rather complicated and, as the noble Lord, Lord Blease, said, technical little order. I admit that I found it technical. I had some experience of being an auditor in the distant past as part of my professional training. I had to ferret out facts and seek to establish truth. The principle behind the Audit Office and what it seeks to achieve has been spelt out in the order.
I am grateful for the welcome given to the order by all noble Lords who spoke. The noble Lord, Lord Prys-Davies, rightly picked up questions about the transfer of the staff of the Exchequer and Audit Department to the new office. That is dealt with in Schedule 1, Part II, paragraph 5(1). The noble Lord's main query, apart from the unions' outstanding problems, to which I shall return, related to the guarantee. He suggested that there should be a legally enforceable provision. He asked whether any transfer request from the Exchequer and Audit Department would be legally enforceable. The noble Lords, Lord Prys-Davies and Lord Blease, will agree that it would not be practicable to guarantee that everyone who sought a transfer from the Northern Ireland Audit Office to a Northern Ireland department of the Civil Service would have his request met.
When I use the terms "guarantee" and "have his request met", I am not trying to be a lawyer. We have to cover against 100 per cent. of requests being met. It would not be practicable to guarantee that, any more than that an officer of the Exchequer and Audit Department, which is part of the Civil Service, would be given such a guarantee. It is important to say that the conditions will be the same as the normal Civil Service conditions of employment which apply at the moment. I would not use the word "guarantee", but all reasonable efforts will be made to facilitate requests such as the noble Lord has mentioned.
The noble Lords, Lord Prys-Davies and Lord Blease, will appreciate that if a member of the Audit Office sought to transfer to another department, for whatever reason, a replacement would have to be sought. As noble Lords will understand, not every civil servant would be able to fit in to the Audit Office immediately. I do not think that that would stand in the way of any reasonable effort being made. "Reasonable effort" are the two words that I stress to facilitate any request for a transfer from a member of the department or the office, as it will be next month.
It is important to note that staff of the new Audit Office will be able to apply for departmental trawl, as it is called. That sounds somewhat odd, but I am given to understand that that is the term used. When a new post requires filling, suitable candidates from all over the Northern Ireland Civil Service are sought. I understand that such trawls will apply to the Northern
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Ireland Audit Office as they apply to the department at present. I hope that the undertaking that trawls will apply to members of the new Audit Office and to the present department, as they have in the past, will meet the query justifiably raised by the noble Lords, Lord Prys-Davies and Lord Blease.
The noble Lord, Lord Prys-Davies, also asked me to give an undertaking that there are no outstanding problems with the unions. As I understand it, there are no outstanding problems. Again, I cannot give a 100 per cent. watertight guarantee. I understand that all major problems have been overcome. If there is any outstanding difficulty, it will be settled through the normal channels. The noble Lord also drew my attention to Schedule 1, Part II, paragraph 5. He will find that paragraph 5(2) (a) and (b)places members of the Audit Office on the same basis' as any other Northern Ireland civil servant. I assure the noble Lord, who asked about the power of the Comptroller and Auditor General, that he will be able to have sufficient staff. If the noble Lord glances at the provision relating to the appointment of staff in Schedule 1, Part II, paragraph 2, he will find that the Comptroller and Auditor General has power to recruit such staff,
"as he considers necessary for assisting him in the discharge of his functions".
We are grateful for the close study, as always, of the order made by the noble Lord, Lord Hampton. We appreciate that this is a technical subject. The noble Lord, Lord Blease, clearly has also studied the order. He drew attention to staff requests. He mentioned the figures 25 and 6 in relation to members of the staff. I had some difficulty identifying who those members were, what type of work they did and why they were separately categorised in these numbers. The noble Lord drew attention to a declaration made by the permanent secretary of the Department of Finance and Personnel and the current head of the Exchequer and Audit Department. He used some very nice terms about them.
I wish to stress that the Government stand absolutely by that declaration. I understand that I should not use the term "statutory declaration". I can use only my forceful words from this position. I hope that the noble Lords, Lord Blease and Lord Prys-Davies, will hear those words and that they will be conveyed to anyone in Northern Ireland who is worried. I understand that the declaration referred to a fairly small number of people. They did not meet the exact requirements of paragraph 5(2) (b) for some reason. It was a question of what was a transfer. I understand that this declaration will have the wholehearted support of the Government.
The noble Lord, Lord Blease, also queried the exchange of staff. Any exchange of staff with outside bodies would be a matter for the Northern Ireland Audit Office under the comptroller. We would certainly welcome that. The issue of information would be under the aegis of the comptroller, The new office will not be the responsibility of any Minister. It will, however, be entirely independent of the Government. I note the request of the noble Lord. I ought to have been aware of any pamphlets that are available in Great Britain under the 1983 Act. However, I undertake to see what we can do. If there

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is any active step that we can take I shall be in touch with him. I shall conduct my own trawl.
The noble Lord also raised the question of these two separate groups among the officers of the Exchequer and Audit Department. He mentioned the figure of 25. This group were recruited to train as audit special-ists. They were recruited on special terms and conditions of service which give them no rights of transfer at present—I stress those two words—to other Northern Ireland departments. The continuation of their employment in the Exchequer and Audit Department was conditional upon their obtaining a specific professional qualification—I understand that it was an accountancy qualification—which would entirely equip them for service in the Northern Ireland Exchequer and Audit Department.
The noble Lord will realise the other side of the coin. With these professional qualifications promotion within that department would not be guaranteed but it would be likely. As he may agree, the reverse side is that one cannot justify giving these people rights retrospectively which they did not previously possess. However, I stress what I said before. They will continue to enjoy the right to apply for posts in the Northern Ireland Civil Service which are so-called trawled.
The noble Lord also raised the question of a few other members—I believe that it was up to six, but the number may be more or less—whom this declaration concerned. There was no intention to exclude them. When the error in the drafting of the order was discovered we regret that it was too late to rectify it and this declaration was sought and obtained. I shall not say anything further on that. I have already given our undertaking. I stress again with regard to this group of officers that the same guarantee about trawl applies. They too will be covered by the trawls. If they wished to apply, were in a suitable category to go to another office and met all the requirements, we could say in my noble friend's terms of 10 years ago that they are on all fours with any other members of the Northern Ireland Civil Service.
We appreciate the care that has been taken in studying the contents of the order before us this evening. I hope that I have been able to reassure the noble Lords, Lord Blease and Lord Prys-Davies, about the members of the existing Exchequer and Audit Department—the six, the 25 and others. I hope that there are no serious problems which would cause us to lose one second of sleep with regard to the unions. If there are, I shall certainly check these matters. But I venture to consider that any of the problems can and will be resolved through the usual channels. I do not see any great enthusiasm from noble Lords to hear further comments from me. I commend the draft order to the House.
On Question, Motion agreed to.

Appropriation (Northern Ireland) Order 1987
7.35 p.m.
Lord Lyell Lord Lyell rose to move, That the draft order laid before the House on 11th February be approved.
The noble Lord said: My Lords, the order is made under paragraph 1 of Schedule 1 to the Northern Ireland Act 1974. It has two purposes. The first is to authorise additional expenditure of some £99 million in respect of the 1986–87 Spring Supplementary Estimates which are covered in Part I of the schedule to the draft order. Your Lordships will find that on page 6 of the draft order. Your Lordships' House has already approved expenditure of some £3,256 million for the 1986–87 financial year, bringing the total estimates provision for this year to £3,355 million.
The second purpose, which is covered by Part 2 of the schedule, is the Vote on Account for 1987–88. The sum of £ 1,483 million, which noble Lords will find on page 10 of the order, is necessary to enable services to continue until the 1987–88 main Estimates are approved later this year. Your Lordships will find full details of all the provisions sought in this draft order in the Spring Supplementary Estimates volume together with the Statement of Sums Required on Account leaflet. Copies of these two documents have been placed in the Printed Paper Office.
As the financial year moves to its close, perhaps I may divert a little with a few words about the Northern Ireland economy. Like the curate's egg the latest available economic information is good in parts but I leave other parts to noble Lords' consideration. On the positive side the United Kingdom as a whole is in its sixth successive year of continuous economic growth. There are encouraging signs in the manufacturing sector of Northern Ireland industry and the prospects are quite bright.
On the negative side there remains the level of unemployment in the Province. The increased output to which I have just referred is yet to have an appreciable effect on unemployment. Again, there are one or two encouraging signs. Seasonally adjusted unemployment has fallen by an average of 700 per month over the last three months as a whole. In January of this year the rate of unemployment in the Province was 19.3 per cent. compared with 11.8 per cent. in Great Britain and 16.9 per cent. in the North of England. The Government remain determined to tackle unemployment through the job creation efforts of the industrial development board, the local enterprise development unit and the various training and retraining schemes.
Turning briefly to the Supplementary Estimates, Class 1 covers the expenditure on agriculture, fisheries and forestry. Of the £600,000 required for Vote 1, £400,000 is for agricultural science services. Noble Lords will be able to find details of this on page 2 in Section A of the Estimates volume. In Section B, £120,000 is to provide accommodation for a computerised system of animal health records. Noble Lords will know that cows—bovines of all types—tend to move extensively around Northern Ireland, occasionally across the border in both directions. I wish to assure noble Lords that this system will be of very great help to all of us. It is designed to provide a more efficient information base giving the ability to respond faster to an outbreak of animal disease, thus reducing the risk of spread.
Class 2, Vote 1, covers industrial support and regeneration. Just over £750,000 is required in this

