Lords Sitting of 8 November 1988

Preamble
The House met at half-past two of the clock: The LORD CHANCELLOR on the Woolsack.
Prayers—Read by the Lord Bishop of Carlisle.

Homelessness: Review of Legislation
Lord Dean of Beswick Lord Dean of Beswick asked Her Majesty's Government:
Whether they have any further plans to deal with the increasing incidence of homelessness.
The Minister of State, Department of the Environment (The Earl of Caithness): My Lords, your Lordships will be aware that a review of the current homelessness legislation is under way. We are making every effort to bring this to a speedy conclusion, but the House will appreciate that these are complex and sensitive issues. I cannot yet say when we shall be ready to announce conclusions, but we perceive the urgency.
Lord Dean of Beswick: My Lords, I am grateful to the Minister for that Answer. He must be aware that the numbers are still rapidly increasing and that among those who are homeless there is an increasing percentage of people who are disabled in one form or another. Bearing in mind the recent statements made by a series of Ministers that the Government's policy is to target aid in the areas of greatest need, will the Minister consider doing something urgently prior to publication of the findings of the report in order to try to alleviate some of the suffering that will be endured by those underprivileged people during the forthcoming winter?
The Earl of Caithness: My Lords, the noble Lord raises an important point. We have targeted aid by giving an extra £74 million to local authorities in the past few months. That has resulted in an increase in the number of available dwellings.
Baroness Ewart-Biggs: My Lords, is the Minister aware that since 1979 the number of council houses sold for owner-occupation is nearly 600,000 in excess of those constructed during the same period? Does he think that that has any bearing on the number of people who are homeless? Secondly, can the Minister tell us which proposals within the Housing Bill can possibly affect the outrageously high level of homelessness and can help to bring it down?
The Earl of Caithness: My Lords, the whole point of the Housing Bill is to encourage the private sector to rent property which we want to be built but which at the moment has not been built, or property which is empty. As the noble Baroness will be aware, there is a sufficient number of empty properties to offer a great opportunity which local authorities can take, with the encouragement of the private sector, in order to give added help to the homeless.
Lord Carter: My Lords, will the Minister confirm that in a review of the legislation the Government will take account of the fact that something like 50 per cent. of the homeless people in the country are in the rural areas? They are not all on the inner cities. Can he say what the Government intend to do about that situation?
The Earl of Caithness: My Lords, we shall of course take account of homelessness in the rural areas. I cannot tell the noble Lord what we shall do about it because we have not yet completed the review.
Lord Cledwyn of Penrhos: My Lords, is the noble Earl aware of the report of the Audit Commission on the extremely grave problem of homelessness at the present time? Is he further aware that the figures show that the number of homeless has risen from 56,750 in 1979 to 112,730 today? Can he say how many houses are likely to be built by local authorities with the comparatively small sum of money that the Government are now allocating to them? That is the core of the problem. Does he agree that the Government are totally responsible for this situation in spite of their boasts about having a healthy economy?
The Earl of Caithness: My Lords, the Audit Commission report is at a preliminary draft stage. There is a little work still to do before it is produced in its final form, at which point we shall carefully consider the conclusions.
The noble Lord the Leader of the Opposition raises an important point about local authority new build. There is the equally important issue of the private sector housing association new build. As your Lordships will be aware, we have been able to announce an increase in funding of 80 per cent. for the housing associations within the next three years. There has also been encouragement for the private sector to build. The number of house building starts is at a record high since 1973. Of particular concern to local authorities also is the number of empty properties. In order to benefit the homeless we are trying to achieve a greater uniformity of performance among some of the local authorities.
Lord Ross of Newport: My Lords, will the noble Earl confirm that when the inquiries into the homelessness legislation take place he will also take into account the enormous amount of money that is being spent at this time on bed-and-breakfast accommodation, which can sometimes last for as long as a year? It is quite outrageous that public money should be spent in that way and not in putting a more permanent roof over the heads of those people.
The Earl of Caithness: My Lords, the noble Lord is absolutely right. The bed-and-breakfast situation is very worrying. It would be resolved by a reduction in the number of empty properties. If local authorities re-let their empty properties within three weeks it would produce another 20,000 units, which would amply cover the number of people in bed-and-breakfast accommodation. That is perhaps the line one should take.
Baroness Fisher of Rednal: My Lords, can the noble Earl tell the House what reduction in empty properties in the ownership of various government departments has taken place? Those properties far exceed the number of empty houses that are held by local authorities. Does the Minister recall that the last time we raised the issue of homelessness he said that he would look into the number of properties held by various government departments? Will he give us some information this afternoon and not keep comparing figures with the few empty properties that are held by local authorities?
The Earl of Caithness: My Lords, the noble Baroness is quite right. I said that I would look into the matter. I can now give her the answer that I could not give her at that time. As I understand it, there are about 20,000 government properties that are empty. They were built for a specific purpose and are not necessarily in the right areas. At the latest count there were something like 110,000 empty local authority properties.
Lord Dean of Beswick: My Lords, my final question relates to London, although the problem does not apply to London alone; it is showing up in rural areas. Is the Minister aware of the report published last week by the organisation, Crisis at Christmas, which calculates that the number of people sleeping on the streets in London—at present 10,000 to 11,000—will double over Christmas? The objective of my question is to ask the Minister—whom I know to be a compassionate, humane man—to appeal to the Chancellor to make some funding available now for the organisations, charitable associations, and local authorities who are grappling with this terrible problem. Otherwise the problem will be seen, quite correctly, only as a national scandal.
The Earl of Caithness: My Lords, the noble Lord will be fully aware that those who sleep rough, or the single homeless, are not strictly homeless under the definition of the 1977 Act about which the noble Lord, Lord Ross of Newport, knows so much. The noble Lord started the Act as a Private Member's Bill in another place.
Notwithstanding that, we are doing much to provide emergency beds by the DSS and the Housing Corporation's programme for hostels and shared housing.
Baroness Seear: My Lords, will the noble Earl agree that one is just as cold if one is homeless but not within the definition in the Act as under such definition?
The Earl of Caithness: My Lords, that is absolutely right. However, the Question related to homelessness and the specific definition in the 1977 Act excludes those people.

Coach Terminal Options
2.45 p.m.
Lord Ezra Lord Ezra asked Her Majesty's Government:
When the public local inquiry into coach terminal options, as envisaged in the Department of Transport's Press Notice No. 201 dated 7th April 1987, will take place.
The Parliamentary Under-Secretary of State, Department of Transport (Lord Brabazon of Tara): My Lords, we had expected a local public inquiry to take place to consider a planning application by London Regional Transport for a new coach terminal at Paddington. London Regional Transport has not submitted such an application, and has recently announced that it has been unable to reach agreement with the owners of the site concerned. It is therefore now considering other options. Any planning application by London Regional Transport for an alternative terminal on another site might need to be considered by a public inquiry.
Lord Ezra: My Lords, is the noble Lord aware that while London is served by some half a dozen main line railway stations, there is still only one main coach station? This is causing undue congestion in the Victoria area, and considerable inconvenience to those who wish to travel by coach, North, South, East or West.
After many years of fruitless discussion, will a determined effort now be made to find alternative stations for using coaches which are becoming an increasingly important means of travel throughout the country?
Lord Brabazon of Tara: My Lords, obviously it is disappointing from the point of view or LRT that the proposals at Paddington did not come to fruition. It is a matter for that body. Its consultants have identified a number of other possible sites, in particular at White City and King's Cross which I expect they will wish to consider. Paddington may remain possible if circumstances change.
Lord Strabolgi: My Lords, in noting what the noble Lord has said, does not the Department of Transport still have overall responsibility for the coach traffic of London? Is it aware that there is urgent need for a coach station to the North of London? Does it retain responsibility, or is it just sitting back and letting the local boroughs fight it out among themselves in conjunction with the property developers?
Lord Brabazon of Tara: My Lords, the responsibility lies with L RT to find a site for a possible new coach terminal.
Lord Underhill: My Lords, despite what the Minister has said, is it not two years since the Minister for Transport in another place said, in reply to a Question, that the Government were not satisfied whether a single-hub coach station was required or whether there should be a number of coach stations? Has nothing been done to consider that matter

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during the previous two years? It is surely a serious matter.
Is not the matter further complicated by a press statement, No. 65, issued a few days ago by London Regional Transport? This made clear that LRT had purchased the Victoria Coach Station for the National Bus Company in order to deal with the immediate situation, but that it was considering what to do on a long-term basis.
Lord Brabazon of Tara: My Lords, that is what I referred to in my original Answer. Because the possible deal as regards the Paddington site appeared to have fallen through it bought the Victoria Coach Station to safeguard the use of that for the time being pending further investigations.
There are arguments for and against a single-hub terminal but we would expect to see such an issue considered by a planning inquiry. I cannot comment in advance of that.

British Nationality
2.48 p.m.
Lord Ross of Newport Lord Ross of Newport asked Her Majesty's Government:
Whether they will make retrospective the exemption from the British Nationality Act conceded to parents serving abroad with the Science and Engineering Research Council, the European Patent Office and similar bodies whose children born after December 1984 are granted full British nationality whereas those born prior thereto are denied such a privilege.
The Minister of State, Home Office (Earl Ferrers): My Lords, we have no power to make retrospective designation orders under Section 2(3) of the British Nationality Act 1981.
Lord Ross of Newport: My Lords, I am grateful to the Minister for that reply, unhelpful though it is. Is he aware of the great concern felt by parents who are British citizens working for the Government or this country in Munich in the patent office, or for SERC in Geneva, whose children, because they were born between 1st January 1983 and December 1984, do not have full British nationality with all that that entails? They are faced with the problem of requiring visas to move within the EC, and also with costs which apply to them when they come to this country. The parents cannot even pass on their British citizenship to their children. Surely that is an anomaly that should be put right.
Earl Ferrers: My Lords, I appreciate the concern of the noble Lord, Lord Ross. We would sympathetically consider an application for registration as a British citizen from a child born in the situation to which he refers. However, I cannot undertake that it would be granted in all cases since such registration is at the discretion of the Home Secretary. However, in practice it is unlikely that there would be any problem over registering a child
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whose parents demonstrably retain close links with this country.
Lord Harmar-Nicholls: My Lords, my noble friend has said that the Government have no power to deal with this. Does he concede that Parliament has the power and how would the Government react to a Private Member's Bill to try to rectify it?
Earl Ferrers: My Lords, it would depend what was in the Private Member's Bill.
Lord Molloy: My Lords, will the proposition that the noble Earl has just adumbrated in reply to the Question be given wide publicity to people overseas so they know that this is something they can pursue?
Earl Ferrers: My Lords, it will have the publicity normally attributed to Questions in your Lordships' House.

Rate Support Grants Bill
2.51 p.m.
Brought from the Commons endorsed with the certificate from the Speaker that the Bill is a Money Bill; read a first time, and to be printed.

Greater Manchester (Light Rapid Transit System) (No. 3) Bill [H.L.]
The Chairman of Committees (Lord Aberdare): My Lords, I beg to move the Motion standing in my name on the Order Paper.
Moved, that the Promoters of the Bill have leave to suspend any further proceedings thereon, in order to proceed with the Bill, if they shall think fit, in the next Session of Parliament, provided that notice of their intention to do so be lodged in the Office of the Clerk of the Parliaments not later than three o'clock on the day before the close of the present Session, and that all fees due thereon up to that period shall have been paid;
That the Bill shall be deposited in the Office of the Clerk of the Parliaments not later than three o'clock on the third day on which the House shall sit after the commencement of the next Session of Parliament, with a declaration annexed to each, signed by the Agent, stating that the Bill is the same in every respect as the Bill at the last stage of the proceedings thereon in this House in the present Session;
That the proceedings on the Bill shall in the next Session of Parliament be pro forma only in regard to every stage through which the same shall have passed in the present Session, and that no new fees be charged to such stages;
That the Standing Orders by which the proceedings on Bills are regulated shall not apply in the next Session of Parliament to such Bill in regard to any of the stages through which the same shall have passed during the present Session.—(The Chairman of Committees.)
On Question, Motion agreed to, and it was ordered that a message be sent to the Commons to acquaint them therewith.

Health and Medicines Bill
2.52 p.m.
The Lord Privy Seal (Lord Belstead): My Lords, I beg to move that the Commons reason and amendments be now considered.
Moved, That the Commons reason and amendments be now considered.—(Lord Belstead.)
On Question, Motion agreed to.

MOTIONS AND AMENDMENTS TO BE MOVED ON CONSIDERATION OF COMMONS REASON AND AMENDMENTS
[Page and line references are HL Bill 75 as first printed hr the Lords. The Commons reasons and amendments are printed in italics]

LORDS AMENDMENT
1 Clause II, page 12, line 1, leave out subsection (7)
The Commons disagreed to this amendment for the following reason:
2 Because it alters the financial arrangements made by the Commons: and the Commons do not offer any further reason, trusting that this reason mar he deemed sufficient.
Lord Belstead: My Lords, I beg to move that the House do not insist on their Amendment No. 1 to which the Commons have disagreed for the reason numbered 2.
I first say a word about the reason given by another place for disagreeing with Amendment No. I, which was passed by your Lordships in July—an amendment which effectively prohibited charging for dental examinations. Of course your Lordships' House had every right to pass that amendment and thereby to ask another place to think again on this matter. As a result this issue has been debated twice in the House of Commons and when Members of another place did so last week they were able to take full account of the views expressed in your Lordships' House. On both occasions Members in another place decided that it was right to proceed with the proposal to charge for dental examinations and in sending the amendment back they have simply given their financial privilege as the reason for their disagreement.
Where the Commons offer such a reason for disagreeing to a Lords amendment then this House does not insist upon it. As Erskine May puts it:
"This hint of privilege is generally accepted by the Lords, and the amendment is not insisted upon".
There are, as your Lordships will be aware, a number of conventions and practices which, along with the statutory provisions of the Parliament Acts, regulate the position of this House in relation to the House of Commons. And respect for Commons financial privilege, so far as Lords amendment are concerned, is one of those conventions which your Lordships I am sure would not want lightly to put aside. I believe that it really would not be appropriate for your Lordships' House to depart from what has undoubtedly been its practice in the past, and that we should not now insist on this amendment.
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However, if your Lordships will bear with me for just a moment or two more, I think it would be right for me to say a word about the Government case for introducing charges for dental examinations. The proposal in the Bill is National Health Service dental examinations should be put on the same basis as all other dental treatment. People who are not exempt—and there are a lot who are—would pay 75 per cent. of the cost, which would work out at just over £3 for an examination. I really do not believe that this will act as a deterrent, provided of course that there are fair exemptions. I give an assurance that the same people who are now exempt from paying any charges for treatment will be exempt from an examination charge also. That means that all children under the age of 16, together with 17 and 18 year-olds and students under 19, will be exempt, as will be people on income support, those on family credit, and expectant and nursing mothers. Some 38 per cent. of the population—21 million people—will get dental examinations as well as treatment completely free.
A week ago the Government announced over £2 billion extra money for the National Health Service next year. That is the largest increase hat the service has ever had. But, as your Lordships know well—there are many experts in this House—the sophistication of medical treatment becomes mercifully greater and greater and the demands on the health service are ever increasing. For that reason we have promised to aim to increase the level of spending by £600 million over the next two years on items which we believe are of the most immediate concern for patient care. At the end of last year the White Paper on primary health care identified areas where more spending would do most good, but it said that we would need to release some resources for this purpose by making charges for dental examinations and eye tests. The fact is that the first of these, the matter we are discussing now, would release some £49 million and the second would release £85 million, making £135 million in all.
That is a very large sum of money, which could, and we hope will, be used to develop medical services, some of which would go back to dentistry improvements for which the profession has been pressing for many years. I am therefore saying that, if today we were to insist on the Lords amendment, we should be forcing the state to offer free dental examinations to everyone, however well off, instead of redirecting those resources to the development of family doctor and dental and also eye services. This would involve a large sum of money being reallocated and financial privilege has been invoked by another place in disagreeing with your Lordships' amendment. To insist on our amendment would be wholly in breach of the conventions between the two Houses and I therefore ask your Lordships not to insist on this first amendment. I beg to move.
Moved, That the House do not insist on their Amendment No. 1 to which the Commons have disagreed for the reason numbered 2.—(Lord Belstead.)
Lord Ennals: My Lords, I do not intend to follow the Leader of the House in debating the funding of

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the National Health Service, but I want to say, before we move on from this issue, that we on these Benches greatly regret both the decision that was taken in another place and the decision that was forced upon it by Her Majesty's Government. So far as we are concerned, the principles underlying free dental examination and free sight testing are the same.
We should have liked to have an opportunity of expressing our views on this subject of dental care, but a ruling has been made and we shall not seek to challenge it. However, I should like to make one request. If those of us on all sides of the House who oppose charges for sight tests are successful this evening—and since the principles of both free tests are the same—are the Government prepared to think again about their decision on dental charges? The two go together and I hope that the Government will hold themselves free to review the dental charges issue if this House is successful in what it has set out to do later this afternoon.
Baroness Gardner of Parkes: My Lords, I speak with great regret at the position we face today over the amendment, because it was my amendment that was passed by this House in July. The whole dental profession looks on this as a very retrogressive move. In that splendid opening speech made by the Leader of the House, the one misleading phrase suggested that we would be forced to offer free dental examinations. That is the present situation. It is not a case of being forced to offer free examinations: they exist now and this provision takes them away.
Dentistry is the success story of the NHS and because of that we seem to be being punished for looking after people too well rather than too badly. I do not accept the Secretary of State's view that dental and eye examinations are not a form of screening and that anything detected in the form of disease is as a result of the skill of the professional person. I still view the examination as a screening process.
Even if this House accepts the Commons rejection of its amendment—as I understand it will—it is only an enabling position. The Government are not obliged to charge for national health treatment. The are merely enabled to do so, but until now they have not had the right. I ask the Government to investigate the possibility of oral cancer screening where the patient could present himself and not be charged. There is a parallel situation whereby if one is bleeding orally and one goes to a dentist, he is allowed to suture the haemorrhage without any charge whatsoever. There are only 14,000 cases a year—approximately one per dentist. The detection rate of oral cancer is not high but the degree of genuine concern on the part of patients is high. Perhaps the Secretary of State can consider that possibility.
If the charges are to be introduced, it is important to simplify Form AG I, a copy of which I am holding. It contains 17 pages and must be completed if one requires any financial assistance for examination or treatment. The number of letters I have received during the past week makes clear people's reluctance to undertake the marathon task of completing 17
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pages of questions to discover whether they can have a free prison visit, glasses or a dental examination. The form appears to cover everything and the answer, when it is received, likewise covers everything.
It would also be good for the Government to consider the position of older pensioners. I refer to the recent statements made by the Chancellor of the Exchequer when he said that they are the very people whom he would like to target. All the charges will be introduced by regulation. If, when the regulation is laid, provision is made to exempt people born before 1919 everyone aged 70 or over will be covered. It is quite clear from the correspondence that I have received that those people are in most distress. They receive the smallest pensions prior to SERPS. Pride is important to them and they are managing with great difficulty on little money.
I accept the fact that we are bound by the ruling from the House of Commons and that we cannot debate the issue fully today. I have made those few comments in the hope that the Secretary of State will read them and consider ways of improving the situation, particularly for the disadvantaged.
3 p.m.
Lord Diamond: My Lords, I was in total support of the noble Baroness when the amendment first came before your Lordships' House, and I still hold that view. However, that is not the issue that we are now discussing. I wish to ask the Leader of the House whether he has sufficiently protected the rights of your Lordships' House in what he has said.
It must be obvious to all noble Lords that this is not a matter of national or local taxation. It is a matter of charges the nature of which, three centuries ago, honourable Members of another place who passed the resolution asserting their privileges could not have contemplated. In other words, we are dealing with territory which was unknown at that time and we must have regard to the way in which these matters have developed.
In that connection it must be equally obvious to all noble Lords that should we take the view that Commons privilege applies to any issue which is directly or indirectly connected with finance, there will be little left to discuss on any day. A case can always be made that something or other has a direct or an indirect effect on finance. Therefore there must be an area between what is and what is not clearly a matter of financial privilege. Without hesitation I accept that the other place— in effect, Mr. Speaker, as advised by his advisers—is the guardian of financial privilege. I accept that without hesitation.
Equally, what our Leader says and what the House decides can also be interpreted as guardianship of the privileges of this place. It is that with which I am concerned. I hope that I may not be regarded as unduly troubling the House if for the sake of accuracy I read out what is stated in Erskine May about the area with which we are dealing at the moment.Erskine May states:
"On some occasions, however, when the Commons have rejected amendments on the ground of privilege"—

