Lords Sitting of 14 July 1988

Preamble
The House met at three of the clock (Prayers having been read earlier at the Judicial Sitting by the Lord Bishop of Southwark): The CHAIRMAN OF COMMITTEES on the Woolsack.

Waste Imports to the UK
Lord Gregson Lord Gregson asked Her Majesty's Government:
Whether they are in favour of the steep rise in special and non-special wastes imported into the United Kingdom.
The Minister of State, Department of the Environment (The Earl of Caithness): My Lords, there has indeed been an increase in the amount of waste we import, but the latest complete figures for 1986 show that imports were less than one-half of 1 per cent. of waste generated here.
Lord Gregson: My Lords, is the Minister aware that landfill sites for waste disposal are becoming scarce in the most critical areas of the country where there is a maximum amount of waste for disposal? Is it not the case that the vast increase in such waste from overseas means, at the end of the day, that British industry and the British taxpayer will have to pay considerably more for the disposal of waste by the more expensive means of incineration and other methods of disposal?
The Earl of Caithness: My Lords, not all landfill sites are suitable for the disposal of such waste and those which are are unevenly distributed throughout the country. As regards imported waste, in 1986 we imported 53,000 tonnes of special waste and about 130,000 tonnes of non-special waste. I understand that for 1987 the importation of special waste was between 70,000 and 80,000 tonnes and non-special waste was down to about 10,000 to 20,000 tonnes. Our figures arc not complete at this stage. However, on those figures there has been a reduction since 1986.
Lord Lucas of Chilworth: My Lords, is my noble friend aware that doubts have been expressed recently as to the content of some of the waste material imported? Is he satisfied that the Hazardous Waste Inspectorate, which comes under his department, is sufficiently adequate both numerically and technically to deal with what is becoming an increasing problem?
The Earl of Caithness: My Lords, I am grateful to my noble friend for his question, but I believe that it represents a misapprehension. It is up to the waste disposal authorities, which are by law the bodies responsible for the disposal of waste, to check waste which is deposited in landfill sites under the Control of Pollution Act 1974. Her Majesty's Inspectorate of Pollution acts as auditor to the waste disposal authorities.
Lord Parry: My Lords, will the Minister give the House information about the Government's attitude to landfill projects? In light of the fact that in many states in the USA landfill projects are banned, what effect will that have on the waste disposal industry in Great Britain?
The Earl of Caithness: My Lords, if landfill projects are carried out in a proper manner, as we believe they are in this country, it is environmentally safe and beneficial for that process to be continued. However, we shall continue to watch the matter carefully. If there is evidence that the methods which we are using need to be altered, we shall do so.
Lord Campbell of Croy: My Lords, is my noble friend satisfied as to the safety of disposal of ordinary wastes in this country? I am referring in particular to the danger of a build-up of methane gas, bearing in mind that at least one serious explosion has taken place in this country.
The Earl of Caithness: My Lords, waste disposal authorities have responsibility for monitoring wastes. I have received this week a further report from Her Majesty's Inspectorate concerning the incident to which the noble Lord refers. We shall take action on that matter if necessary.
Baroness Nicol: My Lords, does the Minister recall that on 17th May he promised that we should have the new regulations on the transportation of hazardous waste before the Summer Recess? Can he say whether they are available, and will the House have them before the Recess? Has the Minister read the fourth chapter of the third report of the Hazardous Waste Inspectorate in which it expresses grave disquiet about imported waste, and not least about the labelling of canisters, which leaves much to he desired? Do the Government intend to take further steps to improve the labelling of imported canisters?
The Earl of Caithness: My Lords, we intend shortly to introduce regulations on the trans-frontier shipment of hazardous waste. I apologise for the fact that they have not been put before Parliament sooner. As regards labelling of canisters, we are discussing that matter with other government departments.
Lord Kennet: My Lords, will the Minister tell the House whether American standards for landfill waste disposal are tighter than British standards? Presumably they are. Otherwise, why would a large country seek to send its waste to a much smaller one? If American standards are higher, why is it all right for British standards to be lower?
The Earl of Caithness: My Lords, I understand that there is not much difference between the standards. The methods of disposal used in America may be slightly different. The noble Lord asked a previous Question concerning importation of hazardous waste from America. I am now able to update my Answer. As I understand it—my information is sketchy at this stage as I received it only this morning the application for the site in Cheshire has been withdrawn.
Lord Mowbray and Stourton: My Lords, as regards the possibility that American standards for waste disposal may be higher—and I declare an interest as a member of Lloyd's—is my noble friend aware that we are finding, 30 years on, that seepages are a great cause of worry to many people in Lloyd's?
The Earl of Caithness: My Lords, if there are seepages, it causes a great deal of worry to all of us. That is why we take the matter seriously.
Lord Parry: My Lords, will the Minister accept that certain states in the USA have already banned landfill projects? As a result, great ships are touring the seas of the world looking for places to dump American rubbish. It is the effect of that rubbish on the water table which gives the greatest cause for concern.
The Earl of Caithness: My Lords, the result depends on how a site is filled and the geological structure of the land. As the House will be aware, landfill sites in the Netherlands are particularly difficult to use because of the high water table.
Lord Carter: My Lords, is the Minister aware that a large number of serious diseases of animals and plants which have been eradicated in this country are still endemic in many other countries? Does he agree that it is vital for the Ministry of Agriculture, Fisheries and Food to use its statutory powers vigorously to ensure that there is no risk to animal and plant health in this country from the importation of domestic and other waste from overseas?
The Earl of Caithness: My Lords, the noble Lord, Lord Carter, raised a very important point. If waste is to be imported it is first up to the waste disposal authority to decide whether or not it wants to import that waste. It is then up to MAFF to ensure that the waste is up to the standards that we require and that no plant or animal produce is imported illegally. Final regulatory powers are available to the Secretary of State for the Environment under the Control of Pollution Act 1974.
Lord Lucas of Chilworth: My Lords, given the exchanges across your Lordships' House, will my noble friend now answer the question which I asked him? That was: given the present concern with regard to waste is he satisfied that the Hazardous Waste Inspectorate— not the pollution inspectorate—is numerically and technically strong enough to deal with this increasing problem?
The Earl of Caithness: Yes, my Lords. We keep not only the numbers of staff but also the finance available to Her Majesty's Inspectorate of Pollution carefully under review. As your Lordships will have seen from the reports they have produced, they are up to a very high standard.
Lord Gregson: My Lords, the Minister has recently announced details of legislation to be introduced by the Government to amend the waste disposal law, which is important for the control of imported waste. Is the Minister aware that some of those amendments
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to the law were promised seven years ago in response to the report of the Select Committee, and will he say when that legislation will he introduced into the House?
The Earl of Caithness: My Lords, the noble Lord is absolutely right. There is a need for that legislation. We have announced the terms of the legislation but unfortunately I cannot give him a date as to when we shall be able to introduce it.

The Economy
3.12 p.m.
Lord Ezra Lord Ezra asked Her Majesty's Government:
Whether they are concerned about the prospects of overheating in the economy.
Lord Beaverbrook: My Lords, the Government's firm financial policies will continue to control inflation and provide the right background for satisfactory and sustainable growth. Moreover, investment growth is expected to be strong this year and this will further improve the supply potential of the economy.
Lord Ezra: My Lords, does the noble Lord nevertheless not agree that there are certain potentially dangerous signs in the economy: the continued high level of consumer expenditure, the continued expansion of credit, the low level of personal savings, the continued increase in house prices particularly in the South-East, and the consequential impact on the balance of payments? Are these not all causes for concern? All of us are keen that the economy of Britain should be properly managed. What are the Government's measures to deal with those problems?
Lord Beaverbrook: My Lords, as my right honourable friend the Chancellor of the Exchequer has made clear, the economy has recently been growing at an unsustainably rapid rate and needs to slow down. However, that can and should be achieved without drama. The Government are determined to take no risks with inflation, as evidenced by recent interest rate rises. The noble Lord is no doubt aware that interest rates are now at 10 per cent., which is the level that pertained prior to the stock market crash. That is some two and a half points up on only six weeks ago.
Lord Bruce-Gardyne: My Lords, since the Government's own current chosen measure of monetary growth is way outside the target zone set for it, does that not suggest that notwithstanding recent increases in interest rates there is a case for further tightening of monetary policy and a further increase in interest rates?
Lord Beaverbrook: My Lords, my right honourable friend the Chancellor of the Exchequer has indicated that if inflation appears likely to increase he will not hesitate to take action to raise interest rates in order to try to stop any such increase.
Lord Peston: My Lords, having mentioned the rise in investment, would the Minister care to comment about the danger of that increased investment—which is sorely needed— being brought to a premature halt if interest rates are raised further?
Lord Beaverbrook: My Lords, it is true to say that investment is running at a higher level than was originally forecast in the FSBR forecasts. Recent rises in interest rates may indeed slow up that rate of investment a little. But it seems that the rate of investment is at a healthy level. It was originally forecast to run at a level of 11½ per cent. in 1988 in the manufacturing sector but is running at a higher level at the moment.
Lord Rippon of Hexham: My Lords, would my noble friend the Minister agree that increasing interest rates does not necessarily control inflation but may in fact fuel it, apart from other side-effects? In so far as the noble Lord, Lord Ezra, suggests that there is a rise in consumer expenditure which is in some ways dangerous, would it not be a good idea for the Government to do something to stop the banks and others issuing credit cards and excessive borrowing at rates of interest which would make a Mafia loan shark look like a charitable institution, and which incidentally would have landed the Mafia loan shark in prison for a very long time?
Lord Beaverbrook: My Lords, the Government's main weapon against inflation is interest rates and for the foreseeable future it will remain interest rates. I would also say to my noble friend that I do not believe that a return to direct credit controls would be very effective. I think that they would cause a major distortion of the market. Such controls can easily be circumvented in the highly developed global credit markets of today.
Lord Seebohm: My Lords, are we to understand from what the Minister has just said that interest rates are the only weapon that the Government have to control inflation?
Lord Beaverbrook: No, my Lords. I said that it is the Government's principal weapon.
Lord Hatch of Lusby: My Lords, is it not the case that the Government's control of monetary policy has been completely abandoned? Is it not also the case that North Sea oil revenues are rapidly dropping and that raw material prices are rapidly rising? Is that not a prescription both for inflation and for continuation and escalation of unemployment?
Lord Beaverbrook: My Lords, the North Sea oil revenues are doing very well. There was a surplus of £4 billion this year in our balance of payments. Employment figures are also doing very well, with considerable decreases in the last year or so. I would also point out that as money supply has increased my right honourable friend the Chancellor of the Exchequer has seen fit to increase the cost of money. I believe that that will be an effective means of controlling inflation in the economy.
Lord Stoddart of Swindon: My Lords, does the noble Lord not appreciate that the weapon which is being used is a blunt instrument and simply is not working? Is it not the case that high interest rates are damping down investment in industry but are not damping down demand for goods and are certainly not damping down demand for houses? The building societies have not put up their interest rates. Does the Minister not understand that if the Government do not take action the enormous increase in the price of houses, particularly in the South-East, will merely drag up wages, cause inflation and put the country's economy at risk?
Lord Beaverbrook: My Lords, in answering the noble Lord, Lord Peston, earlier I stated that investment is running at an even higher level than the Government had predicted. The Government's policies have brought steady growth with no resurgence of inflation, unlike most previous upswings. Our aim is to reduce inflation further and we shall continue not to be deflected from that policy.
Lord Bruce of Donington: My Lords, in noting that the noble Lord has not replied specifically to the Question on the Order Paper, may I ask him whether he is aware that output in the United Kingdom is at the moment running at one-quarter of the rate that it was in 1987? Does he not recognise that for the 2 to 3 million unemployed people in this country the temperature of the economy. far from generating any heat, is completely frozen?
Lord Beaverbrook: My Lords, the Government's policies are encouraging considerable growth within the economy, and I should have thought that growth in economic activity is the best way to bring down unemployment.

Passport Office: Service
3.20 p.m.
Lord Boyd-Carpenter Lord Boyd-Carpenter asked Her Majesty's Government:
What action they are taking to improve the efficiency of the service to the public given by the passport office.
The Minister of State, Home Office (Earl Ferrers): My Lords, the whole system by which passports are issued in the United Kingdom is being computerised in a phased programme starting this month at the Glasgow Passport Office and extending to all six passport offices by the end of 1989.
Computerisation is intended to enable the passport offices to provide a quicker and more reliable service to the public, especially at times of peak demand.
Lord Boyd-Carpenter: My Lords, I thank my noble friend for that interesting reply. Is it to be assumed from his Answer that until this computerised system is running and has overcome the initial troubles that such systems always have, we cannot look for any improvement in the long delays suffered by persons applying for passports or simply for renewal of them?
Earl Ferrers: My Lords, my noble friend will be aware that at this time of the year the demand in applications for passports is at its greatest. In fact, it is up 25 per cent. on last year. Certainly when the peak season has passed there will be a more expeditious turn-around on applications.
Lord Elwyn-Jones: My Lords, can the Minister say how long it takes to obtain a passport on application to the passport office?
Earl Ferrers: My Lords, I am sure that the noble and learned Lord would like to know that it depends on the passport office to which he directs his application. For non-urgent postal applications to London, the average length of time is 49 days; in Glasgow it is 34 days; Peterborough takes 32 days; Newport 20 days; Liverpool 15 days and in Belfast it is three days.
Lord Orr-Ewing: My Lords, can my noble friend explain why it was thought that there would not be an increase in demand for passports in the summer months? Has this not happened every year since passports were introduced? Is it not possible to foresee such an event and perhaps re-employ some retired people who would be happy to return to work in order to offset the peak period, improve efficiency and speed up delivery? Does he not agree that it is unacceptable in these days to wait two and a half months for a passport to be supplied when every other nation can do it in a matter of days?
Earl Ferrers: My Lords, of course these things are possible to anticipate. That is the reason why the Government are spending £7 million trying to expedite matters by a programme of computerisation. It is possible to obtain a quicker, 10 to 15-day service if one calls at the passport office in person; but it means that the more people who apply in person, the longer it takes to deal with all the applications.
With regard to the other point raised by my noble friend concerning the employment of more people, 270 more staff have been recruited since the beginning of this year and 61 per cent. more overtime has been spent on dealing with passport applications this year than was spent last year.
Lord Bonham-Carter: My Lords, does the Minister agree that the increase in staff was largely in order to take up the backlog of unopened letters at Lunar House and elsewhere which caused a certain amount of trouble? Can he tell us how many unopened letters now remain at Lunar House?
Earl Ferrers: My Lords, I think that the noble Lord has Lunar House on the brain. We are talking about a totally different place. Lunar House deals with immigrants; we are dealing with passports. One is in and the other is out.
Lord Boyd-Carpenter: My Lords, is my noble friend able to say whether the figures that he gave to the noble and learned Lord, Lord Elwyn-Jones, for the current period are better or worse than they were at the same time last year?
Earl Ferrers: My Lords, my noble friend will be delighted to know that they are better. This year the figure for London is 49 days while last year it was 65 days; this year for Glasgow it is 34 days and last year it was 49 days; for Peterborough it is 32 days compared with 24 days last year; Newport takes 20 days whereas last year it took 49 days; and Liverpool now takes 15 days whereas last year's figure was 38 days. Belfast remains the same at three days.

Cannon Cinema Chain
3.25 p.m.
The Viscount of Falkland The Viscount of Falkland asked Her Majesty's Government:
Whether the British film industry can expect their support should the sale of the Cannon cinema chain for other uses follow the announcement of the sale of Elstree studios by Cannon.
Lord Beaverbrook: My Lords, I am not aware that the Cannon group has any plans to sell its cinema chain. Any sale, whether of the chain or of individual cinema sites, would be a matter for its commercial judgment.
The Viscount of Falkland: My Lords, I thank the Minister for that Answer but I hardly think that it will bring cheer to the film industry. Does he not agree that in the short time since the Cannon group took over the film interests of Thorn EMI, that group has fallen down on its undertakings and commitments in almost every respect? Indeed, so far as concerns the Elstree film studios, it very recently rejected an offer from a British group to take over the studios and run them should there be any difficulties within the Cannon group; it gave that prospective purchaser to understand that all was well and it had no intention of selling. Is it not therefore quite normal that the film industry, and indeed the public, should now feel very concerned that the next part of that group, which covers nearly 50 per cent. of the cinema screens in this country, could well pass into other hands which might have very little intention of keeping them as cinemas, with the social effects that that implies?
Lord Beaverbrook: My Lords, I should not like to speculate on what may or may not happen to the assets of the Cannon group in this country. It is a matter of record that the company has experienced severe financial problems affecting its international interests. I understand that equity of at least 100 million dollars has recently been injected into Cannon but Cannon is a private sector company and it is not for the Government to intervene in its commercial decisions.
Viscount Mersey: My Lords, now that Elstree film studios have been listed by Hertsmere Council, does my noble friend agree that it would be difficult to use them for any purpose other than filming?
Lord Beaverbrook: My Lords, the future use of the studio property is a matter for the commercial judgment of the new owners, subject to any consents

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which may have to be obtained from the planning authorities. I, too, am aware of press reports on the listing, but I understand that the Department of the Environment has not yet been notified officially.
Lord Lloyd of Hampstead: My Lords, is the Minister in fact saying that the fate of those great studios at Elstree is a mere matter of commercial judgment? Does he not agree that the studios are an important component in our film industry? Are the Government not willing to show some concern about the future of those studios and exert whatever influence they can to affect the outcome of this sale, which is in breach of previous undertakings?
Lord Beaverbrook: My Lords, it is not for the Government to try to intervene in commercial decisions. The owners of the studios are best placed to make commercial judgments as to their future. The noble Lord knows better than I that the Government support the British film industry through a number of initiatives, including the National Film and Television School, of which he has great knowledge.
Lord Harmar-Nicholls: My Lords, is my noble friend aware that, although the film industry is a large and growing world industry, in this country it seems to be getting smaller and smaller? Ought not the Government, without interfering in a private concern, to pay more attention to ensuring that we preserve such an important industry, quite apart from their efforts to establish new industry? At the moment things do not seem to be happening that way.
Lord Beaverbrook: My Lords, the Government do not believe that the commercial British film industry needs wholesale subsidy. However, we recognise that in some areas there are special difficulties and hence our support through British Screen Finance Limited, the British Film Institute and, as I said earlier, the National Film and Television School.
Lord Jenkins of Putney: My Lords, is it not to be welcomed that at long last the noble Lord has got round to the idea that there is a role for the Government in this matter? Is this not a case in which he might even consider the possibility of an element of de-privatisation? Does he not agree that in the past government money has played a very beneficial role in the film industry? Would he not consider the possibility that its re-entry might be necessary at this time?
Lord Beaverbrook: My Lords, the noble Lord will not be surprised if I do not follow him down the route of deprivatisation. However, the Government wish to see as much activity as possible in the film industry in this country but within the policy guidelines that have been laid down and operated by the Government.
Lord Dormand of Easington: My Lords, is the Minister aware that the closure of Elstree Studios would cause great damage to the ability of the British film industry to compete internationally? In view of the blatant breaking of the agreement by Cannon
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and of the fact—despite what the Minister has said—that Elstree Studios have made a profit for a number of years now, is that not the strongest case for intervention by the Government?
I visited the studios yesterday. There was unanimous support for the first-class facilities which exist there from international film stars—they are making two features films there at the moment—from producers, directors, technicians and everybody.
Noble Lords: Speech!
Lord Dormand of Easington: My Lords, the Government ought to take more cognisance of these factors than they have up to now.
Lord Beaverbrook: My Lords, I was very interested to hear the noble Lord's report of the activity at Elstree. It is a matter for the owners to make a commercial judgment on the future of the studios. The Government will not and could not intervene in such decisions. However, the Government would like to see as much activity as possible in the industry in this country.

Business
Viscount Davidson: My Lords, it may he for the convenience of the House if I announce that the Committee stage of the Health and Medicines Bill will be adjourned at approximately 7 p.m. for approximately one hour. During this adjournment the Docks and Harbours (Rateable Values) (Amendment) Order 1988, the EUMETSAT (Immunities and Privileges) Order 1988, and the EUTELSAT (Immunities and Privileges) Order 1988 will be taken.
Summer Recess
Viscount Davidson: My Lords, it may also be for the convenience of the House to know that, subject to the progress of business, the House will adjourn for the Summer Recess on Friday 29th July and return on Monday 10th October. The House will sit at 11 a.m. on Friday 29th July.
Bredero (Bon Accord Centre, Aberdeen) Order Confirmation Bill
Brought from the Commons, read a first time, and (pursuant to the Private Legislation Procedure (Scotland) Act 1936), deemed to have been read a second time and reported from the Committee.
Highland Region (Lochinver Harbour) Order Confirmation Bill
Brought from the Commons, read a first time, and (pursuant to the Private Legislation Procedure (Scotland) Act 1936), deemed to have been read a second time and reported from the Committee.