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Vote by the industrial development board and that appears on page 4 of the volume. The major portion of this increase, some £680,000, in subhead A I is for increased administrative costs. In terms of manpower targets, the industrial development board has been allowed to increase its staff complement by 25 hereby increasing the target for 31st March 1987 from 286 to 311. Of particular interest is the strengthening of the business development division by the addition of 12 staff. We believe that that will have a beneficial effect not just on IDB but also on the business climate in Northern Ireland. In the future this division will take a closer and much more active role in its relations with Northern Ireland industry and will aim to encourage the expansion of existing businesses within the Province. The provision sought also contains an element to take account of additional costs of overseas representation in the Far East.
In Vote 5, "Functioning of the Labour Market" a net additional provision of £3.78 million is sought. This falls broadly into four areas. First, some £3.43 million is for the action for community employment scheme (ACE). As noble Lords will be aware, ACE provides temporary jobs for the long term unemployed. In line with the Government's continuing efforts to respond positively to the special problems of the long-term unemployed, it has been possible to increase, during this financial year, the number of jobs provided through this programme. The original target was 5,400. We have increased this by 750 places to 6,150. I should like to stress that it is the Government's intention to examine the possibility of introducing an enterprise element into the ACE programme.
The second substantial increase in Vote 5 is at subhead B1 on page 8. This seeks an extra £1.24 million for expenditure on government training centres. The additional funding is required mainly for additional running expenses attached to the setting up of the re-start programme for the long term unemployed, and also to carry out necessary maintenance to training centre buildings. Additional provision is also needed to cover increased costs of employers' liability insurance.
Thirdly, in the area of management training under subhead B5, a net additional increase in provision of £678,000 is sought. Your Lordships will find that figure on page 8. The additional funds will enable the Government to increase their activity in this area. In this context, I am glad to be able to report to your Lordships a continuing demand under the enterprise allowance scheme. This pays £40 per week for 52 weeks, in place of unemployment benefit, for those setting up new businesses. The supplementary provision will fund an increase in the previous total of 1,800 recipients in 1985–86 to 2,300 in the current year.
Finally, subhead B4 of this vote covers the revision of the training on employers' premises scheme and the introduction of a new pilot manpower training scheme. These will require a net additional provision of £397,000. Under the new arrangements for the training on employers' premises scheme, a grant of £65 per week will be paid in respect of each additional eligible employee who is under 25 years of age, or who
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was unemployed, or unavailable for work, during the previous 12 months. A grant of £52 per week will continue to be paid to all other categories of additional employees eligible under the scheme. This revision to the scheme will cost an extra £200,000 this year and provide assistance at the higher rate to companies during the costly initial training period for new employees. May I draw your Lordships' attention to one unfortunate typographical error in the provision for subhead A 1 in the Estimates volume. It appears on page 10 in Class 2, Vote 5. Under the column headed "Revised Provision", the figure of £10,330,000 in respect of YTP trainee allowance should in fact read £10,200,000. I should make it clear that this does not affect the draft order. I am advised that the sums work out if the new figure of £10,200,000 is adopted.
Moving on to Class 2, Vote 6, administration and miscellaneous services, page 12, a net increase of some £2 million is sought. This encompasses a number of initiatives, such as the provision of in-depth counselling interviews, aimed at assisting the long-term unemployed.
Class 4 Vote 1, page 15, is the Department of the Environment's Roads Service vote. A net additional provision of just under £6.9 million is required. About £1.9 million has been earmarked for capital works at subhead A2, and, at subheads A4 and A5, nearly £4 million for essential road maintenance. The emphasis within the roads programme continues to be placed on the management and maintenance of the road system. This is complemented by a continuing investment programme in major and minor capital works in response not only to both local needs in particular parts of the Province but also the strategic requirements of Northern Ireland as a whole.
At page 22 of the volume, we find that in Class 4, Vote 3, a further provision of £700,000 is required to fund the upgrading and modernisation of port facilities throughout Northern Ireland under the port modernisation scheme.
Moving on to page 24, Class 5, Vote 1, housing services, a token provision of £ 1,000 is sought to bring to your Lordships' attention additional expenditure of some £5.5 million. I hope it will become clear why only £1,000 is being sought this evening. The additional expenditure will finance increased activity on the general housing association programme and meet the demand for renovation grants. Noble Lords will note however that the expenditure decreases and the increased appropriations in aid detailed on pages 25 and 26 of the estimates volume offsets the additional expenditure. Your Lordships will find a summary set out on page 24, where the figure "1" indicates 1,000. The main expenditure is nullified by increased appropriations in aid and by expenditure decreases.
Turning to Class 6, additional funds are being sought for votes 1, 2 and 4. In vote 1, water and sewerage services, the net additional provision is £2.5 million, of which £1.9 million is for capital works. Vote 2 provides additional expenditure of £3 million for the Urban Development Scheme at subhead D5, page 33, £800,000 for grants to the National Trust at D11 and £600,000 for the repair and maintenance of historic buildings at C4. All this is offset by savings

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within the Vote and by receipts from the sale of land, which leaves a net requirement of £632,000.
Under Vote 4, page 37, which covers rating, records registration, surveys and administration your Lordships will see that the net increase of £ 1.1 million is attributable largely to additional expenditure on computer systems and running costs.
Class 7 has only one Vote—and that is on page 40. This is called Protective Services and it covers expenditure on the fire service. An additional £500,000 is sought to cover the cost of an increased allowance to operational staff of the fire authority for Northern Ireland.
If I may ask your Lordships to turn to page 42, we see Class 8. This relates to education. In Vote 1, schools, a net addition of £4.2 million is sought: £4.6 million is required to meet the increased cost of school teachers' salaries arising from both the April 1986 salary award and from the balance of the 1985 award. A further £300,000 is required by voluntary grammar schools for books and practice materials for the new GCSE examination. This additional expenditure is offset by savings of £700,000 on capital grants to voluntary schools where progress has been slower than expected on a number of major schemes and such items as gas conversion work.
Under Vote 2 of Class 8, page 44, a token estimate of £1,000 is sought to bring to your Lordships' attention increased capital expenditure of £ 1.4 million for equipment and capital grants in respect of the two Northern Ireland universities and capital expenditure at the two teacher training colleges. These additional requirements are offset by savings of about £1.4 million in the recurrent grants to the universities, partly as a result of lower than anticipated rate payments by Queen's University, and partly following a revision of block grants on the recommendation of the University Grants Committee.
Under Vote 3, which is labelled Miscellaneous Services and Administration—that is on page 47—an additional £2.4 million is sought. As may be seen from the estimates volume, the additions required cover a wide range of services. I will not detail them all this evening, but in the main they reflect allocations as part of the Belfast Urban Programme. These were made after the 1986–87 main estimates were finalised and reflect the further measures taken by the Secretary of State in October last year to aid the local construction industry.
The final education item is Vote 4, page 50. This covers grants to education and library boards. Of the total of £14.9 million sought, £11.5 million is required to cover the cost of a revaluation backdated to 1983–84 of the rates on school property. This follows a recent decision by the Lands Tribunal about the method of assessing schools' rateable value in circumstances where the premises are not fully utilised because of falling enrolments.
Responsibility for the education of mentally handicapped children transfers to the education service on 1st April 1987: £2 million is required to carry out essential preparatory work, such as the provision of accommodation, and the purchase of buses. Your Lordships will see that this is detailed under subhead A3 of page 51, under Class 8, Vote 4.
Overall additions totalling £14.4 million are sought in Class 9 for health care provision. In Vote 1, £10.6 million is required for health and personal social services; £6 million of this—at sub-head A2 on page 55—is for capital expenditure which will enable work to begin on a number of major construction projects; £2.3 million is sought to increase existing provision for pay awards recommended by review bodies for doctors and dentists, nurses and paramedical staff, while the balance will fund development in regional hospital services, and will enable enhanced provision for assistance to voluntary organisations. This will also meet expenditure arising from a major campaign aimed at reducing the incidence of coronary heart disease in Northern Ireland. In Vote 2, page 61, we find the seeking of a further £3.8 million mainly to meet the additional cost of dental and pharmaceutical services, where increases in demand, as well as in fees and costs, have exceeded earlier expectations.
Turning to Class 10, Vote 2, page 66 of the volume, classified as non-contributory benefits, we find an additional provision of £33-5 million—that is not in block 1, but comes under summary and subhead detail—which is required to meet the increased expenditure on invalid care allowance, supplementary benefits and housing benefits. The increases are offset by a reduction of £1.7 million in the requirement for severe disablement allowance.
On page 69, Class 10, Vote 4, labelled as Administration and Miscellaneous Services, we are seeking an extra £4.7 million, mainly for salaries and wages and social security adjudication costs. A further £1.7 million is required to accommodate a shortfall in the amounts to be appropriated in aid in respect of administrative costs of the National Insurance Fund. These increases are offset by a reduction of £768,000 in earlier estimates of requirements, mainly of the amount of the grant to the Northern Ireland Housing Executive for its costs in administering the housing benefits scheme.
Finally, if I move on to Class 12, Vote 1, Office and General Accommodation Services, page 76, provision is being sought for an additional £2 million or thereabouts to cover the purchase of office accommodation in central Belfast.
I have taken your Lordships right through this estimate. I believe this may have been of some help in drawing your Lordships' attention to the figures that I and the Government felt should be brought before your Lordships this evening. I have tried to cover the main features of the draft order and to draw your Lordships' attention to a number of new and possibly interesting items of expenditure, but as always I look forward to listening to any points, remarks and speeches made by your Lordships. With that, I commend the order to your Lordships.
Moved, That the draft order laid before the House on 11th February be approved.—(Lord Lyell.)
8 p.m.
Lord Prys-Davies: My Lords, I should like to thank the noble Lord, Lord Lyell, for taking us through the order, and for his explanation of its main features. I can assure the noble Lord that his explanation was helpful. The Minister referred in his opening