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that is today's circumstance—
"and have indicated the fact in their formal statement of reasons, the Lords have not insisted on the amendments—
I imagine that that is today's circumstance—
"but have asserted, by a resolution, that they made no admission in respect of any deduction which might he drawn from the reasons offered by the Commons, and did not consent that these reasons should thereafter be drawn into a precedent".
It is most important for the maintenance of your Lordships' privileges—not an increase in them but their maintenance—that what we are doing this afternoon and why we are doing it should be made absolutely clear. I should have been happier had the Leader of the House added a form of words for which there is precedent to make that position more acceptable to many of your Lordships.
Lord Simon of Glaisdale: My Lords, the Parliament Act begins by defining, explaining and introducing the mechanism of a Money Bill. It goes on to show that your Lordships have a limited right of amendment and, unless the other place accepts it, can delay such a Bill for only a month. The Act then deals with other Bills which your Lordships have the right to delay for a year. Section 6 of the 1911 Act, which remains unamended, states that nothing therein before shall be taken as qualifying or modifying any existing privileges of the House of Commons. That provision was assented to by your Lordships in passing the Parliament Act in 1911.
The question which was raised by the noble Lord, Lord Diamond, relates to that issue; namely, what is the extent of the pre-existing privileges in financial matters of the House of Commons? That is really quite easy to answer because in practically every Bill that comes before this House your Lordships insert what is called the privilege amendment which is then removed b). the House of Commons. It is in common form and the one 1 shall read is from a Bill passed very recently by your Lordships—last week, I think, or possibly the week before; namely, the copyright Bill. It begins:
"Nothing in this Act shall impose any charge on the people or on public funds or vary the amount of incidence or otherwise alter any such".
I should have apologised before attempting to read—your Lordships will accept from appearances that I can disclaim the necessity of declaring my interest in the subject under discussion—but I believe I have read enough. Those words make it quite clear that your Lordships concede and the other place accepts the concession that your Lordships will not interfere in any way with charges on public funds.
It is not merely a question of constitutional propriety. There are powerful practical reasons. The other place has most elaborate machinery for dealing with expenditure and raising funds. The House goes into a Committee of Ways and Means in order to decide how the funds shall be raised. It goes into a Committee of Supply to decide how the funds shall be laid out and the Estimates are voted upon. The House decides in great detail how the money shall be laid out and it is not open to a government department to switch from one head of Vote to another. It passes a Consolidated Fund Bill, and that is certified as a
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Money Bill. As we know from experience in the past two or three days, your Lordships pass it through all its stages; there is then an Appropriation Act which is dealt with in the same way. Above all, at the end of that, there is the Public Accounts Committee that the other place enjoys.
I emphasise the privileges of the other place because I am all against any derogation from the privileges which your Lordships are entitled to enjoy under the Parliament Act. In two respects which I need not go into now, your Lordships do not exercise the full powers. However, in view of what I have read out—and I believe it answers the question of the noble Lord, Lord Diamond—it is essential that your Lordships should respect, in every way, variation as well as outright protection in dealing with the raising and expenditure of public funds.
3.15 p.m.
Lord Colwyn: My Lords, I have to admit that I had intended to put down an amendment insisting on our amendments. However, it was made quite clear to me by the Public Bill Office that that would not be in order.
Perhaps I may bring the discussion back to dental charges. These are, after all, what we are debating. All health care professionals are united in opposing charges for dental examinations and sight tests within the National Health Service. There is not a shadow of doubt that we have won the argument against both proposals. The votes in another place were very close and the arguments very similar. The sums of money for the patients are also much the same.
Most important is a common principle which goes well beyond optics and dentistry. We are entering a new era of health care, promoting positive health instead of merely responding to damage and disease. Millions of people in this country suffer unnecessarily because they are not being directed towards health promotion. Access to advice is the foundation.
The Government's proposed charges will put that whole approach at risk. I share the concern of Members of the other place who dc not feel that satisfactory answers have been given to their questions. Why are dentistry and optics different? If these charges are acceptable, why have charges not been introduced for other screening techniques and even for visits to general medical practitioners? Where do the preventive policies of the Government's White Paper on primary health care then stand?
The Government have tried to put priorities on parts of the body. But all parts of our body contribute to the quality of our lives and need to be looked after. My own view is that both Houses have paid too much attention to the occasional lives which are saved following a dental examination or sight test and not enough to the sheer misery and inconvenience of tooth loss or poor sight. If we have problems with our mouths or eyes, our lives are less satisfactory. The great majority of us function less effectively without regular maintenance of our mouths. I am prepared to defend free dental examinations for dental reasons and in the interests of dental health as an integral part

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of general health. The extreme health problems which dental examinations sometimes reveal are a bonus, not the real argument.
I cannot challenge the Commons reason this afternoon. I would however ask the Minister, even at this late stage—if there is a change of heart by the Government on sight tests either in response to the Motion in the name of my noble friend Lord Cullen or to the amendment in the name of the noble Lord, Lord Ennals—to undertake to have the position of dental examination charges reconsidered. Dental examinations involve the much smaller potential revenue loss of about £50 million out of the £150 million projected revenue of the two charges together. In the case of pensioner exemptions, the cost in lost dental examination charge revenue would be a mere £5 million. This Bill is only an enabling measure. A power to charge for dental examinations does not have to be used or can be used selectively.
I have been especially disheartened by one argument of health Ministers in defence of these charges; namely, that they may be waived as dentists and opticians seek to protect their livelihoods. Although that directly contradicts the other argument that the charges will have no effect on patient demand, perhaps the Minister can confirm that arrangements will be made to ensure the continued availability of National Health dentistry in areas where the inevitable fluctuation of demand and low patient attendance will force many practitioners to reconsider the basis of their contracts with the health service in order to protect their incomes.
Finally, I should like to know whether the Government have an implementation date for dental examination charges. A date sometime before Christmas has been rumoured. If that is so, I should be grateful for the Minister's assurance that all NHS patient information leaflets and posters will first be amended and that dentists will be given adequate warning of the introduction of the new charges.
I am sorry that the other place has invoked its financial privilege and has denied us the chance to test the opinion of the House on these charges. I look forward to the debate on optical charges with great interest.
Viscount Tonypandy: My Lords, I hope, as we approach a decision, that the House will hesitate long and hard before it throws back in the face of another place the claim it has held for centuries; namely, the claim about controlling expenditure.
I do not wish to give the House a lecture about the powers of Mr. Speaker. However, it was in 1376 that the first Speaker was elected, and within four years the other place had demanded of the Monarch the right to control expenditure. To my mind there are two principles at stake today. The question of costs is one. At this very moment, however, the issue before the House is Mr. Speaker's ruling and whether the question of privilege claimed by another place is to be rejected by this House. This is a non-elected Chamber.
Noble Lords: No one is arguing that.
Viscount Tonypandy: My Lords, some have been arguing to that effect. We have just heard a noble Lord do that.
Noble Lords: No.
Viscount Tonypandy: My Lords, in that case perhaps I may say to the noble Lord that I am very pleased that this House is acknowledging the rights and privileges of the House of Commons, which is the elected Chamber in our Parliament.
Lord Glenamara: My Lords, before the Leader of the House replies, can he explain how there can be financial privilege today if there was not financial privilege when we discussed the subject a few weeks ago? What will the public make of a Parliament in which one House is forbidden to discuss a subject which it could discuss two or three weeks ago?
Lord Belstead: My Lords, before I come to that point, I first of all thank my noble friends Lady Gardner and Lord Colwyn for taking part in this debate because there is one aspect which is symptomatic of your Lordships' House; that is, the expert knowledge and a consistency of attitude to subjects which we consider are matters of principle. I respect both my noble friends for the line that they have taken even though 1 am in the position of not agreeing with them.
However, I can be helpful to my noble friend Lady Gardner in two ways. First, my noble friend put her finger on the fact that the forms, which are called AG 17s, certainly need looking at. In fact, my noble friend put that point with some force to me, together with some officials from my right honourable friend's department. Outside the Chamber we certainly agreed that my noble friend has a point and we are now following up that aspect.
The second point is that my noble friend is absolutely right to have pointed to the fact that although those on retirement pensions in this country have been doing better and better in recent years—and let us be thankful for that and proud of it—there are people on retirement pensions who still need to have their needs considered very closely. My noble friend absolutely rightly, if I may say so, drew attention to those who were on retirement pensions without having taken an occupational pension and before the introduction of what is known as SERPS.
I have no difficulty in giving my noble friend an undertaking which I know my right honourable friends the Chancellor of the Exchequer and the Secretary of State for Social Services will endorse. They are looking at precisely those people in the community.
Perhaps I may say to my noble friend Lord Colwyn that the intention, if your Lordships agree with this Motion, would be to bring in these charges next year. Again, I have taken on board what my noble friend said about the need for publicity and I have little doubt that my noble friend is right. Where I part company with my noble friend is on the dentists' contract. I have to say that as the charge for checkups will not, we believe, involve demand we do not

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think that it will affect the contract. However, I should like to look at what my noble friend said and, if necessary, write to him later.
I now quickly deal with the points put to me with considerable expertise from some parts of the House on the constitutional position. I come first to the point made by the noble Lord, Lord Diamond. In effect, the noble Lord said that he regretted that I had drawn attention to the constitutional position in the way that I had. I should like to make absolutely clear that I would be the first among your Lordships to defend the right of your Lordships' House to ask another place to think again—and, if necessary, again—when we believe it should be done.
It is worth bearing in mind that on this Bill, out of the 54 amendments we sent to another place 50 were accepted without query. Noble Lords who appear restive will know that, in what has been an extremely long Session, we have had many Bills through this House where we have sent a mass of amendments to another place and it has agreed with the vast majority of them. However, when the noble Lord, Lord Diamond, says that he questions the rightness of the Commons message—
Lord Diamond: My Lords, I cannot allow that to be said. I never suggested that at all. I said two or three times that I accept without hesitation—I used the words "without hesitation"—the right of the other place to do what it has done. If I am pressed, I am criticising the Leader of the House for his lack of protection of the privileges of this House. He could have done so by using a form of words, for which there are precedents in the plural, during the course of his speech which would not have affected our voting at all, and which would not have affected the privileges of another place, but made clear that we are not agreeing to reduce the privileges of your Lordships' House.
Lord Belstead: My Lords, let me take that point absolutely head on.Erskine May makes perfectly clear on page 849 that when there is a hint of privilege, including the hint of privilege where the financial arrangements made by the Commons are involved, then the House of Lords does not insist on its amendment. That is precisely the message which your Lordships' House has received from another place.
I suggest that the noble Lord should glance at the Marshalled List. He will see that for Amendment No. 2 the Commons disagree to the amendment because it alters the financial arrangement made by the Commons. I do not believe the majority of your Lordships' House would consider that as the Leader of this House I was serving your Lordships well if I advised your Lordships to disagree with such an amendment which would have a severe bearing on the comity between the two Houses.
Finally, I was grateful to the noble and learned Lord, Lord Simon of Glaisdale, and the noble Viscount, Lord Tonypandy, for what they said. I also answer the noble Lord, Lord Ennals. The noble Lord, if he will forgive me for saying so, asked an extraordinary question. He asked what the
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Government would do on this amendment if the noble Lord was to succeed in beating the Government on the next amendment. I do not think that either of those things will happen, and I now ask your Lordships not to insist on this amendment.
Viscount Mountgarret: My Lords, before my noble friend sits down, will he answer the question put by the noble Lord opposite on why the matter of privilege on this issue has been raised at this late stage? It might have been of help to your Lordships' House to know that this matter was possibly subject to privilege.
Lord Belstead: My Lords, privilege is a matter for another place. How we respond to privilege is a matter for this House. I have attempted to advise your Lordships, and I now again recommend to your Lordships that we do not insist on this, amendment.
On Question, Motion agreed to.
3.30 p.m.

LORDS AMENDMENT
3 Clause 13, page 13, line 18. leave out subsection (1).
The Commons disagreed to this amendment but proposed the following amendments to the words so restored to the Bill:
4 Page 13, line 26, leave ma from 'requirements' to 'or' in line 27.
5 Page 14, line 41, leave out front 'person' to 'and' in line 44 and insert—
'(a) whose sight is tested by a person 1,12; provides general ophthalmic services'.
6 Page 14, line 45, leave out from beginning to 'above' in line 47 and insert—
'(b) who is shown during the testing or within a prescribed time after it to jail within subsection (1)'.
The Commons proposed the following consequential amendments to the Bill:
7 Page 15, line 25, leave out from beginning to 'give' in line 27 and insert—
'(3) The Secretary of Stale mar by regulations—

(a) provide for himself or such authority established under this Act as may be prescribed to contribute to the cost of a testing of sight which he or the prescribed authority accepts as having been incurred by a person whose resources fall to the treated under the regulations as exceeding his requirements by only by an amount calculated under the regulations,

(b) provide ,for payments to be made by him or by such authority established under this Act us may he prescribed to meet, or to contribute towards, ant' cost accepted by him or by the prescribed authority as having been incurred (whether by way of charge under this Act or otherwise) for the replacement or repair in prescribed circumstances Of optical appliances for which a prescription was given in consequence of a testing of the sight of a person of a prescribed description' and

(c) direct host' a person's resources and requirements are to be calculated and, without prejudice to the generality of this subparagraph,'.

8 Page 15, leave out lines 33 to 40.
Lord Cullen of Ashbourne: My Lords, I beg to move that this House do insist on their amendment numbered 3 to which the Commons have disagreed and do disagree with the amendments numbered 4 to 6 proposed by the Commons to the words so restored to the Bill and to the Commons consequential amendments numbered 7 and 8 to the Bill
The only reason that I had any doubts about moving this Motion today was as to whether there was any constitutional impropriety in so doing. I

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asked the Clerk at the Table and I have been told that there is no constitutional problem whatever as regards Clause 13. I later saw my noble friend the Chief Whip who did his best to explain to me why Commons privilege attaches to Clause 11 but not to Clause 13. I must admit that I am woefully ignorant about constitutional matters as may also be some other of your Lordships. I hope that during the course of this debate some noble Lord well versed in this subject will explain the position as regards this clause in as simple a way as possible in such a complex area.
I am sure we would all agree that it would be unfortunate if your Lordships voted differently from what they would otherwise have done without this complication if it turns out to be more of a red herring than a grey area. As I understand it, if the Government are defeated today it is possible that when the Bill returns to the Commons the Speaker might or might not invoke Commons privilege. If he did so, that would be the end of the matter.
The reasons that I am on my feet are, first, that after extraordinarily strong pressure in another place from the Whips, the Government overturned your Lordships' amendment which was passed by a majority of no less than 26 votes. This they did on a slender margin of eight votes. There can be no doubt what the result would have been had there been a free vote in another place. Secondly, in spite of the widespread opposition to their proposal the Government have not seen fit to make any concession except at the margin.
Perhaps I may once again declare my interest. Soon after becoming spokesman for the DHSS in your Lordships' House 1 was invited to become president of FODO, the Federation of Ophthalmic and Dispensing Opticians, and I still am president. The views I hold today are those which I was convinced were right when I was at the DHSS. It is the views of the department or of the health Ministers that have changed. My views are strongly supported by the BMA, the RNIB, Age Concern and many other professional institutions. I have had endless supporting letters from these and other institutions, but today is not the time for long speeches and I shall resist the temptation of reading out of any of those letters.
My noble friend the Chief Whip has understandably pulled out all the stops. I am happy to say that he has in no way attempted to twist my arm. So many noble Lords are here today who will not have heard or read our debates so I shall very briefly outline—and I mean briefly—the reasons why I disagree with the Government. I believe that there will be many people who will be deterred from having their eyes examined if they have to pay for it with the consequence that many diseases, not only of the eye, will not he picked up until it is too late. I will not go into the detail of all those diseases because we have heard about them so often on previous occasions.
Whatever Ministers may say, I believe that many people, particularly the elderly, will find it difficult to raise £10 or so for a sight test and will be tempted not to do so. The Government hold the view that
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payment will not be a deterrent. I find that surprising for a Government that believe so much in market forces. Surely, cost is a vital ingredient in any market. I mentioned earlier that the Government have made concessions only at the margin. I have no desire to be a party to some constitutional difficulty between the two Houses nor to impede the passage of the Bill which I warmly welcome, apart from the dental and optical clauses which do not seem to belong in this Bill at all.
As many of your Lordships know, I am not by nature a particularly rebellious character. So I ask my noble friend the Leader of the House to offer a compromise. The Government have wide-ranging, rule-making powers to add to the categories who will continue to be entitled to free eye examination. There will be no need to touch the Bill at all. If my noble friend can give a positive assurance to make worthwhile additions to the exempt categories by regulations I should personally not wish to divide the House. If he cannot find his way to do that I shall have no alternative and this my noble friend understands. So we are in my noble friend's hands.
One very obvious category for exemption would be the elderly who are most at risk as regards the many diseases that can be detected in an eye examination. I am told that this would cost something like £22 million. However, since the Bill was first debated, as a result of an EC directive VAT has been imposed on spectacles. Therefore, the Government will have a windfall of about £25 million a year. I do not think that we are asking for very much there.
The other category that I should dearly like to be exempted is people who are referred to opticians by their GPs for medical reasons. It would be a small but a very important category.
In conclusion, I have the greatest admiration for this Government's remarkable achievements, but I believe that it is right and proper for all of us to speak up if we are convinced that the Government are making a mistake.
Moved, That this House do insist on their amendment numbered 3 to which the Commons have disagreed and do disagree with the amendments numbered 4 to 6 proposed by the Commons to the words so restored to the Bill and to the Commons consequential amendments numbered 7 and 8 to the Bill.—(Lord Cullen of Ashbourne.)
Lord Belstead: My Lords, it may assist your Lordships if I say just a few words early on in this discussion. It occurs to me that the issues in relation to this group of amendments are very similar to those we have just debated. Another place has voted for the second time in favour of charging for eye tests which would enable about £85 million a year to be spent on improvements elsewhere in the health service. In that way it is the same issue as the one we have just debated and decided.
In this case, however, the Commons made various other amendments to the Bill which are to be seen subsequently on the Marshalled List. Members of another place did so in order to fulfil an undertaking to give extra financial assistance to people who just fail to qualify for income support. Apparently it is