Health and Medicines Bill
3.33 p.m.
The Earl of Arran: My Lords, I beg to move that the House do now resolve itself into Committee on this Bill.
Moved, That the House do now resolve itself into Committee.—(The Earl of Arran.)
On Question, Motion agreed to.
House in Committee accordingly.
[The LORD ABERDARE in the Chair.]
Clause 1 [Vesting of property etc. of Corporation in a company nominated by the Secretary of State and dissolution of Corporation]:
Lord Ennals Lord Ennals moved Amendment No. 1:
Page 1, line 6, leave Out subsection (1).
The noble Lord said: If the amendment standing in my name on the Marshalled List is carried a number of subsequent amendments would need to be made to Clauses 1 to 6. However, let me move the amendment first.
The case has not been effectively made out for any change in government policy such as is proposed in the Bill to abolish the General Practice Finance Corporation, and in fact to privatise it. In the debate on Second Reading of this Bill, the issue of the abolition of the GPFC, and the establishment of a new body to replace it, was hardly touched upon in any speech and certainly not by the Front Bench. Nothing was said that would justify what is being proposed here. It would be wrong that the matter should pass through the Committee stage without the issue being properly considered.
As it stands, the clause would abolish the General Practice Finance Corporation if my amendments were not accepted. That is basically because the Government wish to reduce the public sector borrowing requirement. Amendment No. 1 would omit subsection (1) and therefore leave the GPFC in existence because there are insufficient grounds for its abolition. Indeed, to improve primary health care the Government should examine how they can extend the powers and influence held by the GPFC.
The government proposal is ideologically motivated as opposed to being a practical move. The corporation funding represents only about one-hundredth of 1 per cent. of the PSBR. We are therefore talking about cutting one-hundredth of 1 per cent. of the PSBR. Not only is that an ill-judged motivation, in my view, but its effect could be a serious threat to primary health care. There has been some discussion about private capital. I am in no way opposed to private capital being formed. In fact, the GPFC is not debarred from raising private capital. It is certainly within its power. If the motivation is to increase the use of private capital, abolition of the corporation is certainly not necessary. It can already obtain money from the private sector if it wishes to do so.
If we are talking about public spending, the corporation has in no way been a drain upon the Exchequer. It has made a modest profit. We look for assurances from the Minister about what will happen
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to the profit if the amendment that I move is not carried and the corporation's future is threatened.
General practice premises, as is well known, are extremely important. General practitioners are the anchor of primary health care. They must be able to provide a 24-hour service. They must deal in prevention as well as treatment. We should encourage them to develop a wider range of services such as family planning and ante-natal and postnatal care. We also expect them to be involved in psychiatric and other work. Most patients' contact with the health service is with their general practitioner. Accepting that GPs are involved in such a wide range of care, it is important that they have a proper base on which to operate and proper premises. I am sure that noble Lords in all parts of the Chamber would wish to ensure that that is so.
If things go wrong with the primary health care system, as sometimes happens in inner city areas, it has unfortunate consequences for hospitals. For example, if there is not a proper range of prevention, one is likely to have more people in hospitals because the GP service has not been able to help. If people are not confident of the treatment that they are likely to have from their GP, they are more likely to badger the GP to refer them to hospital for a second opinion. One already sees accident and emergency departments being clogged up by people who ought to be seen by their GP but who cannot get their GP to come out at night and do not have confidence in the deputising service.
What has led the Government to the conclusions that they have reached in this Bill? On 4th April 1984, when the Second Standing Committee on Statutory Instruments was being considered, the former Minister of Health, Mr. Kenneth Clarke, was cited:
"Honourable Members may know that at one stage I had doubts about the continuing need for the corporation. We carried out a review of its work to consider the possibility of encouraging doctors to look for their finance from banks and ordinary commercial sources. The review was thorough, conducted by myself and my colleagues at the Treasury and our respective Departments. We had discussions with the clearing banks about other options. Our findings showed that the corporation continued to provide a necessary and important service to general medical practitioners in a very cost-effective way compared with any other possibilities that we could find. I think we all accept that we have a long way to go before every general practitioner operates from premises which are attractive and really suitable, and it is therefore essential that the corporation should continue its work. The review satisfied me that this is the right way to go and I therefore have particular confidence in commending to the Committee the work of the corporation and this order increases its borrowing powers".—[Official Report, Commons, 4/4/1984; cols. 4–9.]
Not long after that, on 2nd May 1984, in dealing with Clause 2 of the Health and Social Security Bill the Minister said:
"As I said when we debated the statutory instrument recently, there has been a review of the corporation, and we have examined that method of financing improvements to the surgeries of family doctors. As a result, my Treasury colleagues and myself are fully satisfied that it is a fully effective and cost-effective way to enable doctors to carry out those improvements, from which doctors and patients throughout the country benefit".—[Official Report, Commons, 2/5/1984; cols. 365–366.)
Even in the White Paper which preceded the Bill in paragraph 3.55 it is stated:
"if evidence should emerge that private sector funds are not available to doctors practising in these areas, the Government will he prepared to consider making arrangements to ensure that funds are made available".
One could hardly have from a former government Minister, the Minister at that time, a more confident assessment of the role of the corporation.
Before we abolish a body so highly praised by the Government and yet doing such a necessary task we should ask the Government for what reason they have totally changed and repudiated the views expressed by the former Minister after what had been a thoroughly detailed study? At this stage I warmly welcome a statement from the Minister which justifies this remarkable about face, which as I said before in no way denies the opportunity of private capital being involved together with public capital in doing the essential task of ensuring the GPs have a proper place from which to carry out their functions. I beg to move.
Lord Winstanley: I wish to support the noble Lord, Lord Ennals, in his amendment, despite the fact that were it to be carried, as I hope it will be, I should not be able to move my subsequent Amendments Nos. 2, 8, 9 and 10 which are designed to introduce certain safeguards were we to go ahead with privatising the General Practice Finance Corporation. I concur entirely with the noble Lord, Lord Ennals, as no doubt will other noble Lords in all parts of the Committee, on the importance of general practice and its being conducted on premises which are wholly adequate and fully staffed. The staffing complement of a general practice is in many ways closely related to the adequacy of the premises used.
The General Practice Finance Corporation over the years has done a great deal to improve standards of general practice by providing money to build purpose-designed practice centres in which the practitioners and their staff are adequately housed and proper provision is made for the patients. That work has been immensely valuable and has done a great deal to improve the standards of that part of the National Health Service, notably the family practitioner committee services, which I believe are crucial and which the former Minister, Mr. Kenneth Clarke, also thought were crucial. He paid many tributes, as the noble Lord, Lord Ennals, said, to the work of the corporation.
My later amendments, which I may not be able to move, are designed to introduce certain safeguards. I shall not go into those in detail, except to state my anxieties about the present system. I agree entirely with the noble Lord, Lord Ennals, that if this major change is to be made—in other words if the General Practice Finance Corporation is to be privatised—the case has to be fully made out in your Lordships' Committee because it was not fully made out in another place and nor was it tested there because of the constraints of time. We are not under quite the same constraints here in Committee and therefore one wishes to hear the arguments deployed fully as to why this major step should be taken.
My anxieties about it are that a privatised General Practice Finance Corporation may be motivated much more by financial considerations than by the needs of the National Health Service. For example, I fear that it might find it more attractive to lend money for the building of practice premises in areas of the country in which property values are high and therefore risks are minimal, rather than to lend the money where it is most desperately needed for National Health Services purposes, in parts of
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Merseyside and other urban areas where property values are not high and where a privatised finance corporation might regard risks as unduly high. That is my fear. I also seek to make sure that if the corporation becomes privatised it will act invariably in the interests of the National Health Service rather than of the finance corporation or in other ways in the interests of government finance.
I shall say no more at the moment, but I shall be interested to hear the Government's justification for making this major change in an institution which has served the nation so well for so many years.
3.45 p.m.
The Parliamentary Under-Secretary of State, Department of Health and Social Security (Lord Skelmersdale): I do not want to start off on the wrong foot with the noble Lord, Lord Ennals, by being too brief on this or any other amendment, but I have to advise the Committee that if my throat totally siezes up my noble friend Lord Arran will be taking over at very short notice.
On Second Reading, and contrary to what the noble Lord, Lord Ennals, said, I referred to Clauses 1 to 6 when I said:
"Also of relevance to GP premises are Clauses 1 to 6, which concern the General Practice Finance Corporation. As we announced in the White Paper, our intention is to change the constitution of that body in order to allow maximum use of private sector funds. These clauses give effect to that intention. We sec no reason to maintain the existence of a public sector body to lend to GPs when the private sector has in recent years shown itself perfectly capable of doing the job".—[Official Report, 26/5/88; col. 1033.]
So this is the core of my argument. Reducing the public sector borrowing requirement is in itself a laudable aim and one that this Government have been signally successful in achieving over the years. But that is not our primary reason for wishing to place the General Practice Finance Corporation in private ownership.
Financing the acquisition and improvement of the premises of family doctors is an activity which is already well established in the private sector. I agree, incidentally, with the noble Lord, Lord Ennals, and everything he has said about the need for achieving that very desirable aim. The question which concerns the Committee is whether this can be better done in the public sector or the private sector.
A number of leading financial institutions are clearly very interested in offering this and a package of other financial services to general practitioners. We are also encouraged that several such institutions with what one might describe as household names have already expressed an interest in acquiring the corporation. This tells us that there are ample funds for this high class business readily available.
Competition among lenders would be very healthy. In the financial climate which this Government have generated no one would be arguing a case for establishing a GPFC in 1988. This is not 1966, when it was established. The need which now exists is to concentrate public resources on those issues which only the public sector can realistically be expected to cope with.
I have been asked what has changed since my right honourable friend, currently the Chancellor of the

937
Duchy of Lancaster, made his statements about the GPFC back in 1984. That is exactly what has changed. The financial climate of this country has been climbing year by year to what may now be regarded as a very healthy temperature. It seems clear to me that the essence of what the then Minister said was that it is essential that the work of the corporation should continue, and the noble Lord, Lord Ennals, and I agree about that. The means, however, by which it is carried out is not sacrosanct.
Circumstances can alter cases. In the light of a further review in 1986 by Hambros Bank, the Government have taken the view that the corporation not only can but should survive and prosper as a viable independent company within the private sector. We are not seeking to abolish or even to modify the essential role of the GPFC as a lender to family doctors. Indeed, the effect of our proposals will be to expand it, for example, to other classes of borrower.
I have been asked what would happen to the profits. Any profits generated by the new corporation after it ceases to be wholly publicly owned will be utilised by it as it thinks fit. That would he the case with any other Companies Act company.
The noble Lord, Lord Winstanley, suggested that the GPFC can borrow from the private sector at the moment and asked what will he the difference. First, because the borrowing still counts towards the public sector borrowing requirement it will affect macroeconomics and the state of the currency on the international market, and so forth. The GPFC is a public body and its borrowing is backed by Treasury guarantee; that is to say that the public sector underwrites the risk. Secondly, because there is no longer any need for such enterprise to be conducted in the public sector, it can properly be left to private enterprise to provide those services as is increasingly becoming the case.
The noble Lord, Lord Ennals, was interested in the situation in the inner cities and remote rural areas after privatisation. Because of the special allowances made to general practitioners for the use of their surgery premises, the unrivalled track record that they have for the repayment of loans and the level of remuneration and reimbursements generally, family doctors are a very attractive prospect for private sector lending institutions. Nonetheless, I am aware that some doctors are worried about the implications of the proposed reconstitution of the GPFC for the continuing availability of loans in commercially difficult areas.
I do not altogether share their view about the likelihood of any difficulties of that kind. However, I believe that it is right that we should seek the necessary powers—in this case in Clause 2 of the Bill—as a safeguard so that we arc fully equipped to tackle any special needs which may in future arise. That is entirely consistent with our aim to ensure that recent improvements in surgery premises are maintained, particularly in underprivileged areas.
Finally, we fully expect and believe that the ethos of the corporation will be preserved in the successor company. We are at present engaged in discussions with representatives of family doctors directed to that
938
end. The outcome of the discussions will be reflected in the memorandum of sale and will form part of the negotiation with prospective purchasers. We expect to achieve a stronger GPFC with ample funds available for lending and offering a wider range of financial services to all the family practitioners in contract with family practitioner committees. That is why we are carrying this out and why the original purport and the safeguards are in Clauses 1 to 6 of the Bill. If the amendment was passed not only would the amendments tabled by the noble Lord, Lord Winstanley, fall but so would approximately one-third of the Bill.
Lord Ennals: We could get through it quicker that way, could we not? I should like to express sympathy with the noble Lord for his throat condition. If I rise to my feet and put a number of questions it is not that I am trying to tire his throat but that I am trying to satisfy myself about what best to do in the interests of the Bill and the general practitioners involved.
I should like to ask the noble Lord one or two questions. I am grateful to him for the assurances that he has given. First, I quoted from the remarks of the right honourable Kenneth Clarke which were made following an inquiry carried out by the DHSS and the Treasury. At that time there was great satisfaction with the performance of the corporation. The Minister may say that the situation has changed because the economy is stronger. Has there been a further inquiry which has led the Government to believe that their present proposals, which are so different from those put forward four years ago, are based on a sound assessment'? Has there been a further inquiry?
Secondly, in the decision reflected in the Bill is there in any way dissatisfaction with the performance of the corporation which now exists? Normally, if there is to be privatisation, the Government come forward and imply that in some way or other the system that they wish to change has not proved to he totally in the national interest. Does the Minister have any criticism or comment to make on the performance of the corporation so far and are there any last words before its demise?
Thirdly, I referred in my introduction to the paragraph in the White Paper. I said that should evidence emerge that private sector funds are not available to doctors practising in those areas will the Government be prepared to consider the matter? I now read that the Government will be prepared to consider making arrangements to ensure that funds are made available.
The anxiety reflected is also shared by the British Medical Association. It said that the GPFC was set up in 1966 when doctors in unattractive or underprivileged areas found it difficult to raise money from private sources at economic rates in order to improve their premises. It states that there is evidence to show that that is a continuing anxiety and that there is no conclusive evidence that practices in those areas will he able to raise funds entirely from the private sector. The Minister touched on the issue but I should like to know whether he is entirely satisfied that the private sector will be able to meet the needs which the BMA anticipates.

939
The BMA goes on to raise the point that in Clause 2 the Secretary of State is given discretion to guarantee certain loans. It seeks reassurance that general practioners working in underprivileged areas will be able to obtain the necessary funding for their premises. I should like to have reassurance that that is a real commitment and that underprivileged inner city areas, and other areas for that matter, can, under the proposals made by the Government, rest assured that they will receive the necessary funding. I hope that the Minister will be able to give me the assurances for which I am asking.
Lord Skelmersdale: I said earlier that circumstances have changed since 1984 when my right honourable friend the then Minister for Health made his comments. Not only have the economic circumstances of the country changed but there was a further review in 1986 carried out by Hambros Bank and the Government have now taken the view that the corporation can and should survive and prosper in the private sector.
No, 1 cannot sell this to the Committee as government dissatisfaction. The corporation is doing a perfectly good job and I cannot see that there is now any point in its being backed by the private sector. I can see no rationale for that at all.
As regards Clause 2, with which we shall deal shortly, the purpose is to provide a kind of insurance policy for doctors. I am sure that that is what the noble Lord would like. Its purpose is to enable the Secretary of State to exercise powers of guarantee or indemnity in respect of the whole or any part of the loan to a family doctor for his or her practice premises where they are used for the provision of general medical services under the health service. That happens at present and it will continue to happen in the future. I hope that that will provide reassurance for the noble Lord.
Lord Ennals: I am grateful to the Minister for that reassurance. My concern is not to raise an ideological issue but to ensure that what we are doing is best for the general practitioners. I am grateful to the Minister for the assurances that he has given and I beg leave to withdraw the amendment.
Amendment, by leave, withdrawn.
4 p.m.
Lord Winstanley Lord Winstanley moved Amendment No. 2:
Page 1, line 14, at end insert—
("(1A) The Secretary of State shall, after consulting such bodies as appear to him to represent the interests of the public within the national health service, appoint three directors to the successor company to represent the interests of the public in the management of the company.").
The noble Lord said: I note that this amendment is grouped with Amendment No. 7 in the name of the noble Lord, Lord Prys-Davies, and my Amendment No. 8. These amendments relate to what I said on the earlier amendment moved by the noble Lord, Lord Ennals; in other words, if we are to proceed with a privatised General Practice Finance Corporation, we must have certain safeguards.
Amendment No. 2 seeks to establish one particular safeguard. Under the Bill as it now is, it is noted that
940
the Secretary of State has the duty to appoint the directors of the new corporation, and he appoints them all. In his earlier reply the Minister told us about the extent of discussions with doctors and general practitioners, and I know that detailed discussions have been going on with the General Medical Services Committee and others. Therefore, I have no doubt that the interests of the doctors will be amply considered.
Amendment No. 2 states:
"The Secretary of State shall, after consulting such bodies as appear to him to represent the interests of the public within the national health service, appoint three directors to the successor company to represent the interests of the public in the management of the company".
Much has been said about the interests of general practitioners and I have no doubt that they will be safeguarded, as will the interests of the DHSS and the Treasury. But very little has been said about the interests of the patients, and the public are the patients. I should like to see appointed as directors—and the Secretary of State does the appointing—people who in the opinion of the Secretary of State can represent the opinions and attitudes of the patients.
Why do I ask for three? One would not be enough, because we have to consider the different geographical areas. The amendment states:
"after consulting such bodies".
Which bodies are those? It is possibly with the community health councils or their equivalent in Scotland. At least it will be bodies which could give authoritative opinions as to the need for substantial improvements in practices in certain areas. On that amendment, I hope that the Minister can give us some reassurance.
Since this amendment is grouped with Amendment No. 8 perhaps I may speak to that now. That amendment comes under Clause 3 and adds the words:
"provided that no such power shall be exercised in a manner prejudicial to the interests of the national health service".
That is the introduction of a further safeguard in the event of this privatised finance corporation being established.
The first amendment is quite simple. I hope that the Minister will see no objection to it, though he may quarrel with the numbers and procedures. Surely he must agree that, among the directors of such an important company, performing a very important public service, a service which is vital to members of the public as patients, there should be adequate representation on the board of people who can speak on behalf of the public.
I accept that the Minister may well say that everybody is a potential patient. I know that. Doctors are potential patients, as are members of the Civil Service and Ministers in the departments. I should like to see the Secretary of State give some thought to appointing to that body people who are known to be able to represent the interests of the patients so that we can take care of the anxieties expressed earlier; namely, that a privatised body of this kind might be inclined to lend money very readily in areas where property prices are very high and the risks are

941
minimal but might be reluctant to lend money in areas where it is desperately needed—urban areas and possibly some rural areas where there is a higher risk. Those are matters upon which I am sure directors appointed by the Secretary of State to represent the public interests might well be able to voice an opinion on the board of this new company. I would hope that those opinions would be considered carefully. However, they cannot be considered carefully if they are not heard. I hope that the Minister will respond favourably and sympathetically to these amendments. I beg to move.
Lord Prys-Davies: I should like to support the amendment moved by the noble Lord, Lord Winstanley, and adopt his arguments. I believe that it is important that the opinions of the public, and in particular those members of the public who have a special interest in the health service, should he voiced within the successor company.
Amendment No. 7 is grouped with Amendment No. 2 and I should like to speak to Amendment No. 7, if that meets with the convenience of the Committee. That is really a probing amendment. The noble Lord, Lord Skelmersdale, has already referred to the powers conferred by Clause 2. I particularly welcome his interpretation of subsection (1)(a). This amendment refers to Clause 2(4), which appears to be a sweeping clause investing considerable powers in the Secretary of State. We should like to know from the Minister what is the Government's justification for vesting that sweeping power in the Secretary of State.
In legislation one does not often come across the words: "in the national interest", though obviously we do from time to time. Is this phrase in the context of subsection (4) synonymous with the phrase: "in the public interest"? I ask that because if it is synonymous with the public interest, one can weigh in the balance concepts or issues such as fairness or indeed justice itself. I am not quite sure whether one is entitled to bring the concept of justice and fairness into the scales when deciding an issue of national interest.
There is another question. Who ultimately is to decide whether the exercise of the power on a particular occasion is in the national interest? Can the Minister explain to the Committee whether that is to be in the sole discretion of the Secretary of State or, linking that to what I said earlier, will the courts have the right to question the Secretary of State's judgment to decide the issue? They would obviously exercise their judgment according to the facts of the case.
I ask that question because in the last limb of subsection (4) we have this reference to the power being exercised:
"notwithstanding any rule of law".
Does that override the courts' right to weigh in the balance the concept of justice? As I said, this is a probing amendment and I should he very grateful if the Minister could throw whatever light he can on the clause.
Lord Skelmersdale: I understand that in these three Amendments, Nos. 2, 7 and 8, both noble Lords are seeking reassurances on what is meant by the various parts of the Bill.
I should like to begin by advising the noble Lord, Lord Winstanley, that it is already our intention to arrange for representatives of the medical profession to nominate directors to the successor company. Clearly that would be right. What I am not so sure is right is what the noble Lord is asking for; namely, for the Secretary of State to appoint directors to what will be a private limited company. I cannot think of any other place in English law where that has happened and I can imagine that there would be constitutional questions on that. It would be unlikely to be acceptable to a prospective purchaser and could adversely affect the prospects of sale.
The successor company will he lending money to family doctors in a competitive market. Many family doctors already obtain their finance from other companies to which the Secretary of State does not appoint directors. That has not proved to be against the public interest. We expect and believe that the financial institution investing in the successor company will be of a type which will be very much aware of the need to safeguard the interests of the public in the conduct of its business. Indeed, there is the Companies Act and the various consumer Acts to back that up, as there would be with any other Companies Act company.
The noble Lord, Lord Prys-Davies, with his lawyer's eagle eye, asked what we mean by the public interest in Clause 2(4).
Lord Prys-Davies: The national interest.
Lord Skelmersdale: I am sorry, the national interest. The purpose of that subsection is to deal with a problem that could arise concerning the successor company's borrowing during a possible interim period between vesting and sale. Between establishing the company and the sale of it there might be circumstances where the public interest would override that of the company and the Secretary of State may wish to exercise his powers in accordance with the former. An example would be where, although increased borrowing by the company might be beneficial to it, it would be undesirable on grounds of public policy.
This problem has arisen in the past and provision in privatisation legislation to avoid it is well-precedented. For example, I am advised that it is found in the Airports Act 1986, Section 9, the Gas Act 1986, Section 68(1) and the Telecommunications Act 1984, Section 67. In parenthesis, let me say that I regard the three stages of the GPFC as described in the Bill as rather like the three stages of man. There is the GPFC as it currently is, a fully-fledged public sector organisation—a quango, if one prefers. There is a short period where it will still be publicly owned but it will be a Companies Act company. There is then a third and presumably very much longer period where it will he fully in the private sector.
As I said earlier, I cannot see that its role and rationale will be any different. During the 22 years of its existence the corporation has never exercised

943
any of its powers in a manner prejudicial to the interests of the National Health Service. There is no reason to believe that it will exercise its new powers in that way. However—and this is the reassurance that the noble Lord, Lord Winstanley, seeks—in the unlikely event of its attempting to do so, the Secretary of State has the powers of direction under Section 4 of the National Health Service Act 1966. I hope that all three points reassure noble Lords.
Lord Ennals: I have to say that I am not impressed by that reply from the Minister. He seemed to rest part of his argument on the fact that the amendment would perhaps be giving too much power to the Secretary of State. However, the amount of power given to the Secretary of State in Clauses 1 and 2 is enormous. Clause 1(3) states:
"The Secretary of State shall have power, with the consent of the Treasury"—
that does not reduce his power very much—
"to acquire, hold and dispose of stocks, shares or other securities of the successor company".
Clause 1(5) states:
"The Secretary of State may by order made by statutory instrument not later than the day on which an order is made … provide that such provisions of the memorandum or articles of association of the successor company as may be specified shall not be alterable without his approval".
Clause 1(9) states:
"An order under subsection (8) above may make such provision as the Secretary of State thinks fit with regard to the disposal of the Corporation's assets and the discharge of its liabilities".
We then come to Clause 2, in which subection (1) states:
"The Secretary of State may by regulations made by statutory instrument with the consent of the Treasury make provision".
There then follow paragraphs (a) and (b) setting out what he may do. There is also the paragraph referred to by my noble friend which gives the Secretary of State powers to overrule the law of the land. The Secretary of State is given enormous powers and no one can doubt that.
However, the Secretary of State has not been given the powers that the noble Lord, Lord Winstanley, proposes and which I and my noble friends wish to support. We are to see a new corporation in private hands where the motivation is, as the Minister rightly said —and I am not disparaging it—that it is a private company for private profit. The original corporation had written into its articles its obligations under the National Health Service Act to the National Health Service and to the tasks of general practitioners. I have no knowledge that anything like that is to be written into the terms of the new company.
Therefore, I want to be assured not just that the medical profession is to be there—the profession may have some interest in it—but that the public interest will be represented. Certainly nothing that the Minister said satisfies me in that respect, which is why I reiterate our support from these Benches for the proposal made by the noble Lord, Lord Winstanley.
4.15 p.m.
Lord Trafford: The noble Lord is being slightly ingenuous here. In the first instance the powers refer
944
to the successor company. They do not refer to an indefinite time in the future. It is clear that it is during the transmogrification, the change in the corporation, that these powers are needed by the Secretary of State. That is when he must exercise them, when the new corporation is set up.
The corporation is a different animal to the subsequent company, which is no longer the successor company. These powers refer to when the corporation—referred to in the Bill as the successor company—is in the hands of the Crown. It is subsequent to that that it would be a different animal. One cannot then carry on to say that when it is in the private sector it will nominate this director for this or that director for that, and so on, because that is not within the usual practice of private corporations.
During the period of time that it is a successor corporation, of course any such instructions to or by the Secretary of State could apply. It would be different if, as is intended according to my understanding, it goes into the private sector fully as a private corporation. My understanding of the major advantage in this connection concerns the range of services and the flexibility thereof, and not other causes. If it helps the noble Lord, I do not think that doctors would be any better protected in the second circumstance of that corporation than they would be under the first. It is, as I understand it, only to the first circumstance that these powers could apply.
Lord Winstanley: I cannot wholly agree with the noble Lord, Lord Trafford, that the matters we are discussing refer merely to the transitional stage—
Lord Skelmersdale: Perhaps I may be allowed to interrupt the noble Lord. My noble friend Lord Trafford is absolutely right. Clause 1 is entirely the intermediate stage, as I described it earlier, of the GPFC; in other words, while it is still in the public sector but is already on its way to being privatised, so to speak, and that should be for a very short period indeed.
Lord Winstanley: As the Minister has intervened may I ask him to go a little further? Earlier he told us that arrangements have already been completed for nominations to the board of the new company to be made by the General Medical Services Committee. Is that in the future or purely in the transitional period?
Lord Skelmersdale: Once the corporation is in private hands, as it were, the directors will be at the disposition of the shareholders, whoever they may be, so no guarantees can be given on that score in the long term. As I said, in the interim period there will be representatives or nominations of the General Medical Services Council on the board.
Lord Winstanley: I listened to both the Minister and the noble Lord, Lord Trafford, and I absorbed what they said, but I have a suspicion that whatever is introduced for an interim period tends to remain when the interim period is over. I can give many examples where that has happened in regard to other matters and I see no special reason why normal procedures should suddenly be departed from in this respect.

945
In one of his earlier replies the Minister said that he thought Amendments Nos. 2, 7 and 8, which are grouped together, were tabled to seek reassurances about the manner in which the newly established corporation would exercise its powers. He is correct. We are seeking reassurance and I do not want the Minister to think that we are not grateful to him for the reassurances he has given. He has made many points which are worth thinking about, particularly the one he has just reiterated in regard to doctors nominating people to the board, though, as he said, that is in a sense the provisional board.
As I said earlier, I am not too concerned about the doctors. I am quite sure that they will be able to fight their own corner and that the doctors will make quite sure that they are adequately represented on the new board. I am by no means sure that the patients will be adequately represented and that we have any clear guarantee that the newly-established privatised finance corporation will in fact act overall in the general interests of the National Health Service and of its patients. I believe that it would be a great mistake to leave the Minister with the impression that we are wholly reassured as regards the future of this body. We are not wholly reassured but partly reassured. though not sufficiently reassured. That being the case, it is only right to test the opinion of the Committee.
4.20 p.m.
On Question, Whether the said amendment (No. 2) shall be agreed to?
Their Lordships divided: Contents, 89; Not-Contents, 135.

DIVISION NO. 1

CONTENTS

Addington, L.

Hanworth, V.

Ardwick, L.

Hart of South Lanark, B.