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paragraph to the Northern Ireland economy, and drew our attention to the positive factors from which the Government draw encouragement. He described them as being "quite bright", but in fairness went on to acknowledge that there is also a negative side to the picture. Of course there is a negative side, the position is still worrying and, according to Coopers and Lybrand in their 15th review of the Northern Ireland economy, the prospects for 1987 remain pessimistic.
During the last few months the economic disparity between the North and South of England has rightly been the subject of keen political discussion, including a debate in your Lordships' House. In the North-South debate the economic malaise of Northern Ireland, the poorest of all the regions of the United Kingdom, was disregarded or ignored. Yet on almost every count Northern Ireland has suffered more than any other region. We are not saying that the problems of Northern Ireland are unique, but we are saying that they are more severe than those in any of the other United Kingdom regions.
Indeed, the Minister explained in his opening paragraph that unemployment in Northern Ireland is 19.3 per cent. against an 11 per cent. average for Great Britain; and for the South of England it is very much lower than that. Not only has the Province lost more jobs in the manufacturing industry, but its gains in the fast-growing sector—namely, banking, finance and services—have been way below the figure for Great Britain. Therefore, when the noble Lord, Lord Young, said generally of 1987 that this is the most hopeful start to a new year that we have had for many years, that comment does not apply to Northern Ireland.
The Government are looking more and more to self-employment and small businesses to produce the remedies. According to the Northern Ireland industry Minister, that is to be the way forward. He described small businesses as the seedcorn of Northern Ireland's future economic development. The background to the Government's thinking and the reasoning behind the policy has been spelt out very clearly by the permanent secretary of the Department of Economic Development in the TSB Northern Ireland Review for 1986. Noble Lords who have read that document will have found it very helpful. However, the permanent secretary was also careful to point out in this article that Northern Ireland is not a particularly small-firm economy. Of course therein lies an important part of the problem. Therefore, the seedcorn to which the Minister for industry referred will not flower overnight in Northern Ireland.
Northern Ireland's economic development will take time to mature. Meanwhile, there are the immense short-term problems. To some extent they are reflected in the main features of the spring Supplementary Estimates, which have been underlined tonight by the noble Lord, Lord Lyell. The increased vote for the Department of Economic Development is obviously extremely important in the long term as well as in the short term. I shall touch merely on two or three features of the department's spending programme.
We welcome the new additional expenditure in order to expand the community employment scheme,
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though sadly this is but a temporary relief for long-term ills. I believe that the noble Lord, Lord Lyell, acknowledged in his speech that that was so. We also welcome the increased expenditure on the training on employers' premises scheme. We hope that this will encourage employers to recruit more young people.
It seems to me that a continuing and major worry is the lack of employment opportunities for young people in the 16 to 25 age group. Every country in the world looks to this group and its skills to provide the basis for its future prosperity and development. I see that in its last annual report the Youth Committee for Northern Ireland said that over 40 per cent. of young people in this age group are unemployed. That is a shockingly high figure. Can the Minister give the average duration of unemployment for a person in this 16 to 25 age group? Can the Minister also say how many young people are currently being trained under the training on employers' premises scheme? How many are eligible for such training but not receiving training? How many additional places will be made available within the next 12 months.
There is also to be additional expenditure on the training centres. I note from the last annual report of the Equal Opportunities Commission that it is concerned that real changes (which are the words used in the report) are required in the provision of vocational and skill training by the training centres. The commission also considered that much greater effort is required to attract women to training centres. Can the Minister tell the House whether the department proposes to take any steps to meet this criticism, if it considers that the criticism is sound?
For a number of reasons—some historical, some geographical and some otherwise—Catholics in Northern Ireland are two and a half times more likely to be unemployed than Protestants. Is the Minister able to give any assurance to the House that young Catholics are not being treated unfairly because of their religion, or because they are perceived to belong to a Catholic community when they apply for jobs or promotion; or must this assurance belong to the future?
Meanwhile, we welcome the additional funds given to the Fair Employment Agency to be used for staff training and increased investigatory work. We also welcome the small, modest increase in the budget of the Equal Opportunities Commission to meet the increased cost of salaries. However, it will be appreciated that the commission is dealing with an ever-increasing volume of inquiries and that its staff are working under great pressure.
This order gives me an opportunity to thank the Department of Finance and Personnel for its first report on equal opportunities in the Northern Ireland Civil Service, which was published in 1986. This report appears to me as a layman to be a first-class document. The programme of equal opportunities which the Civil Service in Northern Ireland is implementing, and which is described in this report, is a precedent which other employers in the Province should be encouraged to follow.
Last September the Department of Economic Development published its consultation paper Equality of Opportunity. The consultation period will

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expire at the end of this month. Some of the options contained in the consultation paper are far-reaching. Does the department intend to publish the response which it has received to the consultation document? If so, when will it be published?
I should like to link this report with the major review which has been conducted by the Standing Commission on Human Rights into the operation of the laws against discrimination in Northern Ireland. I understand that the review should be completed by the end of this year and that it is being supported by government finance. Can the Minister explain to the House the relationship (if there is any) between the consultation instituted by the Department of Economic Development and the review undertaken by the Standing Commission on Human Rights? Does the Department of Economic Development intend to consult with the Human Rights Commission before deciding what initiative it should take in the light of the response to its own consultation paper?
We on these Benches are anxious that the new measures to be taken, particularly if their implementation requires new legislation, should be the best that the department and the commission, working in partnership, can design. I hope that the Minister can assure the House that there will be adequate discussion with the Standing Commission on Human Rights before the department decides on the measures that it will recommend.
It came as a surprise to read that the expenditure on welfare food—free milk for babies and expectant mothers and vitamin drops—and on meals-on-wheels is proving to be less than anticipated. This appears to be inconsistent with other evidence indicating that a growing body of people are vulnerable in Northern Ireland because of larger families and the persistence of high and long-term unemployment. Thus there is evidence in the Supplementary Estimate itself, and not only in Class X, Vote 2, of an increase in the number of people in receipt of rent rebates, an increase in the number of rent allowances and an increase in the number of rate rebates.
It is difficult to reconcile these figures with the finding that the demand for welfare food and meals-on-wheels is less than anticipated. Unless it is already in hand, should not the department be commissioning, or itself undertaking, a study to find out as soon as possible why the demand is lower than anticipated?
I do not propose tonight to make any comments or ask any questions about the Housing Executive, which has attracted, probably unfairly, adverse publicity of late. On a future occasion I may return to the report of the local government auditor and of the Comptroller and Auditor General on the executive accounts for the year ending March 1986 which we received yesterday and the Housing Executive's comments thereon. That is something to which we may have to return.
I come now to the last matter on which I have a few questions for the Minister. I believe that it is important. Many citizens of Northern Ireland are deeply troubled by the difficulties faced by voluntary bodies and community organisations that provide advice and welfare services to those who are less fortunate and require help. These organisations are
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facing great difficulties and uncertainties as a direct result of the adjournment strategy adopted by the Unionist-controlled councils in Northern Ireland in protest against the Anglo-Irish Agreement.
During the year 1986–87 grant aid from Unionist-controlled councils to enable voluntary organisations to pay such items as salaries, rent, fuel and telephone bills was not released or was released only in part or after lengthy delays. Indeed, it became necessary for the Government to send in commissioners to Belfast to award grant aids to voluntary groups. The House will remember that the commissioners moved into action in April and October, but in each case they moved in after the grant had expired at the end of the previous month. It is almost certain that intervention by commissioners will again be required in the year 1987–88, not just in Belfast but in other Unionist-controlled councils too.
As a direct result of the abandonment of their duties by Unionist councils in this struggle against the Anglo-Irish Agreement, many voluntary bodies have had to curtail their services to people, terminate activities and close down advice centres. In addition, they have simply been unable to undertake new initiatives to respond to new needs. In the result, many people have been deprived of basic services, and essential advice that they need.
The delay in receiving grants or non-receipt of grants has also led to uncertainty for the staff engaged in this vital work. There have been above average staff resignations and above average leave of absence through sickness so that the result of the decision of the Unionist-controlled councils has had a multiplying effect. All this is well-documented and known to the department, as the major voluntary bodies involved have made submissions to Ministers about their difficulties.
The question to the Minister is this. Are the voluntary bodies to experience in 1987–88 a re-run of their 1986–87 difficulties? How do the Government propose to resolve the difficulties which will not fly away for as long as the Unionists are determined to adjourn council meetings?
I was delighted to read that the Department of the Environment has already taken the necessary action to make district rates for those 11 district councils that have failed to strike a rate for 1987–88. We urge the department to take equally decisive action, and promptly so, under whatever instrument is available to it to ensure that grants to the voluntary bodies are made and released in the first week of April.
It has been suggested that the difficulties could be overcome by the department promptly attaching to every council that stands adjourned a commissioner charged with the power and the duty to decide the value of the grant and to rearrange for its prompt release. That is one solution. An alternative solution that has been canvassed would be for the department to release the grant aid direct to the voluntary bodies or through the agency of a third party. Therefore, there are solutions that the department could call in aid.
I accept, although I am not sure that it is right, that it may not be possible or prudent for the department to anounce in advance of implementation what steps it will take to ensure that the difficulties of 1986–87,