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not the custom in another place to give a reason for disagreement when any other amendments are made to a Bill. So the issue of Commons financial privilege does not arise on the Marshalled List out of the Commons message with which we are now dealing. But, clearly, questions of' financial privilege are involved here.
In introducing the Lords amendments a week ago today, Mr. Speaker reminded the House of Commons that privilege is involved in these amendments. This is clearly on the Hansard record for Tuesday of last week. Having said that, perhaps I may follow my noble friend by saying a brief word about the merits of the case.
Next year the National Health Service is to receive its biggest ever increase in funding. However, as your Lordships know all too well, the demands on the modern health service are ever increasing. So we are planning to increase the level of spending on the primary health care services—family practitioners, dentistry and the eye service—by £600 million over the next two years to take spending on the primary health care services to a new plateau. We are proposing to make a significant contribution towards this very large sum by asking those who can afford it to pay a contribution towards the cost of their teeth and eye examinations, so releasing £135 million. In a world where decisions have to be taken sometimes- and they are not always easy—surely it must be right to put such a sum to good use for better services, provided of course that those who cannot or should not pay are exempt.
I should like therefore to remind the House about the help that people will receive. The exemptions go a good deal wider than the exemptions on the previous amendment. Those who are on income support or family credit will continue as now to receive a free National Health Service sight test. And as a result of the announcement by my right honourable friend the Secretary of State for Social Security two weeks ago, a further 90,000 people in this category will also become eligible for free tests. Additionally, for those whose incomes are a little above the qualifying level for income support, we intend to introduce a voucher arrangement, similar to the very successful voucher scheme to help buy spectacles, which will give relief in that respect. There will also be free tests for people suffering from glaucoma or diabetes. Because of the hereditary element in glaucoma, people of 40 or over who are the children or brothers or sisters of glaucoma patients will also be exempt. There will also be exemption for children under 16, students under 19 and the registered blind and partially sighted. These exemptions will cover very nearly 37 per cent. of the population.
I have listened to my noble friend. He suggested that our proposals will deter people from having their sight tested. This was certainly not the case when the Government brought forward legislation four years ago to deregulate the dispensing of spectacles. At that time there was doom and gloom from noble Lords opposite who suggested that this would lead to an increase in undetected eye disease and sight problems and fewer visits to the optician. What has
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happened? Nothing of the kind has happened. As the years have gone by greater use has been made of the optical services available; and this has been good news for us all.
My noble friend, who has been absolutely consistent in his attitude to these matters over the years, has put two specific points to the Government. He suggests that the Government should undertake to exempt the elderly—meaning, presumably, everyone of pensionable age—from the charges for sight tests provided for in the Bill. I should remind the House that 25 per cent. of all pensioners are on income support and they will automatically qualify for free testing under the Bill as is stands. For example, anyone who relied solely on the basic state pension would undoubtedly be covered by this as would those of pensionable age who suffer from diabetes or glaucoma or who are closely related to those who suffer from glaucoma. In the light of all these exemptions, and indeed of the voucher scheme for those who are a little above the income support level, it is difficult to see the force of the argument as to why better off pensioners should be exempted in preference to other sections of the population who may be on the same income.
My noble friend made a second and very important point. He asked the Government to consider exempting from charges any person who has been referred to an optician by his or her general practitioner. The difficulty with this proposal is that it would not focus on those in need. It would invite people almost always to visit their doctor before going to an optician and so arguably would overburden those very services of primary care which we are all seeking to improve.
However, my noble friend's case, a case on which he has been absolutely consistent and about which he knows a great deal, requires an undertaking. The assurance 1 gladly give him today is that clearly we must keep a very close eye on the consequences of charging. Statistics will continue to be kept of the National Health Service eye tests—the 20 million people who are exempt and the voucher holders—and I promise that by sampling we will find out whether the number of eye tests in the rest of the community is going up as it has continued to do. Then of course we would reconsider any aspects of these arrangements should the evidence require it. I hope my noble friend will accept that my assurance is given in good faith and will be carried out by the Government.
The Government are planning to spend a great deal more on primary health care. In setting out our priorities—because, heaven only knows, that is what we have to do in such an enormous area as the health service—it is only reasonable to seek a contribution from people in receipt of teeth and sight testing. It involves a large sum of money—some £135 million£of which the greater part is involved in this amendment. I should remind the House that Mr. Speaker has made clear that privilege was involved in these amendments but that the House of Commons gave no reason for their disagreement in respect of this amendment because it is not the custom to do so when consequential amendments are made to a Bill.

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For that reason there can be no question that this is an issue which involves Commons financial privilege. I must strongly recommend that the House should not now insist in the face of Commons disagreement.
Lord Cullen of Ashbourne: My Lords, before my noble friend sits down, perhaps I may ask him about the monitoring suggestion. For how long would that go on, and at what point would the Government decide whether any alterations should be made to the categories?
Lord Belstead: My Lords, my noble friend, who keeps a close eye on the matter, knows more about the speed with which monitoring statistics are received. I stand absolutely by the assurance I gave to my noble friend. We would monitor and sample as well. As the statistics came in, should the evidence require it, we would reconsider any aspects of the arrangements. It is an assurance given in good faith and it would be carried out by the Government.
Lord Hunter of Newington: My Lords, as the Leader of the House has said, in November of last year the Government published their White Paper entitled Promoting Better Health. This was their programme for improving primary health care services with a sub-title, "Putting Patients First". Raising the standards of dental care was one of the declared objectives and the Government referred to the increased and widened remit for pharmacists but, in relation to opticians, they said:
"Increased competition for ophthalmic services while providing adequate safeguards for consumers".
One was disappointed to see that there was no mention whatever of an increased use of opticians in the provision of ophthalmic diagnostic services. That would have had the effect of sparing the hospital eye departments for their increasing role in therapeutics.
It is an exciting world now with lens implants, increased use of lasers and other treatments. All of this makes the necessity of early treatment in eye conditions imperative. The new hope of prevention or cure by modern methods seems to have passed unnoticed; but it has not passed unnoticed by the general public who see new hope if their eye complaints are diagnosed early and treated properly. The demand on the eye departments of hospitals means that every conceivable step must be taken to prevent patients going there simply for routine eye tests. There is no doubt that the properly trained and properly equipped optician can do that job well, including the detection of abnormalities.
Reading the Government's proposals for primary care one wondered if their strategy was to deal substantially with hospital services and specialised services through the Prime Minister's review of the NHS with a consequence that both in the primary care field and in the hospital and specialist field it would be possible within the next year or two to evolve a strategy for the NHS so that resources are spent reasonably and in the best possible way. Such a revolution—and it would be a revolution—would involve disciplining by the medical profession, and other professions, which they have not yet imposed
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upon themselves; but they are certainly willing to discuss such matters.
Then we received the Health and Medicines Bill. As has been said, it is a Money Bill and certainly in relation to dentistry this has been clearly stated by the Speaker in another place. But the distress on reading this, in the light of those happenings, leads one to the view that we are far from obtaining a policy for the National Health Service, that financial considerations rule supreme and that decisions are made about financial matters which totally neglect the medical aspects of the proposals.
Compounding that distress is the argument in the Bill that by stopping free dental and eye tests it will be possible for the Government to devote those moneys to extend and develop primary health care systems. Both those measures are preventive measures which have lasted since the beginning of the National Health Service. Some of the primary care proposals recommended by the Government, to which the Leader of the House has referred, are by no means so certain in their consequences and will require substantial retraining and reorganisation in general practice.
Moreover, the proposals for funding the White Paper seem to be totally inadequate. The proposal to raise funds in this manner has undermined confidence in the Government's concern. Another concern which does not promote confidence is the proud allocation in the Autumn Statement of additional funds for the National Health Service over the next two years. Those sums are almost exactly the amounts of money which the Government have repeatedly been told were needed by responsible agencies, including the health authorities association, during the past two years to maintain the present level of care. The money seems to have been allocated before the consequences of the proposals, emerging from the review of the National Health Service, have been considered—although one has to admit that the Government may have considered the matter carefully in a series of confidential meetings with the medical profession.
The concern which is being expressed by many is the necessity to concentrate constructively on that report about the National Health Service and also to debate in your Lordships' House—I am glad to see my noble friend Lord Nelson, is here—the proposals by the Select Committee on Science and Technology to make medical research and research and development part of the sinews of that service. Without some measure of that kind, savings will not be made in a responsible manner and certainly everyone wants to see the closing of beds by administrators minimised as soon as possible.
Such is the concern in the country about the National Health Service that the Government must be seen to be concerned with its constructive development into the 1990s and beyond. Most have agreed that what seems to have happened on this occasion—namely, the throwing of money at the NHS—is not enough. Forward planning of quality is required. I believe that given the reasons and cogent arguments the medical profession and the people of this country will respond. But funding improvements

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in primary care by cutting out two long-established and effective measures causes grave concern and a profound lack of confidence in the Government's intentions.
If this opinion is confirmed by the House, can we have an assurance that the effect will be monitored by the review body or by the Government?
Lord Ennals: My Lords, I warmly welcome the responsible statement which has been made by the noble Lord. Lord Hunter, who like the noble Lord, Lord Cullen, speaks with great authority on these issues. I was, however, disappointed in the assurance given by the noble Lord the Leader of the House and I should not imagine that what he had to say could satisfy the concerns of those who are facing a difficult issue this evening.
In another place the Minister said that there would be no concessions. That quite clearly is the situation as reflected by the noble Lord, Lord Belstead. As regards financial privilege, it is quite clear that Mr. Speaker has not ruled against the consideration of this particular Motion and thus no constitutional issues arise.
We are not debating the broad issue of the funding of the National Health Service, although I hope that we shall soon do so. We are debating a proposal to breach a 40-year agreement, an all-party agreement, across both sides of the House, which has been in support of preventive medicine. The Government's decision that they would introduce charges has, as the noble Lord, Lord Hunter, said, caused a tremendous amount of concern not just among the people of this country—that is, the patients and the potential patients—but also among those who really know. I believe that the country is waiting for a decision this evening by your Lordships' House.
I believe that the decision of principle which we took when we last debated the issue was one which was warmly welcomed. I also believe that it was warmly welcomed by the majority of Members in another place. 1 further believe that not only would we be letting down the country; but we would also be letting down those who elsewhere have given their support in principle to the position taken by your Lordships in this House.
What must be accepted is that this is an exceptional issue and one on which I believe Ministers really should think again. It is quite clear that all those who know—that is, the professional organisations, be they in dentistry or in ophthalmics—have said that they profoundly disagree with the position which the Government have taken. They have stated that fact absolutely clearly. No doubt within the last few days we have all received the briefing from the British Medical Association. I should like to quote but one paragraph:
"In the White Paper the Government clearly states that it 'attaches great importance to the promotion of good health and the prevention of ill health'. The BMA believes that the introduction of these charges would be a serious deterrent to preventive medicine and contrary to the declared aims of the Government in the promotion of better health".
I could quote similar statements from all the professional organisations. I do not believe that
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Ministers can bring forward any evidence to support the proposal they are trying to push through the House as they pushed it through another place.
It is especially interesting that not only has there been unanimity among the professional organisations, but unanimity also among those in this House and in another place who understand the subject. The position of the noble Lords, Lord Cullen, Lord Mottistone and Lord Colwyn, the noble Baroness, Lady Gardner of Parkes, and those general practitioners on both sides of the House who have spoken in our debates, is clear. It is difficult to see on what evidence, other than a requirement to make financial savings, the Government's position is being taken.
Two former Conservative Ministers for Health in another place, Sir Gerard Vaughan and Sir Barney Hayhoe, both of whom voted against the Government last week, have made their position absolutely clear.
We are not dealing with an issue upon which the Government fought a general election. There was no suggestion in their manifesto that this proposal would be brought forward. It was not even referred to when the White Paper was published. It can only be an after-thought pushed through by the Chancellor of the Exchequer to make financial savings. It is not for the good health of the people. Sir Gerard Vaughan gave a firm assurance to Parliament in 1981 when he said that it was not the intention to proceed with charges for sight tests. That was a clear statement of government policy. One should compare that commitment with the statement made by Mr. Kenneth Clarke on 1st November in another place. He said:
"I have no intention of introducing charges on any other things".
Presumably the "things" were other types of testing. He went on to say, "for the time being". He explained that he said, "for the time being" because he could never say "never". Such a situation causes deep concern to all of us who oppose what the Government are trying to do. Once one starts on the slippery slope with no control over, where one is going, who knows what the consequences will be? How many hundreds of thousands of people may suffer as a consequence? Your Lordships would be right to take a profoundly principled view of the matter.
In the same speech, Mr. Clarke referred to,
"a misplaced sense of priorities which suddenly seized their Lordships when they first considered the matter".—[Official Report, Commons, I I I 88; col. 869.]
I have to say to the Secretary of State for Health that the House has been totally consistent throughout. The House has never in 40 years voted in favour of introducing charges for sight tests and dental examinations. That has been the position across both sides of the House.
We took the decision firmly. We reached our conclusion by a majority of 26 which was a substantial vote for your Lordships' House. I see no reason, and no evidence has yet been brought before us, to lead us to change the view that we then took.
It would be wrong to break the all-party consensus which has survived well for 40 years. There are not

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many things upon which we manage to be in agreement. But this matter until now has been one of them. Let us not lose it. There is no doubt that if there had been a free vote in another place and if there were to be a free vote here, the Government's proposals would be thrown out by a large majority. On the other side, there is only the influence of the Whips who are required to do a duty we all respect and which sometimes hurts us.
Some may have read the description given by Mr. Nicholas Winterton in the Mail on Sunday of the arm twisting that he suffered. It did not make pleasant reading. I heard a great deal of laughter over Mr. Nicholas Winterton. I served with him for several years on the Social Services Select Committee of another place. He was a diligent member of that committee. He is an independent-minded man. That may sometimes offend people. I respect those who show their independence of spirit, especially when they happen to agree with me.
What about attitudes in your Lordships' House? As I have said, there is no reason why anyone should now take a position different to that they took when we had a majority of 26. A leader in The Independent last week said that the Government's decision earlier this year to dragoon hundreds of hereditary Peers to vote through the poll tax demeaned the reputation of the Upper Chamber. I agree with that view. I believe that everyone here will agree with it. Such a situation does no good to the reputation of the House nor to the Peers who, it is suggested, are prepared to be used as Lobby fodder. That is surely an insult to the integrity of Members of your Lordships' House.
I hope that there is no Peer voting tonight who has not carefully considered the issues and whose vote is not based on that careful consideration. I have to say to those who have not taken part in our debates that we have had a high standard of discussion in the earlier stages of the Bill. What would enhance the reputation of your Lordships' House, if it needs it, is for those Peers who have been persuaded to come today—and of course they are welcome—fto use their own judgment on the basis of the arguments that are presented and to vote according to their consciences.
What if we were to succeed tonight? It is suggested by Mr. Kenneth Clarke that the Bill would be lost. That is nonsense. It need not be the case, unless that is what the Government decide. It is possible for the Government to bend to the will of Parliament and of the public. That is what we hope they will do. It would not only preserve the high respect in which your Lordships are held throughout the country; it would do immeasurable good for the principles of preventative medicine for which we have been battling over the years. That point was made by the noble Lord, Lord Colwyn.
If we do not succeed this evening, that will be a blow. I agree that there will be many people, especially those on small incomes, who will be deterred from having their sight tests. All the evidence proves it; so I hope that when we vote tonight in support of the National Health Service we shall also vote in support of our own principles.
Lord Thorneycroft: My Lords, I rise to express the hope that we will leave this Bill alone. I feel that if we reflect quietly about it, the House may come to the conclusion, in more quarters than one, that that is the right course. I recognise to the full the sincerity of those who have argued the case regarding the charges for dentistry, or, as we are now discussing eye tests. Of course they are sincere. Of course there are merits in the arguments that they have put forward.
My noble friends, Lady Gardner and Lord Cullen, and others, do not argue cases which have no merit: They have put forward strong arguments. There is a case for tests and checks. Even under the Bill as it now stands, some 20 million people will have free checks. I am among them. I am not a rich man, but a Bill that is prepared to ask the taxpayer to subsidise my eye test is not lacking in generosity. I am a diabetic and that is why I have free tests.
The noble Lord the Leader of the House indicated that the Government would look to see whether further exemptions should be made. So it is not a question of arguing that no testing is ever any good or any use. I agree with the noble Lord, Lord Ennals: he is absolutely right that there are merits in these tests.
That is not the issue. The issue here is the question of priorities. It used to be said that socialism was the language of priorities. To tell the truth, priorities ought be to be the language of any government, they are the business of government. To my mind, the priority here is to preserve the central core of the National Health Service and to preserve the principle that when men are struck by these emergencies of life and suffer disease and illness, they should not be deterred by their financial position from seeking the greatest skills available which are willingly given by the great medical services of this country.
However, to keep that central core and to hold on to that principle means that one has to go for the central problems: the payment of nurses; the introduction and establishment of new hospitals; the enormous programmes of training; grappling with the new diseases which we see; new methods of tackling old diseases with changed techniques; the growing number of elderly and the introduction of new equipment. The problems of financing those are very great indeed.
The noble Lord, Lord Glenamara, talked the other day at Question Time of money oozing up through the floorboards. It came as a shock to him, he had not seen it oozing up under the floorboards in previous administrations. There is some money—enough to enable this Government to make available £2 billion in extra money for the health service. That seems to me to have been an enormously important event. But it did not just happen. It happened because we have had a Government who have refused to spend £10 million here, £25 million there, £50 million somewhere else, £135 million now. Constantly, amid uproar sometimes and derision, they have stood their ground and kept a very close control over what is spent. As a result, they have been able to spend more on the health service and in some other fields. They have reduced taxes, paid debts and seen the revenue moving upwards.