Attlee, E.

Hatch of Lusby, L.

Aylestone, L.

Howie of Troon, L.

Banks, L.

Hughes, L.

Birk, B.

Hunt, L.

Blackstone, B.

Hutchinson of Lullington, L.

Blease, L.

Hylton, L.

Bonham-Carter, L.

Ilchester, E.

Bottomley, L.

Irving of Dartford, L.

Brain, L.

Jacques, L.

Briginshaw, L.

Jeger, B.

Bruce of Donington, L.

Jenkins of Hillhead, L.

Campbell of Eskan, L.

Kagan, L.

Carmichael of Kelvingrove, L.

Kilbracken, L.

Carter, L. [Teller.]

Leatherland, L.

Cledwyn of Penrhos, L.

Listowel, E.

Cocks of Hartcliffe, L.

Llewelyn-Davies of Hastoe, B.

Diamond, L.

Longford, E.

Donaldson of Kingsbridge, L.

Lovell-Davis, L.

Elwyn-Jones, L.

McNair, L.

Ennals, L.

Mais, L.

Ewart-Biggs, B.

Milford, L.

Ezra, L.

Monson, L.

Falkender, B.

Morton of Shuna, L.

Falkland, V.

Nicol, B.

Gallacher, L.

O'Neill of the Maine, L.

Galpern, L.

Oram, L.

Gladwyn, L.

Peston, L.

Grey, E.

Ponsonby of Shulbrede, L.

Grimond, L.

Prys-Davies, L.

Hampton, L.

Rea, L.

946

Ritchie of Dundee, L.

Stedman, B.

Rochester, L.

Stewart of Fulham, L.

Rugby, L.

Tordoff, L.

Russell, E.

Turner of Camden, B.

Sainsbury, L.

Underhill, L.

Scanlon, L.

Wallace of Coslany, L.

Scear, B. [Teller.]

Wells-Pestell, L.

Sefton of Garston, L.

Whaddon, L.

Serota, B.

Williams of Elvel, L.

Shackleton, L.

Winchilsca and Nottingham, E.

Shepherd, L.

Somers, L.

Winstanley, L.

Stallard, L.

Winterbottom, L.

NOT-CONTENTS

Abinger, L.

Harvey of Prestbury, L.

Aldington, L.

Hesketh, L.

Alexander of Tunis, F.

Holderness, L.

Allenby of Megiddo, V.

Home of the Hirsel, L.

Alport, L.

Hooper, B.

Ampthill, L.

Jenkin of Roding, L.

Annan, L.

Johnston of Rockport, L.

Annandale and Hartfell, E.

Joseph, L.

Arran, E.

Kemsley, V.

Auckland, L.

Killearn, L.

Bauer, L.

Kinnaird, L.

Beaverbrook, L.

Long, V. [Teller.]

Belhaven and Stenton, L.

Lucas of Chilworth, L.

Beloff, L.

Lurgan, L.

Belstead, L.

Lytton, E.

Besshorough, E.

McFadzean, L.

Bethell, L.

Macleod of Borve, B.

Blatch, B.

Manchester, D.

Bolton, L.

Mancroft, L.

Borthwick, L.

Margadale, L.

Boyd-Carpenter, L.

Marley, L.

Brahazon of Tara, L.

Massereene and Ferrard, V.

Braye, B.

Merrivale, L.

Butterworth, L.

Mersey, V.

Caithness, E.

Milverton, L.

Cameron of Lochbroom, L.

Morris, L.

Campbell of Alloway, L.

Mowbray and Stourton, L.

Campbell of Croy, L.

Moyne, L.

Carnegy of Lour, B.

Murton of Lindisfarne, L.

Carnock, L.

Nelson, E.

Cathcart, E.

Newall, L.

Chelmer, L.

Norrie, L.

Chelwood, L.

Nugent of Guildford, L.

Coleraine, L.

Orkney, E.

Colnbrook, L.

Orr-Ewing, L.

Colville of Culross, V.

Oxfuird, V.

Colwyn, L.

Pender, L.

Constantine of Stanmore, L.

Penrhyn, L.

Cox, B.

Porritt, L.

Cullen of Ashbourne, L.

Portland, D.

Dacre of Glanton, L.

Pym, L.

Daventry, V.

Quinton, L.

Davidson, V. [Teller.]

Rankeillour, L.

Dilhorne, V.

Reay, L.

Dundee, E.

Reigate, L.

Elibank, L.

Renton, L.

Elliot of Harwood, B.

Renwick, L.

Elton, L.

Rochdale, V.

Erroll of Hale, L.

Saltoun of Abernethy. Ly.

Fanshawe of Richmond, L.

Sanderson of Bowden. L.

Ferrers, E.

Seebohm, L.

Ferrier, L.

Selkirk, E.

Fraser of Kilmorack, L.

Sempill, Ly.

Gainford, L.

Skelmersdale, L.

Gibson-Watt, L.

Strathcona and Mount Royal, L.

Gisborough, L.

Glenarthur, L.

Strathspey, L.

Grantchester, L.

Sudeley, L.

Gray of Contin, L.

Swansea. L.

Gridley, L.

Swinfen, L.

Grimston of Westbury, L.

Swinton, E.

Hailsham of Saint Marylebone, L.

Terrington, L.

Thomas of Gwydir, L.

Hankey, L.

Thorneycroft, L.

Hardinge of Penshurst, L.

Trafford, L.

Harmar-Nicholls, L.

Trefgarne, L.

947

Trumpington, B.

Wise, L.

Ullswater, V.

Young, B.

Vaux of liarrowden, L.

Resolved in the negative, and amendment disagreed to accordingly.
4.28 p.m.
Lord Skelmersdale Lord Skelmersdale moved Amendment No. 3:
Page 1, line 20, at end insert ("or rights to subscribe for any such securities").
The noble Lord said: In moving Amendment No. 3. with the leave of the Committee I shall speak to Amendments Nos. 4, 5, 6, 57 and 59. Clause 1(3) enables the Secretary of State, with the consent of the Treasury, to acquire, hold and dispose of stocks, shares or other securities of the successor company. It does not refer to the rights to subscribe for securities. That is to say, it does not cover rights issues. While I am not presupposing that there will be any need for rights issues, it is clearly right that we should insure ourselves against that need. The purpose of Amendment No. 3 is to ensure that it does so.
The Committee may be interested to know that it is precedented in Section 52(1)(b) of the Gas Act 1986. As the Bill stands, all moneys received by the Secretary of State in connection with the reconstitution of the GPFC must be paid into the Consolidated Fund. However, it may be that the Secretary of State will wish to discharge liabilities either of the corporation or of the successor company and pay the balance into the Consolidated Fund. Clearly this is another matter that needs to be allowed through the Bill. That is what Amendment No. 4 does.
Amendment No. 5 is consequential upon that. The largest amendment of the block is the new schedule, which looks much more complicated than it actually is. Its purpose is twofold; first, it ensures that any agreement made by the GPFC will have effect after vesting day as if made by the successor company. We wish to ensure in particular that, where the GPFC is a lessee subletting to doctors, any covenants restricting assignment shall not prevent the substitution of the successor company as lessee in place of the GPFC—in other words, all contracts and arrangements will continue in exactly the same way as they had existed theretofore. Secondly, we wish to ensure that the transfer on vesting day will not operate so as to terminate the contract of any person employed by the GPFC, and that the terms of the contract will not he varied in any way apart from substituting the successor company as the employer—again, perfectly fair and reasonable. Both these objectives are secured by the new schedule.
The other amendments in the group will mean that the GPFC provisions will all commence immediately on Royal Assent. I cannot guarantee when that will be because it is hardly in my hands, but clearly it will not be until some time this autumn. There has already been a good deal of interest from major financial institutions in the purchase of the corporation and we may be ready for sale by the autumn. If we do not by then have the powers in Clauses 1 to 6, we might have to miss that valuable opportunity. Amendment No. 57 would avoid that risk.
I think I have covered the various amendments. If noble Lords would like to address any matters of detail to me, I shall do my best to answer them.
4.30 p.m.
Lord Ennals: I am very happy with the amendments. I should be grateful if the Minister could say a little more about the job protection aspect on which he touched briefly just now. Does it give an absolute guarantee that no jobs will be lost? What provisions will be made? Otherwise, the arrangements made by the Government are entirely satisfactory and perfectly reasonable.
Lord Skelmersdale: Obviously I cannot guarantee that no jobs will be lost. The new schedule ensures that the contract for a particular job is handed over to the sucessor company in the interim period and then again to the privatised company in the ultimate period. As to individuals, although new employers will get the man or woman employee originally, one cannot guarantee that individual employees will continue to be employed. However, there is no earthly reason why they should not be.
Baroness Turner of Camden: Is the Minister saying that there will be continuity of contracts? Is that essentially the point?
Lord Skelmersdale: That is essentially what I am saying.
Lord Prys-Davies: This means that not only will the terms of a lease be honoured by the successor company but where there is an existing loan the loan cannot be called in and the terms of the loan cannot be varied by the successor company.
Lord Skelmersdale: We have whistled from contracts of' people to contracts of things. However, as I understand it, the noble Lord is quite right. Any existing contract will be carried forward in exactly the same way.
On Question, amendment agreed to.
Lord Skelmersdale Lord Skelmersdale moved Amendments Nos. 4 to 6:
Page 1 line 20, at end insert—
("(3A) The Secretary of State, with the consent of the Treasury, may use—

(a) sums received by him under subsection (2) above; and

(b) dividends or other sums received by him in right of, or on the disposal of, any securities or rights acquired under this section,

for discharging liabilities of the Corporation or the successor company.").
Page 2, line 19, at beginning insert ("Subject to subsection (3A) above,").
Page 2, line 23, at end insert—
("(13) Schedule (Provisions supplementary to s.1) to this Act shall have effect for the purpose of supplementing the provisions of this section").
On Question, amendments agreed to.
Clause 1, as amended, agreed to.
Clause 2 [Potters of Secretary of State to give guarantees and indemnities]:
[Amendment No. 7 not moved.]
Clause 2 agreed to.
Clause 3 [Corporation's powers pending dissolution]:
[Amendment No. 8 not moved.]
Lord Winstanley Lord Winstanley moved Amendment No. 9:
Page 3, line 21, at end insert—
("2BV. The Corporation shall have the duty to furnish the Secretary of State with an Annual Report on the performance of its functions, and the Secretary of State shall have the duty to publish the report and to lay copies of the report before both Houses of Parliament.").
The noble Lord said: This amendment is also very much related to the matters we discussed earlier in regard to reassurance as to the conduct of the newly established and privatised General Practitioner Finance Corporation. The amendment is quite simple. It says:
"The Corporation shall have the duty to furnish the Secretary of State with an Annual Report on the performance of its functions, and the Secretary of State shall the duty to publish the report and to lay copies of the report before both Houses of Parliament".
I am quite sure that the corporation will have the duty to furnish the Secretary of State with reports and that he will have access to its activities in many ways. However. it is not clear from the terms of the Bill that a report will be made to Parliament. As the activities of this body are of great concern to the public and to patients throughout the country, they must clearly be of great concern to the people in both Houses of Parliament who represent those patients. Therefore I feel sure that the amendment will commend itself to all Members of the Committee and I very much hope that it will commend itself to the Minister as well. I beg to move.
Lord Ennals: I should like to support the amendment. We are dealing with an unusual case in which a public corporation, established by the Government with a clear and distinct function within the National Health Service and owing allegiance to the Secretary of State, is to be replaced by a new and private company. We have to ensure that that new and private company fulfils its public role no less efficiently than its predecessor. This is not like any ordinary private company that is simply in the market and is doing, its business for profit, as is the natural responsibility of a private company. It is established by this Bill and it is to be given a precise job. We all accept that it has a heavy responsibility to the doctors and other practitioners whom it serves and to the health service as a whole. If it has a responsibility to the health service as a whole, it has a responsibility to Parliament.
Under the original Act the Secretary of State is responsible to Parliament for the provision of a health service. Part of the service being provided will in this connection be provided by a private company. We have to be certain that that private company has the same kind of responsibility to the Secretary of State and indeed to Parliament as its predecessor company. Therefore it is absolutely logical and right
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that it should make a report to both Houses of Parliament and that we should have the opportunity to discuss the report. It will be the only opportunity we have to ensure that a private company set up by statute is fulfilling its responsibility to the National Health Service. We all want it to do so and we all hope that it will do so.
I very much hope that we shall not need to divide the Committee on the amendment. I should have thought that, in all reasonableness, the Minister would accept it.
Lord Skelmersdale: Those are indeed honeyed words and I hope that the noble Lord will not find me too unreasonable in my answer to the amendment moved by the noble Lord, Lord Winstanley. The duty which the amendment seeks to place upon the corporation, while it is in its current form, and while it is in what I call its "intermediary form'', is already imposed in law under Section 8(3) of the National Health Service Act 1966. At those moments it is therefore not required.
What happens when the GPFC gets into the private sector? The answer is that under the Companies Act it would be required to publish its annual report and accounts, and therefore a special report will not be necessary. The noble Lord, Lord Ennals, asked whether we can debate a company's published accounts either in this Chamber or another place. That is not normally done. However, as far as I know, there is no constitutional reason why that should not be done, if there is such a crisis going on that it is found to be necessary to debate such accounts of a private company.
Lord Nugent of Guildford: Perhaps I may add a word of support for the amendment. This is a special sort of company taking over a special sort of public duty in financing the new health centres. I think that we have a special case here. The question is just what form it should take. My noble friend is right in that all companies must publish an annual report; so the annual report is published. But I think it ought to be made conveniently available to both Houses of Parliament because of the special nature of the body. I wonder whether my noble friend could, with the help of his advisers, give some thought as to how this might he done.
As my noble friend rightly says, a question could be asked about the matter or indeed a debate could he raised. But we should make it easy for Members of both places to be able to get hold of it and read it, should they wish to do so, because of the very special nature of the corporation. Perhaps my noble friend would be good enough to give some thought to the matter.
Lord Ennals: Does the noble Lord accept that if questions were put in this place about a report for which the Secretary of State has no responsibility, he has a perfect right to say, "This is not for me"? Will he not agree that that is right? Therefore there is no opportunity for questions in this place.
Lord Nugent of Guildford: That is true.
Lord Skelmersdale: When large private corporations get into trouble debate is indeed raised either in this Chamber, or another place, from time to time. My noble friend Lord Nugent will no doubt know that even better than I. However, I take my noble friend's point on the interest of Members of both places in the matter.
I am trying to rack my brains to remember whether, for example, the annual accounts of British Telecom, British Gas or Amersham International—or whatever—are placed in the Vote Office of another place and the Printed Paper Office of this place. If such an arrangement would satisfy the Committee, I shall certainly look into the matter to see what can be done. However, I see that the noble Lord is shaking his head.
4.45 p.m.
Lord Ennals: I am shaking my head because I do not think—for the reasons given by the noble Lord, Lord Nugent of Guildford—that they are on all fours. British Telecom, Amersham International or any other public corporation are not fulfilling part of a statutory responsibility held by a Secretary of State in another place and accountable to both Houses of Parliament. So this is, as he said, a unique situation. If the Minister cannot think how best to deal with the matter now, perhaps he can take it away with him and think about it. We must find a way to deal with this.
It is, admittedly, a small part of what is being done to ensure that the National Health Service works and that the Secretary of State is properly fulfilling the obligation laid upon him by an Act of Parliament. As I said, the situation is totally different from any other public corporation that I can think of. There must be some way that this place can question the way in which that part of the health service is being carried out, in the same way as we can question every other part for which the Secretary of State has a responsibility. Frankly, that is one of the arguments I should have developed when I moved the first amendment. Once you take it out of the public domain and put it totally into the private domain there is a little bit of the National Health Service, or something which enables the National Health Service to work, which is beyond the ken of you and I—I mean those of us in this place; perhaps not you, but certainly I.
Therefore I hope that the Minister will take it away and try to think whether there is some way to deal with it or whether there is some amendment which he can introduce, if he does not like this one. I consider that this amendment is most satisfactory, but perhaps he can find another way to ensure that the matter will come before this place at some stage. maybe in the form of a report, which will afford us an opportunity to ask questions.
My fear is that this is the thin edge of the wedge—an awful phrase which is so often used—and that it might happen in some other part of the provision to ensure that the National Health Service works. Whereas now the National Health Service is the responsibility of both Houses of Parliament, bit by bit we shall discover little bits of it which are not
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the responsibility of Parliament, where we cannot put questions and where we have no right to complain because it has gone from the public to the private domain.
The Minister may think that it is a very small issue, but I plead with him that there is an issue of quite substantial principle here.
Lord Trafford: Are we not getting slightly on to a cross-wired course here? As I understand it, the amendments can apply only to the successor company and corporation: they cannot apply subsequently to the private corporation in the private sector, although one could make some arrangement for them to be put—as my noble friend the Minister said—in the Printed Paper Office, the Library or somewhere else. You cannot in fact apply these amendments as they stand to any company other than the successor company.
I have a suspicion that my noble friend Lord Nugent was under the illusion, or perhaps misapprehension, that this successor company was going to run for ever more and that it was not simply a successor company. I suspect that this can only apply so long as the Crown retains the control of the company and not thereafter. That is the position as I understand it. If so, what my noble friend the Minister said must be right: namely, that he can only advise subsequently.
Lord Nugent of Guildford: I should like to make just one further point for the consideration of my noble friend the Minister. The people who work in the new centres are employed by the health service and carry out an essential part of it.
Lord Skelmersdale: No!
Lord Nugent of Guildford: Surely the health service pays the salaries of the GPs who work there.
Lord Skelmersdale: I am sorry, I misunderstood my noble friend. When he referred to people who are employed in the company, I thought he meant the people employed in the GPFC: but obviously he did not.
Lord Nugent of Guildford: I apologise if I did not make myself clear. I am talking about the doctors who work in the health centres. They are an essential part of the health service, as the noble Lord, Lord Ennals, rightly said. Therefore it is a special situation. I am not sure by what means my noble friend will he able to meet the wish which has been expressed, but I am sure that a way can be found which will make it, first, convenient and easy for Members of both places to get the reports; and, secondly, for them to have access to the Minister if they so wish.
Lord Winstanley: As I understand it, the Minister's earlier reply was that the situation which I should like to see under the amendment is in fact wholly covered with regard to the interim stage: it already happens. But we are anxious to ensure that it happens in the future. Indeed I am quite sure that the noble Lord, Lord Nugent of Guildford, is also anxious to ensure

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that it happens in the future because, as he rightly pointed out, it is not a private company in the ordinary sense; it is a private company set up by statute with certain public functions to pursue.
I took the Minister's earlier reply to be sympathetic and I accept that he understood that Parliament had some right to see such reports. Of course it is perfectly true that the Secretary of State, having set up the company originally, would obviously receive a copy of its annual report and accounts—that is quite clear. However, he will not necessarily have a duty to lay the copy which he receives before Parliament. That is the additional provision we should like to see. I cannot see any great difficulties about that and I doubt whether the Minister can see any difficulties in the matter.
If I was right to assume that the Minister said he would think about the matter to see whether some mechanism can he discovered, I shall be most happy to withdraw the amendment. But I should like to know that first.
Lord Skelmersdale: I said to my noble friend Lord Nugent, unless I am very much mistaken, that I shall of course take this matter away and look at it. I am not sure what guarantees I can give; but it occurs to me, literally off the top of my head, that we might be able to do something through the articles of association. That is only a first thought. I shall consider the matter further.
Lord Winstanley: I am grateful to the Minister for those final words. I beg leave to withdraw the amendment.
Amendment, by leave, withdrawn.
Clause 3 agreed to.
Clauses 4 to 6 agreed to.
Clause 7 [Extension of powers of Secretary of State for financing the Health Service]:
The Deputy Chairman of Committees (Baroness Cox): I should point out that if Amendment No. 10 is agreed to I cannot call Amendment No. 11.
Earl Russell Earl Russell moved Amendment No. 10:
Page 5, line 24, leave out paragraph (f)
The noble Earl said: The amendment seeks to delete the words contained in paragraph (f) which confer on the Secretary of State the right,
"to develop and exploit ideas and exploit intellectual property".
The reason for seeking to delete those words is the concern, which I think is widespread, about the new research contracts administered by the DHSS since approximately the beginning of last December. Those contracts impose a new restriction on the publication of research work commissioned by the department. Under them publication is subject to the prior consent of the Secretary of State, which consent shall not he unreasonably withheld.
There has been a considerable amount of discussion about those contracts and a considerable number of justifications offered, not all of them
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entirely the same as one another. In The Times of 7th June, Mr. Partridge, a second secretary at the department, was quoted as expressing a concern about legal issues. He said that the change was to strengthen the legal position in case the Secretary of State might be liable. The same line has been taken by the Secretary of State himself when writing to the chairman of the Committee of Vice-Chancellors and Principals.
I can well understand the Secretary of State's concern that he should not be liable for an action in damages; but if that is his concern he has taken a hammer to crack a nut. He needed only to look at the standard proforma publisher's contract in which there is a regular clause indemnifying the publisher against any libellous or blasphemous matter. I have never signed a publisher's contract without that clause. Just in passing, I am a little curious as to why the Secretary of State is not anxious about blasphemous matter in medical research. I shall pursue that point no further. If that is the concern, this provision is not the appropriate way to meet it.
Concern has also been expressed about questions of confidentiality of copyright. The British Medical Association has had the old contract vetted by two professors of law who have been unable to see any defects in it. The BMA has also drawn attention to the Home Office research contract as providing a possible alternative model which might meet the Secretary of State's concern. It provides:
"The Secretary of State will not delay publication of submission unless, after consultation with the research body, he considers such delay necessary in the national interest or to enable patent or like protection to be obtained".
That is a much more acceptable form of words because it states a specific reason. The concern about the clause is that it does not. It could he used not only by this Secretary of State but by others to do pretty well anything.
The matter has also been considered by your Lordships' Select Committee on Science and Technology. The committee was also unhappy about the clause and stressed the importance of the right to publish in maintaining academic independence and standards of research. It was not entirely reassured by the Minister for Health's statement about the revision of the DHSS contract in the light of Crown copyright. There is a widespread body of concern. Concern has been expressed by many people about the possibility of research being influenced by political bias. I do not intend to pursue that line at the moment. I do not think we are dealing with a collection of Stalinists. I do not see here a sinister, hidden agenda. Whether I shall be as successful in persuading everyone outside this place who is concerned about the matter, I am not so sure. Speaking for myself, that is not the object of my concern.
We are painfully familiar with the obsessive desire of civil servants to take refuge in secrecy to avoid embarrassment. That is something which we encounter almost every day and it is something that I think the contracts might unduly encourage.
The big argument is about the quality of research. If the Secretary of State wants to commission research, it must be presumed that he wants the best

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research possible. If he does not, I should like to know what he is doing commissioning it. There is a good deal in common, not everything, between academic research in different subjects. One can stop and think about how much the process of publication and the expectation of publication contribute to the intellectual quality and probable truth of the research.
It is a long process. There are a great many corners which are capable of being cut. There is restraint at all stages by the thought of publication and what comes after. If, for example, one is making a note in a hurry it is easy to make a paraphrase which seems to say the same thing in fewer words. It is important that at that stage one sees the irate face of Professor so-and-so looking over one's shoulder telling one that it is not a paraphrase, it is distortion. One tries to do that all the time even if one does not know that one is going to publish. Researchers are not superhuman. They are liable to all the ordinary human weaknesses and all the temptations to cut corners felt by the rest of us.
The same happens of course when one reaches the point of checking something before printing. Again one would not go over everything and ensure that it was right if one did not know that some irate colleague would spot it if it were not. It is that knowledge which keeps one on the straight and narrow path. It is that knowledge which one cannot have without the certainty or near certainty of publication. Finally, if one makes an error, as all of us have, that error does not become falsifiable until it is printed. An error has about it a quality of fecundity. Once one has made one error. one builds other errors on top.
If the Committee will forgive one more reminiscence before I sit down. I remember one occasion when I misinterpreted an obscure Exchequer account in the Public Record Office and allowed the matter into the footnote of an article. Two years later one of my post-graduate students told me that I had got it wrong. I looked at it again and he was quite right. The error that he took out was unimportant, but I had been just about to build on top of one error a major superstructure of further errors. Had I not published at the initial stage, I should not have been saved from a superstructure of further error. I have no doubt that the same applies to medical research.
I am trying to say that if one commissions research without the near certainty of publication, one is inviting one's supplier to supply goods which are not of merchantable quality. When goods of merchantable quality are freely on offer, that is a rather unwise process. I hope that the noble Lord will think about it again. I beg to move.
5 p.m.
Lord Prys-Davies: We want very strongly to support the arguments advanced by the noble Earl, Lord Russell. It seems to me that there are at least two main grounds for concern which have been advanced by the noble Earl. First, the very existence of the power to prohibit or to delay publication, whether or not it is exercised, is damaging to
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research. The first-class researcher will he very reluctant to accept a research contract under those conditions. He will want to see his work published to the whole world and not published within the confines of the DHSS. He will want to see it published to the whole world so that it can be discussed by independent researchers. That in turn will lead to further debate and further research.
The first-class researcher does not want to see the publication of his work delayed. He wants to see his conclusions published at the earliest possible moment because every research worker wants to be a first discoverer.
The second ground for concern follows inevitably from that first concern. It is that the quality of the research undertaken for the department under those conditions will probably be second-rate, as the first-rate researchers will keep clear of the contract. But the Secretary of State currently enjoys this power. It is linked with the revised contract published in February 1987 which stipulates that the publication of research is subject to the prior consent of the Secretary of State, which consent shall not he unreasonably withheld.
Ministers have stated that consent will he withheld only in exceptional circumstances and that the consent will normally be given within 28 days. There is one snag with this assurance—that it is not necessarily binding on another Secretary of State or on another administration. We accept what the noble Earl. Lord Russell, has told the Committee: that there could he exceptional circumstances which would justify the Secretary of State withholding his consent. That would he the case if he had been advised that the document was defamatory or in breach of copyright or if it contained a major factual error.
However what puzzles us is this. Why cannot the Secretary of State, in order to safeguard his position, follow the precedent which is acceptable to the Home Office so that the contract specifically defines the circumstances which enable the Secretary of State to withhold or delay his consent? Perhaps the Minister can answer the question posed by the noble Earl. Why is the Home Office contract not acceptable to the DHSS?
There is one other question which I wish to ask the Minister. Who, again, is to judge whether the consent is being unreasonably withheld or whether the consent is being unreasonably delayed? Does that again lie in the sole discretion of the Secretary of State, or can his decision be challenged?
Lord Trafford: This clause and the amendment apply to income generation and give various powers to health authorities, via the Secretary of State, to generate income. It says that the Secretary of State can do a number of things. To quote two of them, he has the power