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which had multiplying effects, are not repeated. Nevertheless, I urge on the Minister that the voluntary bodies concerned should be reassured within the next week or two that the appropriate action is in hand. Such an assurance would be, in the words of the noble Lord, Lord Young of Graffham, a most hopeful start to a new year. If the assurance is not forthcoming, Ministers will rightly be exposed to public criticism in the Province. I should be grateful to the Minister if he would convey that message to his right honourable friend the Secretary of State.
With those comments and few questions, and my apologies for taking a little time over my speech as I wanted to get the message over we approve the order.
8.15 p.m.
Lord Hampton: My Lords, I too thank the Minister for introducing the order. Before I proceed to deal with matters mainly of finance, perhaps I may reaffirm from these Benches our support for the Government's stand over the Anglo-Irish Agreement.
The noble Lord, Lord Prys-Davies, mentioned some of the difficulties that we hope the Government will meet. We regret that Dr. FitzGerald will no longer be the head of the Government in the Republic. We must hope that co-operation with Mr. Haughey will not be as difficult as has at times seemed likely.
One must condemn the IRA outright for its coldly-calculated process of bombing, brutality and terrorism. But the reaction of the so-called Loyalists—loyal to no-one except themselves—has been to a great extent counter-productive. Add to this the activities of common criminals and the scene is indeed grim. I believe, however, that there is good news and one of my pleas is that the Government should relieve the considerable gloom of mainlanders about life in the Province by more and better information. This is necessary to counterbalance the more newsworthy items of tragedy and despair.
I have given the Minister notice of a number of questions—in some cases rather short notice, I fear—and I shall now proceed to put them. They are based in the main on information sent direct from the Northern Ireland Office. First, corporal punishment. We welcome the announcement that corporal punishment is to be ended in all grant-aided schools in Northern Ireland from the year 1987–88. This is in line with the rest of the United Kingdom where corporal punishment is being abolished by the Education (No. 2) Act of last year. This is also in line with the Government's obligation as a party to the European Convention on Human Rights.
My noble friend Lord Donaldson tells me that he completely supports this move, and was himself, when in the Northern Ireland Office, responsible for the ending of corporal punishment in the Province in approved schools. I should like to ask the Minister whether that move has affected discipline in those schools for better or for worse, or is the situation entirely as before?
Secondly, the fire service programme—and the noble Lord, Lord Lyell, just touched on this. We are told that an £18·3 million fire service programme is to be put in hand. This is necessary because the number
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of fire calls has increased from 15,800 in 1981 to 27,800 last year. Can the Minister say what is the cause of this increase in fire calls by over 75 per cent? Are there many hoaxes? If so, by whom and why? Are there more terrorist attacks or simple criminal cases of arson? If not, what is happening?
We are told that six totally new stations are to be built, one of them being at Crossmaglen. Are steps being taken to ensure that the work involved will not be countered by terrorist attacks and deliberate damage? I do not ask the Minister to say what steps will be taken, I just ask for an assurance, which I hope he can readily give, that this matter is in hand and that suitable contractors are available to undertake the construction work.
Thirdly, the new Holland sewage works scheme. We are told that in March a £6 million extension and renovation scheme will be started at the new Holland sewage works near Lisburn. This will, we are told, improve the standard of effluent discharge into the River Lagan, and this will be important for future generations of people not only in the Lisburn area but in Belfast, who will be turning their attention more and more towards the Lagan as a major recreational amenity. Can the Minister say what steps have already been taken to use the Lagan for recreation, and what future steps are proposed?
Fourthly, a £28 million inner-city package for Belfast. There has been a recent announcement of
"a £28 million financial package to be aimed at improving the quality of life for people living in some of the worst areas of inner-city dereliction in Belfast".
We must applaud the Government's move to help derelict areas and to create jobs in the process.
I have just two questions for the Minister here. First, it is said that it is essential that the Government's measures for Belfast should continue to promote the flow of private investment into the city. I emphasise the word "continue". Can the Minister give details of private investment that has recently flowed into the city, and what success there has been for the IDB or LEDU? There is talk of expansion of staff, as the Minister mentioned. Secondly, in the Belfast area almost £100 million will be spent by the housing executive and the housing association on houses. My question is: has there been any real success at stopping segregation of the two communities from each other? It will be tragic if segregation is encouraged in perpetuity, although I realise the immense difficulties of ending the system arbitrarily. The success of a few integrated schools shows that breaking through the divide is possible.
Fifthly, roads. The Minister told us that an additional £4 million is to be spent on Northern Ireland's roads during the next few months. Will he clarify how the allocation of this extra money will be determined?
Sixthly, the Probation Board for Northern Ireland. Is any extra money being allocated for victim support schemes as well as additional aid for voluntary organisations which, we are told, have,
"developing schemes for the supervision and assistance of offenders and the prevention of crime"?
The aim must be to stop crime. But when it is not prevented surely there should be generous support for

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those who have suffered, alongside efforts necessary to prevent the criminals striking again.
Lastly, Co-operation North. I refer back to the debate recorded in the Official Report for 11th December last year and cols. 1316 and 1324 in particular. My noble friend Lord Donaldson said how enormously impressed he was (and I agree with him) by the work done by this organisation—I quote from Col. 1316:
"to bring together Irish people from North and South and to destroy the ignorance which breeds fear, hatred and violence".
And he mentioned the school exchanges where,
"Groups of pupils from the South go to the North, and in reverse. They are exchanged for a month at a time in 200 schools-20 per cent. of the secondary schools of the whole of Ireland and 50 per cent. of those in Northern Ireland."
When I first heard these figures I felt that they were barely credible, but I came to believe them and found them encouraging.
Two questions arise. Can we not hear more about such splendid efforts as this to counter stupidity such as Mr. Peter Robinson's escapade across the border? And can the noble Lord the Minister give information as to how the Government will help Co-operation North this year? With that, we support the order, and I should be grateful to have the Minister's replies.
8.30 p.m.
Lord Dunleath: My Lords, I thank the noble Lord for his usual courtesy in having written to us in advance of this debate. We are grateful to him, as always, for having sought points that we may wish to raise on this occasion. Looking at a number of the matters in the draft order, to start with the Department of Agriculture, Class 1, Votes 1 and 2, there are many complex and indeed some worrying facets to the new EC price packages with regard to farm produce.
Of course we realise that resolute action had to be taken to control the surpluses of food that exist, but I shall not go into that. If I may, I should like to concentrate on just one matter which is of particular and perhaps peculiar interest and significance to Northern Ireland; that is, the smuggling of beef cattle.
As the Minister will probably know, animals are smuggled from the north of Ireland across the border to the south. They are then given new ear tags so that they can claim to be citizens of the Republic. They are re-imported to the north of Ireland by normal means, whereby they qualify for a monetary compensatory amount, which at the moment averages about 130 per head. In fact it was up to f150 earlier, I believe.
It is estimated by the Livestock Marketing Commission that about 100,000 cattle have been so smuggled over the last year, which amounts to £13 million of public money having gone astray through the MCAs having been paid for smuggled cattle. This indicates that it is not a small operation. It is not a matter of two or three bullocks in the back of a trailer being smuggled across the border late at night. This is a big operation, big business. It is of significance not only to the taxpayer but it also means that those who re-import the cattle are able to take a lower price for them because they already have the 130 premium to ensure a quick and certain sale. That in turn depresses
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the price to the ordinary farmer in Northern Ireland who is selling to the meat plants.
Furthermore the meat plants themselves are at present on short time. One of them has had to pay off a number of employees because of the shortage of cattle now, due to the number that went across the border by illicit means during the autumn. I know that the customs have been able to apprehend some consignments. This has been a disincentive. But I am told that the cost of policing the border to this extent would be excessive on a continuous basis. It looks as though we are only having a respite at the moment and that the incentive to smuggle will remain.
The noble Lord mentioned the new system, which I sincerely hope will tighten up the movement of cattle. But whatever happens I hope that this will be controlled and eliminated in the future. One suggestion that has been made is that the green pound should be devalued by perhaps 10 or 11 per cent. so as to reduce the monetary compensatory amounts, thus removing the incentive to smuggle. Another suggestion which the Livestock Marketing Commission favours is to equalise the intervention price between north and south, making adjustments for any variation in currency, which might be a cleaner and easier way of doing it. But whichever means is selected this is something which ought to be addressed with the greatest urgency.
Turning now to the Department of the Environment, Class IV, Vote 1, the Strangford Ferry has two vessels. Unfortunately on several, if not numerous, occasions both have been out of service and an ordinary motorboat has had to be put on which can carry passengers only. Even that had bad luck on one occasion and broke down. Is this the best we can do, considering the cost to the taxpayer, the inconvenience to the user and the fact that many people now drive round the lough rather than risk finding that the ferry is out of order?
Under the Department of the Environment, Classes II and V, Vote 2, it was back-in the mid-1970s that I warned in a speech about extortion on building sites and over contracts, both government and private. This warning caused a certain amount of annoyance and irritation at the time. But what I said seems to have been endorsed by remarks made by Mr. Justice Nicholson recently. Here again is public money being wasted and, worse still, being channelled off, very often to paramilitary organisations. I should be interested to know what action Her Majesty's Government can take.
Also under the Department of the Environment, I wonder whether sufficient funds are being devoted to rural as opposed to urban housing. I know of one village near where I live where at least five houses are being built by the Housing Executive after 20 to 25 years. People have been trying to get houses there for as long as that.
Under Class VIII, Vote 1, Department of Education, perhaps the noble Lord can tell us why so many temporary classrooms have become permanent. They were adopted by the schools in question in good faith on the understanding that they would be replaced fairly soon, but after many years they are still there and permanent accommodation has not been provided.