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It seems to me that that policy is right. It would be amazing if any members of the Conservative Party were to challenge the Government on that policy today. For we boast of it, we are proud of it. It is what has made the financing of the National Health Service possible. We ought to stick with it. It is not right to say that £120 million is chicken-feed. I once resigned high office for half that figure. The difference today is that we have a Prime Minister and a Chancellor of the Exchequer who are agreed upon these matters. The difference today is that we have a Government who really think it matters to control government expenditure; who really watch the proportion of government expenditure in relation to the gross national product.
It is those hard, economic decisions and that honest money that have made it possible for this country to keep the social services and to manage to advance the National Health Service and matters of that kind. I believe that we ought to support the Government at this moment.
Finally, I ask this question: how would these sums of money which are now asked for by some of my noble friends be financed? There are only two ways. We could ask the Commons to reopen the statement on public expenditure. We could ask them to do that. We could challenge their financial arrangements and tell them that they have to vote more money. We could do that. But, if that is not going against the principle of privilege, what is? It surely must be. There is an alternative: we could take it out of the National Health Service. It represents two district hospitals a year. We could say, "Let's sacrifice two district hospitals a year in order to pay opticians £10 for a test", knowing that many of them might charge much less and quite a lot of them would charge nothing at all. It seems to me that that is the most extraordinary approach to the running of a health service. I therefore beg the House to leave the Bill alone.
4.15 p.m.
Lord Winstanley: My Lords, it would not be in the interests of the side of the argument that I support for me merely to repeat arguments which have already been put forward by noble Lords in every single part of the House. I feel sure that those arguments have already convinced every noble Lord in your Lordships' House, even those who voted against the suggestion. The argument was won.
I rise merely to make it quite clear that I and my noble friends on these Benches will support the noble Lord, Lord Cullen of Ashbourne, in this Motion on a matter of principle. It is a very important principle indeed. We have accepted charges for the National Health Service. The Labour Government introduced them twice, the Conservative Government introduced them later and increased them and increased them, over and over again. But here we are in danger of creating an alarming precedent. Never at any time have we levied a charge for an examination.
There is no charge for testing a patient's urine to see whether he has diabetes. There is no charge for a blood test to see whether somebody has AIDS. There
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is no charge levied on a woman for a cervical smear to see whether she has cervical cancer. We have never accepted the principle of charges for examinations. I am opposed to charges, but we have never had charges for examinations. We are here establishing a very dangerous precedent and that is why my noble friends on these Benches will support the noble Lord, Lord Cullen.
I have listened most carefully to the Leader of the House telling us about exemptions from the charges. However, if something is wrong in principle, then it does not become right because certain people are exempted from the provisions. It is still wrong in principle. It is the principle to which we are opposed. The noble Lord the Leader of the House said that he was convinced that despite this charge many people would still go for sight tests. He says they will, but will they? It might have been different had this argument been about the dental examinations because I believe many people will go for other reasons. But the sight test is not an eye examination, although it should be. We should like it to be an eye examination, but it is merely a sight test. The noble Lord will know that the Secretary of State has taken power in this Bill to change that, so that by order he can insist that when an ophthalmic optician tests eyes:
"it shall be his duty—
(a) to perform such examinations of the eye for the purpose of detecting injury, disease or abnormality in the eye or elsewhere as the regulations may require".
I say that because this test does not require those provisions at the moment; it should require them and it will later, if and when the Secretary of State introduces that regulation. Therefore there is a very real danger that if a charge is imposed people will not go for sight tests at all. Here we have a new principle established—a charge for an examination. There have never been charges under the National Health Service purely for examinations. I ask your Lordships' House to do everything possible to resist what I think would be a very dangerous and a very damaging precedent.
Lord Wyatt of Weeford: My Lords—
Noble Lords: Baroness Young.
Baroness Young: My Lords, I thank the noble Lord, Lord Wyatt, for giving way on this occasion. Feelings are running high, and that is not surprising. This is a matter about which everybody cares a very great deal. Like my noble friend Lord Thorneycroft, I respect very much the sincerity and integrity of my noble friend Lord Cullen of Ashbourne. We worked together as close colleagues in government:. We stood side by side on various matters during the days of opposition. We have often argued on the same side.
I hope that at the end of the debate, when my noble friend Lord Cullen of Ashbourne has listened to all that has been said, he will feel that it is not right to press his amendment on this occasion. My noble friend Lord Thorneycroft stated very clearly the arguments about the health service, the money aspect and the success of the Government. I would only add that since I left the Government I have been involved in trying to raise a very considerable sum of money

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for medical research. That has brought me into close contact with the Oxford hospitals, and indeed other hospitals. I am very conscious of the extremely difficult decisions that confront the health service, particularly with an ageing population. I am quite certain that my right honourable and honourable friends in another place only took this decision about charges after very careful thought and after consideration of the right place for the money to be used.
We are talking about £120 million. That money will continue to be used in the health service, but for something else. The poorest will be helped; 20 million people are to be helped. I do not think there is any question that this is a perfectly fair argument in a world where the living standards of pensioners have risen very considerably, thank goodness. Those living standards will continue to rise and the poorest will be protected, quite properly.
But there is an issue of constitutional principle here for the House to consider. It is on that point that I wish to add a few words in support of the very carefully chosen words of my noble friend the Leader of the House. He has done a very great service to your Lordships' House in very difficult circumstances. As a former Leader of the House I know the kind of problems that can arise. As he explained to us, my noble friend Lord Cullen quite properly moved his amendment, but he was fortunate, if that is the right word, in being able to move it. That position only arose because one of the amendments that the Government were intending to put down in this House was not called and there was a further amendment in another place.
Technically the privilege applies just as much to this measure as it does to the question of dental charges. It would be a great mistake for the House to pretend that the position is otherwise. No one could be more devoted than I to the House of Lords for the work that it does and for the many amendments that it has moved which have, quite properly, improved Bills. Nevertheless I say to the noble Lord, Lord Ennals, that it is a very dangerous argument to try to persuade the House that it would somehow do itself some good by moving and agreeing to this amendment this afternoon. I fear that it would not. It would go against the constitutional principle, as my noble friend Lord Belstead said. It would be damaging to your Lordships' House. As my noble friend said, another place accepted 50 out of 54 amendments to this Bill and, to my certain knowledge, very many other important amendments to other Bills.
The views of this House have been listened to in another place when those in another place quite properly should have listened. But in this case we would be damaging the relationship between the two Houses to persist with this amendment. That damage would be felt not just today but on future occasions. For those reasons I hope very much that the House will listen to the words of my noble friend the Leader of the House and give him the support which he so justly deserves on this occasion.
Noble Lords: Cross-Benches.
Lord Wyatt of Weeford: My Lords, I have given way once. I think it is the turn of the Cross-Benches now.
Lord Belstead. My Lords, may I suggest that we listen to the contribution of the noble Lord, Lord Wyatt, who was about to get in when my noble friend spoke. Then I suggest we listen to the noble Lord, Lord Kilmarnock, then possibly my noble friend Lord Boyd-Carpenter and then see how we go from there.
4.30 p.m.
Lord Wyatt of Weeford: My Lords, I am very grateful to the noble Lord the Leader of the House. This debate must remind some of us of merry old times. The subject of teeth and spectacles always raises more emotion than anything else to do with the National Health Service.
In 1951 Nye Bevan split the Labour Party by resigning in protest against Hugh Gaitskell's Budget proposals for charges on teeth and spectacles. Labour lost the general election later that year. Now it is the turn of the Conservatives to try splitting their party over teeth and spectacles. They should be warned by the fate which befell the pioneers in this strangely passionate cause.
I was surprised when Nye Bevan resigned over charges imposed in the health service. In October 1949 he commended to the Parliamentary Labour Party a Bill which he thought was urgent and which he wanted to bring in. That Bill was to impose prescription charges of a shilling a time. I shall never forget his words, which went as follows:
"Something has to be done about the cascades of medicine pouring down British throats, and they're not even bringing the bottles back".
Nye Bevan's Bill did not become law for administrative reasons. But it was obvious that the architect of the National Health Service realised very early on that the NHS could never be entirely free. He realised there would have to be charges. If the NHS were to be really free, the ceaseless new developments devouring ever-increasing sums would crush the nation, NHS patients and all, into total poverty. That is why a Labour Government correctly began the introduction of charges in 1951. That is why all governments will have to go on finding ways of supplementing taxation to fund the National Health Service. Even the colossal extra £2 billion or so of recently announced government spending on the National Health Service is not enough.
I thought it very intelligent of Mr. Kenneth Clarke, the Secretary of State for Health, to propose harmless little charges for teeth and eye checks. They will only be paid by 60 per cent. of the population, but they will raise £134 million for the National Health Service which it would not otherwise have. That is not a small amount. The noble Lord, Lord Thorneycroft, reminded us of the numbers of hospitals, operations and so on that it can fund. An enormous improvement could be made with that money.
We are asked today to deprive National Health Service patients of these benefits, not because of hardship caused by the new charges because there cannot be any hardship. No one on family credit or

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income support will pay them. The list of exemptions is enormous. Only the two-thirds best off in the country will be asked to pay the charges. Many of the same people who attacked the tax reductions for this section of the nation now complain that the better off will have to pay minute charges when they have teeth or eye checks, but surely the tax reductions of which they complain for two-thirds of the population make it all the more reasonable that they should be asked to make a small contribution.
In the past three years gambling on football pools has risen by 26.2 per cent., gambling in bingo halls has risen by 23.5 per cent. and betting on horses and dogs has risen by 29 per cent. Bets of all kinds total more than £8,000 million a year. Is this a hard-up nation that cannot afford to pay £ 3.15 for an occasional dental check or up to £10 for an occasional eye test? The idea is farcical.
We are told that some people with plenty of money in their pockets may be put off vital tests by these tiny costs. If this is true, what are we to do with people who put a few cigarettes or drinks or the hire of a few videos in front of taking care of their teeth or eyes? People who are such fools should take the consequences. It is not for the state to employ town criers or social workers to go up and down the streets asking whether the citizens have had their occasional teeth and eye checks.
There must be some responsibility left on the individual to look after his own health; or is it proposed that there should be a law requiring people to take regular eye tests and teeth checks and to fine them if they do not? Charges in the health service are a long-established and necessary principle. It is suggested that these new charges may lead to more charges in the NHS for those who can afford them. 1 hope that they do. It used to be a socialist principle that state help should be directed at the poor, not at the better off. Now the cry is that if something is available from the state everyone, however rich, should have it free. The right way to get more money to give more help to the poorest is to make the better off pay something, not to get it free.
I support the Government in their forward-looking approach and in their obvious determination to see that the expanding National Health Service really is safe in their hands. I supported the unpopular charges in 1951 when I sat on the Labour Benches in the other place, and I support these charges now.
Lord Kikmarnock: My Lords, it may take some temerity to venture to disagree with the noble Lord the Leader of the House in his advice on the amendment. In his earlier intervention—I noted his words—he said that it was appropriate in certain cases for this House to disagree again and again, which means twice; and this seems to be one such occasion. If the Bill went back once again to the other place, there is no reason whatever why it should not meet for an additional day or morning and reassert its view or change its mind, as the case may be. Either way, that would be the end of the matter.
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I have only one point to make. In this case I believe that there is a reason that has not so far been mentioned for returning the Bill to the other place a second time. Some have adduced the narrowness of the majority in the House of Commons as a sufficient reason for so doing, but a majority is a majority and I do not believe that to be the real point.
What strikes me as extremely important is that the Chancellor's Autumn Statement was deliberately made on the very day that these charges were to be debated in another place. The timing was obviously intended to influence the outcome by creating the impression of' a cornucopia of National Health Service spending, in which case it would be churlish and unmannerly of the rebels to persist in their revolt.
As we all know, NHS statistics are open to many different interpretations. In making his Statement the Chancellor mentioned large cash sums—this has been referred to also by the noble Lords, Lord Thorneycroft and Lord Wyatt of Weeford—that he claimed would amount to an increase in real cash terms of 4.5 per cent., but detailed analysis tells another story. The Financial Times in a leading article on 3rd November could find a rise of only 1.5 per cent. in real terms for next year, with even smaller increases in the two succeeding financial years. One reaches this conclusion principally because much of the £861 million cash increase for hospital and community services will he wiped out by inflation, which is now running at 6 per cent., not:5 per cent. as calculated by the Government.
There are other technical factors that reduce the cornucopia further that I will not go into. Noble Lords who are interested will find them all set out in an article in the next issue of the British Medical Journal, which comes out with a real increase of only 1.4 per cent., very close to the figure reached by the Financial Times and considerably less than the 2 per cent. in real terms that the Government themselves admit is necessary to stand still.
The point I make is that these are intricate calculations. I very much doubt whether all Members of another place had either the time or information available to make them on their cuffs or on the back of an envelope last Tuesday. If they had, some who were overwhelmed by the Government's apparent generosity might have changed their minds when it came to vote on optical and dental charges. Now that they have had time to digest the evidence, it seems to me entirely appropriate on those grounds that in this specific instance this House should give the other House a chance to think again.
Lord Boyd-Carpenter: My Lords, for those like the noble Lord, Lord Wyatt of Weeford, and myself who have been in one House or another for a good many years, this debate and its subject have a rather nostalgic effect. As the noble Lord, Lord Wyatt of Weeford , partly reminded us, as long ago as 1951 not only the late Mr. Bevan but also the noble Lord, Lord Wilson of Rievaulx, resigned from the Labour Government on the grounds that the Government were introducing charges in respect of teeth and eyes. It is a curious indication of the continuity of controversies in our system and in our society that

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here we are again in 1988 having largely and fully attended strongly felt debate on those very subjects.
Before I pass to my main point, I wish to say how amused I was by the noble Lord, Lord Ennals. Not only did he indicate that he thought that this House was strengthening its reputation by accepting the amendment but he added a statement referring to the high regard in which this House is now held. That coming from a Front Bench spokesman of a party that has recently committed itself to the abolition of this House, seems to carry a paradox rather far. To the noble Lord who said, "Wrong again" I can only suggest, if it does not bore him too much, that he has not talked to his friend Mr. Hattersley, who said exactly this.
Noble Lords: No!
Lord Boyd-Carpenter: My Lords, there are two issues before your Lordships this afternoon. One is the constitutional; the other is the merits. I think that the constitutional has been very clearly and definitely thrashed out, particularly by my noble friend Lady Young. It is quite clear that we should be acting contrary to the spirit of the constitution if we were to reject the Commons amendment.
Moreover, from a practical point of view we should undoubtedly be hardening and making more difficult our relations with another place if we were to push to this extent what some of your Lordships seem to think are our powers and to reverse its decision on a matter of this kind. Therefore the final legal assessment of the situation, from a practical point of view I think that we should be doing a great deal of harm to the working not only of this House but of Parliament as a whole if we were to throw this legislation once again back at the Commons.
Lord Cledwyn of Penrhos: My Lords, perhaps the noble Lord will give way. Is he not aware that when in opposition the party opposite did precisely that on at least three occasions in the 1970s. In 1974 during the passage of the Trade Union and Labour Relations Bill, on an occasion comparable with this one, the noble Lord, Lord Carrington, as Leader of the Opposition, urged his colleagues who were then on the Opposition Benches to follow him into the Division Lobby, and they did so. Among those who went into the Division Lobby on that occasion—a comparable case with this one—were the noble Lord, Lord Belstead, the noble Earl, Lord Ferrers, and the noble Lord, the Government Chief Whip.
Lord Boyd-Carpenter: My Lords, the noble Lord, Lord Cledwyn, has been sitting there all afternoon longing to get that off his chest. I do not know whether he refers to it as an example of what should be done or uses it merely as a form of reproach. I rather understood his tone to be one of reproach, with the suggestion that my noble friends to whom he referred had erred. If that is so, it is no argument that the offence should be repeated by the present Opposition. On the other hand, if the noble Lord is holding it out as an example of correct behaviour, I
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am sure my noble friends will be greatly embarrassed to have such a tribute from such a source.
The substance of the matter is the reality of social policy. As one who for six-and-a-half years held appointment as Minister of Pensions and National Insurance, I want to put to your Lordships the point about conflicting philosophies because they are highly relevant to this issue. There are two philosophies. There is the philosophy that practically everything should be provided by the state and that everyone, however well off or comfortably funded, should share in it but pay very heavily in taxation for the privilege. The other philosophy—and it is one which I support— is that social welfare and social payments should be concentrated on the least well off and that those who are better off should again and again be encouraged to provide for themselves. After all that is the prevailing philosophy in the United States which has produced the highest standard of living of any major country in the world. That is highly relevant to this discussion.
As your Lordships know, roughly one-third of the population—the poorest one-third—will be exempt from these charges. My noble friend has made clear that if at the margin there are any hard cases which are not covered by that exemption, he and the Government will look into the matter. However, the great majority of the population will not suffer any hardship through charges of this sort because, fortunately, for the reasons given by one or two of my noble friends, under this Government the general standard of living of the population has risen so substantially over the years that charges of this kind are not a deterrent to going for tests; they are not a deterrent to using the services.
Your Lordships therefore have to judge between the two different philosophies. There is the philosophy which, I must confess, I tried to follow as Minister; namely, that of concentrating more and more of the aid—except of course in respect of contributory benefits—that is to say, the non-contributory aid, on the poorest section of the population. That is exactly what this Bill and these clauses do. While exempting the poorest one-third from the charges the money saved—and it is a substantial sum—is then put into the health service as a whole to help those in need of it.
Noble Lords opposite often rightly complain about the underfunding of certain parts of the health service. Yet, when the proposal is made, without inflicting hardship on anyone who is poor enough to suffer, to transfer funds (which is what this operation amounts to) toward the general benefit of the service and its improvement, noble Lords opposite seem to object to it. According to their philosophy, which I tried to outline a moment ago, that is a perfectly consistent attitude. I believe that the prevailing philosophy in this country increasingly tends to favour the concentration of public aid on the least well off. And the matter of these charges is a small but significant contribution to that shift.
Finally, I ask your Lordships to look at the matter in this way: if these charges were in effect now, would anybody think that their abolition should take

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priority over any other expenditure or improvement in the health service? I have no doubt what the answer would be.
4.45 p.m.
Lord Mishcon: My Lords, before the noble Lord sits down feeling any contentment with his reply to the very valid point made by my noble friend the Leader of the Opposition, perhaps I might be allowed to quote something said by the noble Lord, Lord Carrington, when he was Leader of the Opposition. The noble Lord said:
"In our system we have hitherto taken the view that the will of the elected House must in the end prevail, but there should be a second House which has the opportunity—in rare cases, perhaps—to enforce a delay in which there can be a reassessment by Government, by Parties and by the people of this country of the rights or wrongs of an issue. If now we decide to use that very limited power, we are not thwarting the will of the people for, in so far as it is represented by the House of Commons, it will and must prevail in a comparatively short time. We shall be using those powers for the purpose for which they were given to us—that is, as an opportunity for further consultation, for second thoughts before this legislation inevitably reaches the Statute Book and because we did not want the Second Chamber to be associated with what the Government are doing".—[Official Report, 11/11/75; col. 1742.)
Viscount Whitelaw: My Lords, I have been provoked. I did not intend to take part in the debate but surprisingly for me I want to rise in answer to the noble Lord the Leader of the Opposition. I say "surprisingly for me" because I owe so much to him from the time when I was Leader of your Lordships' House. I think that his point and that made by the noble Lord, Lord Mishcon, are completely misplaced.
I come back to what my noble friend Lady Young said. There is all the difference in the world between the case put by the noble Lords and the case which I and my noble friend Lady Young believe in. The difference is that the case they put does not relate in any circumstance to financial privilege. It is no good the noble Lord, Lord Ennals, trying to pretend that there is no constitutional principle involved in the case we are looking at today. One of the amendments is financially privileged. That is admitted. The other amendment is not so privileged, because of a minor technicality resulting from a concession made in another place to views put forward in this House. Theirs is a most extraordinary argument.
The noble Lord, Lord Cledwyn, refers to my noble friends Lord Carrington, the Leader of the House and the Chief Whip and says that this situation goes back in time. On this occasion however there is all the difference in the world. This is a question of financial privilege in one case and, but for a technicality, financial privilege in the other. If we are going to go back on that, we shall do grave damage to your Lordships' House.
Lord Molloy: My Lords, the noble Lord, Lord Wyatt, referred to the fact that the quarrel within the Labour Party over the introduction of prescription charges, which Nye Bevan opposed and others wished to introduce, resulted in the Labour Party losing the subsequent election. He forgot to mention that it lost the election in spite of having half a million votes more than the Tory Party. That is a
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very significant fact because it means that the majority of people who voted in that general election wanted Labour Government.
The noble Lords, Lord Thorneycroft and Lord Boyd-Carpenter, have brought in taxation. They have argued that people who might be in danger of going blind or having some terrible disease of the eyes should make a contribution to some other aspect of the National Health Service if they can afford it. While they argue that point, like the Leader of this House, they also agree that tax relief should be given to people on £100,000, £250,000 or £300,000 a year. Such tax relief would have paid for all the matters that have been argued about this afternoon. The noble Lord the Leader of the House quite rightly, and I believe generously, paid his sincere respects to his two colleagues who are experts in this matter—and they are. But after recognising them as experts, he refused to take their advice.
However, the argument goes much further than that. If there is some severe economic or other problem in the country we have what are called think-tanks to argue it out and to find the solution. We have think-tanks for the National Health Service. They have given their advice, but the Government are totally rejecting it. Every Member who votes tonight has to take this into consideration. The British Medical Association is opposed to the Government's proposals. The Health Visitors Association, which deals specifically with preventive measures, is opposed to the Government's proposition. The Confederation of Health Service Employees, which covers a vast area of our National Health Service, is opposed to the Government's proposition. The ophthalmic practitioners are opposed to the Government's proposition. The opticians are opposed to the Government's proposition.
I am suggesting that a remarkable number of specialised people who work in this area every day of their professional lives feel that our Government are making a serious mistake; but they are going to be totally ignored. I hope that the arguments advanced by the ophthalmic practitioners and the opticians will not be considered a laughing matter by Members opposite. These professions argue that sometimes, because people have not taken advantage of the possibility of having free eye tests, they have become blind. I hope that the House will take that into consideration. Even those who have not become blind may have had some other fearful eye disease. The Society of Ophthalmic Practitioners says—these are its words, not mine—that in the main all these instances of people who have gone blind or who have serious eye diseases could have been prevented if they had been sensible enough to have their eyes tested. Is it a good thing that extremely rich people have massive tax reductions and that ordinary folk who believe that they should have their eyes tested but who may not be able to afford it are to have a means test to find out who shall go blind and who shall not? I consider that a deplorable attitude.
I sincerely ask the House to consider these points. They may not be the points of view expressed by great practitioners in the City of London but they are the views of every single British professional organisation involved in Britain's National Health