"(a) to acquire. produce, manufacture and supply goods;

(dl to supply services to any person".

etc. In the course of that it also says:
"(f) to develop and exploit ideas and exploit intellectual property".
Therefore this clause which is concerned with income generation, which is of some importance to the

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National Health Service at the present time because it expands the funds, has suddenly been turned into a talk about contracts. I do not know that I say this with total accuracy, but I am probably more aware than anybody in this House of the nature of the DHSS research contract and of the regulations and conditions attached to it. We discussed at very considerable length in the education Bill in Committee and on Report the iniquity of contracts from research councils, from the Ministry of Agriculture, from the Department of Health and Social Security, and so on. However, with due respect to the noble Earl and the noble Lord, this is not relevant to income generation. Where this question about whether consent is reasonably withheld is relevant to the exploitation of ideas I am not quite sure. Surely the main thrust of the noble Earl's argument was that in some way the Secretary of State would sit on this research, refuse to publish it or in some way adapt it or require it to be adapted so that it was acceptable, though perhaps not as academically pure as when he had presented it or when his postulated medical researcher had presented it in the first instance.
I suppose, incidentally, while we are on the subject, that the answer to the noble Lord, Lord Prys-Davis, as regards who reviews it is that, if it is not at the discretion of the Secretary of State, it would possibly he subject to judicial review with regard to the administrative functions of the Secretary of State. I cannot think of any other way in which it could be directly reviewed.
However, surely that is not relevant. None of the part on income generation, as it is now called, applies to this clause in order to carry out these functions. I do not disagree with the noble Earl's comments about research and the basic mistake that might be made upon which a huge superstructure of subsequent errors could take place. All that is totally acceptable. I seem to recall the noble Earl saying exactly the same on education. I did not disagree with him then and I do not disagree with him now. I also accepted that he said that the dark forces, which he hinted were suspicious of the Secretary of State in general. did not apply on this occasion. I presume that my right honourable friend the Secretary of State for Social Services is in some way immune from the dark suspicions of the noble Earl. They do not seem to apply to my other right honourable friend the Secretary of State for Education, to whom apparently dark forces do apply. Of course, if the noble Earl wishes me to, I shall give way.
Earl Russell: Only for the time being.
Lord Trafford: That presupposes that he expects that either they will switch positions or the Secretary of State for Social Services will change. The noble Earl also hinted—and it would be unusual for one of the speeches of the noble Earl not to hint— that if his advice were not followed, desperate events would happen and the state of the nation would be at risk. If I quote him correctly, he said that he himself was not going to attribute this but that outside he would have great difficulty in persuading others that dark forces were not at work. All these dark forces are at
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work on income generation in the National Health Service. The clause says:
"to supply accommodation to any person; to provide instruction for any person: to develop and exploit ideas and exploit intellectual property".
I see nothing wrong with that. Many of the functions which are performed lead to universities doing this now through their science department. through their joint companies. Why should not the National Health Service? That is the sort of thing that the Bill is giving the Secretary of State power to achieve. It looks to me as though it is a way forward which would suit or could suit all parties.
There is no shadow of doubt that many of these functions could be abused. But without good will all sorts of things that we do or arrange to do could he abused. With due respect. I do not think that most of the arguments we have heard apply to this clause or amendment. It would and could be very helpful to the National Health Service, to income generation for the hospital service, without any of the terrible drawbacks that are described for those who produce the intellectual property.
Lord Winstanley: I fear that the judgment of the noble Lord. Lord Trafford, on this matter may have been clouded by the fact that he has enjoyed an entirely satisfactory contractual arrangement with the DHSS for many years. He is apparently, entirely content that the department will make no improper use of these particular powers, and that we need have no fears at all.
Since he feels so entirely happy about the situation I wonder whether he can explain why it is that Sir Mark Richmond and the other members of the Committee of Vice-Chancellors and Principals of the universities of the United Kingdom are deeply anxious, and have written to so many noble Lords to say that they are anxious. Can the noble Lord tell us that?
Lord Trafford: Yes, I can. I agree with the noble Lord that Sir Mark Richmond and others, including the noble Earl, are anxious about the substance of some of these contracts. I am not arguing about that. As I said in reply to the noble Lord, Lord Swann, when he first moved that Motion, I accepted what he said about the restriction on academic matters of those particular contracts. But I am arguing that this is not part of this amendment. Nobody is going to exploit anybody.
What we wish to do is to create income generation for hospitals. We are really going way overboard. We have walked the plank, and I am sorry to see that the noble Lord, who is also in the profession, is walking the plank also.
Lord Winstanley: I am glad to have that reassurance from the noble Lord, Lord Trafford, but I would prefer to hear precisely the same words coming from the Minister. We have not had those words yet. It may well be that our fears are groundless. My own personal anxiety —I am associated with one of these amendments, and I ventilated it in a recent debate in your Lordships' House on priorities in medical research—is that if

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there are to be delays put on the publication of important research (and I am not saying there are, but if delays were to be put on it) that would be damaging to the recruitment of postgraduate research workers on medical research. It would be damaging to the morale of those engaged in medical research work, because what they want is publication.
I have no objection to the exploitation of intellectual property in the way that is referred to, but I would have serious objections if the fears of the committee and Sir Mark Richmond and others were realised; namely, that there will be a freeze put on the publication of certain items of important research. I also fear that if that freeze is prolonged—and it has been sometimes—the department may find to its cost that somebody else will have done the research and somebody else will be exploiting their intellectual property in some other part of the world because we have missed the bus by delaying things. That is the source of my anxiety. I am glad to be reassured by the noble Lord, Lord Trafford, but I would rather be reassured by the Minister.
Lord Prys-Davies: The noble Lord, Lord Trafford, has overlooked the fact that Clause 7(1)(f) has to be read in conjunction with subsection (2). Certainly if Clause 7(1)(f) stood on its own I would not be unduly concerned, but what worries me is that you have to read that in conjunction with subsection (2), which gives authority to the Secretary of State to impose directions. One direction would be to prohibit publication.
Lord Ennals: Before the Minister adds his own honeyed words to all this, may I say that when I was listening to the noble Lord, Lord Trafford, it seemed to me that he was just looking at paragraph (f) as if there had not been an enormous debate on the principle of new contracts. Of course there is an enormous debate and it has been going on for many months. I am looking at a piece of paper dated 9th October 1987, which says:
"A new contract being enforced whenever grants come up for renewal states that publication requires the consent of the Secretary of State. While it adds that approval 'shall not unreasonably be withheld', the Department of Health can attach conditions to publication".
One unit director says:
"This is virtually a censorship clause, and it makes my hair curl".
After all, there are 30 leading research bodies which have been affected by this new contract. There are some bodies that have reluctantly entered into an agreement, and I see that the personal social services research unit at the University of Kent is one of those. Professor Bleddyn Davies said:
"We have signed on the dotted line, although very reluctantly".
He added:
"We had been negotiating for months, and we reached a point where staff had little time left in their contracts".
Therefore, it is not just a bright idea as to how the Secretary of State can make a little money on the side. As my noble friend says, you have to relate it to the rest of this clause and the whole background to this contentious issue about new contracts. The Secretary
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of State quite clearly, before this Bill reached this Chamber, was seeking to take powers to control the publication of research, and if we do not challenge it under this clause I do not know when we can challenge it.
5.15 p.m.
Lord Trafford: I did not say, and I do not say, that I disagree with a lot that the noble Lord has just said about contracts. Indeed, it was said over and over again on many sides of the Chamber throughout the Education Bill. I am not disagreeing with the noble Lord. What I say is that this clause is about income generation and not about basic researchers' rights or the dark forces of Secretaries of State, or anything else.
It is about a fairly straightforward income generation, and it is difficult to see that this is closely related to the question of the contracts which I agree with the noble Lord are a source of some concern to a lot of people. I would not dispute that at all, but that is not relevant to this amendment, in my argument. I would also say that if for some reason we wished to discuss this point, it should be brought up under a more relevant clause.
Lord Rea: With regard to the contention of the noble Lord, Lord Trafford, that this is inappropriately placed, surely it is parliamentary practice, when there is a matter of considerable concern, for it to be raised and placed into a Bill which is relevant as a whole and which is passing through either another place or this Chamber. For instance, who would have thought that a local government Bill would be the place for a hotly contentious issue such as the promotion of homosexuality? It does not in the first place seem to be appropriate that homosexuality and local government are necessarily connected.
I do not think that the Government have succeeded in convincing anybody who is seriously interested in the subject that they need to change the rules for research contracts. Nobody, to my knowledge, has been mortally hurt by research findings critical of aspects of the National Health Service, whether those aspects were mainly of administrative parts of the service or clinical practices which were perhaps upheld by some powerful sections of the medical profession.
A worrying aspect of the more restrictive rules may well be that first-class researchers who expect to publish their findings in internationally respected journals will be deterred from taking up research contracts funded by the DHSS. Should not the DHSS support the very best, and not be content with possibly having to hire less successful researchers who might be prepared to compromise for the sake of getting a grant and a job in a situation where grants are not easy to come by?
If DHSS research is governed by a contract thought by some to be censored, it would surely have less academic credibility in the way in which the noble Earl, Lord Russell, has said. That this is a real fear was made clear to those of your Lordships who sat on the Select Committee on Science and Technology which took evidence and made recommendations on

961
priorities in medical research, with special reference to the National Health Service. The strong impression of the committee was that too little research into the actual functioning of the National Health Service was being done, and we made recommendations as to how this could be strengthened and put on a sounder footing.
Interestingly, this type of research is never very popular, as we found out on the other side of the Atlantic as well. This is because it probes and questions established practices or decisions that have been made, or are about to be made, which might be uncomfortable. That type of research is very necessary even if it may embarrass some people. Most research into health care is presented in very diplomatic terms. Names are not named. The original contract had a clause in it that ensured confidentiality. Even those in the field that is being discussed may not know the name of hospital A, for instance, which has twice the mortality from prostrate operations or coronary artery bypass operations as hospital B. The research should surely he published because the reasons for the differences are vitally important.
Recent research shortly to be published in the British Medical Journal will show that the results of eliminating gallstones by using the expensive machine Called a lithotrypter in St. Thomas' Hospital are rather less good than a far less expensive percutaneous method. I shall not give further details of that because the paper is still in the press. (This is parliament, in which I think one is allowed to say such things!) This is just the kind of research in which the department might feel it necessary to step in and not allow publication to go ahead. It is the kind of research that is necessary to provide not only a cost-efficient but a humane and effective health service, just what any Government need to know if they are interested in catering for the needs of their citizens whether in the capacity of taxpayer or consumer. The fact that the Government seem hypersensitive to possible critical research findings suggests to many that cost containment rather than improvement of the service may he their main concern.
The select Committee was not entirely satisfied with the Government's defence of the change of rules. Mr. Newton, the Minister, said:
"The changes were intended first of all to enable us to safeguard ourselves on legal grounds Where, for example, we might ourselves he open to challenge in circumstances where a particular report was published".
I think that the Minister was being unnecessarily cautious. As I have said, researchers are very careful not to apportion blame that might provide a basis for litigation. Most of the research funded by the DHSS results in findings that may have some political overtones. This is as it should be. I feel that the dividing line between legal challenge and political challenge is being regarded by the Government as too fine. The scientific community will draw its own conclusions if the Government persist in implementing the new arrangements and not going hack to the original ones.
Dr. Ann Cartwright, director of the Institute of Community Studies—and I quote from Volume III
962
of the evidence to the Select Committee—said:
"The new contract is unacceptable because it gives the Secretary of State an unchallengeable power of censorship. This could restrict not only the publication of critical research findings but also the nature of research that is undertaken''.
I hope that the Minister will pay attention not only to those noble Lords who have spoken in support of the amendment but also to the large number of submissions that the department must have had, as expressed in the Chamber, from researchers, directors of research units and learned societies who have asked the department to revert to the earlier form of contract.
Lord Skelmersdale: This has been a substantial debate on what is obviously a serious subject that much concerns the Committee. I must admit that at one point I was wondering whether J. R. Tolkien wrote The Lord of the Rings or "The Earl of the Rings"—I heard the dark forces of Mordor swooping down over my right shoulder.
Members of the Committee will of course recall that this issue was discussed on Second Reading on 26th May. Following that debate I wrote to the noble Lords, Lord Winstanley and Lord Prys-Davies, to explain that Clause 7(1)(f) does not in any way alter the existing arrangements set out in the recently revised standard conditions for support for research grants made by the Secretary of State. In this standard contract it is made clear that the Secretary of State has ownership of, and power to exploit commercially, the results of research work carried out by university staff and funded by the DHSS. That is all that it has. The individual universities or sometimes the individual researchers enter into a contract with my right honourable friend. It is in the subject of this contract that most members of the Committee have been interested in the discussion today.
I can confirm what my noble friend Lord Trafford said is right: the subject of the contract, important though it is and of such concern as it is to the Committee, has absolutely nothing to do with Clause 7 of the Bill. The noble Lord, Lord Prys-Davies, will recall that when I wrote to him on 9th June I said in regard to Clause 7(1)(f):
"The intention of this provision is to allow health authorities to benefit more from any research and development work carried out on their own premises by employees and to the results of which research such authorities already hold the ownership rights under common law".
In other words, health authorities are not being allowed by licence, as it were, to poach from the researchers and the universities. The clause does not then change the existing arrangements for rights to intellectual property and should neither attack intellectual freedom nor inhibit medical research. Therefore, the argument is not about what is in the Bill; it is about what is not in the Bill. That I fully accept.
Our intention remains that research commissioned by the department will normally lead to publication without restriction. I understand from all the academics whom I have met that this is a vital part of conducting their work. Indeed, their reputation is made on publication of the research—or, in the case of the noble Earl, very nearly not made by the

963
publication of research, but that perhaps is a different matter.
However, there may be perfectly reasonable legal reasons for such a libel, breach of confidentiality or error of fact where an unrestricted right for the researcher to publish would be wrong. I am sure that the noble Earl, with his experience of academic research and writings, could confirm that.
The revised DHSS contract gives the power to avoid such dangers. However, I think that it would be very difficult for any general contract on every occasion to spell out the conditions or times when such things might be used. I understand that this is what the Home Office contract seeks to do. I am advised that a better recourse would be to get the Home Office to use a DHSS contract rather than the other way round. I shall look into this as I do not have the two contracts with me to compare them side by side. The whole objective of such a contract is to give the power to avoid the dangers to which I have referred.
However, the DHSS contract contains a very important safeguard for academic freedom. It states explicitly that agreement to publish shall not be unreasonably withheld. We all know what happens when the test of reasonableness of the Secretary of State gets applied: the roof falls in, and there is application to the courts for judicial review and all the other serious matters. I think that the noble Earl will be able to accept that that is a very real safeguard. As regards Clause 7(1)(f) of the Bill, that has no bearing on the matters which the noble Earl and the rest of the Committee wish to address.
5.30 p.m.
Earl Russell: This is a debate in which it has been a pleasure to take part. It has been conducted to a high level. I must confess that I rather like the idea of being Earl of the Rings. The noble Lord, Lord Trafford, made an intervention which raised the level and the pleasure of the debate. Perhaps I may reply briefly to him.
The Bill confers on the Secretary of State the right to exploit intellectual property. It seems to me to be perfectly relevant to consider the capacity of the Secretary of State's stewardship of intellectual property. That is something about which I believe we need to be satisfied. The noble Lord also said, in effect, that the Secretary of State did not need the powers and was never going to use them. If he does not need them, why is he taking them?
I take the point which was made regarding judicial review. The point is significant. However, judicial review is a very slow process. As my noble friend Lord Winstanley has said, the process of medical research is very rapid. While judicial review takes place, many people's names will, as Tom Lehrer would have it, need to be cursed in Itopetrovsk because they published first.
I thank the Minister for the care with which he has listened to the debate and for the thoughtful qualities of his reply which suggest that the gap between the two sides of the Chamber is not infinite. I take note of the restrictions he mentioned—libel, confidentiality and error of fact. Those seem to me to
964
be perfectly reasonable. I understand that there are difficulties in the way of specification. However, if some attempt could be made to see whether it is possible to reach an agreement on words, that would be a big advance.
I also take note of the tendency to cast me—as I was going to say before the noble Lord put it in another way—as Cassandra. I shall bear that very much in mind. However, I should like the noble Lord to bear in mind in his turn what happened to those who did not listen to Cassandra. After all that I have said about the need to read documents with care, it would not be reasonable for me to reach a snap decision on the Minister's reply. Therefore, I shall read that reply very carefully. Meanwhile, I beg leave to withdraw my amendment.
Amendment, by leave, withdrawn.
Lord Ennals Lord Ennals had given notice of his intention to move Amendment No. 11:
Page 5, line 24, at end insert ("without prejudice to the academic and intellectual freedom of people from universities, and other research establishment or freelance researchers contracted to carry out work for the Department of Health and Social Security".).
The noble Lord said: Both the Minister and the noble Lord, Lord Trafford, seemed to think that in our previous debate we were seeking to make something out of nothing. I hope that the Minister does not feel that that is the case. Certainly he made no offer to reflect upon the matter. I hope that I shall be rather more successful in persuading him to reflect on the next paragraph which we are debating in Clause 7(1)(g).
I submit that the wording of paragraph (g) gives to the Secretary of State powers which are excessive to an extraordinary degree. In that paragraph we are not simply asked to give additional powers for financing the National Health Service. It provides for additional income for improving the health service. Paragraph (g) states that the Secretary of State has power:
"to do anything whatsoever which appears to him to be calculated to facilitate, or to be conductive or incidental to, the exercise of any power conferred by this subsection;"—
I shall jump a few lines—
"and may give directions … with respect to the manner in which any such body is to exercise any such power; and it shall be the duty of the body in question to comply with the directions".
It is surely not possible to be much tougher than that. The powers given in that clause, unless the words are either deleted or changed, will give the Secretary of State adequate power to reorganise the National Health Service in any way that he thinks fit. After all, we are speaking of—
The Deputy Chairman of Committees (Baroness Cox): Perhaps it will be for the convenience of the Committee if I say that I called Amendment No. 11. I have just realised that the noble Lord is speaking to Amendment No. 12. May I take it that Amendment No. 11 is not moved?
Lord Ennals: Yes.
[Amendment No. 11 not moved.]
The Deputy Chairman of Committees: Perhaps I may now call Amendment No. 12.
Lord Ennals Lord Ennals moved Amendment No. 12:
Page 5, line 25, leave out paragraph (g).
The noble Lord said: I have been suitably demoted, defrocked and undermined! Perhaps I may return to my exciting theme.
If the clause is passed unamended, whatever the Prime Minister's review body may recommend can be carried out by the Secretary of State under the wording of' the paragraph. He will be able to do anything which appears to him to facilitate or be conducive or incidental to the exercise of any power conferred by the subsection. The subsection confers powers to finance improvements to the National Health Service. The principal issues that the review body will he looking at will be how the National Health Service is to he funded; whether that should be done by means other than taxation; what the role of the private sector will be and whether a system of insurance or health maintenance should be introduced. Anything can be done under the words of the subsection.
The Minister must recognise that there is concern about what the review body may put forward. We get leaks, nudges and winks that such and such a matter has not been decided on or will not be fundamental. However, we do not know who will be on the review body, what its terms of reference will be and when it will report. We do not know the sorts of things that we would know about, for instance, a Royal Commission. I am not suggesting that we should have such a commission. We had a commission under Sir Alec Merrison some years ago.
However, my worry is not about the method by which the Prime Minister will carry out the review. My concern is that I do not want the Chamber to give powers to carry out any recommendations which may be made without giving the Chamber an opportunity to consider them. If the Prime Minister or the Secretary of State come up with recommendations in the autumn or at the party conference, undoubtedly those recommendations will come before us, either in the form of a Bill or some other form. If this clause is passed, there is no need for a Bill. The Secretary of State is given power to do anything he likes. He may give directions and it will be the duty of the body in question to comply with them.
I submit that the powers which are given in paragraph (g) are quite extraordinary and must be explained by the Minister. In my view they must be changed before we can authorise anything like the powers which are set out. I beg to move the correct amendment.
Lord Winstanley: I do not wish to prolong the discussion on this amendment. However, I should like to say that it seems to me that paragraph (g) is very wide; it could not possibly be wider. It virtually empowers the Secretary of State,
"to do anything whatsoever which appears to him"
etc. etc. Having said that, why on earth do we need subsections (a), (b), (c), (d) and (e)? They read:

"(a) to acquire, produce, manufacture and supply goods;

(b) to acquire land by agreement and manage and deal with land:

(c) to supply accommodation to any person;

966

(d) to supply services to any person and to provide new services:

(e) to provide instruction for any person;

(f) to develop and exploit ideas and exploit intellectual property".