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Further, under education, I hope, and should be grateful for an assurance, that the Department of Education has sufficient resources to look after mentally-handicapped children, since the responsiblity for them has been transferred from the Department of Health and Social Services.
Lastly, and sadly, a Vote of £173,000 is asked for the Northern Ireland Assembly. Presumably this is for the cost of the residual winddown of the assembly machine—one might say it is the last shovelfull of earth over its coffin—the assembly which was brought down by the Unionist reaction to the Anglo-Irish agreement. The Anglo-Irish agreement by contrast is still alive but in 154 months it has not shown much in the way of visible or tangible results.
The noble Lord sounded a note of optimism on the economy. One can only say that we have yet to detect a continuing favourable trend in the economy or in the employment pattern. The increase from December 1985 was 7,330 unemployed—an increase of that amount from a year previously. Furthermore, I am sorry to say that we have not yet seen any trend towards constructive politics, though it just may be that the document recently issued by the Ulster Defence Association is a straw in the wind. I hope that it is. I do not think that a constructive statement should be discounted because of the record of the source from which it comes.
The activities of the Ulster Defence Association have been damnable, but then so were those of St. Paul before he was converted on the road to Damascus. Therefore, I take this in good faith. But if the UDA were to express sentiments of contrition and repentence, as did St. Paul, it would help to reinforce one's confidence in its sincerity.
One visible result, unfortunately, has been the exacerbation of community tensions. Despite what we are told we cannot see any improvement as yet in the security situation. One could say that life goes on. I believe that our constitutional position has not been eroded by the Anglo-Irish Agreement. But life does not go on for those people (and it is an increasing number) who have lost their lives through violence during 1986, for those who have been injured, for those who have been bereaved and for those who have lost their jobs.
Where do we go from here? One suggestion being canvassed at the moment is integration. It has been for some time. I think that the policies of the campaign for equal citizenship are unrealistic to the point of naivety.
No one would like to see the Northern Ireland electorate voting Labour, Liberal-SDP or Conservative more than I would, but that will not happen until the problem of sectarianism has been overcome. That is the first matter to which politicians should devote themselves, together with the removal of doubts about the constitution. Similarly, I think that any hint of British withdrawal would be disastrous to everyone, whether in the north of Ireland, the south of Ireland or Great Britain.
Therefore I adhere to the view that the only way forward is for devolved consensus partnership government. That must be the objective, with all constitutional parties working together towards that
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end. It is something which the Alliance party has advocated since 1970. The late Brian Faulkner, subsequently Lord Faulkner—who by coincidence was killed 10 years ago this afternoon—came to realise that in 1973. Unfortunately it was too late, and now it seems that the Ulster Defence Association has recognised the fact in 1986.
Therefore, contrary to what I may have advocated in your Lordships' House in the past, I suggest that Her Majesty's Government should now keep the lid on the situation. They should not promote further political initiatives for the time being. They should try to enable life to go on, with benevolent direct rule, and await a climate for partnership and devolved government. Let us see results from the Anglo-Irish Agreement. Let Her Majesty's Government try to cool it. After all, opinion polls reveal that the people may be very much more reasonable than the politicians. I say to Her Majesty's Government, try to keep the lid on it, take no further initiatives which may stir things up and let us pray that the climate will improve as time goes on.
8.45 p.m.
Lord Blease: My Lords, this is the 20th occasion on which I have taken part in a debate on a Northern Ireland appropriation order in your Lordships' House. I have expressed many times my reservations about the efficacy of debating across the Floor of the House such complex matters as are contained in these orders. At the same time I have always looked upon the debates in this House, and especially the debates on these orders in another place, as being particularly important to the government ministers for Northern Ireland, to the personnel in charge of administration in Northern Ireland and to the statutory boards whose members have already been mentioned by my noble friend Lord Prys-Davies, as well as being of special importance for the wellbeing of the people of Northern Ireland.
Not only do these orders deal with Votes for huge sums of public expenditure in Northern Ireland—as has already been mentioned the annual total amount of appropriation is in excess of £4,200 million—but the orders also allow for a debate on the likely impact for good in comparative terms on the Northern Ireland economy. The detailed programme of sums allocated to the various sectors and how the finances are effectively utilised can determine to a major degree how Northern Ireland can best move forward from a dependent economy to a resilient economy, better able to build prosperity and progress on its own resources and strengths.
We have already had mentioned by my noble friend Lord Prys-Davies and by the noble Lords, Lord Hampton and Lord Dunleath, that such progress requires much more than financial input: it requires political stability and common sense on the part of the citizens. I think that must be realised more and more in Northern Ireland by the people who elect their public representatives.
Notwithstanding the forthright and wide-ranging speech on this order in another place on 24th February by my honourable friend Mr. Peter Archer, I was saddened, as were many people in Northern Ireland, that no elected Members of Parliament for Northern Ireland took part in that debate. As has already been

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mentioned, the importance of a debate about public finance to sustain the Northern Ireland economy and to provide for the social well-being of the Northern Irish people cannot be denied. Surely there was nothing to lose and much to gain from participation by the Northern Irish elected representatives in that debate.
Perhaps I may for a moment join with my noble friend from Northern Ireland, Lord Dunleath, in expressing sincere gratitude to the Minister, to my noble friend on the Front Bench, to the noble Lord, Lord Hampton, and to all those who from time to time come to this House and take an interest in Northern Ireland affairs and who, particularly this evening, have given thoughtful consideration to the problems confronting the people of Northern Ireland and have had that consideration recorded in this debate. I know it is very difficult to address this House when there are rows of empty seats here, but at the same time there is an obligation on us to record how we feel and at least to indicate to those who have prepared this appropriation order that note is being taken of what it contains.
I want to refer particularly to the allocation of available funds and I should like to make a few observations. With a view to promoting a thrust forward from a dependent economy to a resilient one—an economy equipped and prepared to adapt to the challenge of positive and productive change—the four matters I wish particularly to raise and in regard to which I should like the kind attention and the great assistance of the Minister are these. The first is Vote 1, Class I, agricultural research; and the second is Vote 1, Class II, industrial research. I am pleased that there has been some movement by way of additional finance which has been granted to agricultural research. It is a modest increase. In 1985–86 the increase was 9 per cent.; in 1986–87 it dropped to 3 per cent. In the sector dealing with industrial research we find that for 1984–85 the sum was £225,000 and in 1985–86 it dropped to £220,000. For 1986–87 it is £216,000. There has been a decrease in this particular Vote.
Clearly there is a need for forward-looking and well-funded research and development programmes in both agriculture and industrial production—research and development aimed at making swift and effective responses to changes in consumer demand, technological innovation and in competitive world marketing.
In connection with the finance for research and development, I invite the Minister's attention to the report of your Lordships' Select Committee on Science and Technology. The report, published in November 1986, dealt with civil research and development projects. In the three volumes of the report, consisting of over 1,000 pages and with some 144 submissions from United Kingdom organisations and individuals, only three pages referred to Northern Ireland, and those were submitted on invitation by the Northern Ireland Office.
I should like briefly to quote a section from that Northern Ireland submission in the report. It reads:
"It should be noted that the levels of public support for R&D in NI are in general lower than in Great Britain. For example, in the agricultural field R&D expenditure is only 0.7 per cent. of output (compared to 1.4 per cent. in GB). Agriculture is of greater relative importance to the economy of NI and there is a preponderance of
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small farms and an absence of large commercial organisations which could otherwise be expected to support R&D. In the industrial sector public support for R&D is only 0.37 per cent. of output (compared to 0.53 per cent. in GB or 3.6 per cent. if defence R&D expenditure is included)".
I should like to ask the Minister whether he will suitably draw these R&D issues to the attention of his ministerial colleagues and ensure that the Government deal adequately and effectively with these vital aspects of Northern Ireland's economic prospects which have been expressed in this report.
I now turn to Class II, Vote 5, sections A. B. C and D, which are contained on page 10 of the Supplementary Estimates. Under these four headings, there are listed numerous schemes and programmes for employment, industrial training and community projects. In this connection, I would refer the Minister to his Written Answer to my Parliamentary Question which was published in the Official Report on 2nd February this year. The Answer listed some 66 employment, training and enterprise development initiatives which are currently available to people in Northern Ireland supported by the Government and public funds. Many in Northern Ireland were astounded when I pointed out the number of initiatives that are available.
In my opinion, many of these schemes are highly commendable and worthy of support. At the same time, I am led to believe that the very panoply of such schemes has become so complex in its administrative diversity that it has created confusion and communication blockages which have led to delays. Indeed, it has thwarted the main objectives for which many of these schemes were designed.
I would wish the Minister also to read the report of the Comptroller and Auditor General for Northern Ireland which was published on 12th December 1986 (Report No.77). On pages xxxiii to xxxix of the report, matters concerning the cost-effectiveness and the economic and social objectives of the vote under the heading Class II, Vote 5, are very forthrightly and seriously examined.
I accept the need for flexibility in industrial training and in employment development matters. At the same time, I believe there is an urgent need for clearly defined economic objectives for the vocational training of youth, for measures to help the long-term unemployed and for the provision of suitable retraining in technological development. For these reasons I invite the Minister's attention to a possible review of the programmes and schemes under these four votes, and the application of the criteria stipulated in the examination undertaken by the Auditor General concerning government training centres and industrial training boards, which I have already mentioned.
I now turn to Class IX.1, Section Al—community care services. I could go into some detail but at this stage of the evening I will simply stress that there is a continuing emphasis on care being provided within the community. This means that more health care services are urgently required outside hospitals. To meet this new need, an increase in the numbers of professionals and trained health care workers is vitally necessary if the services are to be meaningful in terms of the health and wellbeing of the community.