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Service. I believe that we should show ourselves to be an arrogant House if we totally disregarded the advice that they have given us.
Lord Campbell of Alloway: My Lords, I shall be very brief at this stage of the debate. I wish to make one point. The noble Lord, Lord Ennals, has said specifically and quite clearly that no constitutional issue arises. He is of course entitled to his view. However, I am bound to point out to your Lordships' House that it is not the view of Mr. Speaker. Mr. Speaker said:
"I remind the House"—
that is the other place —
"that privilege is involved in these amendments".
Mr. Speaker carried it further:
"Lords amendments Nos. 20 and 22 involve Commons privileges. The House gave a reason for disagreeing with the Lords on amendment No. 20. It did not do so in respect of amendment No. 22 as it is not the custom to give a reason when consequential amendments arc made to a Bill".—[Official Report, Commons. 1/11/88; cols. 923 and 1197.]
Therefore my noble friend the Leader of the House and my noble friend Lord Whitelaw are totally correct when they maintain to your Lordships that there is a constitutional issue involved. It is for that reason that the hope must be that your Lordships will not insist on this amendment. If we do so we surely put comity between the two Houses in the ordering of their affairs to the hazard, and for all one knows invite possible confrontation—one cannot look too far into the future—or perhaps impose reform.
When the noble Lord, Lord Ennals, said on the first amendment that the principles are the same for teeth and eyes, that the two go together, he was in essence right, because it is to be inferred from what Mr. Speaker said—and I have quoted it—that but for the concessionary amendments on the eye test charges he would have certified by reasoned agreement on the eye test charges.
Surely the position quite shortly is this. Privilege has not been waived on either dental charges or on eye test charges. Privilege was claimed on dental charges by reasoned disagreement, but privilege could not be claimed on eye test charges by reasoned disagreement, by reason of the concessionary amendment. As I understand it from reading Erskine May and Hansard only—and I speak with deference to noble Lords who have served in another place—unless another place waives its privilege as regards the allocation of public funds, which on no showing is the case here if one reads the Commons Hansard, the convention is that your Lordships' House does not insist upon the amendment. In these circumstances it would surely be wrong to trespass upon the spirit of these privileges.
There is a grey area. Mr. Speaker has certified. I agree that Mr. Speaker is the guardian of the privileges of another place, but so in a sense are we, quite apart from our own privileges, because both Houses have an interest in the maintenance of the bicameral system. To trespass upon privilege against the spirit of a convention would be unwise and would at this stage of this Session, of all times, appear to create a situation where we are seeking to force the
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Government to introduce alternative proposals acceptable to your Lordships' House.
Your Lordships may think this a reasonable suggestion. It is in that that perhaps lie the possible seeds of confrontation to which I have referred. Does not the maintenance of the spirit of our conventions and the conventions of the other place transcend the merits of this single amendment? The Clerks at the Table, quite rightly, have declined to advise on the constitutional implications for your Lordships' House.
Noble Lords: Not so; not right.
5 p.m.
Lord Campbell of Alloway: My Lords, noble Lords say "Not right", but I have a copy of the document. In the last paragraph of the document dated 7th November 1988, signed by J. M. Davies, the Clerks at the Table declined to advise on the constitutional implications of insisting on this amendment; and rightly so, because that is not the responsibility of the Table. It is the responsibility of your Lordships' House.
Noble Lords: Quite misleading.
Lord Cledwyn of Penrhos: My Lords, with great respect, the noble Lord has quoted from a submission from the Clerks at the Table, but he did not read all the submission. That is a great weakness. If I may I shall read the appropriate paragraph, if I am in order in doing so. The noble Lord has opened this door. The document states:
"The Commons have disagreed to the Lords amendment but because they have amended it, in response to Government undertakings given last summer, they have not given a Reason for their disagreement. It is therefore proper for the House of Lords to seek to insist on their amendment and return it to the House of Commons for further consideration".
Lord Campbell of Alloway: No, my Lords. There is no suggestion that there is any procedural impropriety in the amendment that has been put forward. I have made none. All that I sought to maintain was that, in the circumstances which exist, to trespass on the spirit of a convention would not be wise.
The Earl of Halsbury: My Lords, the Cross-Benches, I think.
Lord Diamond: My Lords, from the words used by the mover of the amendment—
The Earl of Halsbury: My Lords, we know—
Noble Lords: Cross-Benches.
Lord Diamond: My Lords, I shall be very short, my Lords.
Noble Lords: No; Cross-Benches.
The Earl of Halsbury: My Lords, I am greatly obliged to the noble Lord for giving way. I have always tried to discriminate between right and its

573
wise exercise. Undoubtedly the noble Lord, Lord Cullen of Ashbourne, has a right to put forward the amendment. Your Lordships have a right to support it, but whether it would be wise to do so is another matter. I probably have a common law right to climb some tree or other, provided that it is not governed by the law of trespass on the one hand or by the by-laws of some public park on the other, but it would not necessarily be a wise exercise of my right at my age.
At this point in the parliamentary year it might be unwise to embark upon a game of ping-pong, with only four working days left to go on a Bill of this character. I know that it is part of the fun of the game that the Government always mix cunning with bluff at this stage and manage to get their Bills through with the threat that they may get lost if we insist on out right to do this, that and the other.
However, I feel that this is not a case of bluff. I believe that we might lose the Bill if we play pingpong and say "Ping" this afternoon and then at the beginning of next week the Commons say "Pong" and back it comes again with some procedural nicety which enables the Commons to claim privilege. It is too late in the parliamentary year to play that kind of game. Therefore I shall not support the noble Lord, Lord Cullen, but I shall support the noble Lord, the Leader of the House.
Lord Ferrier: My Lords, as an aboriginal Life Peer back in the days when a Back-Bencher could get a word in edgeways. I started to speak continually about the necessity for preventive medicine. I have done so for 30 years. I am sorry that I was unwell and unable to take part in the debates on the Bill until this came. Now I have a new point to raise which I want to make. I came here to support my noble friend Lord Cullen, but if he is going to hedge bets and suggest a compromise, I shall be against him and I shall agree with the noble Lord, Lord Ennals, that this is a straightforward constitutional problem and we have the right to say no.
The importance of this matter is that well-to-do people, government people, Members of the House of Commons, say that £10 can easily be afforded. People cannot afford it, as people like myself who are constantly in touch with others, know. I agree with what the noble Lord said about the BMA, the opticians and the like who are against these charges. Of course they are. They are more than that. The district nurses, people who live alone and one-parent families are amazed when they are told £10 and that they can easily afford it. They cannot. Whatever one may think about privilege and the like, this House is entitled to choose. When they know what we have been doing here, they say "Well done, the House of Lords!"
Noble Lords: Hear, hear!
Lord Ferrier: They are speaking from their hearts. I speak from my heart. The point I want to make is that it is no use saying that we lose the money if these charges are not accepted, but there are other ways of saving money that the department could well
574
undertake. What about accepting manipulative therapy as a contribution? There would be enormous savings there if only it could be accepted. Is there any penalty for people who do not take up beds when they have been allotted a bed and are advised that it is vacant? If they do not turn up the bed is lost and the operation time and the doctors' time are wasted. I am strongly of the opinion that we have every right to oppose this matter, even if it means losing the Bill by opposing any application of charges of this nature.
Lord Rea: My Lords, I hope the House will think that it is appropriate that the voice of a practising general practitioner, as well as that of a practising dentist, should be heard in the debate, particularly as it is about eyes and not teeth. Some of my remarks will follow the arguments which convinced your Lordships to vote for the original amendment at Committee stage.
Many noble Lords were not present during the earlier stages of the Bill. Most reasonable people—and on 2nd November that included Mrs. Edwina Currie—concede that the £10 charge will deter a proportion of the 7.2 million people who will have to pay for seeking eye tests.
In 1986 a similar exercise took place in Alberta, Canada, when free eye tests were abolished. In the following year there was a fall of 30 per cent. in the number of eye tests undertaken on members of the population between the ages of 16 and 64; that is the economically active population. If, in the United Kingdom, that proportion was applied to those who would have to pay, it would result in 2.2 million fewer eye tests per annum. It is important to examine the implications. On the current rates 150,000 of the 2-2 million people would have been referred by their GP for a specialist's opinion because of the finding by an ophthalmic optician of a potentially serious condition. Early glaucoma makes up the largest proportion of those referrals—approximately 20 per cent. of the recent series reported in this week's British Medical Journal, for example.
If there is a delay in diagnosing glaucoma—and it has been pointed out many times that people do not seek help until their vision begins to deteriorate—there is a greater chance of eventual blindness. The costs of out-patient and in-patient treatment for such people will be far higher than it would have been had it been detected at an earlier stage. One conservative estimate suggests between £11 million and £22 million extra hospital costs per annum, plus £10.5 million extra per annum to support the resulting 3,000 additional blind people. Therefore, £30 million must be deducted from the savings which the Government hope to make, quite apart from considering the social and human costs of additional blindness and impaired vision.
Further costs are involved. It is likely that at least one in ten of the 2.2 million people deterred from having eye tests will go to their GP requesting referral to a hospital eye department which is free. At £25 to £50 per out-patient visit, that may total a further £5 million. General practitioners are not so expert as ophthalmic opticians in detecting and describing early eye conditions, and they fully admit that. They

575
do not have the training, equipment or time. That is clearly shown in the report from Burton-on-Trent published in the British Medical Journal.
General practitioners have no wish to be cast into the role of screeners for eye disease and they are not particularly well-qualified for it. However, approximately 900 general practitioners are specially qualified medical practitioners who carry out excellent work. Approximately one in ten of referrals to hospitals are theirs. Their livelihood would be in jeopardy if free eye tests were abolished and an excellent service would be lost.
I have concentrated on glaucoma because that is the most common cause of preventable blindness detected by eye tests. However, there are numerous other conditions which it is useful, even essential, to detect at an early stage in order to achieve good results. For example, diabetic retinopathy which, according to the BMJ series I mentioned, was discovered in a few cases even before the patient knew he had diabetes. Other general medical conditions are high blood-pressure and thyroid disease which are often first discovered at an eye examination when the patient is unaware of it.
I consider that it would be a proper step for your Lordships to uphold the original amendment. The stated intention of the Bill, which is to improve the health of the population, may look more credible. I reiterate the fact that the clause allowing the sale of over-the-counter reading glasses may act as a further deterrent to eye tests for those who have presbyopia, which is difficulty in reading in early middle age. By temporarily improving their sight a more serious underlying condition, such as glaucoma, may be masked. The two clauses sit ill together, and that is a further reason for insisting on our original amendment.
Lord Belstead: My Lords, at the end of a long debate, during which there has been a good deal of disagreement, there is one issue upon which all noble Lords are agreed. It is that, unquestionably, the National Health Service as we know it today—we are all interested in it for different reasons and although meeting together on one issue today we shall all make use of it at one time or another—
Lord Mottistone: My Lords—
Noble Lords: Order!
Lord Mottistone: My Lords, as a supporter of the amendment I should like to say a few words. However, my noble friend the Leader of the House rose, and I should not like to speak after him. Many of my noble friends, particularly those whom I respect a great deal, have made the point that the issue is constitutional and that we should not go through with it. It may help your Lordships if I read an extract from a letter from my right honourable friend the Secretary of State for Health with whom I have been in correspondence during the past two days. I said that I was sorry I could not see him last Thursday because of other commitments and that I
576
believed that one of the difficulties was the constitutional issue. He replied as follows:
"I do not want to rely particularly on the so-called constitutional argument. Their Lordships did exercise their undoubted right to make the Commons think twice about this issue. However, the Commons has now given the Government a majority for the second time and I think the House of Lords should think very seriously before forcing a crisis over £140 million of expenditure on the National Health Service".
I have read the whole of the quotation.
I have thought very seriously, and I believe that your Lordships have thought very seriously. Before I supported my noble friend's amendment we took advice from the Clerks. We were thoroughly reassured that there was no consitutional issue and it is clear that my right honourable friend the Secretary of State does not wish to make a great issue of that aspect.
Secondly, there is absolutely no doubt, as everyone who has spoken agrees (including Mrs. Edwina Currie) that if charges for eye tests are imposed, some people—it is anyone's guess how many; some will say more and some will say less—will forgo a test that they would otherwise have had and will suffer from doing so.
I quote from a letter I received from a university lecturer. He says:
"In June, 1987, I went for an eye test more to accompany my elderly mother who was due for one rather than for any great need myself. The oculist on examining my eyes advised me to have a blood-pressure test. The doctor found that my blood pressure was very high and said that I might well have had a stroke. He put me on a course of tablets which has brought my blood pressure back to normal. I would have known none of this if I had not had the eye test and would certainly not have had it if there had been a charge".
That is the kind of situation that we seek to avoid. The writer goes on to say that had he had a stroke the cost of treating him would have been a great deal. That is one of the reasons why we believe that the amount which the Government will save will be offset by many unforeseeable charges.
I believe that on balance we must challenge the issue and accept my noble friend's amendment.
Noble Lords: Hear, hear.
Lord Belstead: My Lords, I am sorry if I seemed to be trying to cut out my noble friend and I am glad that we have had an opportunity to hear him. The first point I should like to make at the end of this long debate is that although clearly my noble friend Lord Mottistone and the Government do not agree on this issue I believe that there is one matter with which all your Lordships would agree; that is, that the health service as we know it today constantly needs more and more resources.
I was interested that my noble friend Lord Thorneycroft made the point very clearly that priorities must be the language of any government and particularly in the health service. It is in that context that the Government believe on this issue that they are right to ask those who can afford to do so to make a contribution towards the cost of a sight test so as to release greatly increased resources for the development of primary health care services. That

577
means in simple terms better services for patient care with, however, wide exemptions for people who either cannot or should not pay.
We have heard the argument put today—it has been put by the noble Lord, Lord Rea, and the noble Lord, Lord Winstanley, in particular—that there would be deterrents in this policy. However, I say to both noble Lords that the evidence simply does not support that contention.When we took the dispensing service for spectacles out of the National Health Service and started the voucher scheme some years ago, noble Lords, as I said earlier, predicted doom and gloom. And yet, people going for sight tests know perfectly well that in most cases the tests will lead to their spending money on the purchase of spectacles. Those people have done what? People have made steadily increasing use of optical services in this country.
The noble Lord, Lord Rea, and my noble friend Lord Mottistone sought to suggest that my honourable friend the Parliamentary Under Secretary of the department had suggested in some way that there would be deterrence. My understanding of what my honourable friend said was that she was clearly making the point that it would be commercial suicide for opticians to charge a fee for sight tests at a level which would drive customers away from having spectacles. Three out of four tests result in a prescription for glasses and therefore I believe that what my honourable friend said was perfectly sensible.
At the beginning of this debate I gave an assurance to my noble friend Lord Cullen which I shall not repeat except to say that it was made in good faith and I do not detract one word from what I said twice in my opening speech.
I should like to end this debate by making a brief reference to the position between the two Houses. We have heard a good deal about matters of principle in the past hour and a half. My noble friends Lady Young and Lord Boyd-Carpenter made it clear that they believed that insistence in this case would be damaging to relations between the two Houses. The noble Lord the Leader of the Opposition, Lord Cledwyn, asked why that should be so in this case and not, for example, in the case of aircraft and shipbuilding. It was because the sticking point on the question of aircraft and shipbuilding was hybridity and ship repair and was not money. On another famous Bill of the 1970s concerning trade unions and labour relations, the sticking point was freedom of the press and the closed shop and it was not money. Therefore when my noble friend Lord Whitelaw intervened, he was right—and oddly enough he very often is.
Despite the fact that he did not go any further, there is one other issue which I believe I need to lay before your Lordships. Under the conventions which regulate the passage of Bills between the two Houses, if this House were to insist on this amendment and if another place again insisted on its disagreement, which incidentally would be the third time that the issue was before another place, the Bill would be lost
578
for this session. It would only be open to the Commons either not to insist on their disagreement or to offer an amendment in lieu. It would not be possible for them to insist again. That option would be closed to them.
Nonetheless, noble Lords opposite, and particularly the noble Lord, Lord Ennals, and the noble Lord, Lord Kilmarnock, from the SDP Benches, said that they believe we should ask another place to think again. The fact is that if we insisted on the amendment we should not so much be asking another place to think again as to prefer the judgment of your Lordships' House in a matter involving the major financial arrangements on which another place has twice taken the same decision. I feel sure that that is not what your Lordships would wish to do and I ask the House not to insist on this amendment.
Lord Cullen of Ashbourne: My Lords, there are one or two points I should like to pick up from the debate. First, I did not make clear originally that I have another interest to declare; namely, that my mother had extremely bad glaucoma for many years, not having had a proper sight test. My wife took my mother to the ophthalmologist about 50 times. She had operations on both eyes. I shall therefore be eligible for free sight tests as a result of this Bill as the son of somebody who has had glaucoma. Therefore that is another interest to declare.
One remark made by my noble friend Lord Thorneycroft needs correcting. He suggested that instead of the sight test fee being £10, it might be £5 or less, or even nothing. Your Lordships will remember that in Clause 14 of the Bill it is laid down that opticians, having given the sight test, have to give the prescription to the person who has had the test. That person can take that prescription away and shop around; that was really the whole point of it. I do not know what your Lordships!:kink about opticians, but they are not so silly as to give a free sight test and then have the person walk straight out of their shop and go elsewhere. There is no doubt that the cost of the sight test will not come down in general terms, and in some cases it will probably go up. I know some opticians have said that they definitely cannot make a profit on the £10 charge.
We seem to have been talking more about constitutional matters than health matters this afternoon. I said originally that my noble friend the Chief Whip had not twisted my arm in any way, and that was so. As regards this debate, I feel that I have been twisted a great many ways. Both my arms feel dislocated and mentally I feel absolutely whacked because of all the constitutional problems that seem to have arisen. However, I go back to the advice I have received from the Clerks at theTable and I have no reason to think that they would have given me advice that was not entirely right. I suspect that some Members of the Government may have given me advice which was a little biased, but perhaps I should not say that. I commend my Motion to your Lordships, and I wish to test the opinion of the House.
5.30 p.m.
On Question, Whether the Motion shall be agreed to?
Their Lordships divided: Contents, 207; Not-Contents, 257.