If paragraph (g) says that the Secretary of State can do anything whatsoever, why do we need paragraphs (a), (b), (c), (d) and (e)? It seems to me that this has been put into the Bill merely for there to be something for us to take out. Therefore I support the noble Lord.
Lord Trafford: I should like to congratulate the noble Lord, Lord Ennals, on now being back on the rails and speaking to an amendment which is relevant to this issue.
Lord Skelmersdale: I think that there has been a certain amount of misunderstanding in all this. If noble Lords would like to look at line 15 at the beginning of Clause 7, they will find that the first line curtails the rest of the clause:
"In order to make more income available for improving the health service (as defined in the National Health Service Act 1977 …), the Secretary of State shall have power".
In other words, he will not have power for any other reason. The clause relates solely to income generation.
Lord Ennals: Will the noble Lord allow me to intervene'? Thank you very much. The purpose of the clause is to raise income for improving the health service. That is what is covered by the clause. How could it be more all-embracing?
Lord Skelmersdale: If I am allowed to develop my argument perhaps we may get a little further forward. The point about paragraph (g) is that it does not give power to reorganise the health service, as the noble Lord, Lord Ennals, suggested. The wording is similar to that already contained in Section (2)(b) of the National Health Service Act 1977 under which the Secretary of State can—'and I almost quote—do anything whatsoever which is calculated to facilitate or is conducive or incidental to the discharge of' his duty to provide the health service. In other words, the clause in the existing legislation is a belt and braces clause, and it is a belt and braces clause which paragraph (g) is also intended to provide. There is nothing sinister in it at all.
Lord Winstanley: Is it the noble Lord's advice that we should all wear belt and braces?
Lord Skelmersdale: If that was supposed to be a suggestion that I am hinting that Members of the Committee should belt up, I am not doing anything of the sort. I was trying to explain to the noble Lord that paragraph (g) is not unusual. When legislation confers powers to carry out certain activities every situation that might arise in the exercise of those powers obviously cannot be foreseen. It therefore makes sense to give powers to do anything incidental to the activities with which the legislation is principally concerned as, as I said earlier, is shown by Section 2 of the National Health Service Act 1977.
The activities which we have in mind in this clause and for which health authorities need this new power include advertisement of the services which

967
authorities have to offer and employment of staff for business purposes. That is what we intended with this paragraph. Not to have that provision would be akin to building a ship without the means to launch it. I described it earlier as a belt and braces provision and that is exactly what it is.
Earl Russell: I take the point about income generation, which clearly covers this clause. However, the power to do anything whatsoever to generate income is still a quite sweeping power. For example, if I may ask a not entirely frivolous question, would it be lawful under the terms of the clause to raffle the office of Secretary of State to raise funds for the health service?
Lord Skelmersdale: I think that I would have to take legal advice on that question! I cannot imagine that there would be many takers for some Secretaries of State in those circumstances.
Lord Ennals: I am very disappointed by the Minister's reply. He says that it is perfectly OK: do not worry about it; we already have it in another piece of legislation—Section 2 of the National Health Service Act 1977. I suggest to him that two wrongs do not make a right. If we made a mistake then why should we make another mistake now? Perhaps he will look at the words. I challenge him to say what cannot be done under those terms. It is not just a case of whether someone could raffle the office of the Secretary of State. He should get a lot of money for it because it is a very expensive office in the centre of London.
To be more serious about this, what happens if someone comes forward with a proposal as to how we could, in their view, more effectively fund the National Health Service? They might say that it could be better funded by private contributions; by people paying for the services that they receive; by some system of insurance cover. The Secretary of State is allowed to do anything whatever which appears to him to be calculated to facilitate such schemes.
It is really not good enough for the Minister to say that those words have been used before. I do not care whether they have been used before; I am determined that they will not he used again. We cannot give power to the Secretary of State over issues which must be debated by this Parliament and by organisations which have a right to a view. The Minister has not said anything which would justify the use of such extreme wording: the Secretary of State "may give directions", and,
"It shall he the duty of the body in question to comply with the directions".
That really is going too far. I have every intention of dividing the Committee on this issue, I can tell the Minister, unless he is prepared to make some concessions or withdraw it. The powers in this Bill seem to me to be absolutely unjustified.
Lord Skelmersdale: The noble Lord is perfectly entitled to divide the Committee over words which were used in his own legislation which was introduced when he was Secretary of State. He may well find that they are not pertinent today.
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Returning to Clause 7 of the Bill, which was where we came in, paragraph (g) enables the Secretary of State to licence the health service,
"to do anything whatsoever which appears to him to be calculated to facilitate. or to be conducive or incidental to"—
and these are the important words—
"the exercise of any power conferred by this subsection".
In other words, so long as it comes within the subsection relating to income generation and the various categories of income generation which are described in what will be Section 7, then it is all right. If it is for any other purpose it is all wrong.
Lord Ennals: I am very grateful to the Minister for responding as he has. However, I cannot see that the Secretary of State is not given powers here to adopt a different method of funding, other than tax funding, for the purpose of improving the National Health Service. I am very sorry, but I must press this to a Division.
5.48 p.m.
On Question, Whether the said amendment (No. 12) shall be agreed to?
Their Lordships divided: Contents, 65; Not-Contents, 110.

DIVISION NO. 2

CONTENTS

Addington, L.

Mclntosh of Haringey, L.

Ardwick, L.

McNair, L.

Aylestone, L.

Mais, L.

Banks, L.

Morton of Shuna, L.

Blackstone, B.

Nicol, B. [Teller]

Bottomley, L.

Oram, L.

Bruce of Donington, L.

Ponosby of Stulberde, L. [Teller.]

Carmichael of Kelvingrove, L.

Cledwyn of Penrhos, L.

Prys-Davies, L.

Diamond, L.

Rea, L.

Elwyn-Jones. L.

Ritchie of Dundee, L.

Ennals. L.

Rochester, L.

Ewart-Biggs. B.

Ross of Newport, L.

Falkender, B.

Rugby, L.

Fisher of Rednal. B.

Russell, E.

Gallacher, L.

Seear, B.

Galpern, L.

Seebohm, L.

Gladwyn, L.

Serota, B.

Grey, E.

Shepherd, L.

Hampton, L.

Stallard, L.

Hanworth, V.

Stewart of Swindon, L.

Hart of South Lanark, B.

Stoddart of Swindon, L.

Hatch of Lusby, L.

Strabolgi, L.

Hooson, L.

Tordoff, L.

Houghton of Sowerby, L.

Turner of Camden, B.

Howie of Troon, L.

Underhill, L.

Hughes, L.

Wallace of Coslany, L.

Jacques, L.

Whaddon, L.

Jeger, B.

Williams of Elvel, L.

Jenkins of Hillhead, L.

Winchilsea and Nottingham, E.

John-Mackie, L.

Longford, F.

Winstanley, L.

Lovell-Davis, L.

Winterbottom, L.

McCarthy, L.

NOT-CONTENTS

Aldington, L.

Beaverbrook, L.

Alexander of Tunis, F.

Beloff, L.

Allenby of Megiddo, V.

Belstead, L.

Ampthill, L.

Bessborough, E.

Arran, E.

Blatch, B.

Auckland, L.

Blyth, L.

Bauer, L.

Bolton, L.

969

Borthwick, L.

Lytton, E.

Boyd-Carpenter, L.

McFadzean, L.

Brabazon of Tara, L.

Margaadale, L.

Caithness, E.

Marley, L.

Cameron of Lochbroom, L.

Massereene and Ferrard, V.

Campbell of Alloway, L.

Merrivale, L.

Carnegy of Lour. B.

Mersey, V.

Carnock, L.

Milverton, L.

Chelmer, L.

Morris, L.

Chelwood, L.

Mowbray and Stourton, L.

Coleraine, L.

Munster, E.

Colnbrook, L.

Murton of Lindisfarne, L.

Colwyn, L.

Nelson, E.

Constantine of Stanmore, L.

Norfolk, D.

Cox, B.

Nugent of Guildford, L.

Craigavon, V.

Orkney, E.

Craigmyle, L.

Orr-Ewing, L.

Cullen of Ashbourne, L.

Oxfuird, V.

Dacre of Glanton. L.

Pender, L.

Davidson, V. [Teller.]

Penrhyn, L.

Dilhorne, V.

Peyton of Yeovil, L.

Dundee, E.

Portland, D.

Eden of Winton, L.

Pym, L.

Elibank, L.

Quinton, L.

Elliot of Harwood, B.

Rankeillour, L.

Elton, L.

Reay, L.

Ferrers, E.

Reigate, L.

Ferrier, L.

Renwick, L.

Gardner of Parkes, B.

Rochdale, V.

Gibson-Watt. L.

Saltoun of Abernethy, Ly.

Gisborough, L.

Sanderson of Bowden, L.

Grantchester, L.

Sandford, L.

Greenway, L.

Selkirk, E.

Gridley, L.

Skelmerdale, L.

Hanson, L.

Somers, L.

Hardinge of Penshurst, L.

Strange, B.

Harmar-Nicholls, L.

Strathcona and Mount Royal, L.

Hesketh, L.

Holderness, L.

Sudeley, L.

Home of the Hirsel, L.

Swinfen, L.

Hooper, B.

Swinton, E.

Hylton-Foster, B.

Teviot, L.

Jenkin of Roding, L.

Thorneycroft, L.

Johnston of Rockport, L.

Trafford, L.

Lawrence, L.

Trumpington, B.

Lindsay, E.

Ullswater, V.

Lindsey and Abingdon, E.

Vaux of Harrowden, L.

Long, V. [Teller.]

Westbury, L.

Lucas of Chilworth, L.

Resolved in the negative, and amendment disagreed to accordingly.
5.56 p.m.
Lord Ponsonby of Shulbrede: Before we take the next amendment, perhaps I may ask the noble Viscount the Government Whip whether it is the intention of the Secretary of State for Trade and Industry to make a Statement to the House shortly after 6.30 p.m.?
Viscount Davidson: I can confirm that my noble friend Lord Young will make a Statement on Rover at a convenient moment after 6.30 p.m.
Lord Ennals Lord Ennals moved Amendment No. 13:
Page 5 line 28, leave out paragraph (h).
The noble Lord said: The principle at stake in this amendment is very similar to that in the amendment which we have just discussed and on which we have voted. Clause 7(1)(h) states:
"the Secretary of State shall have power … to make such charge as he considers appropriate for anything that he does in the exercise of any such power and to calculate any such charge on any basis that he considers to he the appropriate commercial basis: and may give directions … and it shall he the duty of the body in question to comply with the directions".
I do not need to go into as much detail as I did in relation to the previous amendment, when we were discussing powers to facilitate the powers which might lead to organisation. We are now concerned with powers to charge, and I make a similar submission to the one I made previously; namely, that the Secretary of State is being given powers to introduce charges.
In the same way as in the previous amendment, whatever may have been passed in 1977 at a time when the Government were not considering either the reorganisation of the National Health Service or the introduction of charges, we are now dealing with a situation in which the Government are considering the introduction of charges and have made clear in this Bill that they will introduce charges which have not existed before. Later we shall be debating those charges in the context of dental examinations and eye tests. However, unless the Minister can persuade me that I am totally wrong—particularly when this paragraph is taken together with paragraph (g) which the Chamber in its wisdom, or lack of it, has decided to keep—I submit that this measure would enable the Secretary of State to introduce charges that would affect the hospital service; it would enable him to authorise charges for general practitioner visits, for meals and other services within the hospital and to levy charges for consultants and anything else that he might decide upon, without the introduction of further legislation. In my view, that would be wrong.
If there are ever to be any such proposals, they should be brought properly before this Chamber in legislation and effectively debated. Clause 7(1)(h) cannot be allowed to pass without question. I submit that it gives to the Secretary of State powers which it would be quite wrong for this Chamber to give to a Minister.
I am reminded of an experience I had a few years ago when my wife was ill in the United States. She was admitted to the Hilea Hospital in Miami. She was there for three days. The charges amounted to 4,400 dollars for the services. They came in a succession of bills from different groups of consultants, and from the hospital for different types of services. I do not wish to see that system introduced into our National Health Service. The Minister will say that the clause is not drafted to provide for that. I want him to prove to me that those words would not give the Secretary of State the powers to introduce charges without this House and another place having the opportunity of challenging them.
The introduction of phrases such as this—and I have read them, I therefore do not need to do so again—show an arrogance of power, and a failure to recognise the concerns and the sensitivities that exist not only on this side of the committee but in the country in general about what the Government may be planning to do about the health service. Because of those sensitivities, I believe that the Minister ought to agree to consider this amendment again. I believe that he ought to have done the same with the previous amendment. This one is perhaps even more sensitive. Bearing in mind that paragraph (g) is still there, paragraph (h) is even more dangerous. I hope that the Minister will take my protest seriously this time, and

971
that he will give serious consideration to whether these words are necessary in this part of the Bill. I beg to move.
Lord Trafford: I understand the argument put forward by the noble Lord with regard to the extent of the powers. He is certainly managing to extend these powers on every part of this clause. We have discussed paragraph (f), and that led us to contracts. The debate on paragraph (g) led to discussion of a National Health Service review by my right honourable friend the Prime Minister which apparently could be introduced under paragraph (f). Now bills of 4,000 dollars could be introduced under paragraph (h).
If we adopted the amendment put forward by the noble Lord, it would also have other deleterious effects even if it prevented the charging to which he referred. It would rule out any charging under this clause. This would include a number of quite minor activities in hospitals and elsewhere which generate income. I refer to snack bars, and some of the services where volunteers take items around for sale such as toiletries and so on, for which no charge could be made in these circumstances. I am sure that the Minister will say that this is not what the clause envisages. However, apart from that, and whether it would be extended to other forms of charging, it would also rule out any possibility of making those relatively minor but significant forms of income generation. It is my understanding that they generate about £70 million to £100 million a year in the health service. Even if the amendment were right in spirit, it would be wrong in practice since it would stop that happening and deprive the health service of money.
Lord Wallace of Coslany: I intervene briefly because I referred to this at Second Reading. I consider that these powers are far too sweeping and should be subject to some change. I appeal to the Minister on the ground that further consideration be given to this issue before the Report stage. The powers are somewhat sweeping. I appeal to the Minister at least to consider it, and perhaps come back to it at the Report stage when we can sort matters out.
Lord Skelmersdale: Yes. I shall certainly think about it. However, it can only do my case justice to point out that Section 1(2) of the National Health Service Act 1977 states:
"The services so provided shall he free of charge except in so far as the making and recovery of charges is expressly provided for by or under any enactment whenever passed".
In other words, if my right honourable friend should have a sudden coup de foudre and decide to change her mind, on the subject, for example. of raising income by the sale of hospital meals—which she has specifically and categorically excluded from her thinking—it would be necessary to pass primary legislation to enable my right honourable friend to do just that. In other words, the worries expressed by the noble Lord, Lord Ennals, simply do not exist. My noble friend Lord Trafford is quite right. The power contained in paragraph (h) is needed so that health authorities may charge for goods and services
972
provided to various people and organisations in the context of income generation. For example, without these powers an authority could not charge people for items sold to them in authority-run hospital shops. snack bars, from trolleys, or whatever.
That is totally without prejudice to what I am about to say to the noble Lord. Lord Wallace of Coslany, about the tremendous value of the Leagues of Friends. However, should the hospital authorities decide to take their own trolley services, without phraseology such as is contained in Clause 7(1)(h), they would not be allowed to charge for chocolate bars. I cannot think that that is a terribly good idea.
Lord Ennals: The Minister cannot imagine that I would wish to leave a situation in which Leagues of Friends with their trolleys could not charge 22p for a Yorkie.
Lord Skelmersdale: I must correct that straight away. I said that if the League of Friends did not provide the trolley and the health service decided to do so, it would be the health service that would not be allowed to charge 22p. or whatever it is, for the Yorkie.
Lord Ennals: I do not wish to deprive the Secretary of State charging 22p, or even making a profit from 23p for a Yorkie. I am perfectly satisfied that, if I am successful in securing the deletion of this extraordinarily dangerously widely-worded clause, we should be able to put it right at the Report stage. We should be able to put in a clause. I would offer all my support to the Minister to get it right to ensure that such modest items could be provided for. It is not the modest items to which we refer, but the implications of a very much more substantial order that could be covered by this clause. Nothing that the Minister has said relieves my worry any more than he did when we debated Clause 7(1)(g). I am afraid that I have no alternative but to press this to a vote.
6.8 p.m.
On Question, Whether the said amendment (No. 13) shall be agreed to?
Their Lordships divided Contents, 61; Not-Contents, 100.

DIVISION NO. 3

CONTENTS

Addington, L.

Hart of South Lanark, B.

Ardwick, L.

Hatch of Lusby. L.

Aylestone. L.

Hooson. L.

Banks. L.

Houghton of Sowerby. L.

Bruce of Donington. L.

Howie of Troon. L.

Carmichael of Kelvingrove. L.

Hughes. L.

Cledwyn of Penrhos. L.

Jacques. L.

Diamond, L.

Jeger. B.

Elwyn-Jones, L.

Jenkins of Hillhead. L.

Ennals, L.

John-Mackie. L.

Ewart-Biggs, B.

Kearton, L.

Falkender, B.

Longford. E.

Fisher of Rednal. B.

Lovell-Davis, L.

Gallagher, L.

McIntosh of Haringey. L.

Galpern, L.

McNair, L.

Gladwyn, L.

Morton of Shuna, L.

Grey, E.

Mountevans. L.

Hampton. L.

Nicol. B. [Teller.]

Hanworth, V.

O'Neill of the Maine. L.

973

Oram.

Stoddart of Swindon. L.

Ponsonhy of Shulbrede, L.[Teller.]

Strabolgi, L.

Tordoff, L.

Prys-Davies, L.

Turner of Camden, B.

Rea, L.

Underhill, L.

Ritchie of Dundee. L.

Wallace of Coslany, L.

Rochester, L.

Whaddon, L.

Ross of Newport, L.

Williams of Elvel, L.

Russell, E.

Winchilsea and Nottingham, E.

Serota, B.

Shepherd, L.

Winstanley, L.

Stallard, L.

Worcester, Bp.

Stewart of Fulham, L.

NOT-CONTENTS

Aldington, L.

Hooper, B.

Alexander of Tunis, E.

Hylton-Foster, B.

Allenby of Megiddo, V.

Johnston of Rockport, L.

Arran, E.

Lawrence, L.

Auckland, L.

Lindsey and Abingdon, E.

Bauer, L.

Long. V. [Teller.]

Beaverbrook, L.

Lucas of Chilworth. L.

Beloff, L.

Lytton, E.

Belstead, L.

McFadzean, L.

Bessborough, E.

Margadale, L.

Blakenham, V.

Marley, L.

Blatch, B.

Massereene and Ferrard, V.

Blyth. L.

Mersey, V.

Bolton, L.

Mowbray and Stourton, L.

Borthwick, L.

Munster, E.

Boyd-Carpenter, L.

Murton of Lindisfarne, L.

Brabazon of Tara, L.

Nelson, E.

Caithness, E.

Nugent of Guildford. L.

Cameron of Lochbroom, L.

Orkney. E.

Carnegy of Lour. B.

Orr-Ewing, L.

Carnock, L.

Oxfuird, V.

Chelmer, L.

Pender, L.

Colnbrook, L.

Penrhyn, L.

Colwyn, L.

Peyton of Yeovil, L.

Constantine of Stanmore, L.

Pym, L.

Craigavon, V.

Quinton, L.

Craigmyle, L.

Rankeillour, L.

Cullen of Ashbourne, L.

Reigate, L.

Dacre of Glanton. L.

Renwick, L.

Davidson. V. [Teller.]

Rochdale, V.

Dilhorne, V.

Saltoun of Abernethy, Ly.

Dundee, E.

Sanderson of Bowden. L.

Eden of Winton, L.

Sandford. L.

Elibank, L.

Seebohm, L.

Elliot of Harwood, B.

Selkirk, E.

Elton, L.

Skelmersdale, L.

Ferrers, E.

Somers, L.

Ferrier, L.

Strange, B.

Fortescue, E.

Strathcona and Mount Royal, L.

Gardner of Parkes, B.

Gisborough, L.

Sudeley, L.

Greenway, L.

Swinfen, L.

Gridley, L.

Swinton, E.

Hankey, L.

Teviot, L.

Hanson, L.

Torrington V.

Hardinge of Penshurst, L.

Trafford, L.

Harmar-Nicholls, L.

Trumpington, B.

Harvey of Prestbury, L.

Ullswater, V.

Hesketh, L.

Vaux of Harrowden, L.

Holderness, L.

Wyatt of Weeford, L.

Home of the Hirsel, L.

Resolved in the negative, and amendment disagreed to accordingly.
6.16 p.m.
Lord Winstanley Lord Winstanley moved Amendment No. 14:
Page 5, line 42, at end insert —
("(3A) The directions may not be given to Community Health Councils nor to Local Health Councils.").
The noble Lord said: I need hardly remind the Committee that Clause 7 deals with income generation. The Minister told us that and the noble
974
Lord, Lord Trafford, told us three times very firmly that that was what it was all about. Perhaps I may remind the noble Lord, Lord Trafford, of the words of Lewis Carroll in the Hunting of the Snark:
"What 1 tell you three times is true."
I accept that what the noble Lord, Lord Trafford, said three times is true: the clause is about income generation. We have already referred to the fact that the Secretary of State shall have power to do this, that and the other. But in addition the clause states that that he may give directions,
"for the exercise of any of those powers by any body constituted under the National Health Service Act"—
and so on. My amendment merely removes from the question of directions the community health councils in England and Wales and the local health councils, their Scottish equivalents.
Why should the community health councils and the Scottish equivalents not be regarded as one of the bodies within the National Health Service to which the Secretary of State shall be able to give directions with regard to income generation? I believe that the community health councils are in a slightly different situation from other health service bodies. They are there to monitor the way in which the other bodies work. They are there to supervise the adequacy or otherwise of the health service provisions in their areas. They are there to monitor the activities of the local health authorities, but they are not there to do things within the National Health Service. The community health councils are representatives of the public.
I accept, and I am sure that the Minister will tell us so, that community health councils have powers to raise funds for their own use and purposes. I have no objection to that, but to direct them to raise funds for other purposes in connection with the National Health Service seems to me to be inappropriate, bearing in mind the real functions of the community health councils. That is one reason.
My second reason for believing that they should be exempt from this provision is that, as is well known to any Member of the Committee who has had any dealings with community health councils, they are extremely short-staffed. Most of the work is done voluntarily by members of the councils and some of them give a great deal of time. To add to their already heavy burdens the kind of burdens which might result as a consequence of directions from the Secretary of State would be unfair, inappropriate and might cause grave difficulties to the community health councils.
I have no doubt that the Minister will have something to say about this when he replies, but I hope he appreciates that the community health councils are by definition slightly different from the other bodies within the National Health Service to which it is entirely appropriate for the Secretary of State to give directions in relation to fund-raising. I hope that in his reply the Minister will agree that these bodies should be regarded in a different light. I beg to move.
Lord Skelmersdale: This is an extremely complicated matter and I hope that I can explain it to the noble Lord's satisfaction. If not, I suggest that we have consultations between now and the next stage.

975
Although community health councils and the Scottish equivalents are bodies constituted under the 1977 Act, they are not given functions by means of directions as is necessary in the case of health authorities. In other words, they do not operate normally by carrying out the suggestions or guidelines of the Secretary of State; they are, in a sense, bodies corporate. I hope that the noble Lord, Lord Prys-Davies, will not haul me over the coals about that. I do not mean it in the legal sense but in the sense that they are freely constituted bodies which operate under Schedule 7 to the 1977 Act. Therefore they are not analogous to health authorities or to special health authorities.
The functions of the community health councils and their Scottish equivalents therefore bear no relation to the functions which health authorties have been directed to perform. As I have said over and over again, Clause 7 is specifically about the powers delegated to district health authorities via the Secretary of State.
This is a complicated matter and if I need to have colloquia with the noble Lord I shall be delighted to do so.
Lord Winstanley: The noble Lord appears to agree with every word that I have said. He said that they were different bodies and appeared to suggest that they should not be subject to directions in this way. Does he agree with the amendment? I shall be delighted to have consultations with him at any time.
Lord Skelmersdale: No, I was trying to point out to the noble Lord that the amendment is unnecessary because Clause 7 does not cover community health councils.
Lord Winstanley: If the amendment is unnecessary because the clause does not cover community health councils I shall be much happier. However, I do not necessarily feel deprived of the right to have consultations about the matter with the noble Lord—
Lord Skelmersdale: The noble Lord may be my guest.
Lord Winstanley: In the light of that further explanation, I beg leave to withdraw the amendment.
Amendment, by leave, withdrawn.
Lord Skelmersdale Lord Skelmersdale moved Amendment No. 15:
Page, 5, line 43, leave out from ("The") to ("the") in line 46 and insert ("Secretary of State shall exercise the powers conferred by subsection (1)(c) and (d) above only if and to the extent that he is satisfied that anything which he proposes to do in the exercise of those powers does not fall within section 65 of the National Health Service Act 1977 or section 57 of").
The noble Lord said: In moving the amendment, I should like also to speak to Amendments Nos. 16, 17. 20, 21, 23, 24 and 25. This group of amendments, large though it may seem, seeks to achieve the same end. That the group is so large is in part due to the fact that they seek to make parallel changes to both English and Scottish legislation.
My honourable friend the Parliamentary Under-Secretary for Health promised in another place that
976
the Government would bring forward amendments which would address the points made by the Opposition in relation to private patients. These were that provisions relating to a definition of a "private patient" and to consultants' rights in law to admit their own private patients be reinstated in legislation. They had been removed during the drafting of subsection (7) of Clause 7, as part of a tidying up and consolidation of legislation relating to private patients.
Disapproval was expressed in another place and I am now honouring my honourable friend's pledge to reinstate them in legislation. Therefore, this group of amendments ensures that there is a clear definition of what constitutes an NHS "private patient" and also reinstates the Secretary of State's discretion to permit NHS consultants to admit their own private patients. I could say more but for the moment I think that it is sensible merely to beg to move.
Lord Ennals: It would be churlish of me to challenge this series of amendments. Indeed, I am grateful to the Minister for introducing them. As he said, there were in another place a number of requests for some definition. The amendments that have been proposed by the Minister go a long way to making a fair definition. Amendment No. 17 reads:
"('for private patients to such extent as he may determine') and insert ('. to such extent as he may determine. for patients who give undertakings … to pay. in respect of the accommodation and services made available. such charges as the Secretary of State may, determine')".
That is one example of the need for clarification.
Even without this legislation I believed that we were reaching the stage of having a narrow and unclear line between those who were private patients for a period of their stay in a National Health Service hospital and were not private patients for another period. I believe that the role of consultants in introducing patients—sometimes, as it may appear. in obtaining an advantage in doing so—has been cleared up by the amendments. It may be that there are colleagues in another place who are not satisfied with the amendments proposed by the noble Lord. I do not believe that to be the case but, if it is, they will have an opportunity to speak in another place. I am satisfied that the Minister has quite properly fulfilled the obligation he undertook, and I am grateful to him.
Lord Winstanley: On behalf of my noble friends on these Benches I should like to say that we are most grateful to the noble Lord for bringing forward the amendments. We believe that they are helpful and we support them.
Lord Skelmersdale: I am grateful to both noble Lords.
On Question, amendment agreed to.
Lord Skelmersdale Lord Skelmersdale moved Amendments Nos. 16 and 17:
Page 6, line 13, leave out ("as private patients") and insert ("under section 65 of the National Health Service Act 1977 or section 57 of the National Health Service (Scotland) Act 1978'').
Page 6, line 29, leave out ("for private patients to such extent as he may determine") and insert (", to such extent as he may determine,