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It is sufficient for me to draw attention to page 57 of the Supplementary Estimates. Your Lordships will note, under community health services and personal social services, the total inadequacy of the amounts granted to meet the steep increase in the demands on these services. As well as enhanced training and the employment of professional people, we require special training for home helps and special measures to deal with meals-on-wheels services—this has already been mentioned by my noble friend Lord Prys-Davies—day care accommodation and facilities, district nurses, health centres and trained social workers. I request the Minister to use his influence to meet these urgent needs.
Finally, I turn to Class X, Vote 2, on page 66 of the Supplementary Estimates, which deals with invalid care allowances. Noble Lords will be aware of the recent decision to extend the deadline for backdated claims for invalid care allowance from 31st December 1986 to 31st August 1987. It is estimated that approximately 4,500 persons will qualify. However, the Northern Ireland Council for the Handicapped has taken a special interest in this subject. It has made a survey and it is very concerned about the lack of information to ensure that married women who are eligible to claim are fully aware of their entitlement. The council feels that there is a lack of awareness of these benefits by the general public.
Without going into further detail, I appeal to the Minister to draw this matter to the attention of his ministerial colleague who is responsible. If it is not possible to get out some special leaflets which are designed to meet this particular concern, I suggest that he makes a ministerial statement of some kind to let people throughout Northern Ireland know that this benefit is available in the Province as well as in other parts of the United Kingdom.
With those remarks, I apologise for pursuing at some length this Northern Ireland appropriation order. The staff have been very patient and the Minister and his colleagues have sat through this debate. It is an important debate for Northern Ireland and I am sure that note will be taken of it in the Province. With those remarks, I give support to the order.
8.58 p.m.
Lord Lyell: My Lords, I begin by saying that the eloquence and kindness of the noble Lord. Lord Blease, are appreciated by everybody in your Lordships' House. It is important that we discuss fully the 76 or more pages of the order that is before us, because it is only three or four times a year that we get an opportunity of examining every aspect of Northern Ireland life from all angles, including the small items that are earmarked for as little as £1,000.
The Government appreciate the close attention and scrutiny that has been paid to the order. I should like to thank everybody who has spoken and I shall try to reply to the points that have been raised with the usual Lyell accuracy, if that is not a double-edged weapon. I shall attempt to improve on previous efforts, although thanks to my ministerial colleagues and my valuable band of helpers I have usually been able to
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reply to most points. I hope that I shall be able to do that again this evening.
I listened with great interest to the remarks of the noble Lord, Lord Prys-Davies, on the Northern Ireland economy. Nobody would disagree with the noble Lord that the Province suffers the highest level of unemployment of any region in the United Kingdom. I acknowledged that point in my remarks. It is in recognition of the special problems of the Province that the Government have set public expenditure levels for Northern Ireland substantially higher than in any other part of the United Kingdom. That alone, as would be acknowledged by all your Lordships, is not sufficient and it is our further aim to create circumstances in which the private sector can thrive. The words of the noble Lord, Lord Blease, and the encouragement given by the noble Lord, Lord Dunleath, add considerable power from within Northern Ireland to the Government's efforts.
Output in Northern Ireland has responded to the promotion of growth. Total production in Northern Ireland is now only 8 per cent. below the level of 1980. The most recent private sector survey from PA Management, published in January this year, noted that investment by Northern Ireland manufacturing industry is on the increase. This of itself will contribute substantially to the restructuring of industry and the wealth creating base in Northern Ireland. There are problems and there are challenges but there is subjective evidence that we are making progress. When I say "we", I mean everybody in the Province.
The noble Lord, Lord Prys-Davies, also raised the problem of the quality of employment and opportunity for young people from minority communities, and above all from the Roman Catholic population in Northern Ireland. I stress to him that the Government are making vigorous and consistent efforts to attract new investment, and hence more jobs, to Northern Ireland. In step with this the promotion of equality of opportunity and the eradication of discrimination in employment, for which the Fair Employment Agency has statutory responsibility, remain a central part of government responsibility. I very much welcome the kind comments of the noble Lord about the recent report by the Department of Finance and Personnel on equal opportunity in the Civil Service, which will be widely noted and passed on.
The noble Lord, Lord Prys-Davies, also raised the question of unemployment. The noble Lord targeted some of his remarks upon unemployment among young people in the Province, particularly those under 25 years of age. The Department of Economic Development gives a high priority through a variety of measures to young people in the 16-to-25 age bracket. For those in the 16-18 age bracket, the Government have every year since the launch in 1982 of the youth training programme honoured their guarantee of the offer to every minimum age school leaver of a year's training on the programme. The same guarantee is being made to this year's minimum age school leavers—16 year-olds—who leave school and for various reasons are unable to find a job. If they do not have a fixed and definite job we guarantee that the youth training programme will continue this year.