DIVISION NO. 1

CONTENTS

Addington, L.

Gloucester, Bp.

Airedale, L.

Graham of Edmonton, L.

Alport, L.

Gray, L.

Amherst, E.

Greenway, L.

Ardwick, L.

Gregson, L.

Auckland, L.

Grey, E.

Aylestone, L.

Grimond, L.

Banks, L.

Hampton, L.

Barnett, L.

Hanworth, V.

Basnett, L.

Harris of Greenwich, L.

Beaumont of Whitley, L.

Hart of South Lanark, B.

Birk, B.

Hatch of Lusby, L.

Blackstone, B.

Hayter, L.

Blease, L.

Henniker, L.

Bonham-Carter, L.

Hertford, M.

Boston of Faversham, L.

Hirshfield, L.

Bottomley, L.

Hooson, L.

Bramall, L.

Howie of Troon, L.

Briginshaw, L.

Hughes, L.

Brimelow, L.

Hunt, L.

Broadbridge, L.

Hutchinson of Lullington, L.

Brooks of Tremorfa, L.

Hylton, L.

Bruce of Donington, L.

Ilchester, E.

Buckmaster, V.

Ingleby, V.

Burton of Coventry, B.

Irvine of Lairg, L.

Callaghan of Cardiff, L.

Irving of Dartford, L.

Campbell of Eskan, L.

Jacques, L.

Carmichael of Kelvingrove, L.

Jay, L.

Carter, L.

Jeger, B.

Chandos, V.

Jenkins of Hillhead, L.

Chelmsford, Bp.

Jenkins of Putney, L.

Chelwood, L.

John-Mackie, L.

Chesham, L.

Kearton, L.

Chichester, Bp.

Kennet, L.

Chitnis, L.

Kilbracken, L.

Cledwyn of Penrhos, L.

Kilmarnock, L.

Cocks, of Hartcliffe, L.

Kinloss, Ly.

Colwyn, L.

Kirkhill, L.

Combermere, V.

Kirkwood, L.

Craigavon, V.

Kissin, L.

Cudlipp, L.

Lawrence, L.

Cullen of Ashbourne, L.

Leatherland, L.

[Teller.]

Leathers, V.

Darcy (de Knayth), B.

Listowel, E.

David, B.

Liverpool, Bp.

Davies, L.

Llewelyn-Davies of Hastoe, B.

Davies of Penrhys, L.

Lloyd of Hampstead, L.

Dean of Beswick, L.

Lloyd of Kilgerran, L.

Denington, B.

Lockwood, B.

Diamond, L.

Longford, E.

Donaldson of Kingsbridge, L.

Lovell-Davis, L.

Donoughmore, E.

Lucas of Chilworth, L.

Dormand of Easington, L.

Lytton, E.

Ennals, L.

McCarthy, L.

Ewart-Biggs, B.

McGregor of Durris, L.

Ezra, L.

McIntosh of Haringey, L.

Falkender, B.

Mackie of Benshie, L.

Falkland, V.

McNair, L.

Ferrier, L.

Mais, L.

Fisher of Rednal, B.

Manchester, Bp.

Fitt, L.

Masham of Ilton, B.

Flowers, L.

Mason of Barnsley, L.

Foot, L.

Mayhew, L.

Gallacher, L.

Meston, L.

Galpern, L.

Milner of Leeds, L.

Gardner of Parkes, B.

Mishcon, L.

Gifford, L.

Molloy, L.

Gladwyn, L.

Monkswell, L.

Glenamara, L.

Monson. L.

580

Mottistone, L. [Teller.]

Southwark, Bp.

Mountevans, L.

Stallard, L.

Mulley, L.

Stanley of Alderley, L.

Murray of Epping Forest, L.

Stedman, B.

Nelson, E.

Stewart of Fulham, L.

Nicol, B.

Stoddart of Swindon, L.

Northfield, L.

Strabolgi, L.

Ogmore, L.

Swann, L.

O'Neill of the Maine, L.

Tanlaw, L.

Oram, L.

Taylor of Blackburn, L.

Paget of Northampton, L.

Taylor of Gryfe, L.

Parry, L.

Taylor of Mansfield, L.

Perry of Walton, L.

Tedder, L.

Peston, L.

Teviot, L.

Phillips, B.

Tordoff, L.

Pitt of Hampstead, L.

Turner of Camden, B.

Ponsonby of Shulbrede, L.

Underhill, L.

Prys-Davies, L.

Vernon, L.

Raglan, L.

Wallace of Coslany, L.

Rathcreedan, L.

Walston, L.

Rea, L.

Wedderburn of Charlton, L.

Ritchie of Dundee, L.

Whaddon, L.

Robertson of Oakridge, L.

White, B.

Robson of Kiddington, B.

Williams of Elvel, L.

Rochester, L.

Willis, L.

Ross of Newport, L.

Wilson of Langside, L.

Russell, E.

Wilson of Rievaulx, L.

Ryder of Warsaw, B.

Winchilsea and Nottingham,

Sainsbury, L.

E.

Scanlon, L.

Winstanley, L.

Seear, B.

Winterbottom, L.

Sefton of Garston, L.

Wise, L.

Serota, B.

York, Abp.

Shepherd, L.

Young of Dartington, L.

Sidmouth, V.

Zuckerman, L.

Simon, V.

NOT-CONTENTS

Abinger, L.

Campbell of Croy, L.

Airey of Abingdon, B.

Carnegy of Lour, B.

Aldington, L.

Carnock, L.

Alexander of Weedon, L.

Carrick, E.

Allenby of Megiddo, V.

Cathcart, E.

Allerton, L.

Cayzer, L.

Annaly, L.

Chalfont, L.

Arran, E.

Chelmer, L.

Ashbourne, L.

Chilston, V.

Astor of Hever, L.

Coleraine, L.

Aylesford, E.

Colnbrook, L.

Barber, L.

Colville of Culross, V.

Bathurst, E.

Constantine of Stanmore, L.

Bauer, L.

Cornwallis, L.

Bearsted, V.

Cottesloe, L.

Beaverbrook, L.

Cowdray, V.

Bellwin, L.

Craigmyle, L.

Beloff, L.

Craigton, L.

Belstead, L.

Crathorne, L.

Bessborough, E.

Crickhowell, L.

Bethell, L.

Croft, L.

Birdwood, L.

Dacre of Glanton, L.

Blanch, L.

Daventry, V.

Blatch, B.

Davidson, V. [Teller.]

Blyth, L.

De La Warr, E.

Boardman, L.

Denham, L. [Teller.]

Bolton, L.

Denman, L.

Borthwick, L.

Derwent, L.

Boyd-Carpenter, L.

Digby, L.

Brabazon of Tara, L.

Dilhorne, V.

Braye, B.

Dulverton, L.

Bridgeman, V.

Dundee, E.

Brookeborough, V.

Dunrossil, V.

Brougham and Vaux, L.

Eccles, V.

Broxbourne, L.

Eden of Winton, L.

Bruce-Gardyne, L.

Elibank, L.

Butterworth, L.

Ellenborough, L.

Caccia, L.

Elles, B.

Caithness, E.

Elliot of Harwood, B.

Camden, M.

Elliott of Morpeth, L.

Cameron of Lochbroom, L.

Elphinstone, L.

Campbell of Alloway, L.

Elton, L.

581

Erne, E.

Moyne, L.

Erroll of Hale, L.

Munster, E.

Falmouth, V.

Murton of Lindisfarne, L.

Fanshawe of Richmond, L.

Nathan, L.

Ferrers, E.

Nelson of Stafford, L.

Foley, L.

Newall, L.

Forbes, L.

Norfolk, D.

Forester, L.

Norrie, L.

Forte, L.

Nugent of Guildford, L.

Gainford, L.

Onslow, E.

Geddes, L.

Orkney, E.

Gibson-Watt, L.

Orr-Ewing, L.

Gisborough, L.

Oxfuird, V.

Glenarthur, L.

Peel, E.

Goold, L.

Pender, L.

Gorell, L.

Pennock, L.

Goschen, V,

Perth, E.

Gowrie, E.

Peyton of Yeovil, L.

Grafton, D.

Piatt of Writtle, B.

Grantchcster, L.

Plummer of St. Marylebone, L.

Gray of Contin, L.

Gridley, L.

Portland, D.

Grimston of Westbury, L.

Portman, V,

Halsbury, E.

Pym, L.

Hardinge of Penshurst, L.

Quinton, L.

Harmar-Nicholls, L.

Reay, L.

Harris of High Cross, L.

Rees, L.

Harvington, L.

Rees-Mogg, L.

Havers, L.

Reigate, L.

Henley, L.

Reilly, L.

Hesketh, L.

Renton, L.

Hives, L.

Renwick, L.

Holderness, L.

Rippon of Hexham, L.

Home of the Hirsel, L.

Rochdale, V.

Hood, V.

Rockley, L.

Hooper, B.

Rodney, L.

Inchcape, E.

Romney, E.

Ingrow, L.

Rotherwick, L.

Ironside, L.

Rugby, L.

Jenkin of Roding, L.

Sackville, L.

Johnston of Rockport, L.

St. Aldwyn, E.

Joseph, L.

St. Germans, E.

Kaberry of Adel, L.

Sanderson of Bowden, L.

Kemsley, V.

Sandys, L.

Kenilworth, L.

Savile, L.

Kimball, L.

Selborne, E.

Kimberley, E.

Selkirk, E.

Kinnaird, L.

Sharpies, B.

Kitchener, E.

Sherfield, L.

Knutsford, V.

Simon of Glaisdale, L.

Lauderdale, E.

Skelmersdale, L.

Lindsay, E.

Southborough, L.

Lindsey and Abingdon, E.

Stevens of Ludgate, L.

Liverpool, E.

Stockton, E.

Loch, L.

Stodart of Leaston, L.

Long, V.

Strange, B.

Luke, L.

Strathcarron, L.

Lurgan, L.

Strathclyde, L.

Lyell, L.

Strathcona and Mount Royal, L.

McAlpine of West Green, L.

McFadzean, L.

Strathspey, L.

McFadzean of Kelvinside, L.

Suffield, L.

Mackay of Clashfern, L.

Swinfen, L.

Macleod of Borve, B,

Swinton, E.

Malmesbury, E.

Terrington, L.

Mancroft, L.

Thomas of Gwydir, L.

Margadale, L.

Thomas of Swynnerton, L.

Marley, L.

Thorneycroft, L.

Marsh, L.

Thurlow, L.

Marshall of Leeds, L.

Tollemache, L.

Massereene and Ferrard, V.

Torphichen, L.

Maude of Stratford-upon-Avon, L.

Torrington, V.

Townshend, M.

Merrivale, L.

Trafford, L.

Mersey, V.

Trefgarne, L.

Middleton, L.

Tryon, L.

Montagu of Beaulieu, L.

Ullswater, V.

Montgomery of Alamein, V.

Vaux of Harrowden, L.

Moran, L.

Vestey, L.

Mountgarret, V.

Waldegrave, E.

Mowbray and Stourton, L.

Wedgwood, L.

582

Weinstock, L.

Windlesham, L.

Weir, V.

Wolfson, L.

Wellington, D.

Wyatt of Weeford, L.

Westbury, L.

Wynford, L.

Whitelaw, V.

Yarborough, E.

Wigram, L.

Young, B.

Willoughby de Broke, L.

Young of Graffham, L.

Resolved in the negative, and Motion disagreed to accordingly.
5.43 p.m.
10 Lord Belstead rose to move. That the House do not insist on their amendment numbered 3 to which the Commons have disagreed and do agree with the Commons in their amendments numbered 4 to 6 to the words so restored to the Bill and to the Commons consequential amendments to the Bill numbered 7 and 8.
The noble Lord said: My Lords, I beg to move.
Moved, That the House do not insist on their amendment numbered 3 to which the Commons have disagreed and do agree with the Commons in their amendments number 4 to 6 to the words so restored to the Bill and to the Commons consequential amendments to the Bill numbered 7 and 8.—(Lord Belstead.)
11 Lord Ennals rose to move, as an amendment to the above Motion, at end to insert ("with the following amendments to Commons consequential amendment 7—
Line 16, leave out ("and)
Line 19, at end insert ("; and
(d) make provision for those in receipt of state retirement pensions to be exempted from such charges us are levied under this subsection.")
The noble Lord said: My Lords, I beg to move the Motion standing in my name which would amend the Motion that has been moved by the noble Lord the Leader of the House.
Naturally I had hoped that it would not be necessary for me to move this amendment because it is very much a fallback position. I find it sad that so many of those noble Lords who have come and voted today do not come more frequently and take part in the debates in your Lordships' House. It is sad that, having taken a major decision after a substantial debate in which this House recorded its views with a majority of 26, we now find that it is reversed and we have to ask why that is so. I am not going to produce the answer now because I believe that this should be a short debate because many people have already considered the issues that are at stake.
If by some mischance on our original vote with our 26 majority we had not succeeded, instantly there was an amendment that would have done the same as I am seeking to do today. I have no doubt that it would have been carried by an overwhelming majority. I know too that that would have been the case in another place. It had been expected by many of us who have taken an active part in this debate that at some stage the Government would have made a concession and would have said, "Right, we will make the concession of excluding retirement pensioners from this new charge that we are introducing".
The Government were determined to make the minimum concessions possible. I hope that this time the Government will not look upon this matter as a concession but as something that should properly be done because we know that it is not the case that there is only a small minority of pensioners who are poor. The King's Fund Centre report published in The Times yesterday revealed that 25 per cent. of the 65 to 70 age range and 40 per cent. of the over 75s have an income lower than half the national average. It is no fun being a pensioner on a very modest income. It is those people more than any others who are likely to suffer from complaints that can be detected by an eye test at the right time. Moreover, it is those people who are most likely, because of their modest income, to be deterred by the charge. This is something that has been said by experts throughout this debate. Somehow or other the Government always seem to think that they know best.
A number of noble Lords have referred to personal cases. I received this morning a letter from an elderly relative of mine written with a very shaky hand. She said:
"Two years ago I went to an optician for a sight test. He sent me to the optical surgeon at Plymouth Eye Hospital. He said he would like me to see the neurologist, who arranged for me to have tests at Freedom Fields Hospital, where they discovered a cyst on my brain. I was operated on and was in intensive care for five weeks. I think without this eye test I would not be writing this to you now".
I believe that to be absolutely the case for very many people. I believe that it would be utterly wrong for this Parliament and this House at this moment to decide to take some positive action which would make it more difficult for pensioners to obtain what up to now has been an absolute right, namely an eye test without payment. I believe that there will be no saving to the Government at all. Not only do I believe that people will suffer, but the actual cost to the health service will be substantially greater if my amendment is not carried through or if the Government offer to do it in some other form—but I do not suppose they will.
I believe that this is an issue which many of us have thought about. If anyone has uncertainty or doubts about the way to cast their vote and be loyal to the Government today, they should feel that this is some kind of a gesture that they can make to people who are most likely to need it. I hope that that sympathy and concern will be thought of carefully by noble Lords when they come to reach their decision and the vote is taken.
Moved, as an amendment to the above Motion, at end to insert ("with the following amendments to Commons consequential amendment 7—
Line 16, leave out ("and)
Line 19, at end insert ("; and
(d) make provisions for those in receipt of state retirement pensions to be exempted from such charges as are levied under this subsection."—(Lord Ennals.)
Lord Belstead: My Lords, we have spent the whole afternoon debating whether money should be contributed to the improvements of primary health care services by asking people who can afford it to contribute towards the cost of dental and eye
584
examinations, and this is in addition to an enormous injection of funds into the health service next year. The House of Commons has now voted twice on each of the matters—dental examinations and eye examinations—and both issues undoubtedly involve Commons financial privilege. The noble Lord, Lord Ennals, tabled his amendments yesterday. They give the Secretary of State powers to exempt pensioners from sight test charges. The issue has been fully debated, as the noble Lord himself said in his brief remarks, and I shall follow him by saying only a brief few words.
Perhaps I may remind the House that pensioners' total incomes have increased by more than 23 per cent. in real terms since 1979. That should be compared with a 3 per cent. increase when the noble Lord and his right honourable friends and noble Lords were in office in the 1970s—
Noble Lords: Oh!
Lord Belstead: Although noble Lords opposite do not like that, therein lies a difference. It is that the blanket exemption which the noble Lord seeks this afternoon is not appropriate. What is appropriate—and here I agree with him—is that help must be available to those who are in need. Twenty-five per cent. of all pensioners are on income support, which incidentally was uprated only 10 days ago, and accordingly, they will automatically qualify for free sight tests under the Bill as it stands. Anyone who relies solely on the basic state pension will be covered by this, as will those who are of pensionable age who are diabetics or glaucoma sufferers or have a near relative who suffers in that way. The amendments made in another place will enable us to start a scheme to help people who are a little above the income support level.
In the light of these exemptions, there are two views about what the noble Lord has said. I take the view that it is not unreasonable to ask those who can afford to do so to make a contribution to the cost of sight tests. I am comforted by the experience of my noble friend Lord Thorneycroft who said quite clearly that, leaving politics aside, priorities ought to be the language of us all. I should like to assure your Lordships that the proposals before the House today have only been brought forward after trying to think carefully about priorities. In the context of primary health care services, these priorities have been fully debated and then confirmed by another place last week. So both Houses have been round and round this course.
One thing is crystal clear. We are talking about trying to use a large sum of money to good effect in developing primary health care services. In allocating that money, Commons financial privilege clearly is involved. Yet the noble Lord comes along at the last minute demanding that a certain sum of money—he did not favour the House by saying how much it would be—must be peeled off in order to exempt every single person of pensionable age. We are talking probably of upwards of £30 million. If we agree to what the noble Lord wants, we shall get into exactly the trouble which the House has voted twice this afternoon not to get into.
Noble Lords: Twice?
Lord Belstead: My Lords, on merits, and in terms of relations between the two Houses, I do not think that the noble Lord is being reasonable in this amendment. I ask your Lordships not to agree to it.
Lord Ennals: My Lords, as it seems that no other Lord wants to take part I shall briefly reply. The noble Lord said that this issue had been debated several times before. Yes, I said that, but it has never been voted on before. That is because, in your wisdom, your Lordships have always sought to protect the whole population from these new charges.
There is a debate about the standard of living of pensioners. In making my case 1 sought to leave politics aside. When the noble Lord plunged into some comparison between the position of pensioners 10 years and more ago with those of today he did so quite deliberately, involving politics in the issue. I urge noble Lords not to involve themselves in party politics on this issue.
Noble Lords: Oh!
Lord Ennals: Yes, I certainly do. I do not think that pensioners would respect us much if they thought that, even in your Lordships' House, we were playing politics with their interests.
The noble Lord referred to people who are in need. He said that the Government would ask people to make a contribution. Will they have a church plate so that they can put in their pennies if they want to? No, it is a charge that will be imposed on all those who are not excluded. I am seeking to ensure that more are excluded. Who is in need? How do we tell who is in need? The only way is to have a means test. Do Members of the House recognise the extent of the pride of many pensioners who are simply not prepared to involve themselves in a means test? This has always been the case and it is the case no less today than it was 30 years ago.
This presents a great problem because, as the noble Lord knows, means tested benefits very often have a low take-up. Here we are depriving people of what has been an absolute right ever since the National Health Service was set up. The Government are not targeting but are saying that all pensioners will have to pay except for the limited number who have been exlcuded. I believe that we should leave the pensioners out.
The noble Lord asked me about the cost. I prefer to use the word "saving". It would cost £22 million to make this exclusion. I ask your Lordships to recognise the actual cost of treating people who go blind and of treating people during their illness or disease. I ask them then to consider the cost of the operations that have to be carried out and of the help the state must give not only to those in hospitals but to those in care homes and nursing homes. I believe that government will save not £22 million but much more for the NHS by ensuring that people have this opportunity. The arguments are overwhelming and I hope that this will be recognised by noble Lords when they go into the Division Lobby.
5.58 p.m.
On Question, Whether the amendment to the Motion shall be agreed to?
Their Lordships divided: Contents, 196; Not-Contents, 237.