977
for patients who give undertakings (or for whom undertakings are given) to pay. in respect of the accommodation and services made available, such charges as the Secretary of State may determine").
On Question, amendments agreed to.
Lord Prys-Davies Lord Prys-Davies moved Amendment No. 18:
Page 6, line 36, leave out ("to a significant extent interfere") and insert ("interfere in any way").
The noble Lord said: I should like to speak to Amendments Nos. 18 and 19. They relate to the new Section 65 of the National Health Service Act 1977. When I read the Marshalled List I was delighted to see that my noble friend and I had been able to convince the Minister that Amendment No. 19 was acceptable to him. I understand that the Minister has—
Lord Ennals: He has withdrawn his name.
Lord Prys-Davies: The Minister has withdrawn his name but we still hope to convert him to the wisdom of Amendments Nos. 18 and 19.
The new Section 65 gives power to the Secretary of State to authorise accommodation and services at an NHS hospital to be made available for private patients. Therefore it empowers him to advance private medicine within NHS hospitals within the limits specified in sub-paragraphs (a) and (b) of the new Section 65. I understand that the two amendments are in line with Amendments Nos. 22 and 27 standing in the name of the noble Lord, Lord Winstanley. They tighten up the limits within which private medicine can he introduced within NHS hospitals.
The Bill as drawn allows the accommodation and services to be made available provided that it will not to a significant extent interfere with the provision of accommodation and services for NHS patients, and provided that it will not operate to a significant extent to the disadvantage of the NHS patients. Therefore the key phrase in sub-paragraphs (a) and (b) is "not to a significant extent".
We say that if the private sector is to be built up within NHS hospitals it should not interfere in any way with the capacity of the hospitals to provide services for the NHS patients and that those patients should not be disadvantaged in any way.
It seems to us that as subparagraphs (a) and (b) now stand they tend to give encouragement to the manager to favour the private sector within the NHS. In our view, the manager, the authority, should be under no doubt at all that if it is wished to build up the private sector within an NHS hospital, that should not interfere with the capacity of the hospital to discharge its duties to NHS patients. We fear that the Bill gives encouragement to the manager to favour the private sector. We think that the words in the Bill should he replaced by the emphasis in our amendments on the need to ensure that the services are in no way affected by the introduction of private medicine within the NHS. I beg to move.
6.30 p.m.
Lord Trafford: I oppose these amendments for three reasons. First, they are impossible. There is no way in which one can guarantee that the admission of
978
one patient will not interfere in any way. One can guarantee that it will not significantly interfere, and so forth, but to guarantee that it cannot makes it virtually impossible.
Secondly, one of the most disastrous things that ever happened to the National Health Service was the deliberate division between the private and the public sector which took place mostly during the mid-1970s. That resulted in the creation of an enormous external private sector which has drawn off nursing staff and consultants. Indeed, they are now accused of being more often up West than down in the inner city in this town in which we sit. Those were disastrous consequences of a mistaken policy. That was not the intention of that policy but that was what happened.
Another reason is that if we can reverse that and bring the nurses as well as the doctors back into the same area, that is beneficial to all patients.
Thirdly, it is another form of quite significant income generation which is for the benefit of national health patients. I understand why the noble Lord moved this amendment and I understand his reasons. We would perhaps never agree on the question of private and public sector medicine. However, there is no Member of this Committee who is a stronger supporter of the National Health Service than I and no member of my profession who would be more distressed to find anybody who was preferring the private sector to the national health sector, or something of that sort. That is to be totally deprecated and I am sure that other members of my profession in this Committee would agree with me on that score.
Nonetheless, there is no need to shackle our feet and to either make it impossible for the provisions of the amendment to be carried out or to deprive the hospitals of a certain amount of income; nor is it bad to allow the coming together again of the various parts of the hospital service in particular which would lead to greater efficiency and, I genuinely believe, a greater benefit to all the patients. For those reasons I oppose this amendment.
Lord Winstanley: I had overlooked and now note that my Amendments Nos. 22 and 26 are grouped with this amendment which we are now considering. I have no doubt that when the Minister replies he will also reply to my amendments, and therefore I should perhaps say a few brief words about them.
Amendment No. 22 is self-explanatory. We are concerned with the same matter which is dealt with by the amendment of the noble Lord, Lord Prys-Davies. Clause 7 of the Bill states:
"The Secretary of State shall revoke an authorisation under this section only"
and so on. I delete from the word "section" and insert:
"if he ceases to he satisfied that sufficient accommodation and facilities are available for services provided by the National Health Service".
In a sense, that puts the matter in reverse. It requires that the Secretary of State should be satisfied that satisfactory resources and so on are available with regard to the National Health Service before he authorises certain things and also that he should revoke an authorisation if at any time he ceases to be

979
satisfied that the National Health Service is adequately provided for. That matter is covered by Amendment No. 26, which states:
"unless he is satisfied that sufficient accommodation and facilities are available for services provided by the National Health Service".
I believe that my amendments will become clearer when we hear what the Minister says in response to them. I have no doubt that he understands their purport; namely, to place the efficiency and effectiveness of the National Health Service as the top priority in taking all these decisions. I have not moved these amendments as we have not yet reached that stage, but I have spoken to them because of the grouping.
Lord Skelmersdale: I have never before had to ask a question of Members of the Committee, but perhaps I may ask whether they are satisfied with the situation which pertains at the moment. My answer will differ as to whether or not they are.
Lord Winstanley: I am not satisfied. At such time as I am not satisfied with the conditions in the National Health Service, I would not divert resources to other activities. That is the point. I believe that it is proper for the Secretary of State to use resources for other purposes when he is so satisfied, but it is not proper when he is not so satisfied. I am not satisfied at the moment. I should not make use of these powers at the moment were I the Secretary of State. That appears to be unlikely, but perhaps I may hasten to say that I should not necessarily reject the appointment should it happen to be offered.
Lord Skelmersdale: What I meant was that the Secretary of State already has powers under Section 62 of the National Health Service Act to use private beds for public purposes should he need to do so. These powers are extended by Section II of the Health Services Act 1980.
These amendments restrict that discretion of my right honourable friend to authorise pay beds with regard to the individual merits of each case. As my noble friend Lord Trafford pointed out, health authorities earn valuable revenue of around £60 million a year which can be used to help National Health Service patients. The clause as drafted uses well-established and commonly accepted phraseology which was used in the 1977 Act as extended by the 1980 Act. Therefore, I am not convinced that there is any need to change that established wording. I believe that it is unreasonable to restrict the discretion of the Secretary of State in such absolute terms.
The clause contains provisions which restrict authorisation of private patients' facilities if that would significantly disadvantage NHS patients or interfere with the duties of the Secretary of State under the National Health Service Act 1977, which is clearly right. Therefore, I am confident that there are more than adequate safeguards for National Health Service patients without these amendments. I hope they will not be pressed.
Lord Prys-Davies: It will be helpful if the Minister can explain to the Committee how the phrase "to a
980
significant extent" will be interpreted in the context of this clause.
Let us assume that one has an NHS hospital of 10 wards working under pressure, as they do. If the Secretary of State authorises the use of one ward for private patients, would that be a significant interference in the ability of the hospital in those circumstances to provide services for the NHS patient? Would it make any difference if he were to authorise the use of half a ward instead of a ward?
Lord Winstanley: On the same point and a related one, the noble Lord explained that the Secretary of State must be satisfied in regard to the National Health Service in various ways before he authorises certain things. My amendment provides for the situation when the Secretary of State ceases to be so satisfied. It enables him to revoke a previous authorisation. Can the Minister say something about that? I am sure he believes that to be desirable and that an authorisation should not be in perpetuity. The Secretary of State should have the power to revoke an authorisation if the situation relating to the National Health Service should change.
Lord Skelmersdale: Subsection (7) introduces a new Section 65 to the National Health Service Act. The point at issue is that the Secretary of State must be satisfied that the existence of pay beds does not prejudice the carrying out of public services and, to an extent, vice versa. He has to keep a balance within a given hospital where pay beds are authorised.
Lord Winstanley: Does that mean continuously, and that if the situation changes his decision will change?
Lord Skelmersdale: Yes, obviously if one side robs beds from the other and the situation changes the imbalance must he corrected. The words at issue with the noble Lord, Lord Prys-Davies, are "to a significant extent". To accept the formulation preferred by the noble Lord of "interference in any way" removes discretion from the Secretary of State. In order to keep a balance and correct imbalances discretion continues to be needed. That is why I do not like the formulation proposed by the noble Lord.
Lord Prys-Davies: We on this side of the Committee will have to consider carefully what the Minister said in reply to our amendments. Therefore, I beg leave to withdraw the amendment.
Amendment, by leave, withdrawn.
[Amendment No. 19 not moved.]
Lord Beaverbrook: Perhaps this would be a convenient moment to take the Statement. I beg to move that the House do now resume.
Moved accordingly, and, on Question, Motion agreed to.
House resumed.

The Rover Group
6.43 p.m.
The Secretary of State for Trade and Industry (Lord Young of Graffham): My Lords, yesterday I informed the House that the European Commission had decided the outline terms governing the state aid for the proposed British Aerospace acquisition of the Government's shareholding in Rover Group. I also explained that BAe had asked for more time to consider the implications of other conditions attached to the Commission's decision.
I should make clear that the points of difficulty for BAe were not related to the basic financial framework of the deal which was acceptable in principle to BAe and which has not changed since yesterday. The issue was the commercial flexibility available to BAe in complying with the Commission's decision. I am however glad to report that talks with the Commission this morning have clarified the position in terms satisfactory to the BAe board.
As I informed the House yesterday, the Commission has approved the final terms of the acquisition after certain changes in the structure and scale of the March agreement. In making this judgment, the Commission has recognised the important implications for competition and restructuring in the European vehicles market through the return of Rover Group to the private sector. It has also taken note of the prospects for the development of the company, on the basis of Rover Group management's plans which BAe has endorsed.
Under the revised arrangements it has been agreed that some residual items of trading debt should remain on the balance sheet. The revised terms also take account of the continuing improvement in Rover Group's financial performance since the talks with BAe were launched. I am sure the House will have welcomed the improvement in the half-year results which Rover Group announced today. These show a profit before interest of £28·8million compared with a loss of £10 million for the same period last year.
On this basis, BAe will still pay £150 million for the Government's shareholding in Rover Group. The precise timing of the payment will follow the clarification of certain tax matters arising out of the change of ownership of the company. The Government, BAe and the Commission have also agreed a new cash injection of £547 million comprising £469 million in recognition of historic debt and £78 million to support part of the Rover Group's investment programme in the assisted areas.
In addition, we have agreed material changes to the tax provisions of the March agreement. There has been no change in the provision that only £500 million of Rover's existing trading losses will be available after it has been acquired by British Aerospace. But we have agreed to remove two other tax restrictions which were in the earlier agreement. These will give the BAe group the same freedom as any other company has under tax law to utilise some £200 million of Rover Group's capital losses and up to £300 million of disclaimed capital allowances. Estimating the value of these tax benefits is a matter for BAe, though they are clearly very significant.
982
I should like to pay tribute to the contribution made by Graham Day, his management team and workforce whose skills and hard work have permitted the return of 18 Rover Group businesses to private ownership since May 1986. They have now raised the performance of Rover Group to the point where it can look with confidence at its final return to the disciplines of the market place, as part of one of the major engineering groups in Europe.
I am certain the return of Rover Group to the private sector will prove to be in the best interests of the company, its employees and dealers as well as the many thousands of others in the supplying industries whose livelihood depends upon the health of Rover Group. The deal also means that, subject only to approval at an extraordinary general meeting of British Aerospace, we shall have returned to the private sector the last of the constituent parts of what was once British Leyland.
6.47 p.m.
Lord Williams of Elvel: My Lords, the House will be yet again grateful to the noble Lord for his Statement on the Rover Group, which I believe is the third Statement we have had in this somewhat bizarre soap opera.
The Statement to a certain extent follows and confirms our impression that yesterday there was a serious difference of opinion between British Aerospace and the Government, and possibly the Commission, which has now been resolved. My first question to the noble Lord is: can he tell us exactly what was the point at issue? If the British Aerospace board had accepted the financial terms of the Commission was it, as we have read in the press this morning, that the hoard was worried that the Commission was proposing to look over its shoulders at the Rover Group's corporate plan after acquisition?
I also ask the noble Lord whether the Commission in any way departed from the statement it issued today that it would not change the terms on which it agreed to this transaction? It is of great importance to know who gave what, and where, in order to get this deal finally put to bed. I should be grateful if the noble Lord will tell us whether it was the company, the Commission or the Government.
The sentence that I am particularly concentrating on occurs on the first page of the Statement. but for the benefit of your Lordships I shall read it out again:
"I am however glad to report that talks with the Commission this morning have clarified the position in terms satisfactory to the BAe board.".
That seems to be the fundamental point upon which we need further comment from the noble Lord. I ask the noble Lord what is meant by the expression:
"The precise timing of the payment will follow the clarification of certain tax matters arising out of the change of ownership of the company."
That relates to the payment of £150 million to the Government for their shareholding in the Rover Group. The noble Lord will know from our exchange yesterday that we have certain serious doubts about the potential—it is only the potential—legality of what is happening.
We are concerned about the potential precedent that might be created if the Inland Revenue were to

983
give clearance as regards this particular matter, whereas it would not normally give it to a private sector company. We should like that point finally cleared up. Can the Minister also give the House an estimate—I recognise that he will say it is for British Aerospace to do so—of the benefits of the Rover Group capital losses and the disclaimed capital allowances that are now in the deal, whereas they were not part of it before? There must be some figure that British Aerospace has communicated to the Department of Trade and Industry and I believe that it would be appropriate for your Lordships to have it.
Lastly, I note from the Statement that this deal is now subject to an extraordinary general meeting of the shareholders of British Aerospace, as is proper under company law. We must assume that there will be no inducements given to institutional shareholders, or any other shareholders of British Aerospace, in order to secure their favourable vote. We must assume that the inducements have already been given to practically everybody capable of being induced, and that the shareholders will have to make up their minds without further encouragement. The word today is that the shareholders may not be as happy as the Government might like. If the shareholders decide that they do not like this particular transaction, can we be given an assurance from the noble Lord that the Government will stop these adventures and allow the Rover Group to remain as it is without further adventures in all directions of the kind which it has been taking?
Lord Hooson: My Lords, I thank the noble Lord for his Statement. Is he aware that on the six o'clock news the contents of this Statement were relayed to the British public? Does the Minister not agree that that is a grave discourtesy to this House?
Turning to the contents of the Statement itself, does the noble Lord not agree that for British Aerospace to shy away at the 11th hour from this deal suggests that there was more to it than mere uncertainty about its commercial flexibility regarding the monitoring processes of the Commission? Can the noble Lord tell the House when the removal of the two tax restrictions was agreed? Was it agreed between the making of the Statement yesterday and the Statement the noble Lord made today? Can the Minister tell us what is the value arising from the removal of those two restrictions?
I appreciate that the noble Lord might have difficulty in quantifying it exactly; but he is obviously of the opinion that it is a very considerable sum. Does it not make up to a very large extent the difference between the original money offered to British Aerospace and the amended figure approved by the Commission? As regards the timing of the payment, can the Minister tell the House whether the timing has been amended; namely, that there is a different formula to be applied now for the payment of £150 million by British Aerospace? When the noble Lord said that he thought that the deal was to the benefit of the Rover Group and its shareholders and workforce, is the Minister equally satisfied that it is to the benefit of British Aerospace and the British public at large?
Lord Young of Graffham: My Lords, I am grateful to the noble Lord, Lord Williams of Elvel, who asked me what was the problem. That matter was covered in my Statement. The board of British Aerospace, very prudently, wanted to be sure that there was commercial flexibility available to the board in complying with the decision of the Commission. I am sure that all noble Lords will be aware that it was only yesterday morning that the Commission decided this case. British Aerospace very prudently wanted to make sure that it would have sufficient commercial flexibility for the future within the company. That would be consistent with their responsibilities. In answer to another question asked by the noble Lord, and as my Statement said, the talks in Brussels this morning clarified those points to the satisfaction of British Aerospace. Those matters were causing it some doubts. The matter now proceeds.
The noble Lord, Lord Williams, asked me whether there was any change in the terms. In my Statement I stated the position very clearly and I shall repeat it again:
"I should make clear that the points of difficulty for BAe were not related to the basic financial framework of the deal which was acceptable in principle to BAe and which has not changed since yesterday".
That applies to all of the terms of the deal. That statement also applies to a point raised by the noble Lord, Lord Hooson; namely, to the timing and matters of tax. All those conditions remain unchanged. The cause of the delay was the prudent desire on the part of the board of British Aerospace to make sure that it had read all the fine print.
The noble Lord, Lord Williams, asked me about tax. It was yesterday that the noble Lord gave me a little lecture about Section 768 concerning the need to ensure that one has followed satisfactorily the formulas in transferring the ownership of companies and ensuring that one still has the use of tax losses. As I said yesterday to your Lordships—and I repeat again for the benefit of noble Lords opposite—the law of the land is followed in this matter. There is nothing unusual: there are no changes and these are the normal tax rules that the Inland Revenue apply to every company in the land. It would be surprising if the Government did anything other than follow their own tax laws. I am happy to assure the noble Lord, Lord Williams of Elvel, that, with the recommendation of the board of directors of British Aerospace, I have every reason to suppose that it has confidence that the outcome of the extraordinary general meeting will be satisfactory. That is a matter for the company alone.
The noble Lord, Lord Hooson, must have seen a different six o'clock news from the one that I saw. To my knowledge the news at six o'clock stated only that I was coming to your Lordships' House to announce my decision. If there was anything else in the news, I am surprised and I shall stand corrected. I shall find it surprising indeed if anyone else had information at that time since it was only a few minutes ago that we were in a position to clear this agreement. I shall check on the position. I am happy to tell the noble Lord that there was no change in timing. The only change that occurred between yesterday and today is that British Aerospace has confirmed and clarified the position in terms which are satisfactory to it.
Lord Hooson: My Lords, I simply wish to clarify to the House that I was informed by our Chief Whip that this matter had appeared on the news. Obviously, it can be investigated further.
Lord Young of Graffham: My Lords, I watch the news very carefully; but I have always found it better to rely upon first-hand evidence in such matters. At that particular time the question was being asked during the programme as to which way the decision was to go. A report was made to the effect that I was expected to come to your Lordships' House at that time.
Lord Diamond: My Lords, we are grateful to the noble Lord for informing the House so quickly. We are glad that the matter has been finally resolved in the belief that this will mean securing for this country a motor car manufacturing industry without which no country's economy is strong.
There is, however, one aspect of the agreement which keeps on cropping up and which is bound to cause unease. There are so many references to the tax position that it would appear that this is a tax deal rather than any other kind of deal. I was grateful to hear the noble Lord say that these matters are being subjected to the tax law of the country in the same way as any other company's matters are subjected. It was a considerable relief to hear that.
However, I cannot understand the provision that only a certain part of Rover's trading losses would be available after it has been acquired. Does "available" mean available as tax losses in the normal way? If so, how do the Government, who, as the noble Lord has made clear, arc subject to the same tax laws as the rest of us, secure a provision of that kind? While the noble Lord is dealing with the tax aspects of the matter, can he also say what is meant by a new cash injection of £547 million? Who is injecting the cash? I take it that it is the Government, but the Statement is not at all clear about that.
7 p.m.
Lord Young of Graffham: My Lords, I am grateful to the noble Lord, Lord Diamond. Of course the Government follow the normal tax laws of the land. Noble Lords opposite questioned whether we would, but I am happy once again to give the assurance that this is a society in which the rule of law applies, and that rule applies to government as it applies to everybody in the land. I assure the noble Lord, Lord Diamond, that the trading tax losses are limited to £500 million because such has been the glorious experience of the nationalised industry sector that the Rover Group had available to it when we first announced this deal no less than £1,600 million of tax losses. The first arrangement in the March agreement was to limit the availability of the trading losses to £500 million as part of work we were doing on behalf of the taxpayer. That agreement still applies and continues. But part of the arrangements now, reflected in a lower cash injection, is to release part of the capital losses and capital allowances.
The new cash injection of £547 million being paid by the Government to Rover comprises £469 million in recognition of historic debt and some £78 million
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as an advance payment under regional selective assistance in respect of work which will be done in assisted areas but otherwise in the normal way. That will end with this payment and as the matter becomes completed it will result in the Varley-Marshall assurances which now exceed some £1·6 billion or £1·7 billion falling away, and the Government and the taxpayer will be relieved of this great potential liability.
Lord Stoddart of Swindon: My Lords, I listened carefully to the noble Lord's Statement and I also watched most of the news bulletins last night. I heard Commissioner Sutherland say that the agreement that was reached was unalterable. Does the Statement mean that the agreement has been altered, or merely clarified, to the satisfaction of British Aerospace?
Secondly, hearing in mind the Government's philosophy of non-interference with private industry, which was further enunciated by the noble Lord, Lord Beaverbrook, at Question Time today. is the noble Lord happy that British Aerospace. having taken over the Rover Group, should now be subject to supervision by an unelected junta—call it what you like—sitting in a foreign capital? Would he do that if the Commission had not been involved? Would he insist on government involvement in Rover after it had been taken over by another private firm?
We are entitled to know the facts. The workers in Rover and British Aerospace are entitled to know just how far they are to be supervised, not by the shareholders and not by their board, but by a group of bureaucrats who perhaps do not know anything about this industry or, for that matter, any other industry?
Lord Young of Graffham: My Lords, I am grateful to the noble Lord, Lord Stoddart. I am not sure whether he is aware of the fact that some years ago we signed the Treaty of Rome and are now part of the European Community. The foreign junta to which he referred is something of which we are part. If the noble Lord wishes, I shall send him some literature on the impending single market in Europe which may have come to his attention. Of course we are part of that. We are bound by Community law and this law has an important purpose.
The noble Lord and the car workers not only at Rover but at all the car companies in the United Kingdom would be concerned if foreign nationalised car companies—foreign in the sense of being part of the European Community—could receive any amount of state subsidies from their own governments and therefore undermine our share of the market. The work done by the Commission in Brussels ensures that there are level playing fields and that all the car companies in Europe get about the same level of state aid from their national governments in order to ensure that there is a fair and competitive market. It is always difficult when bureaucrats supervise companies. That is why my department no longer enters into planning agreements throughout industry, as it did a dozen years ago. That is all to the better and it shows in the industrial state of the nation today. The Commission

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will ensure—and we will provide it with the information from time to time—that the investment programme of Rover is followed through, and that it is followed through in ways which the management plan for the board has already provided. It is no more than the normal follow-through that occurs when any state aid programme is carried out. It has happened to British Steel all the way through and it happens on most of these programmes. It is a necessary part of ensuring that the level playing fields are regularly mown.
Lord Williams of Elvel: My Lords, as a matter of elucidation, will the noble Lord reply to the question which the noble Lord, Lord Hooson, and I asked about the effect of the release of the Rover Groups' capital losses and up to £300 million of disclaimed capital allowances? I recognise that it may be an estimated number but the noble Lord must have some figure that he can give the House.
Secondly, the noble Lord insists that all this is within the tax law. Can he tell us under which section of tax law—I do not say that I do not agree with what he has done—the entitlement to tax loss carry forward is limited?
Lord Young of Graffham: My Lords, I can deal with the second part of the noble Lord's question. It will be limited by contract. It is part of the agreement between the Government and Rover Group to limit down to £500 million. The trading losses will be limited to £500 million. That is the only way in which that can be provided. It is part of the tax law of the land. It is only of use to Rover and not of use to British Aerospace unless British Aerospace were to be in the business of manufacturing motor cars. That is quite clear.
The benefit of the other capital losses is a matter for British Aerospace. British Aerospace is the one to value that. It is not for the Government to value those tax benefits. That is something for British Aerospace and British Aerospace alone to do.
Lord Hatch of Lusby: My Lords, is it not the case that the publication of the Rover half-year returns demonstrates how a nationalised company can succeed? Can the noble Lord tell the House just how much money the taxpayer has been saved as a result of the intervention of the European Commission as against the taxpayers' money which the Government previously intended to pay on this issue?
Lord Young of Graffham: My Lords, I should like to pay great tribute to Mr. Graham Day, to the board and to everyone in the Rover Group, for the splendid results they achieved for the half year. I have the privilege of driving a Rover car. I believe that it is a marvellous vehicle and I wish to pay tribute to it. I think that the company has a great future in the private sector. However, that is not a tribute to its past in the nationalised industry sector because after this transaction is concluded the whole of BL will have cost the taxpayer some £3·4 billion. That does not seem to me to be a great tribute to the nationalised industry sector.
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It is true that the deal, which has changed considerably since we first went to Commissioner Sutherland, involves a lower cash injection. The cash injection is some £253 million less than it would have been. It now involves a substantial release of tax benefits and also reflects the fact that there has been a substantial improvement in Rover's trading position.
Noble Lords may recall that a year ago when a similar matter went to Brussels there was a reduction of about £70 million—in fact, rather more than £70 million—as a result of the process of going there. I must confess that I was not unaware of the matter before I first went there.
Lord Williams of Elvel: My Lords, on a matter of elucidation, is the noble Lord saying that the Commission has cut back on the cash injection and that the Government have made it up by tax relief on the other side?
Lord Young of Graffham: My Lords, no; that is not what I am saying. I am merely reporting the difference in figures. At the end of the day, it is a matter of judgment for the board of British Aerospace.
Lord Shepherd: My Lords, perhaps I may make an appeal to the Leader of the House. The Secretary of State has fulfilled his obligations and his undertaking to the House that at the earliest opportunity he would report to us in regard to this matter. The question now is whether this is the time when and whether these are the circumstances where this most important issue should be left.
I wonder whether the Leader of the House would consider, through the usual channels, whether this is a matter that could be developed more profitably through a debate—I agree it is at short notice—recognising the difficulties of the Secretary of State, BAe and the Rover Group. We have a Secretary of State here who is directly responsible at this relatively late hour of the evening; we had no prior knowledge that a Statement would be made—a Statement of great major significance. So quite clearly we should consider whether this should be the end of the process.
As I said, I appeal to the Leader of the House—through the usual channels— to consider whether there should not be an opportunity for a debate on the matter and an opportunity for reflection upon the points which have been made by the Secretary of State and other noble Lords. In the interests of both the Secretary of State and I believe this House, because we have the Secretary of State in the House, I wonder whether we ought not to ask the Leader of the House to try to find time for a debate.
The Lord Privy Seal (Lord Belstead): My Lords, I am most grateful to the noble Lord, Lord Shepherd, for saying that my noble friend the Secretary of State has indeed discharged his undertaking to the House by coming to the House today and making the Statement that he has just made. That is the first thing I ought to say.