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The Department of Economic Development also recently announced its intention to guarantee to offer by Christmas a suitable two-year training to all 16-year-olds who would otherwise be unemployed and a one-year place for the 17-year-olds who would otherwise be unemployed. For those in the 18-25 group there is a wide range of training, employment, self-employment and counselling provision. It is most encouraging to see this age group take up almost one-third of the places available under the enterprise allowance scheme.
Many of the available opportunities are designed to help the longer term unemployed back into employment. The new workers' scheme, the action for community employment scheme and the restart programme all have this objective. A new pilot job training programme to which I referred in my opening remarks will provide an additional 250 places mainly for young adults who have been unemployed for more than six months. We shall continue to increase the number of job clubs, which have been instrumental—and, if I may stress, very successful—in helping those who are unemployed to find jobs, to find the confidence to go to interviews, to learn from what has gone right and to learn from any mistakes. Job clubs have a role to play and I am very pleased to pay our tribute to them.
The noble Lord, Lord Prys-Davies, asked about the employers' premises scheme. The training on the employers' premises scheme is demand-led. The take-up is dependent on the expansion plans of private sector companies. I stress that trainees under 18 years of age are excluded from the scheme. In the year to December 1986, about 4,000 young people under the age of 25 qualified their employers for training on employers' premises assistance. This number is likely to remain at the same level during 1987. That is one answer which I can give to the noble Lord, Lord Prys-Davies.
As regards the criticism from the Equal Opportunities Commission, I stress that there is no obstacle placed by the department on TOEP's application to women or young ladies. However, it is a matter for employers as to the number of women they wish to or indeed can employ. The noble Lords, Lord Dunleath and Lord Blease, may worry about young ladies heaving large sacks of grain or doing heavy manual or physical work on the farm, so perhaps there are some areas where young women may not be suitable. As I said, it is a matter for the employers.
The training branch of the department has arranged to meet a representative of the Equal Opportunities Commission on 6th March to discuss and examine the possibility of single-sex classes in training centres. That is in response to the commission's concern about a lack of women in non-traditional occupations. Taking engineering and construction, your Lordships need only look at my noble friend Lady Platt to discover that there are very eminent lady engineers. I hope that the meeting later this week will provide some progress in that direction.
The noble Lord, Lord Prys-Davies, may be interested to learn that in management training women are well represented. In the department's junior management programme, 32 of the 71
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participants are women. I am sure that will please the noble Lord, but whether it will please the other 39 young men rivals we shall have to see.
The noble Lord, Lord Prys-Davies, also asked about welfare food and expenditure on the provision of badly needed vitamins, free milk, baby foods and similar items to families who receive supplementary benefit or who are otherwise on low incomes. This also includes milk for young children in day care. I hope that the noble Lord will accept that the revised provision in the order reflects the actual level of demand. This is slightly higher than it was in 1985–86. Since there has been this rise in take-up, we do not believe that there are prima facie grounds for an inquiry. Although the problem raised by the noble Lord may be there, we believe that the rise in the take-up indicates that it is diminishing and that an inquiry would not serve any useful purpose, given all the other avenues which are at present available to see that the take-up of these allowances will be higher than at present.
The noble Lord referred to the problems of voluntary groups. I understand that a meeting of Belfast City Council took place last night and approved the continuation of grants for 1987–88. I hope that this will set a pattern for other councils where there may have been difficulties—I use that word advisedly—during this year. I think the noble Lord will accept that last night's decision gets us over the worst of the hump since the voluntary services do a tremendous amount in Belfast; and I pay our tribute to them. However, I stress to your Lordships that the payment of funds to community groups is a discretionary district council function and the Government are prepared to intervene only when district council jobs and services are at risk.
The noble Lord, Lord Prys-Davies, continued by referring to what he called the strategy options and asked what the Department of Economic Development will be doing when the consultation on its strategy options ends on 31st March. On 1st April this year the Department of Economic Development will be analysing responses to its consultation paper. It will also have discussions with selected key interest groups and will provide policy advice. The SACHR has been asked to forward comments on the consultation paper. If the commission wishes, those comments will form the basis for the discussion with the Department of Economic Development. I stress that the reviews are separate and that they have made progress independently; but we intend to take the outcome of both into account when we decide on possible new measures and what options are available. I believe that concludes the queries about which the noble Lord, Lord Prys-Davies, kindly warned me, but if I have missed anything I am sure we will pick it up.
The noble Lord, Lord Hampton, raised several queries. I very much welcome his firm support for the Anglo-Irish Agreement. I do not want to say more than that this evening, particularly as I have already been speaking for quite a few minutes, but we are very grateful to him for his remarks and certainly my right honourable friend will note his continuing support.
His first query concerned the somewhat esoteric subject of corporal punishment in schools. I can advise him that training schools still have authority to use corporal punishment under well defined conditions.

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However, I am advised that corporal punishment has fallen into disuse largely because of social pressure but more generally because it is no longer considered an effective means of achieving the rehabilitation of pupils. Whether corporal punishment is accepted as a means of modifying behaviour is rather hard to assess. It has not been used since 1981 and indications are that there is no pressing need for its retention. The Northern Ireland Office is in process of consulting the management of the training schools with a view to removing their statutory power to inflict corporal punishment.
The noble Lord raised the question of the Lagan recreation facilities and coupled it with the happy thought of the New Holland sewerage scheme, although I am advised that that also concerns water purification. The Lagan valley regional park stretches a total distance of 10 miles from Lockview Road in Stranmillis to the Union locks in Lisburn. The park provides a variety of opportunities for all kinds of public recreation such as walking, jogging and bird watching, which I understand is a popular pastime in the park since a number of rare and interesting species tend to gather there. They seem to congregate at other points such as Strangford Lough and over vast areas of the counties of Armagh, Tyrone and Fermanagh, where it seems that there are some rare and exotic birds.
I am also advised that cycling is popular in the regional park. There is a towpath there which is owned by the department for which I am primarily responsible; namely, the Department of Agriculture. The park has provided a number of attractive recreational facilities in recent years. In 1985 it provided a canoe slalom course at Shaw's Bridge and a new footbridge at Edenderry. I stress that the department will be maintaining these facilities, but at present we have no plans for additional water recreation facilities.
The noble Lord then turned from water to fire. He raised an interesting question which led me to search among statistics for the last six years. He noticed that there had been an increase in the number of fire calls between 1981 and 1986. It was not obvious why there was an increase but I do not think that it was entirely due to a single cause. I understand that there were two very large increases in numbers of fire calls during the period in question. In 1984 there were 23,942 calls; in 1986 there were 25,400 calls; but in 1981 there were only 15,000 calls.
As everyone in Northern Ireland will remember, 1984 proved to be a very hot, dry summer, which gave rise to over 10,000 small fires accidentally caused mainly on grassland and heath, as well as in forestry areas. In 1986, February and March were very dry and windy months, giving rise to a substantial increase in small fires on grassland and heath—over 8,700 in fact, which was the second highest figure in the history of the brigade since 1984.
The year 1986 saw an increase over the preceding years in other fires: chimney fires, false alarms (malicious and with good intent), and special service—I shall not go into that category—which appears to entail rescuing cats from trees and that kind of thing. All this appears to reflect a growth in public
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demand for the services provided and, in relation to the false alarm with good intent calls, an awareness on the part of the public about the dangers of fire.
The noble Lord asked about the security aspect of fire stations and raised the question of Crossmaglen. The fire authority certainly takes the view that the Northern Ireland Fire Brigade is a neutral organisation, and that is accepted by everybody in the Province. The fire brigade serves the whole community and is seen to do so. That view is substantiated by the fact that there have been no attacks of any substance on fire brigade premises throughout the 18 years of the current troubles, apart from foolish, minor vandalism such as people going home in a state of high excitement and lobbing something like a small bottle at a window and shouting abuse. There have been no calculated, vicious attacks made on any fire stations. The Government are encouraged by that. We treat the fire service as neutral. We want to pay our tribute to what we can see that it has done.
The noble Lord asked about the additional £4 million for roads. That brings the roads budget to nearly £110 million. The extra £4 million is in addition to the £4.5 million allocated earlier this year. It is being used primarily on maintenance work on roads. Some minor works and some street lighting improvements are being carried out. They are being carried out earlier than would otherwise have been possible thanks to the provision of the extra £4 million. Those works are well advanced in most instances, and we think that they will be completed by 31st March this year.
The noble Lord asked me about the increase in private sector investment. Remarkable changes have taken place in Belfast in recent years. There has been a large amount of investment in Belfast, especially in the inner city. In the past three years major retail and office developments have been completed, are under way or have been committed to start. They are all in excess of £150 million. That includes a recently announced commitment to proceed with a major £60 million development complex at Castle Court. That is due to begin during 1987–88.
Since 1981, the Belfast enterprise zone has succeeded in attracting substantial private sector investment. An additional 2,300 jobs have thereby been created of which 1,600 are new to Northern Ireland. That is no mean achievement. The total investment in the enterprise zone has been £28 million of which £20 million has been in the private sector.
The noble Lord asked about segregation in housing. He asked whether we had had any success in ending housing segregation in the communities. The public sector housing programme in Northern Ireland is undertaken solely on the basis of housing need. Applicants are offered accommodation on the basis of need, but they are free to choose the areas in which they wish to live. That is important. If people want to live in a particular area and their need is great, then the Housing Executive will do all that it can to meet their wishes. I think that it achieves that to an overwhelming extent. The Government provide good accommodation for everyone who needs it. Everyone who knows about Northern Ireland knows that it is the people who can reduce segregation if they wish to do so, but of course people must and will live where they want.