DIVISION NO. 2

CONTENTS

Addington, L.

Greenway, L.

Airedale, L.

Gregson, L.

Alport, L.

Grey, E.

Amherst, E.

Grimond, L.

Ardwick, L.

Hampton, L.

Auckland, L.

Hanworth, V.

Aylestone, L.

Harris of Greenwich, L.

Banks, L.

Hart of South Lanark, B.

Barnett, L.

Hatch of Lusby, L.

Basnett, L.

Hayter, L.

Beaumont of Whitley, L.

Henderson of Brompton, L.

Birk, B.

Henniker, L.

Blackstone, B.

Hertford, M.

Blease, L.

Hooson, L.

Bonham-Carter, L.

Houghton of Sowerby, L.

Boston of Faversham, L.

Howie of Troon, L.

Bottomley, L.

Hughes, L.

Briginshaw, L.

Hunt, L.

Brimelow, L.

Hutchinson of Lullington, L.

Broadbridge, L.

Hylton, L.

Brooks of Tremorfa, L.

Ingleby, V.

Bruce of Donington, L.

Irvine of Lairg, L.

Buchan, E.

Irving of Dartford, L.

Buckmaster, V.

Jacques, L.

Burton of Coventry, B.

Jay, L.

Callaghan of Cardiff, L.

Jeger, B.

Campbell of Eskan, L.

Jenkins of Hillhead, L.

Carlisle, Bp.

John-Mackie, L.

Carmichael of Kelvingrove, L.

Kagan, L.

Carter, L.

Kennet, L.

Chandos, V.

Kilbracken, L.

Chelmsford, Bp.

Kilmarnock, L.

Chesham, L.

Kirkhill, L.

Chichester, Bp.

Kirkwood, L.

Chilston, V.

Kitchener, E.

Chitnis, L.

Lawrence, L.

Cledwyn of Penrhos, L.

Leatherland, L.

Cocks of Hartcliffe, L.

Leathers, V.

Craigavon, V.

Listowel, E.

Cudlipp, L.

Liverpool, Bp.

Cullen of Ashbourne, L.

Llewelyn-Davies of Hastoe, B.

Darcy (de Knayth), B.

Lloyd of Kilgerran, L.

David, B.

Lockwood, B.

Davies, L.

Longford, E.

Davies of Penrhys, L.

Lovell-Davis, L.

Dean of Beswick, L.

Lucas of Chilworth, L.

Denington, B.

Lytton, E.

Diamond, L.

McCarthy, L.

Donaldson of Kingsbridge, L.

McGregor of Durris, L.

Donoughmore, E.

McIntosh of Haringey, L.

Dormand of Easington, L.

Mackie of Benshie, L.

Ennals, L.

McNair, L.

Ewart-Biggs, B.

Mais, L.

Ezra, L.

Manchester, Bp.

Falkender, B.

Masham of Ilton. B.

Falkland, V.

Mason of Barnsley, L.

Fisher of Rednal, L.

Mayhew, L.

Fitt, L.

Merrivale, L.

Flowers, L.

Meston, L.

Foot, L.

Milner of Leeds, L.

Gallacher, L.

Mishcon, L.

Galpern, L.

Molloy, L.

Gardner of Parkes, B.

Monkswell, L.

GifTord, L.

Monson, L.

Gladwyn, L.

Mottistone, L.

Glenamara, L.

Mountcvans, L.

Gloucester, Bp.

Mulley, L.

Graham of Edmonton, L.

Murray of Epping Forest, L.

Gray, L.

Nicol, B. [Teller.]

587

Northfield, L.

Southwark, Bp.

Ogmore, L.

Stallard, L.

O'Neill of the Maine, L.

Stanley of Alderley, L.

Oram, L.

Stedman, B.

Paget of Northampton, L.

Stewart of Fulham, L.

Parry, L.

Stoddart of Swindon, L.

Perry of Walton, L.

Strabolgi, L.

Peston, L.

Taylor of Blackburn, L.

Phillips, B.

Taylor of Gryfe, L.

Pitt of Hampstead, L.

Taylor of Mansfield, L.

Ponsonby of Shulbrede, L. [Teller.]

Tedder, L.

Tordoff, L.

Prys-Davies, L.

Turner of Camden, B.

Raglan, L.

Underhill, L.

Rathcreedan, L.

Vernon, L.

Rea, L.

Wallace of Coslany, L.

Ritchie of Dundee, L.

Walston, L.

Robertson of Oakridge, L.

Wedderburn of Charlton, L.

Robson of Kiddington, B.

White, B.

Rochester, L.

Willis, L.

Ross of Newport, L.

Willoughby de Broke, L.

Russell, E.

Wilson of Langside, L.

Ryder of Warsaw, B.

Wilson of Rievaulx, L.

Sainsbury, L.

Winchilsea and Nottingham, E.

Scanlon, L.

Seear, B.

Winstanley, L.

Serota, B.

Winterbottom, L.

Shepherd, L.

Wise, L.

Sidmouth, V.

York, Abp.

Simon, V.

Young of Dartington, L.

NOT-CONTENTS

Abinger, L.

Colville of Culross, V.

Airey of Abingdon, B.

Constantine of Stanmore, L.

Aldington, L.

Cork and Orrery, E.

Alexander of Weedon, L.

Cornwallis, L.

Allenby of Megiddo, V.

Cottesloe, L.

Allerton, L.

Craigmyle, L.

Annaly, L.

Craigton, L.

Arran, E.

Crathorne, L.

Ashbourne, L.

Crickhowell, L.

Astor of Hever, L.

Croft, L.

Barber, L.

Dacre of Glanton, L.

Bathurst, E.

Daventry, V.

Bauer, L.

Davidson, V. [Teller.]

Beaverbrook, L.

De La Warr, E.

Bellwin, L.

Denham, L. [Teller.]

Beloff, L.

Denman, L.

Belstead, L.

Derwent, L.

Bessborough, E.

Digby, L.

Bethell, L.

Dilhorne, V.

Birdwood, L.

Dulverton, L.

Blanch, L.

Dundee, E.

Blatch, B.

Eden of Winton, L.

Blyth, L.

Elibank, L.

Boardman, L.

Ellenborough, L.

Bolton, L.

Elles, B.

Borthwick, L.

Elliot of Harwood, B.

Boyd-Carpenter, L.

Elliott of Morpeth, L.

Brabazon of Tara, L.

Elphinstone, L.

Braye, B.

Elton, L.

Bridgeman, V.

Erne, E.

Brookeborough, V.

Erroll of Hale, L.

Brougham and Vaux, L.

Falmouth, V.

Broxbourne, L.

Fanshawe of Richmond, L.

Bruce-Gardyne, L.

Ferrers, E.

Butterworth, L.

Foley, L.

Caccia, L.

Forbes, L.

Caithness, E.

Forester, L.

Camden, M.

Forte, L.

Cameron of Lochbroom, L.

Geddes, L.

Campbell of Alloway, L.

Gibson-Watt, L.

Campbell of Croy, L.

Gisborough, L.

Carnegy of Lour, B.

Glenarthur, L.

Carnock, L.

Goold, L.

Cathcart, E.

Goschen, V.

Chalfont, L.

Gowrie, E.

Chelmer, L.

Grafton, D.

Coleraine, L.

Grantchester, L.

Colnbrook, L.

Gray of Contin, L.

588

Gridley, L.

Piatt of Writtle, B.

Grimston of Westbury, L.

Plummer of St. Marylebone, L.

Halsbury, E.

Harmar-Nicholls, L.

Portland, D.

Harris of High Cross, L.

Portman, V.

Harvington, L.

Pym, L.

Havers, L.

Quinton, L.

Hemphill, L.

Reay, L.

Henley, L.

Rees, L.

Hesketh, L.

Reigate, L.

Hives, L.

Renton, L.

Holderness, L.

Renwick, L.

Home of the Hirsel, L.

Rochdale, V.

Hood, V.

Rockley, L.

Hooper, B.

Rodney, L.

Inchcape, E.

Romney, E.

Ingrow, L.

Rugby, L.

Ironside, L.

Russell of Liverpool, L.

Jenkin of Roding, L.

Sackville, L.

Johnston of Rockport, L.

St. Aldwyn, E.

Joseph, L.

St. Germans, E.

Kaberry of Adel, L.

Saltoun of Abernethy, 1

Kemsley, V.

Sanderson of Bowden,

Kimball, L.

Sandys, L.

Kimberley, E.

Savile, L.

Kinnaird, L.

Selborne, E.

Knutsford, V.

Selkirk, E.

Lauderdale, E.

Shannon, E.

Lindsay, E.

Sharpies, B.

Lindsey and Abingdon, E.

Sherfield, L.

Liverpool, E.

Simon of Glaisdale, L.

Loch, L.

Skelmersdale, L.

Long, V.

Slim, V.

Luke, L.

Southborough, L.

Lyell, L.

Stevens of Ludgate, L.

McAlpine of West Green, L.

Stockton, E.

McFadzean, L.

Stodart of Leaston, L.

McFadzean of Kelvinside, L.

Strathcarron, L.

Mackay of Clashfern, L.

Strathclyde, L.

Macleod of Borve, B.

Strathcona and Mount Royal, L

Malmesbury, E.

Mancroft, L.

Strathspey, L.

Margadale, L.

Suffield, L.

Marley, L.

Swinfen, L.

Marsh, L.

Swinton, E.

Marshall of Leeds, L.

Thomas of Gwydir, L.

Massereene and Ferrard, V.

Thorneycroft, L.

Maude of Stratford-upon-Avon, L.

Thurlow, L.

Tollemache, L.

Mersey, V.

Torphichen, L.

Middleton, L.

Torrington, V.

Montgomery of Alamein, V.

Townshend, M.

Mountgarret, V.

Trafford, L.

Mowbray and Stourton, L.

Trefgarne, L.

Moyne, L.

Tryon, L.

Munster, E.

Ullswater, V.

Murton of Lindisfarne, L.

Vaux of Harrowden, L.

Nathan, L.

Vestey, L.

Nelson of Stafford, L.

Waldegrave, E.

Newall, L.

Wedgwood, L.

Norfolk, D.

Weinstock, L.

Norrie, L.

Weir, V.

Nugent of Guildford, L.

Westbury, L.

Onslow, E.

Whitelaw, V.

Orkney, E.

Wigram, L.

Orr-Ewing, L.

Windlesham, L.

Oxfuird, V.

Wolfson, L.

Peel, L.

Wyatt of Weeford, L.

Pender, L.

Wynford, L.

Pennock, L.

Yarborough, E.

Perth, E.

Young, B.

Peyton of Yeovil, L.

Young of GrafFham, L.

Resolved in the negative, and amendment to the Motion disagreed to accordingly.
6.9 p.m.
The Lord Chancellor: My Lords, the Question is that the House do not insist on their amendment numbered 3 to which the Commons have disagreed

589
and do agree with the Commons in their amendments numbered 4 to 6 to the words so restored to the Bill and to the Commons consequential amendments to the Bill numbered 7 and 8.
On Question, Motion agreed to.

LORDS AMENDMENT
12 Clause 13, page 15, line II, leave out subsection (2)
The Commons disagreed to this amendment but proposed the following amendment to the words so restored to the Bill:
13 Page 15, line 13, leave out from beginning to 'after' in line 18.
Lord Belstead rose to move, That the House do not insist on their amendment numbered 12 to which the Commons have disagreed and do agree with the Commons in their amendment numbered 13 to the words so restored to the Bill.
The noble Lord said: My Lords, I beg to move.
Moved, That the House do not insist on their amendment numbered 12 to which the Commons have disagreed and do agree with the Commons in their amendment numbered 13 to the words so restored to the Bill.—(Lord Belstead.)
On Question, Motion agreed to.
[Amendment No. 14 not moved.]

LORDS AMENDMENT
15 Clause 13, page 15, line 41, leave out subsection (4)
The Commons disagreed to this amendment but proposed the following amendments to the words so restored to the Bill:
16 Page 15, line 48, leave out from 'requirements' to 'or' in line 49
17 Page 17, line 8, leave out from 'person' to `and' in line 11 and insert—
'(a) whose sight is tested by a person who provides general ophthalmic services;'
18 Page 17, line 12, leave out from beginning to 'above' in line 14 and insert—
'(b) who is shown during the testing or within a prescribed time after it to fall within subsection (1)'
The Commons proposed the following consequential amendments to the Bill:
19 Page 17, line 30, leave out from beginning to 'give' in line 32 and insert—
'(3) The Secretary of State may by regulations—

(a) provide for himself or a Health Board to contribute to the cost of a testing by sight which he or the Board accepts as having been incurred by a person whose resources fall to be treated under the regulations as exceeding his requirements but only by an amount calculated under the regulations:

(b) provide for payments to be made by him or by a Health Board to meet, or to contribute towards, any cost accepted by him or by the Board as having been incurred (whether by way of charge under this act or otherwise) for the replacement of repair in prescribed circumstances of optical appliances for which a prescription was given in consequence of a testing of the sight of a person of a prescribed description; and

(c) direct how a person's resources and requirements are to be calculated and, without prejudice to the generality of this sub-paragraph.'

20 Page 17, leave out lines 38 to 45
Lord Belstead rose to move that the House do not insist on their amendment numbered 15 to which the Commons have disagreed and do agree with the Commons in their amendments numbered 16 to 18 to the words so restored to the Bill, and in their consequential amendments numbered 19 and 20.
The noble Lord said: My Lords, I beg to move.
Moved, That the House do not insist on their amendment numbered 15 to which the Commons
590
have disagreed and do agree with the Commons in their amendments numbered 16 to 18 to the words so restored to the Bill, and in their consequential amendments numbered 19 and 20.—(Lord Belstead.)
On Question, Motion agreed to.
[Amendment No. 21 not moved.]

Water Industry: Competition Policy
6.10 p.m.
Lord Ezra Lord Ezra rose to ask Her Majesty's Government whether it is their intention to introduce a measure of competition in the water industry on privatisation.
The noble Lord said: My Lords, I wish to raise the Question on the Order Paper because I believe that it is now a relevant issue for us to be discussing the impending privatisation of the water industry. Before proceeding further I wish to declare that I am chairman of an energy company in which, through another company, a French water company has a major interest. I should add that I am not involved in the water industry.
The privatisation of public utilities has raised many issues. The privatisation of telecommunications raised the issue of competition. There is a limited amount through Mercury. There have been problems with the quality or the service from that enterprise since it has been privatised. With the gas industry, there was recently a reference to the Monopolies and Mergers Commission, which criticised the exercise of monopolistic powers in the industrial and commercial markets. In the case of the electricity industry, on which legislation is expected, it is understood that a measure of competition is to be introduced.
In the case of the water industry, introducing competition is especially difficult because, of all the utilities that have been or are likely to be privatised, it is the one which is the most obvious natural monopoly. It is no doubt for that reason that the Government have devised a fairly complex system of control and regulation. It is so complex that one wonders whether the enterprises will be able to work as effectively as they have in the past.
When the whole subject of privatisation was originally considered by the Government, they proposed to privatise the water authorities on the river basis upon which they presently operate. It was soon realised that in private hands that would create an anomaly because they would have regulatory functions. Those therefore have been taken away, one might argue quite properly, and have been given to the National Rivers Authority. However, in addition to the National Rivers Authority, which will be concerned with resource planning, quality, pollution control, land drainage and other matters currently the responsibility of water authorities, there will be the Director General of Water Services, who will be concerned with prices and service standards. Certain powers will be reserved for HM Inspectorate of Pollution. The Department of the Environment

591
will retain certain regulatory powers. The Ministry of Agriculture, Fisheries and Foods, the Monopolies and Mergers Commission and finally the European Commission in Brussels will also be involved.
The first question one might ask under the proposed privatisation measure is whether those newly privatised bodies will not be submerged under a welter of regulations. But, secondly, regulation is not the best answer to safeguarding the consumer interest under a privatised system. A far better answer would be to introduce some measure of competition, however difficult that might be.
I am encouraged to raise the issue because one of the duties to be given to the Director General of Water Services will be to enable effective competition to take place. It is proper for us, before we see the Bill, to consider what type of competition he could enable to take place.
In preparation for the debate I have talked to a large number of people connected with and operating within the water industry to try to see, despite the monopolistic nature of the industry, what measures of competition could be introduced. I have come up with the following which I should like to mention and to comment upon. I hope that when he replies the noble Earl will let us have the Government's views on them.
The first measure of competition in the privatised water industry which has been mentioned in the literature on the subject is competition by comparison. Competition by comparison is of course something which already exists. The water authorities publish their annual reports and comparisons can be made. It is argued that that would be an important element of competition. I have my doubts about it. I was for many years concerned with running a large public enterprise; namely, the coal industry. We had a number of areas operating mines. We tried to compare their results one with another, but it was extremely difficult to do so because the conditions were so different, the geology was so different and the problems of marketing the product were so different. In the end, we had to look at each case on its merits, and the comparative data were of relatively little use for management purposes.
There is obviously some merit in competition by comparison, but it is limited. If it is to have any merit it must be based on the publication of large amounts of information. It cannot be done on the basis of limited information.
It is then argued that the capital market could exercise some competitive pressure on the privatised companies; and that those which were most efficient would be the most successful in raising money. That too is a limited area of competition. Generally speaking, the Stock Exchange and investors tend to look at sectors rather than individual firms in sectors. Today, for example, the oil sector might be the favoured sector, or it might not; and tomorrow it could be the water sector, the steel sector, the retail sector, or whatever. The interest goes by sectors. Any suggestion that there could be an effective measure of competition from the attitudes of those who provide capital is again overemphasising that approach.
It is argued that competiton could be achieved by pressure from shareholders. Many of us, I presume, have been involved in companies of various types. We know that on the whole shareholders come together in limited numbers only at the annual general meeting and that if everything is going normally the attendance is fairly sparse and the contributions to the discussions virtually nonexistent. So long as a company ticks over and there are no scandals or problems, the pressure from shareholders, in my experience from having been involved in a number of companies, is limited.
We are told that there could be competitive pressure through the threat of takeover. This can certainly make an impact but the question of takeovers raises all sorts of other issues. For example, how far can one let the takeover process develop? One would be left with a very limited number of independent companies in this sector. The pressure of takeover certainly has an impact. I have been involved in takeovers of one sort or another in recent years. I know that one is galvanised into action and generally speaking one tries to defend oneself against this situation, if one is on the receiving end. Nevertheless, that in itself is a fairly blunt instrument which cannot be carried too far if we want a sufficient number of individual firms to survive.
We are told that there is a greenfield site possibility; namely, that when a new water supply is required and can be obtained, there could be freedom for new enterprises to take over that operation. This is perfectly true, but on the other hand, to the extent that the new operators will need to make use of the existing network in order to link their new greenfield site into it, that could raise problems with the existing operators. In any case, I think the number of greenfield sites is likely to be fairly limited.
These are the four or five forms of competition which have been mentioned in the discussions arising from the proposals for privatisation. While they will exert some competitive pressure, 1 doubt whether it will amount to very much. I think, however, there is another form of competition which is well worth consideration. In the water industry, price competition will be virtually impossible except by comparison. There is no way in which one could choose to buy one's water more cheaply from one authority than another.
However, cost competition opens up some interesting possibilities. Cost competition can be introduced by contracting out a proportion of the core business. I mean the water supply business, the water treatment business, the sewage treatment business. There it is a real possibility. I have seen it in operation in my coal industry days. That was precisely the way in which we ran the opencast operation. I hesitate to mention opencast coal in the presence of my old friend, the noble Lord, Lord Mason, but I am merely talking about the ways in which we did it.
That was done on the basis of contracting out. The operation of an opencast site was contracted out on a competitive tender basis. That very quickly created cost yardsticks which enabled us to compare one