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Secondly, I think that we would be going well beyond our own rules of procedure if we were to continue with what is rapidly becoming a mini debate, although I well understand the interest of noble Lords opposite and other noble Lords on all sides of' the House.
Thirdly, I should say that of course I shall consult with the Whips on all sides of the House and use the usual channels to see whether it is possible to have a discussion on the matter. However, I must not mislead your Lordships. As a result of the statement which was made today about the House rising on 29th July for the Summer Recess, we have a congested timetable but we shall, nevertheless, do our best. However, I cannot give an undertaking to the House that we can definitely find time for a debate; I can only give an undertaking that I shall use my best endeavours to do so through the usual channels.
Lord Tordoff: My Lords, before the debate is terminated, I think it would be proper for me to say a word about the exchange between the noble Lord, Lord Hooson, and the Secretary of State on the question of the six o'clock news. I must say straight away that I did not see the six o'clock news either. I was informed by what I suppose is called the "usual reliable source" and I passed the information on to my noble friend. If I was misinformed and thereby misinformed him, so that what was said in the House was not true, then I apologise unreservedly.
I shall of course check out my source to find out whether it was perhaps another channel or another part of the media—as the Secretary of State rather aptly pointed out. However, if I am wrong then of course I apologise.
Lord Young of Graffham: My Lords, I am most grateful to the noble Lord for what he has said. I shall also check the matter because it would be a grave misuse of privilege if any information were to come other than first to your Lordships' House. I readily understand that and I shall look into the matter. I am fairly certain in my own mind that it did not, but the evidence will obviously clear up the matter.
Lord Stoddart of Swindon: My Lords, just before we finish this debate perhaps I may say a brief word.
Lord Beaverbrook: Oh no!
Lord Stoddart of Swindon: Oh yes! The noble Lord, Lord Young, cast some doubt as to whether I knew that we were in the European Community and that we had passed the Single European Act. I just want to draw his atention to the fact that the noble Lord, Lord Bruce, and I opposed that Act from this Front Bench.
Lord Young of Graffham: My Lords, when the noble Lord referred to the Commission in Brussels as a "foreign junta" it led me to suppose that at the time he may not have been totally in favour of it.

Docks and Harbours (Rateable Values) (Amendment) Order 1988
7.16 p.m.
Lord Hesketh Lord Hesketh rose to move. That the order laid before the House on 10th June be approved [31st Report from the Joint Committee].
The noble Lord said: My Lords, the rateable values of statutory docks and harbours undertakings are determined by a formula set out in the 1976 Order SI 1476 No. 535. It takes rateable values as a percentage of the specified operating income for the previous year. To discount the effects of inflation the percentage is then adjusted back to 1976 price levels by means of the retail price index. In 1987 the retail price index was re-referenced; in other words, it was set back to a new base of 100. As a result the figures of the 1976 order no longer work to return valuations to their 1976 level. If nothing were done to correct the position, a four-fold rise in rateable values would result. The amending order seeks to rectify that by inserting a new term in the 1976 order which reflects the current RPI. That will preserve existing levels of assessment.
The proposed amendment has been the subject of full consultation with the industry and local authority associations, all of whom are content with it. I beg to move.
Moved, That the order laid before the House on 10th June be approved [31st Report from the Joint Committee].—(Lord Hesketh.)
Lord McIntosh of Haringey: My Lords, I do not think that those of us on these Benches have any objection to the purpose of the order. However, it is necessary to draw attention to the report of the Joint Committee on Statutory Instruments which points out that it purports to have retrospective effect where the parent statute confers no express authority to do so. I would not even draw the attention of the House to that if it were not for the fact that the report of the joint committee says that the department replied to its questions with a memorandum which may be found in Appendix 1. When one looks at Appendix 1 the memorandum refers to:
"The Harbours Works (Assessment of Environmental Effects) Regulations 1988",
and as to why they should not apply to Scotland.
I do not think that the noble Lord would wish to be reminded of orders relating to the assessment of environmental effects. So the information before us, which unfortunately I did not read in time to get it corrected, is not entirely helpful. However, we accept that, although it would be possible to avoid retrospection, it probably would cause a lot of extra work and be unfair to many operators on dock and harbour land. Therefore we are content that the order should be made.
On Question, Motion agreed to.

EUMETSAT (Immunities and Privileges) Order 1988
7.20 p.m.
The Minister of State, Foreign and Commonwealth Office (Lord Glenarthur)The Minister of State, Foreign and Commonwealth Office (Lord Glenarthur) rose to move, That the draft order laid before the House on 28th June be approved—[31st Report from the Joint Committee].
The noble Lord said: My Lords, I shall speak also to the EUTELSAT (Immunities and Privileges) Order.
Perhaps I may first say a few words about the activities of these two organisations. The European Telecommunications Satellite Organisation (EUTELSAT) was created in May 1977. Its functions include the design, development, construction, establishment. operation and maintenance of the space segment of the European telecommunications satellite systems.
EUTELSAT's primary role is to provide the satellites required for international public telecommunications services in Europe. The primary purpose of the European Organisation for the Exploitation of Meteorological Satellites (EUMETSAT) is to establish, maintain and utilise European systems of operational meteorological satellites. In doing so it takes into account as far as possible the recommendations of the World Meteorological Organisation, a specialist agency of the United Nations.
The conventions provide that each organisation is to have privileges and immunities necessary for the performance of its functions. The UK is a party to both the EUTELSAT Convention and the EUMETSAT Convention. It has signed but not ratified the two protocols on privileges and immunities. The United Kingdom is a leading participant in both those organisations and a net beneficiary of their success.
It is important to ratify the protocols since, in the case of EUTELSAT, members of the organisation have already arrived in the United Kingdom on attachments to companies. The draft orders will, when made, enable Her Majesty's Government to give effect to the protocols and therefore to ratify them. The draft orders follow precedents for similar orders made in respect of other international organisations.
We are satisfied that the privileges and immunities accorded under those protocols are necessary for the effective functioning of the two organisations. They provide for officials of those organisations to have (depending on their status and functions), first, immunity from legal action in respect of acts done by them in the course of their duties; secondly, inviolability of official documents and papers; and, thirdly, immunity from United Kingdom taxation and Customs duties.
Ratification would further facilitate the letting of contracts by the two organisations in the United Kingdom. They provide a source of demand for European (particularly United Kingdom) satellite manufacturers. The three EUTELSAT satellites were built by the European Space Agency. In each case
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British Aerospace was the prime contractor, with Marconi also playing a leading role. I commend the order to your Lordships, and beg to move.
Moved, that the draft order laid before the House on 28th June be approved [31st Report. from the Joint Committee.]—(Lord Glenarthur.)
Lord Cledwyn of Penrhos: My Lords, we are grateful to the Minister for explaining both the orders. We give them general support As he explained, EUTELSAT performs functions of great importance in the telecommunications field. I note that 26 countries are currently members of EUTELSAT. In this country, British Telecom International and Mercury operate to provide services for customers; that is, television and radio programmers.
Will the Minister give some indication of how British Telecom co-operates with EUTELSAT and how much it costs the British taxpayer? I have been told that our percentage contribution could be said to be disproportionately high. Now that British Telecom is a private company, I presume that it will pay all the costs and that the British taxpayer will be relieved of any cost in relation to EUTELSAT. That is something which should be explained to the House. In short, it would be of interest to know what part we play in the overall administration of EUTELSAT and what the financial implications are. The order deals in detail with the organisation, and so on. It would be useful to know what sort of representation the United Kingdom has within the organisation.
Secondly, I know that 17 countries are members of EUMETSAT. That again performs important work on the meteorological side. The same questions are relevant here; namely, what part we play in the administration and how much it costs us. The order goes into detail about the organisation. Perhaps the Minister can clarify that from the British point of view.
Finally, we should always look at privileges and immunities with great care. Noble Lords have shown their interest in the continuing increase in the numbers who can claim those privileges in this country and how they are frequently and unhappily misused. Will the Minister tell us how many additional personnel are likely to be able to claim the privileges and immunities which he described in his introductory speech? Subject to those points, we support the orders.
Lord Glenarthur: My Lords, I am grateful to the noble Lord. He asked me a number of questions about the organisation of EUMETSAT and EUTELSAT. I shall start by dealing with privileges, which are especially relevant to the orders, and the numbers of those who may benefit from them. As neither EUMETSAT or EUTELSAT plans to open an office in the United Kingdom, there will be no permanently resident beneficiaries. However, a few officials are to be seconded to British companies. It is not possible to be specific, but the numbers involved are expected to be small. Their entitlement will be limited to first-arrival privileges and official-act immunity only.

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With regard to those people who may be here at present, one couple from EUTELSAT is on secondment to Marconi. It is not known how long they will be here, but probably about a year.
Reverting to the operations and headquarters element of EUTELSAT, perhaps I may explain that it has three satellites in orbit. In the United Kingdom, British Telecom and Mercury provide the uplinks and downlinks for customers. The customers are largely television and radio programmers. In addition, the EUTELSAT space segment can also be used for domestic public telecommunications services in Europe. The headquarters of the organisation are in Paris.
I understand that the cost to the British taxpayer was approximately £2 million last year and that annual payments of that order will continue until about 1991. The contributions were agreed with British Telecom when the organisations were set up. Two meteorological office staff represent the United Kingdom on the EUMETSAT council, and the current cost to Her Majesty's Government is about £8 million a year. The headquarters of EUMETSAT are at Darmstadt in Germany.
I believe that I have answered the points the noble Lord raised. If he has no further points, I commend the order to the House.
On Question, Motion agreed to.

EUTELSAT (Immunities and Privileges) Order 1988
7.29 p.m.
Lord Glenarthur: My Lords, I beg to move the second Motion standing in my name.
Moved, That the draft order laid before the House on 28th June be approved. [31st Report from the Joint Committee]. —(Lord Glenarthur.)
On Question, Motion agreed to.
Viscount Long: My Lords, I beg to move that the House do now adjourn during pleasure until 8 o'clock.
Moved accordingly, and, on Question, Motion agreed to.
[The Sitting was suspended from 7.30 to 8 p.m.].

Health and Medicines Bill
House again in Committee on Clause 7.
Lord Skelmersdale Lord Skelmersdale moved Amendment No. 20:
Page 6, line 45, leave out ("as private patients") and insert ("under this section").
On Question, amendment agreed to.
Lord Skelmersdale Lord Skelmersdale moved Amendment No. 21:
Page 6, line 45, at end insert—
("(1A) The Secretary of State may allow accommodation and services to which an authorisation under subsection (I) above relates to he made available in connection with treatment, in pursuance of arrangements made by a medical practitioner or dental practitioner serving (whether in an honorary or paid
994
capacity) on the staff of a health service hospital for the treatment of private patients of that practitioner.").
On Question, amendment agreed to.
[Amendment No. 22 not moved.]
Lord Skelmersdale Lord Skelmersdale moved Amendments Nos. 23 to 25:
Page 7, line 10, leave out ("for private patients to such extent as he may determine") and insert (", to such extent as he may determine, for patients who give undertakings (or for whom undertakings are given) to pay, in respect of the accommodation and services made available, such charges as the Secretary of State may determine").
Page 7, line 26, leave out ("as private patients") and insert ("under this section").
Page 7, line 26, at end insert—
("(1A) The Secretary of State may allow accommodation and services to which an authorisation under subsection (I) above relates to be made available in connection with treatment, in pursuance of arrangements made by a medical practitioner or dental practitioner serving (whether in an honorary or paid capacity) on the staff of a health service hospital for the treatment of private patients of that practitioner.").
The noble Lord said: I beg to move Amendments Nos. 23, 24 and 25 en bloc. I spoke to them with Amendment No, 15.
On Question, amendments agreed to.
[Amendment No. 26 not moved.]
Lord Wallace of Coslany Lord Wallace of Coslany moved Amendment No. 27:
Page 7, line 47, at end insert—
("( ) In all that is involved in the forgoing due regard shall he paid to the existing work of Voluntary Societies in the National Health Service.").
The noble Lord said: I beg to move the amendment standing in my name. This amendment is quite important. The noble Lord wrote to me in his letter dated 9th June:
"We do not believe that primary legislation is the right place to draw attention to the contribution which voluntary bodies make".
If noble Lords read my amendment they will see that it does not involve paying tribute to the contribution of voluntary societies but refers to the part that they play in the National Health Service. That part does not apply in the private sector because there is no voluntary service in the private sector. The amendment is necessary because of the possible conflict of interests between hospital management and the voluntary services such as the friends of the hospitals. At the moment the friends run shops and many other services in the various departments of the hospitals. There is no doubt that their work is appreciated.
I admit that managers have already had a reminder from the new management board and that further guidance will be given when the Bill is passed. The Minister, the noble Lord, Lord Skelmersdale, referred to the work of the friends, which I have already mentioned. The right place to draw attention to this is in the legislation. It is all very well for managers, the management board, to send out the preliminary letter of which I already have a copy and then later on when this Bill is passed to send out further details on the legislation. However, trouble is already occurring and I have personal experience of it.
I do not wish to get involved, because the chairman of the health authority does not quite agree with my

995
point of view. The point concerns car parking where there is a problem with nursing staff and volunteers. I believe this is being ironed out in one hospital but there are problems with others. Many other difficulties arise from time to time and I have found that the best way to solve them is to set up a joint consultative body of management and the voluntary societies concerned in each hospital to try to iron out the difficulties. However, they will continue to occur.
There is an instance of a flower shop proposed in my local hospital. We, the friends, have had to insist that the shop shall not sell anything other than flowers and congratulatory cards. Whether that will be the case I do not know, but in any case the friends already sell some flowers themselves. These problems go on and on.
I feel quite strongly that there is no harm in the words which I have suggested in the amendment before the Committee appearing in the Bill. It is essential in my view that the voluntary organisations should have some part in this legislation which will enforce the co-operation which is desirable. Not all hospital managers are willing to co-operate; it has to be said that some can be quite difficult.
I have great faith in the voluntary spirit which exists within the National Health Service but I am very much afraid that difficulties may arise, which is why I have put down this amendment. It is purely a personal matter, not a party political matter by any means. It is something which I believe in very sincerely. I hope that the Government will see their way clear to inserting these words at the end of Clause 7. That is all I ask. There are parts of Clause 7 with which I agree, but this is essential. I beg to move.
Lord Ennals: In supporting this amendment from my noble friend Lord Wallace. I wish first to pay a tribute to him. He has been involved in voluntary organisational support for the National Health Service for between 20 and 30 years. For most of that period I have known and respected the work he has done through the hospital friends, and the work he did in his own constituency when he was Member of Parliament for Norwich, North. Throughout his period in public life he has been a tremendous champion of the work of voluntary organisations. He has done great work himself and I think he has given a lead to others. It would be very sad, as he himself said, if in putting this Bill through the interests of the voluntary organisations were somehow not fully recognised. This is the right place to do that because, after all, in order to do their work the voluntary organisations have to raise money. I am thinking particularly of the leagues of hospital friends and those who raise money for reseach in hospitals or for scanners or whatever it is to help hospitals in their work.
There is no doubt that in Clause 7 and the provisions for income generation there will be resources which the public will contribute either through sales or gifts or what-have-you which will make it that much more difficult for leagues of hospital friends and others to raise the necessary funds.
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It is not only necessary to consult with them—as I am sure should be done so that they are brought in, and I think I deal with this in a later amendment—about what is done in terms of income generation, particularly on the premises of National Health Service hospitals, but it is essential that their interests should be recognised in the Bill. It should be a statutory requirement that action is not taken which damages the interests of the voluntary organisations. Not only personally but for the reasons that my noble friend gave. I warmly support his amendment.
Lord Winstanley: On behalf of my noble friends on these Benches—or those noble friends who will he on these Benches if required—I should like to join with the noble Lord, Lord Ennals, in supporting the noble Lord. Lord Wallace of Coslany, on this amendment. I have always been an enthusiastic supporter of the National Health Service. Indeed I have always been an enthusiastic supporter of what was once known as the welfare state. I would merely say that whoever is the government of the particular day—whether it is the government of the noble Lord, Lord Ennals, or anybody else—whatever is done by the state there will always be gaps. It is my experience of medical life that some of those gaps can only be filled by voluntary organisations.
I have seen at first hand not once but over and over again the way in which voluntary bodies in various parts of the country. and in different functions within the National Health Service, have filled gaps which were inevitably left, and will always he left, whatever the flavour of the government of the day. Therefore it is important that proper regard should be paid to the work of these voluntary bodies.
The noble Lord, Lord Ennuis, was right to pay a tribute to his noble friend Lord Wallace of Coslany for his long service in the voluntary field. I think it is right to say that when your Lordships' House is full, the Benches in all parts of your Lordships' House are festooned with Peers who have worked indefatigably for voluntary bodies. They include the noble Baroness, Lady Macleod of Borve, the noble Baroness, Lady Elliot of Harwood, and many others in all parties. I mention that merely to say that it is not only on this side of the House but in all parts of the House that noble Lords have worked for these voluntary bodies. It is right that proper regard should be paid to them in this Bill, and I am glad that the noble Lord, Lord Wallace, has raised the matter.
Lord Trafford: From this side of the Committee it is a pleasure for once to he able to agree entirely with what the noble Lord, Lord Winstanley, said about voluntary bodies. I was rather surprised to hear that there were any problems arising, because I should have thought that it was very bad management that did not take note of what voluntary organisations wanted to contribute and did not consult them in the manner of their contribution. I can truthfully say that at least half of the high-tech equipment in my department is provided by charity. It is not provided by the National Health Service as such. Without such enormous contributions it would be somewhat difficult to carry on at a level of service that one always hopes can be achieved.

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As regards the spirit of what the noble Lord, Lord Wallace, and other noble Lords have said, I fully support the activities of voluntary agencies, particularly in connection with the collection of money, which is invaluable, and for providing all those, if you like to call them, extras that otherwise one would have at least to wait a long time for. They play an enormous and significant part.
Lord Prys-Davies: I apologise to my noble friend Lord Wallace that I was not in my place when he moved this amendment. I want to echo the words of appreciation expressed by my noble friend Lord Ennals of the contribution of my noble friend Lord Wallace. My noble friend Lord Wallace is right to draw attention to the role of the voluntary organisations and the charitable societies in the NHS since 1948. Every hospital up and down the country has been the recipient of voluntary help and financial aid since it was built. Prior to 1948 all our hospitals were voluntary hospitals.
In this Bill the Secretary of State is concerned with cost benefit and the price of everything, but he must not overlook the role of the hundreds of voluntary bodies and charitable organisations and the forgotten army of volunteers who have been in support of groups of patients or of individual hospitals. Today their role, although it may be junior, is nowhere mentioned in this Bill. I think that that is the point made by my noble friend. I am not certain that the wording is perfect and I am not certain that it is in the right clause, but I am sure that the underlying message of the amendment should be acceptable to the Government and incorporated somewhere in the Bill.
8.15 p.m.
Lord Skelmersdale: Yes, the underlying message is certainly acceptable to the Government. I have more difficulty with whether it should be incorporated in the Bill, and I shall explain why to the Committee. The noble Lord, Lord Wallace of Coslany, was alone among those who spoke at Second Reading in confining his remarks to Clause 7. I note that he feels so deeply about this subject that this is the first time he has uttered today.
In bringing forward Amendment No. 27, which seeks to ensure that the existing work of voluntary societies in the National Health Service is not forgotten when new "income generation- schemes are considered, he recognises. as I do, that the income generation activities of voluntary bodies of various sorts in the health service are virtually the only ones which are currently allowed by law. Therefore, of course, it would be a very foolish manager indeed who would interfere with, for example, the leagues of friends or the WRVS. That is why we very much welcome, and agree with, the intention behind the noble Lord's amendment.
It goes without saying—at least, I hope that it does—that the Government greatly admire the selfless work carried out by the various voluntary societies. At the risk of offending those I do not mention, I can cite the leagues of friends and the WRVS as two organisations whose activities are particularly well known to the public. The work done
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by such bodies is quite invaluable, whether by way of voluntary work to provide services such as snack bars and hospital shops which otherwise would not have been provided, or by fund-raising activities to provide additional items of equipment, and so on, as my noble friend Lord Trafford mentioned.
The noble Lord, Lord Wallace, has expressed concern that the practical effect of the provisions of Clause 7 might be that the work carried out by voluntary societies would be in some way devalued or rendered unnecessary or unwelcome. On an earlier occasion he has himself quoted from the National Health Service Management Board's letter to hospital managers dated 5th April this year that:
"Authorities will [also] need to take account of any existing activities by voluntary organisations and discuss any changes fully with them with a view to ensuring that their services are channelled into those areas where they can he of most benefit. In short, we expect health authorities to act sensitively over the way in which they undertake or introduce commercial activities".
This letter is an example of the correct way to put across such messages.
I hope that the noble Lord will agree that we share his aims. But, as I said earlier, I am less sure that primary legislation is the best way of getting this message across. It needs to be brought directly to the attention of hospital managers. If' the noble Lord, Lord Wallace, or indeed any other Member of the Committee knows of anybody in a hospital who has actually read any of the National Health Service Acts I should be extremely surprised.
Having said that, of course there may be instances where local management may wish to introduce new arrangements for, say, a snack bar or cafeteria where such services are currently being provided by a voluntary society. This is, however, not necessarily wrong. Provided that there is full consultation throughout, and provided that it is clearly the best solution for the hospital, it would not seem to me to be wrong that the society concerned be invited to consider alternative ways of helping. After all the aims of such societies are generally to provide help for the hospital where it is most needed.
To sum up, I repeat the Government's admiration oldie welcome efforts of the voluntary societies in the National Health Service. We hope that they will continue the good work. Let us also look to the positive benefits to be gained from the clause. I shall certainly look at ways beyond the Bill to direct and encourage hospital managers to take into account the wishes and needs of the leagues of friends and other voluntary bodies, but I doubt whether it would be proper to enact such exhortive legislation. Perhaps the noble Lord would like to consider what I have said and come back to it at a later stage.
Lord Ennals: I have no doubt that the noble Lord. Lord Wallace of Coslany, will speak for himself. I wish to speak for myself.
I do not think this is good enough. I do not think that the only job of Ministers is to defend the text of a Bill in every respect. When there is a clear feeling in the Chamber that something should he done, it is surely the job of a Minister to try to respond to it, whether in this place or somewhere else. I know that the Minister said he would try to see whether some