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The noble Lord mentioned the interesting subject of victim support schemes. Over 200 such schemes are operating in Great Britain. The development of such schemes in Northern Ireland is still relatively new. I am advised that the Northern Ireland Office has been discussing with other Northern Ireland departments and public agencies how best to achieve the establishment of more schemes in Northern Ireland. We hope we shall be making our way forward. We expect that some additional funding will be available, but I cannot advise the noble Lord this evening how much that will be.
The noble Lord asked about Co-operation North. We think highly of it and want to praise it for the valuable work it has done. We raised the grant that we made available to Co-operation North this year by £5,000 to £40,000. We are carefully considering the level of grant for next year. We shall note, as we have in the past, the remarks made by the noble Lord, Lord Hampton, and other Members of your Lordships' House.
The noble Lord also mentioned school exchanges. We do not have much on that, but we take our hat off to and praise Co-operation North for all its valuable work. One may be able to couple school exchanges with this organisation, but I am sure that the remarks of the noble Lord will be noted by Co-operation North, which scans the Official Report of your Lordships' House. I am sure that it will take them on board. We shall be interested in and will note the comments of the noble Lord.
The noble Lord, Lord Dunleath, raised a number of fascinating topics, some hitting hard at my department, and hitting home with the noble Lord's accustomed charm and ability. One of the sad elements of the suspension and non-appearance of the Northern Ireland Assembly is that we do not hear or read his forthright contributions to the Assembly. Everybody in Northern Ireland knows the high esteem in which he is held and the ability with which he used to chair the sometimes turbulent activities in that Assembly.
The first point that the noble Lord raised was on cattle smuggling. We all appreciate the concern expressed by the noble Lord and by everyone who I meet in Northern Ireland about the incentive to smuggle cattle from north to south. This arises almost entirely because of the agri-monetary differences between Northern Ireland and the Republic. In considering this matter we take into account many other factors. One is public expenditure in the United Kingdom as a whole. Another is consumer interest; housewives are not altogether too sad when beef prices are affected, especially in their favour.
However, this does not help the Northern Ireland agriculture industry. It does not help the meat plants in the north, which, as the noble Lord so rightly points out, are having problems. But I assure him that the problem of MCAs, green pounds and agri-monetary differences concern my department. They concern me, my right honourable friend the Secretary of State, the Minister of Agriculture, the Minister of State, and other Ministers, who all fight hard for all our sakes for agriculture in Northern Ireland. We are trying to see what we can do to alleviate this major problem which rears its worst side in Northern Ireland.
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I also noted the suggestion of the noble Lord about the setting of common intervention prices between Northern Ireland and the Irish Republic. This may be attractive at first sight, but he of all people may be aware that the operation of such an arrangement would not only have some difficulty with regard to the tax regime, the green pound and so on, but would also necessitate border controls between Northern Ireland and the rest of the United Kingdom. I do not know how popular that would be, particularly in the current political climate in Northern Ireland. It is not a matter that I would wish to raise. I assure the noble Lord that this issue is bound to continue to occupy the centre of our attention.
The noble Lord raised the problem of the Strangford Ferry. I am advised that the ferry is generally reliable. It must be enormously frustrating for people to drive from one end of the Ards peninsula and down the other side and to be looking across a very narrow stretch of water. I am advised that that distance is nearly 45 miles. It may be more if one takes the better roads inland towards Comber. However, I am advised that the service is generally reliable.
In terms of the annual levels of service, the periods during which it has not been provided are negligible. But it is infuriating if that occurs for two or three days. I believe that it was longer than that in November 1986 when mechanical problems developed in the standby vessel when the main vessel was having a refit. That was before the very busy spring and summer period when the service operates continuously. I believe that the service is probably more frequent than at half-hourly intervals. I appreciate that interruptions cause enormous annoyance and inconvenience to travellers and local residents. I assure the noble Lord that every effort has been made to keep any interruption in the service as short as possible.
The noble Lord spoke of tax exemption certificates, fraud and paramilitaries. There were a number of recent convictions in Northern Ireland of which the noble Lord will be aware. They are the latest in a long line of successful prosecutions for tax exemption fraud in Northern Ireland. I understand that over 85 people have been convicted in respect of frauds totalling more than £13.25 million. When the noble Lord puts that into perspective with the amount that he was suggesting was crossing the border as regards cattle going back and forth, it is a fairly substantial success. However, other cases are pending and they remain under investigation.
The Government are satisfied that the Royal Ulster Constabulary, with the full support of the housing executive in Northern Ireland and the other relevant agencies, have made commendable progress in combating what is a potential and very lucrative source of finance for terrorist organisations and paramilitaries, as well as being thoroughly undesirable and a mere racket.
The noble Lord, Lord Dunleath, raised the question of housing in rural areas. Since 1981 expenditure on housing in Northern Ireland has been planned on the basis of the strategy for housing in which the levels of the programme have been calculated to achieve "specified targets" for improving housing conditions and for meeting housing needs. The distribution of the resources of the housing executive is a matter for the

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executive. It will allocate its resources to the regions on the basis of local needs as the executive perceives those needs. The allocation to the housing executive for the year 1987–88, which was made in December last year, matched the bid for resources to mount its strategy programmes. We believe that the executive will have sufficient resources to carry out its plans in all parts of the Province and we believe that that includes rural areas. However, we take the point of the noble Lord that rural areas should not be left out, or feel that they are in any way discriminated against.
The noble Lord, Lord Dunleath, also raised the question of temporary classrooms. Regrettably, it had been necessary to provide temporary classrooms in many schools to meet their urgent needs for additional accommodation. The policy is that the schools' long-term accommodation needs should be met by modern, permanent buildings; but we do not have the resources to meet this aim immediately. My honourable friend Dr. Mawhinney, the Minister responsible for education in the Province, has recently announced a programme of new starts for the year 1987–88 involving no fewer than 24 schools. We hope to be able to mount similar programmes for the next few years.
The noble Lord also raised the question of mentally handicapped children and the fact that their education needs will now be catered for by education and library boards. The boards will take the aim that they must ensure the standards of provision in schools for mentally handicapped children will be on a par with those in other special schools. For the year 1986–87 your Lordships have been asked to approve expenditure of £2 million for the purchase of buses and the provision of accommodation. In addition, £8.8 million will be made available for the year 1987–88, and £2 million of that has been provided for capital expenditure on buildings, equipment and buses for those children.
A major building programme to replace most of the existing schools will be required but the planning is still at an early stage. However, the £2 million will be sufficient to enable the board to make a start in the year 1987–88.
It is right to say that the noble Lord, Lord Blease, raised the question of the residual amount of money for the Northern Ireland Assembly. The provision for the Assembly is required to recover the residual costs, such as the clerk, the members' pension fund and the library. But I should like to stress to the noble Lord, in support of his constant search for value for money and efficiency, that the majority of the staff have gone back to their parent departments.
The noble Lord, Lord Blease, referred to the current constitutional and, above all, political situation in Northern Ireland. I hope he will forgive me if I undertake to draw the attention of my right honourable friend the Secretary of State to the remarks of the noble Lord. I should not want to go further than that, and as far as concerns the paper that was put out by the UDA, we take the view that we have noted this and that is as far as I will go tonight. We believe that any negotiations on political and constitutional life in Northern Ireland should be pursued by the constitutional political parties. The noble Lord knows
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that that is our aim. He, of all people, will know probably better than I exactly what the situation will be from day to day, but I undertake to convey the noble Lord's remarks to my right honourable friend.
The noble Lord, Lord Blease, drew attention to research and development. I will bring his comments to the attention of all of my colleagues, my right honourable friends and my honourable friends. I should not want to do more than that, apart from commenting briefly on the IDB, which he will know operates the research and development grant scheme. Between September 1982 and 1986 the IDB offered grants of £28.4 million against a total expenditure by companies which we estimate at £72.8 million, so that is an average of about 25 per cent. over the period. The IDB is encouraged by the fact that the rate of applications under the scheme has been increasing each year. The IDB board itself is anxious to encourage increased research and development activity and it has embarked on a major promotion of the R&D grant scheme.
The noble Lord, Lord Blease, also raised a subject dear to my own heart, agricultural research and development in Northern Ireland. This would be approximately £10 million to £10.5 million in 1986–87. A similar figure will be made available next year, 1987–88, and I believe that this represents a reasonable share of the total resources which are available for agriculture.
The noble Lord, Lord Blease, raised the question of attendance allowance and invalid care allowance. The administration of both of these allowances may be under pressure, but I believe this is only a reflection of the considerable efforts of the Department of Health and Social Security to publicise the extension of the invalid care allowance to married women. The legislation which gives effect to the Government's decision to extend the allowance did not come into force until 19th November 1986, compared with July 1986 in Great Britain. We feel that this did not have any adverse effect, because arrangements had been made already to match Great Britain's publicity and to deal with claims on an extra-statutory basis pending the introduction of the new legislation.
In September 1986 the department was able to write to each of the 22,000 people who received attendance allowance about the eligibility of the carers to claim invalid care allowance, though in Great Britain it was only possible to contact 60 per cent. of such beneficiaries—the people who should have been receiving this allowance. New beneficiaries since then are similarly advised. The response to all that we have done has been very encouraging, with the result that over 5,000 invalid care allowance claims have been received, while attendance allowance claims have gone up six times. In the light of public interest we propose to issue a further round of press advertisements in the spring and in the summer.
The noble Lord, Lord Blease, also raised the question of the youth training programme. This is not of itself an unemployment measure, but it is a vocational education and training programme with both economic and social aims. The method by which full-time training is delivered is more institution-based. It is more geared to government or quasi-government institutions, such as colleges and training

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areas, than is the case in Great Britain. To that extent administrative costs are proportionately greater, but the vast bulk of YTP expenditure is on direct programme costs. The noble Lord raised the question of the Citizens' Advice Bureau. We are giving consideration to the continuing needs of the association. The allocation of grant which we have approved for next year, 1987–88, should permit improvement in the areas of information and social policy where we have recently been employing additional staff.
The noble Lord also raised the question of community care services. There were some additional amounts. I think that Class 9, Vote 1 takes account of the need to develop domiciliary and community services so that essential care and treatment are available to those people who are being maintained in the community.
I gasp when I look at the clock; but your Lordships have been very kind and I am grateful to noble Lords who have stayed. I have tried to answer all the questions which have been raised. The House may not be exceedingly full this evening, but there are not many opportunities for your Lordships to ask questions of the Government in order that we can account for our stewardship and for the care of everybody in Northern Ireland. Once again, we are immensely grateful for the care, attention and scrutiny given to the order this evening. I guarantee that we shall read through all my replies to check that I have not missed any points. With that, I commend the order to your Lordships.
On Question, Motion agreed to.

County of Cleveland Bill [H.L.]
Returned from the Commons agreed to with amendments; the amendments considered and agreed to.

West Glamorgan Bill [H.L.]
Returned from the Commons agreed to with amendments; the amendments considered and agreed to.
House adjourned at eighteen minutes before ten o'clock.