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non-statutory way could he found in terms of circulars—that of course, is good—but in Clause 7 of the Bill a clear initiative is being taken; namely,
"Additional powers for financing Health Service".
Given the many different ways of producing, manufacturing and supplying goods and selling this and that and so on, I am aware that we are taking action that will affect the ability of the voluntary sector to raise money. I too think of the WRVS, and so on; and particularly of hospital friends, who raise money to a great extent on hospital territory and not just in the city.
I do not accept the argument that this is just an exhortation. It is not. If it is written in the Bill that anyone planning anything set out in the clause should consider the effect upon voluntary organisations, it is a requirement. I know that this is not one of the most fundamental issues in the Bill, but I plead with the Minister to consider whether a place could be found in the Bill for this thought to be incorporated rather than just saying, "Not in the Bill, we'll do it some other way".
Lord Winstanley: I share the point of the view of the noble Lord, Lord Ennals. I welcome what the Minister has said, and agree with much of it. However, he seemed to find a difficulty in every solution.
It is acknowledged that the NHS, since its inception on 5th July 1948, has been heavily dependent on a large number of voluntary bodies. Mention has been made of two, the leagues of hospital friends and the WRVS. However, the Minister knows that there are many more. There is an increasing tendency for voluntary bodies associated with particular conditions to combine to raise money for a specific purpose—research, the provision of technological equipment, to which the noble Lord, Lord Trafford, referred, and many other causes.
Whether or not members of health authorities read the Bill very carefully—the Minister appeared to suggest that they would never look at it—their attention should be drawn to it. It would be regrettable if the Bill was allowed to continue its passage to the statute book without a single mention of the voluntary bodies, bearing in mind that the NHS always has been and always will be very dependent on them. I hope that the Minister, with the assistance of his departmental advisers, may be able to devise some means of giving these essential bodies a mention in the Bill.
Lord Wallace of Coslany: I thank the noble Lords who spoke from the Liberal and Labour Front Benches for what they have said.
I have with me the letter of the management board, which runs to pages. On the penultimate page, a few words appear in a general paragraph referring to the voluntary bodies, and this is an indication of what will go out on the next occasion. I see no objection whatever to mention of the work of the voluntary societies being enshrined in the legislation in the simple way that I have suggested. This will reinforce the fact that there exists a valuable and vital voluntary sector.
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The wording may not be acceptable. I do not pretend to be perfect in putting forward amendments to Bills. I appeal to the Minister to consider the matter so that on Report a small item can be included at the end of Clause 7. That would do a tremendous amount of good and go a long way to keep the voluntary spirit alive and well. The voluntary sector is doing sterling work, which is not even appreciated by some people. My own local body raises over £32,000 a year, and indeed much more besides. We are not the only ones involved.
If the Minister will think seriously between now and Report, I am prepared to withdraw the amendment. However, at present I am not prepared to do so.
Lord Skelmersdale: The noble Lord has given me the opportunity to speak again.
I am replying to a particular amendment put down at a particular time. I can imagine what would be said by the noble Lord, Lord Winstanley, for one, and probably the noble Lord, Lord Ennals, for another, if they were arguing about the phrase:
"In all that is involved in the foregoing due regard shall be paid to the existing work of Voluntary Societies in the National Health Service." In my position they would say, "Oh, how super! We can have due regard to it and then totally ignore it". However, I am well aware that that is not the spirit in which the amendment was moved, and therefore I did not use that argument.
I cannot see that the suggested formulation is right. If another formulation can be found to cover the points that the Committee clearly would like to see included in the Bill, obviously I shall consider it. I confess that at present I can see no particularly good prognosis on that score; but I shall do my best to see what can be done.
Lord Wallace of Coslany: I much appreciate what the Minister has said, as, indeed, I appreciated the correspondence that he sent to me.
If the Minister will do that, I shall be satisfied for now and withdraw the amendment. If he does not come forward with a proposal on Report, I shall have to press the matter. I beg leave to withdraw the amendment.
Amendment, by leave, withdrawn.
Lord Ennals Lord Ennals moved Amendment No. 28:
Page 7, line 47, at end insert— ("(12) The Secretary of State shall appoint advisory councils at national and district level to set standards for commencing initiatives with respect to National Health properties.
(13) Advisory councils appointed under subsection (12) above shall include representatives of National Health Service management, voluntary organisations (including Hospital Friends and Patients Associations), the Community Health Council and local trading associations.").
The noble Lord said: I hope that the Minister will not accept the wording of the amendment, which is rather clumsy. Something appears to have gone wrong in the printing of it. It says:
"The Secretary of State shall appoint advisory councils at national and district level to set standards for commencing initiatives".
There is some error in regard to "commencing initiatives". The intention is to set standards for the

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Secretary of State. Without putting too much stress on the confused wording, I should like to argue the case.
On Second Reading, I said that I should object also to the selling of tobacco products on hospital premises; and I raised one or two other problems about the standards set in income generation. I was thinking particularly of the kind of shops and kiosks that might he set up on NHS premises. I said that while I did not object to that. I wanted to see that it was done with decent standards. I said also that we did not want our hospitals and their entrance halls to look like a tourist attraction or a local bazaar, but that there must he standards, and I wanted to know how these would be maintained. The Minister did not say how they would he maintained. I therefore felt there was a duty upon me to suggest some way in which this should he done.
I suggest that advisory councils should be appointed at national and district level to include representatives of National Health Service management—which has a crucial role to play—voluntary organisations such as hospital friends and patients' associations, community health councils and local trading associations. Local trading associations are included because we are dealing with different aspects of trade, whether it he groceries, flowers, or whatever.
My fear is that unless we take the initiative and find a common approach to the matter, we may find that we have leisure centres containing one-armed bandits, betting shops, tobacco shops—heaven forbid! —or licensed premises. Those services would not be consistent with the standards of the health service and the message that it teaches in terms of health education. I do not know whether the proposed advisory councils should be at regional level as well as district and national levels. Perhaps the composition of the councils should be broader than I have suggested. However. I believe that the matter should not be left simply to management or to private enterprise bodies which may rent or purchase shop fronts in properties of the National Health Service. I want to see the establishment of premises in good taste, handled properly and efficiently. If my amendment is not acceptable, perhaps the Minister can tell me what he will do about the matter. I beg to move.
Lord Trafford: I object to the amendment on two grounds. The first is that it sets up yet more councils and committees. We are inundated with councils, committees, sub-committees, sub-councils, special committees, ad hoc committees, multi-disciplinary teams and all the other apparatus of NHS rule. I feel that if we can avoid committees, councils or advisory bodies, that will be a good thing. That does not mean that I am against the setting of standards. I am not and I do not believe that any reasonable Members of the Committee will be against setting standards. It would not he appropriate to have a roulette table with free drinks set up in the entrance hall of a hospital to attract customers.
On the other hand, I believe that this matter could he left to local management. Let us assume that local
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management makes a mistake and does something which shows a severe lack of taste. Inevitably, that will be drawn to its attention not only by the community health council and by protests in the local press but also by a local Member of Parliament and—dare I suggest it? —perhaps a resident Peer who lives nearby. We should not go overboard in dealing with this matter.
If we set up national and regional councils, they will not apply the standards to the circumstances of a particular hospital or district. The noble Lord, Lord Ennals, mentioned alcohol and tobacco. It would he totally inappropriate to have any agencies selling those products outside any hospital which deals with children, young persons, adults or even middle-aged people. However, if we consider geriatric units, I am not so sure. I believe that it would be going over the top to suggest that, at the very end of one's life, at age 70 or 80, it is improper for one to be able to get a packet of cigarettes. I do not think that such a provision would be contrary to standards. However, if such sales were encouraged in an ordinary hospital, and particularly in units dealing with children and young persons, it would be quite outrageous.
We must look for a local balance in the matter. I fail to see why local authorities and management should not be able to deal with the problem, controlled, as they always are, by local public opinion. The idea of creating yet more committees and councils, even if it is only a matter of creating one, is abhorrent to anyone who has watched the bureaucratic strangulation of the health service which has taken place over the last 20 years and which is one of its least endearing features. I hope that the noble Lord will not press his amendment too far. I believe that the matters about which he is concerned will he taken care of under the existing system and that the amendment is not necessary.
Lord Winstanley: I am not seeking any opportunity to differ with the noble Lord, Lord Ennals, simply to demonstrate that I sit in a different part of the Chamber. However, I have some differences with him as regards the amendment. I shall comment on the points raised by the noble Lord, Lord Trafford, in a moment.
The noble Lord, Lord Ennals, has already referred to the drafting of his amendment and to the fact that there are certain typographical errors and that parts of the amendment are tautological and otiose. I accept that. I note also that the amendment refers to community health councils. It is not my business, in the absence of certain of my noble friends, to speak for Scotland. However, I assume that the omission of local health councils, which are the Scottish equivalent of community health councils, is an error and that the noble Lord would like to include those councils.
Lord Ennals: Yes.
Lord Winstanley: Jolly good. I am glad to hear that. The noble Lord, Lord Trafford, is right in saying that we have too many committees. However, he said that the matter should be left to local

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management. We need consistency in our standards nationally. We shall not achieve that through the agency of' local management. Someone must look at the matter nationally and decide whether what is being done nationally is appropriate. I suggest that your Lordships' House might look at those matters, consider them, and comment when we believe that the wrong things are being done. Some mechanism must be found so that general guidance as to standards can be given.
I shall not enter into the argument about tobacco or alcohol. As a general practitioner, to any of my elderly patients who were teetotallers I said, "On no account have any alcohol". If I knew that my patient liked a drop of drink, I used to say, "I think that a brandy and perhaps a Guinness at night would be very good for you". I was extremely popular with those patients. However, I shall not enter into the argument, save to say that I believe that guidance at a national level would be helpful. We do not want to see totally differing standards in what is provided in various regions. I shall listen to what the Minister has to say about how we shall achieve that laudable aim.
Lord Skelmersdale: It goes without saying that we need standards. I rather doubt that we need another statutory committee. I welcome the opportunity to repeat assurances given in another place that there are adequate safeguards contained in Clause 7 to ensure that nothing may be done which affects adversely the duties of the Secretary of State under the 1977 Act. As I explained earlier this afternoon, that has absolutely nothing to do with either local or community health councils. Therefore, the noble Lord, Lord Winstanley, may strike that matter from his memory. That is to be found in Clause 7(4) and under the new Section 65, which, for Scotland, is Section 57.
I cannot see the need to establish the sort of advisory council network which is envisaged in the amendment. Nonetheless, we need standards. My right honourable friend the Secretary of State has a unit within the Department of Health and Social Security to maintain standards so far as income generation is concerned, to issue advice, to issue statuory guidelines if necessary and to inspect hospitals that go in for income generation. Lest it he thought that that is just another minor unit, let me assure the Committee that the unit is headed by the ex-District General Manager of the North Hertfordshire District Health Authority, Mr. Ron Kerr, who knows from experience what is necessary for the management of hospitals and, perhaps even more importantly, what can interefere with the management of hospitals. One does not want income generation to be so burdensome on management time that proper management of the hospital goes by default.
Further, we already also consult widely on major issues such as the authorisation of pay beds where the views of the community health council are taken along with those of private sector health care providers and National Health Service staff. In the case of relatively minor income generation activities, such as the letting of accommodation to, say, a florist
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or a newsagent, it would seem to be overkill to require by law that the health authority consult an advisory body. Nonetheless, it is possible to maintain standards and I hope that I have convinced the noble Lord that that is so.
Lord Ennals: When one gets no support from anyone for a proposal it always seems that the best course is to drop it. If I am prepared to do so, I hope that if there are occasions later in the Bill when the Minister finds, as on Second Reading, that he has no support at all for some proposals in the Bill which are condemned all round, he may be prepared to do the same.
Given the Minister's assurances that standards will be maintained I am certainly not prepared to press an amendment that clearly has only one supporter. I would need a Teller. so it might not have a vote at all. I beg leave to withdraw the amendment.
Amendment. by leave, withdrawn.
Clause 7, as amended, agreed to.
Clauses 8 and 9 agreed to.
Clause 10 [Dental services]:
Lord Colwyn Lord Colwyn moved Amendment No. 29:
Page 9, line 8, leave out paragraph (b) and insert—
("(b) the following paragraph shall be added after paragraph (a) of subsection (1) —
"(aa) to arrange, to such an extent as he considers necessary to meet all reasonable requirements in England and wales, for the following dental services—

(i) for the dental inspection of pupils in attendance at schools maintained by local education authorities and for their dental treatment and for their education in dental health (and the additional provisions as set out in Schedule 1 to this Act have effect in relation to this paragraph);

(ii) for the provision of facilities for the inspection and treatment of such other groups as he considers to be in need of special care, and for their education in dental health where appropriate.".").

The noble Lord said: My purpose in moving the amendment is to improve the Bill in a way which I hope will find favour in what is left of all sides of the Committee. As it stands. Clause 10 seeks to amend the National Health Service Act 1977 to remove the present statutory duty on the Secretary of State to provide dental inspection and subsequent treatment in schools and to replace that duty by an enabling power to provide such services. My amendment would also amend the 1977 Act but would retain the duty on the Secretary of State, albeit in a modified form.
The provision of those services is carried out by the community dental service. I believe there is general agreement in the Committee that the 1977 Act is in need of amendment in order to provide better targeting of the CDS. That Act imposes a duty which extends to provision for all school children, including some who are already covered by the general dental service. That leads to a duplication of effort and a waste of resources. An example of that is the fact that my two young children were recently checked by the CDS at their school despite the fact that I had checked them myself some three or four weeks earlier.
The amendment would permit the targeting of services to where they are most needed. It would do so in a form which retains the statutory duty. It is necessary to retain the statutory body to prevent health authorities making inappropriate economies in their CDS for the sake of short-term financial expediency.
The CDS does important work but it is not a glamorous part of the National Health Service. Moreover, a service which there is a duty to provide seems somehow more important than one for which there is only a discretionary power. By amending the 1977 Act in the manner now contained in Clause 10, I fear that we would he sending a signal to health authorities that the CDS is less important than it was previously. I do not believe that that is the intention of my noble friend the Minister. I am sure he is aware that in the past two years over 14 health authorities have sought to cut back or close their CDS but have been inhibited by the existence of the statutory duty.
I should say a few words about subparagaph (ii) of my amendment. My purpose here is to extend the coverage of the statutory duty to cover groups for which the general dental services cannot provide. Those include expectant and nursing mothers, the elderly, the mentally or physically handicapped and others who are housebound. Such people find it difficult or impossible to visit a dentist's surgery; nor is the average dental practitioner equipped to seek them out. Thus the CDS provides dental inspection and treatment for patients who would not otherwise receive it. I must stress that that service is already provided in practice by the CDS. The amendment would merely extend the duty to provide it by amending the 1977 Act. It would not impose any extra burden on the National Health Service.
At Second Reading my noble friend the Minister more than hinted that he would be willing to compromise on this point. He said:
"I am prepared to look at another formulation to see whether it is possible to avoid wasteful duplication in another way if such a proposal is presented to me at a later stage of the Bill".— [Official Report. 26/5/88; col. 1088.]
I know that many dentists shared my gratitude for that encouraging statement. I suggest to my noble friend that this amendment is such a proposal and I hope that he will give further favourable response. I commend it to the Committee. I beg to move.
8.45 p.m.
Lord Ennals: I should like to give my total support to the noble Lord, Lord Colwyn, and the amendment he has proposed. The Committee will recall that at Second Reading I strongly criticised the Government for their move to abolish the statutory role of the CDS. I tabled my own proposal to remedy that mischief. I then saw, on the same day, the amendment tabled by the noble Lord, Lord Colwyn, I recognised that it was more comprehensive and more suitable, that it took in groups such as pregnant and nursing mothers. the elderly and the handicapped. Therefore. I decided that I would withdraw my amendment and give my support to his.
I totally agree that there needs to be a statutory duty. I do not think that it is enough simply to leave it to discretion. I was glad that the noble Lord quoted
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the fact that there are so many health authorities which, because there is at present a statutory duty, have decided that they could not drop the service, which they would otherwise have done. I think that that is a very important argument. I think that we would find the service collapsing, particularly in some parts of the country where we really cannot afford to have that happen.
I know that there is an awareness in the Committee and the Minister may very well say that there has been a great improvement in dental health. The condition of teeth and gums of children in this country has improved dramatically. I think that we would all welcome that fact and congratulate those who have had any part in it. But there is still very much to he done and we cannot be complacent. We have to acknowledge the important work of the community dental service and we must also look to the future to see how we can meet the targets which we have set ourselves.
The World Health Organisation's goal is that, by the year 2000, 67 per cent. of children should be without caries. In Wales only 33 per cent. —that is only half—of' the children are caries free at five years old. The World Health Organisation's goal for the year 2000 is 50 per cent. at that age. In Scotland the position is even worse: only 25 per cent. of Scottish children are caries free despite the 50 per cent. target. In Northern Ireland the situation is worse still, with only 22 per cent. of children of the age of five being caries free. Therefore I think it must he seen that there is an enormous amount still to be done.
All the evidence is that the service is very cost-effective. Since 1974 the community dental service has been an integrated part of the National Health Service, now run by district health authorities. Health authorities have funds to spend according to their own assessment of need, so the role and pattern of the service tends to vary from area to area. It is perfectly reasonable that it should be so. In areas that are well supplied with general practitioners the emphasis of the community service has been to move away from the routine treatment of children toward priority groups among pre-school children, nursing mothers, handicapped children, the housebound and institutionalised elderly. In rural areas of course, there is greater use of mobile clinics.
There is much more that one could say but I want to emphasise that the proposals that are contained in this amendment are generally welcomed and supported by the British Dental Association, which the Government, until recently, felt was the only association that needed to be consulted on these issues.
There is an amendment to be discussed later that will be moved by the noble Baroness, Lady Gardner of Parkes, who is herself a dentist. In this Chamber we have the privilege of hearing people whose whole life may have been devoted to the welfare of children and the health of their teeth, and it is bounden upon us to take their views very seriously. When the noble Lord, Lord Colwyn, speaks from his own experience, I do not believe that we, as laymen, can say, "Silly Colwyn, you don't know what you are talking about; there is no need for a statutory obligation". One of our great advantages is that this Chamber is

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composed of people who have wide yet deep experience and whose lives have been dedicated to the subjects on which we legislate. We must take them seriously.
When we know that an amendment tabled by the noble Lord, Lord Colwyn, which I am honoured to support, has the total support of the profession, it should be taken very seriously. One is not asking that the Government should start spending new sums of money. As the noble Lord, Lord Colwyn, said, that is not the case. However, we do not want to see the statutory obligation disappear because we think that if it goes we shall see a deterioration in the health of some people in some parts of the country where the battle has yet to he won. I hope that the Minister will take seriously the plea made by his noble friend Lord Colwyn.
Lord Winstanley: On behalf of my noble friends on these Benches—and I am sure that noble Lords will have noticed that the number has now doubled—I should like to add support to the amendment moved by the noble Lord, Lord Colwyn. The amendment will go some way to repairing some of the damage which may be done by this Bill to the dental health of our nation in other ways—some way but not necessarily all the way. However, it is a very important way, particularly in so far as it affects our children.
In my experience the work of the community dental service has not been sufficiently recognised. It has not been so recognised because in some areas of the country it barely exists. We need not merely the maintenance of the community dental service but an expansion of it, in particular in many areas where it is understaffed and the work which it does is minimal in relation to the extent of the need.
The dental health of children is crucial. I shall not repeat the type of arguments used by the noble Lord, Lord Ennals, but we all remember the deplorable state of the dental health of the nation before the National Health Service started in 1948. In Europe, Britain ranked very low in the league of dental health. It took only a very short time for our position to change and that was largely owing to the splendid work of the dentists in those days. I do not say this critically, but fellow students of mine who practised dentistry rather than medicine used to be paid on a piecework basis and they made a great deal of money. They made hay while the sun shone in those very early days of the National Health Service because an enormous amount of work needed to be done to repair the ravages of many years of serious neglect. As a result, in Britain the state of the nation's dental health changed dramatically, as I am absolutely sure the noble Lord, Lord Colwyn, would confirm.
I think that it would he lamentable if Britain were allowed to slip back into the low place that we occupied before the National Health Service began. I am sure that the work of the community dental service could go a very long way towards protecting us from that possibility. I honestly believe that there is not sufficient recognition of the importance of that service. In some areas it is not recognised simply because it does not exist to a sufficiently substantial
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extent. I hope that when he comes to reply the Minister will have some favourable comments to make about this amendment.
Lord Skelmersdale: Since this matter was first raised with me by the noble Lord, Lord Prys-Davies, before Second Reading a good deal of unanimity seems to have broken out around this clause. Noble Lords may be relieved to hear that, although I do not believe that it is yet complete, we are certainly getting there. I believe that we are unanimous in welcoming the dramatic improvements in the dental health of the country, particularly among children. I have disgraceful teeth myself, with a large number of fillings which were needed when I was at a much younger age than are my two children now, and I am well aware of the enormous improvement achieved in the dental health of children by dentists under the National Health Service, which the noble Lord, Lord Winstanley, has pointed out.
I hope that the noble Lord did not think me discourteous, but while he was speaking I was trying to whistle through the speech made by my noble friend Lady Gardner of Parkes during the Second Reading debate, in which, although at this moment I confess that I cannot find the exact words, she said something to the effect that dentists were working themselves out of a job. I would not be quite as bullish as was my noble friend on that occasion. Nevertheless, the dental health of the people of this country certainly in part has been improving in leaps and bounds.
The noble Lord, Lord Ennals, pointed to the fact that there are parts of the country which have still a long way to go in dental services. I certainly agree with him but, as I said on Second Reading, I do not think that that is any good reason for legislating for overkill; in other words, why there should be a duty placed on the Secretary of State in every area of the country for every category of person in the country where that service is being provided perfectly well by the ordinary dental service.
I believe that there is pretty well unanimous recognition that the dramatic improvement in children's teeth, together with the increase in the numbers and effectiveness of the general dental service, mean that the time has come for a reexamination of the role of the Community Dental Service. I therefore welcome my noble friend's amendment. I welcome the spirit in which it was tabled and the fact that the noble Lord, Lord Ennals, felt that it had slightly more points in it than had his own amendment.
The amendment that we are discussing now seeks to replace the current absolute duty to provide for routine inspection and treatment of school children by a duty to provide those services in such a way as, "to meet all reasonable requirements". I welcome this approach, which seems to me to avoid the requirement for the Community Dental Service to duplicate the services provided by family dentists, while at the same time meeting the concerns of this Chamber and the profession that services might be reduced to an unreasonable level.
However, I am afraid that I cannot say quite the same for the second leg of the amendment, which

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goes on to adopt the same approach in relation to other groups of people with special needs. Although I very much welcome the intention behind it and I believe that it reflects our proposal that the Community Dental Service should put greater emphasis on prevention and treatment of those who otherwise might have difficulty in getting access to services, such as people with handicaps, I must say that I am less convinced that a change on the lines of the second part of the amendment is needed.
The first part is a specific duty whereas, as I am sure my noble friend will recognise, the second part is much more general. The Secretary of State is already under a general duty under the National Health Service Act to provide dental services:
"To such extent as he considers necessary to meet all reasonable requirements".
The second part of this amendment would overlap with that provision and might even cast doubt on the generality of the duty.
While the words in the amendment may not be quite right, I very much welcome the approach that it adopts. If my noble friend is prepared to withdraw the amendment now, I undertake to come back with a government amendment at Report stage which will impose a duty to provide dental inspection, treatment and health education of school children to meet all reasonable requirements. We may then be able to reach total unanimity.
Lord Colwyn: I am most grateful for the support that I have received from the noble Lords, Lord Ennals and Lord Winstanley, and his supporter. The noble Lord, Lord Ennals, stressed the point I made
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about the need for a statutory duty, its cost effectiveness, and the need in different parts of the country. I am most grateful for his help. I am obviously delighted to hear the words of the Minister. I shall look forward to seeing the planned government amendment. I am very grateful for his help in the matter. I beg leave to withdraw my amendment.
Amendment, by leave, withdrawn.
On Question, Whether Clause 10 shall stand part of the Bill?
Lord Ennals: In view of the concession from the Minister, which I warmly welcome, I do not wish to oppose this clause.
Clause 10 agreed to.
The Earl of Arran: I beg to move that the House do now resume.
Moved accordingly, and, on Question. Motion agreed to.
House resumed.

Harwich Parkeston Quay Bill
Order of commitment to a Select Committee discharged, and Bill committed to an Unopposed Bill Committee.
House adjourned at one minute past nine o'clock.