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operation with another. The payment was made and I presume still is made on the basis of the coal supplied. Conditions had to be met: the way in which the coal was produced, the quality to be produced, the restoration of the site after the operation was complete. The payment was made as the operation went ahead on the basis of the coal supplied.
I suggest that this contracting out operation could introduce a healthy element of competition within the privatised water industry. Let me indicate how I think it could work. Perhaps we may take the case of a sewage operation which was inadequate for the purposes for which it had originally been constructed. Let us say that it serves a growing conurbation. It requires refurbishment and enlargement. Instead of the water company doing that itself, it could put the operation out to competitive tender. The tenderer would have to undertake to invest in the new installation. He would have to build it and to operate it and would then be paid on the basis of the amount of sewage treated. If there were a number of these contracted out operations which could relate to sewage plants, water treatment plants,or networks within the area of each of these natural monopolies, in my opinion that could introduce an interesting measure of cost competition.
I have no doubt that in replying the noble Earl will say that the companies will be perfectly at liberty to do this if they wish. However, I shall take this a stage further. I suggest that there should be an obligation to contract out a proportion of the core business over a period of time, let us say 10 per cent. That would have to be done in order to introduce competition in the only part of the business where I think it can be introduced. That is at the cost end, because there is no way of introducing it except by comparison at the price end.
Those are the suggestions I wish to make on this very important issue. Let me now try to sum up my brief remarks. Water is a natural monopoly— more of a natural monopoly than any other of the utilities which have been or are about to be privatised. The water industry in Britain, as at present organised, has worked well under the river basin system which was introduced by the Water Act 1973. It has become something that the rest of the world admires.
Unfortunately, for the reasons I have explained and which are well known, this form has been deemed inappropriate under a privatised system, so it has been broken up. In its place we shall have a heavy and complicated regulatory system. I feel that so far too little attention seems to have been devoted to competitive safeguards. As the Director General of Water Services has this duty to provide for competition, I have felt it appropriate to go through the various forms of competitive pressure which could be introduced into this newly privatised sector. I hope very much that noble Lords who are kindly taking part in this debate will add their views on the subject. Then when the noble Earl comes to reply, he will be able to advise us on the extent to which the Government will try to introduce a measure of competition in the privatised water industry.
6.30 p.m.
Lord Elliott of Morpeth: My Lords, we are all grateful to the noble Lord, Lord Ezra, for raising this subject at such an opportune time. We expect legislation on the subject of water soon to be before us. I listened with great interest, as I am sure did everyone, to what the noble Lord said about the possibilities of competition in the water industry. I think we were all particularly interested in his suggestion on cost competition. We realise that he has enormous industrial experience, particularly in the sphere of the coal industry. I am sure we shall study further what he said on cost competition.
When the noble Lord said that water was a monopoly, that is something on which we all agree. The water industry is in a position of absolute monopoly. Water is an essential commodity. There are no alternatives. The nature of water as a product is that it is heavy and bulky. This means that alternative supplies for customers are wholly impossible. Therefore, unlike customers in other industries, the customer in the water industry is not protected even partly by competition in its normal sense. The customer is stuck with the quality of the water which he receives and with the supplier whose pipes lead into his premises.
Water is a monopoly, but it is unfair to say that no competition is possible in the industry. I believe that the competition, which the Secretary of State has rightly called comparison, is there. There is comparison in the industry. I should declare an interest. I am chairman of the Newcastle and Gateshead Water Company. It is one of 28 statutory water companies. There are, of course, in the country 10 regional water authorities.
Again, I wholly agree with the noble Lord, Lord Ezra, that the water industry in England and Wales has worked extremely well since the Act of 1973. I believe that that is so. I am sad that it is necessary to change the industry at this time. Nevertheless, it is to be changed. And so we must look at the possibilities that come before us within that change.
I should like to assure noble Lords that comparison has been there all the time and that it is present at this time. It has been present in the water industry particularly since the Act of 1973. Each water company is very conscious of its need to keep up standards and to make sure that its performance compares favourably not only with other companies but with the 10 regional water authorities.
I declare a further interest. I had the privilege for some years to be president of the Water Companies' Association. That body is representative of the 28 statutory water companies. I assure the noble Lord, Lord Ezra, that every year in the month of July, at the association's annual general meeting my presidential address was always based on the suggestion that the companies must be efficient and be seen to be efficient, or they would go out of existence. Therefore, I suggest that we have had competition by comparison.
Part of the Government's proposals, we understand, will deal with the new system of regulation which will of course be necessary to protect the customer against abuse of the monopoly

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in a situation where profits could be unconstrained. That regulatory system will, as I see it, put the existing competition between undertakers, by comparison on standards and charges on to a formal basis. The preparatory work, we understand, is being done to gear the industry up for the transition to the new system. It is made very clear that comparisons between undertakings will play a most important part. It is that comparison which we shall have to depend upon for competition.
From the information which the regulator—he is known as the director general of water services—will collect, benchmarks of effectiveness and efficiency in terms of cost and service are to be established. We are to have the "K" factor. Undertakings will be compared against those benchmarks. I see that bringing in a significant degree of competition. If the regulator considers that a move towards a benchmark is appropriate, then presumably, in the interest of customers, he will encourage that movement. So it would seem that undertakers, with these benchmarks and the standards which are to be set, will have to keep up to a certain standard.
I am sure that the new system will work very well if it contains this comparative content. I pause for one moment here and suggest that the new regulatory system is replacing a system already in existence which the statutory companies know. I still regret very much that Her Majesty's Government are, it seems, inclined against the statutory model for the 10 regional water authorities which are to be privatised. Here, we have regulation by statute. Here, we have regulation without a new quango body. But it seems that that is not to be. I hope therefore that it will be possible to have comparative competition by means of a new system.
The proposal in its way is quite sensible and encouraging, even though I would have much preferred the alternative.
In the short time that I propose to speak, I should like to suggest to my noble friend and to Her Majesty's Government that comparison within the water industry can only mean anything at all if there are enough undertakings to compare one with another. The great fear in the water industry as we approach privatisation is that there will be fewer water undertakings than there are at present. We live in an era when takeover is a word often used. And it is used a great deal at the present time with regard to the water industry.
It would be a great pity if there were too few water undertakings because, as I see it, competition by comparison is the only possible real competition that one can know in the water industry. I hope that when he replies my noble friend will recognise that if we are to have any kind of competition and a healthy water industry, there will need to be enough companies to compare one with another.
6.35 p.m.
Lord Mason of Barnsley: My Lords, I believe the pending water privatisation measure is a distinctly different privatisation measure from those that have gone before. The privatisation of gas, British
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Telecom, Rolls-Royce and others revealed strong party political differences. They revealed such conflicts as the Left versus the Right and trade unions against the Government. All those privatisations were highly political. Major political parties with strong, extreme standpoints come into conflict. However, a vast grey area of indifference existed between the different views.
This proposed privatisation measure however, moves into a more sensitive sector. To some it is the sacred sector, next to taking over the air we breathe. The difference, I believe, on this occasion, apart from the political fight over privatisation as such, is that there exists this time a vast body of opinion representative of many different groups in between the political extremes. Now the environmentalists, the greens, all the angling associations, all the water users as well as a considerable number of ordinary people are really concerned and anxious about the water they drink, its quality, its content and its cleanliness. They are also concerned about pollution control and other matters.
This time the privatisation is not just a clear-cut political Left versus the Right issue. It is not seen by many people simply as a political squabble. Instead the whole populace, for a variety of reasons, feels involved.
There is one word of credit due to Her Majesty's Government on this matter. Although I am not in favour of the Government's obsession with privatisation, especially privatisation in this sensitive sector, when the Government put forward their initial plan it incurred the wrath of so many interested groups—some of which I have already mentioned, plus an alliance of the Confederation of British Industry, the Country Landowners' Association, the National Farmers' Union and the Council for the Protection of Rural England; a most powerful lobby—that it was changed. They decided to introduce a major public element into their proposed legislation; namely, the National Rivers Authority. That is a public body with a national board of authority at the head of 10 public regional boards.
The National Rivers Authority is a new public authority, accountable to Ministers and to Parliament. That means that water, its quality, its purity, the problems of pollution in our rivers, lakes, reservoirs and the seas round our shores will have a higher profile than ever before. The National Rivers Authority is subject to accountability via Ministers. It is subject to parliamentary scrutiny, questions, statements and debates on every aspect of water activity from the quality of tap water to polluted rivers, dirty seas, floods and major accidents.
The National Rivers Authority will have to set standards. That will form the basis of the competition between the National Rivers Authority and the private sector. The National Rivers Authority will have to set a standard of operations that is efficient and professional. It will set a public image to be judged by standards not set and achieved by profit. The public and indeed the nation—everyone will be involved and will be watching—will put the privatised sector, the 10 public limited companies, on test. The National Rivers Authority will have to set

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a standard for the public and Parliament to accept. The private sector will be forced to compete so that there will be some competition. There is the NRA's image, its national responsibility, its duty to the public and, as the noble Lords, Lord Ezra and Lord Elliott of Morpeth said, competition by comparison.
The aim of the National Rivers Authority will be to achieve a noticeable improvement in our water quality from the tap right through to the North Sea, and, with it working alongside Her Majesty's Inspectorate of Pollution, there is bound to be a major progressive drive for a clean-up. However, improvement measures will be costly and will take time. There is no doubt, with so much to be done to satisfy the consumer, the pressure groups and the European Community standards, that water in all its forms of usage will become more expensive.
The National Rivers Authority not only will be the recognisable national body with national policies for river management and water quality but it will also be responsible for environmental quality and pollution control. It will have the national and statutory responsibility for land drainage, flood protection and catchment management; that is, the control of our water resources especially on the issue of abstraction licences. It will also cover fisheries, recreation, conservation and navigation and will be publicly accountable in all those areas of water activity. The establishment of the NRA could be a power for good.
With 10 public limited companies—the proposed new private sector—being established in the pending legislation and 29 existing private water companies there is bound to be some competition between them, particularly bearing in mind the flurry of foreign activity and interest in investing and buying into the present private water companies, and the distinct possibility of mergers and takeovers beating the Bill before it becomes law. Twenty-five per cent. of the control of Britain's water is already in the hands of the 29 private water companies, with foreign interests and shareholders on the increase. I believe that the foreign element will grow rather than recede, so there will be some competition.
The privatised sector will be responsible for the utility functions of water supply, sewerage and sewage treatment and disposal. This is a very large proportion of the water authority's business, which has a turnover of £3 billion a year. These services are in constant and growing demand. The profit. incentive will surely be the motivating force, just as the privateers want it. There will no doubt be some competition too, but I hope not to the detriment of the consumer.
The private sector will be looking for quick, easy and lucrative rewards from its freedom. In this respect I am afraid that beautiful and attractive stretches of unspoilt countryside in reservoir catchment areas may well be sold to developers. As to competition, land sharks will be fighting to compete for these rich pickings. 1 sincerely hope that the legislation will protect all these water catchment areas, or vast expanses of our most beautiful countryside may well be under threat.
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Consumers may be concerned about whether the National Rivers Authority will be sufficiently independent of the private sector. I think that the Anglers Co-operative Association of Great Britain and the National Anglers Council will want to be assured. We shall have to await the legislation to be certain of the powers to be granted to the NRA, and especially of its independence of the public limited companies.
I can only quote from a speech delivered by the noble Lord, Lord Crickhowell, chairman of the NRA advisory committee, of which I am a member. When addressing the national water conference on 12th October 1988 he said:
"I see no reason at present to doubt that the NRA will be given adequate powers by Parliament, and I am confident that it will be able to act with total independence in enforcing the laws and regulations that Parliament approves. I am certain that we will have access to all the information we require; that, working with Her Majesty's Inspectorate of Pollution, we will be able to set standards based on the very best possible scientific advice; that we will be able to sample independently of the plcs and other dischargers; and that the arrangements that we propose for laboratory services will enable the NRA to monitor adequately effluent discharges and water quality".
We may therefore feel satisfied that the NRA will get the independence that it requires to satisfy consumer and fishing interests.
Incidentally, and somewhat oddly, although trade union leaders may well oppose this privatisation measure—and rightly so—from my visits and talks on water privatisation and its future I find that trade unionists and workers—some workers not being in any trade union—are not banding together to oppose privatisation of their industry. They are keen to purchase preference shares in the private sector.
In the private sector the workers will expect them. In the NRA they do not have the same claim but, they say, they too have been responsible for placing the water industry in a position where it could become an attractive proposition for privatisation and therefore they should have some preference shares. They are saying, in other words, that they are not really opposing the measure but they want a share of the spoils. If the Bill goes through, it may well be an ironic challenge for the trade unions and the trade union leaders to try to establish the claim for preference shares for the NRA sector. I believe that to be a novel sign of the times.
I conclude by thanking the noble Lord, Lord Ezra, for giving us an opportunity to debate the question of privatisation and competition in the water industry. No doubt both Houses will soon be up to their necks in water, but I am sure the Government will make certain that their water Bill does not become waterlogged.
6.48 p.m.
Earl Russell: My Lords, your Lordships may be aware that I have a certain occupational bias towards the view that there is nothing new under the sun. These issues have been before both Houses before. The first time that water was debated in the other place as far as I know was in 1572 when one Member said that the proposers of the Bill could not possibly have taken so much trouble for anything so unimportant as water. Your Lordships may not be

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surprised to learn that your Lordships' House took a rather more balanced view of the matter.
The issue of competition in the water industry was before your Lordships' House on 30th January 1641, on which occasion a memorandum was submitted by the New River Company defending its monopoly of the water supply to London, which I regard as one of the ablest defences of a monopoly in a public utility that I have ever read. The New River Company argued that the competition for sources of water might lead to a temptation to use polluted sources. It also discovered one of the more unsavoury forms that competition by comparison might take by industriously spreading reports that its rivals were using a polluted water supply. It argued that competition, by diminishing the level of profits, would diminished the incentive to invest. It argued that the criss-cross laying of pipes for two different water companies in the same place would create a rather confusing cat's cradle and it said, which I think was the clincher of the argument, that if there were a burst main and flooding, no one would know whose pipes to dig up. For whatever reason, your Lordships' House decided that it agreed with the view expressed by my noble friend Lord Ezra that water is a natural monopoly, and the New River Company remained in possession.
It is a view for which I have found further support in more recent times by observing the privatised water industry in the United States. Perhaps your Lordships are not aware that in the State of New Jersey there are 640 water authorities. In the State of Connecticut there are slightly fewer. They are all extremely small and do not have any competition because proverbially water tends to find its own level and a small water company does not run a pipe over the top of a hill or even through the middle of it in order to supply half a dozen consumers in another company's area. So we have a host of small companies which do not compete with each other and—this is the point to which I want to draw the attention of the noble Earl—because they are small they have very inadequate reserves for coping with drought. New Haven in Connecticut has an average rainfall of 44 inches a year, which one does not think of as drought conditions. Nevertheless in any dry summer a water emergency is liable to be declared. Companies on such a small scale simply cannot afford the capacity to carry the reserves.
I also remember 1976. Your Lordships may say that such a situation will not happen again, but that is what we said in 1975. With a service of such importance, it is vital to have some spare capacity in order to keep the country alive during another period of drought. I want to raise this question. Under privatisation will such spare capacity exist and, if so, who will pay for it? An important point and one of which I am not always sure that the Government are aware is that the purpose of industry is to make profits. It is not the purpose of industry to conduct philanthropy. So I do not think that it is reasonable or legitimate to expect a private water company to make provision for drought unless it is in its interest to do so; in other words, that it expects to make a profit out of it.
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One does not expect to make a profit out of providing for conditions that occur once every 100 years and I think that it would be an unreasonable burden to place on a privatised water industry unless the Government in identifying a social objective were also prepared to meet the cost of it. It is a subject on which government thinking is quite frequently inconsistent. I can remember the then Mr. Anthony Wedgwood Benn instructing electricity boards not to cut off pensioners who were in arrears with their bills. That was a very laudable social objective. However, the right honourable gentleman expected the electricity companies to pay for it. In fact, the right honourable gentleman conspicuously failed to put his money where his mouth was. That is an inconsistency which I think we should try to avoid.
If the Government intend to identify an objective of provision for drought, they should be prepared to pay for it. They may perhaps say that this is not their business and it is simply the responsibility of private companies. However, no doubt the noble Lord, Lord Callaghan of Cardiff, with whom the buck stopped in 1976, will confirm that when water is running out people expect the Government to do something about it, and if people expect action it might be wise of the Government to think about it sooner rather than later.
6.55 p.m.
Viscount Hanworth: My Lords, I think it must have been more than 20 years ago that when I was talking to the Leader of the then Opposition, he gave me this advice: "Never speak on a subject on which you are not fully informed". However, he added, "We politicians unfortunately often have to". I have tried to follow that advice. I am not personally informed about what is happening in the gas industry and how far privatisation, with limited statutory control, may be being abused. However, on the broad issues which also affect the privatisation of the electrical, generating and distribution industries, I have no hesitation in speaking in support of the noble Lord, Lord Ezra.
As I get older it frequently strikes me that we lurch from one extreme doctrine to another, apparently never taking into account the lessons that we ought to have learnt in the process. It now ought to be apparent that nationalised industries, where competition is impossible, often tend to be inefficient. It is partly due to the dead hand of the Treasury and parliamentary control. Strangely, however, it is even more difficult to ask questions in Parliament about nationalised industries than would otherwise be the case, which is hardly in keeping with the social idea of national ownership.
At this point let me make clear that I am not against either privatisation where appropriate or the retention of some nationalised industries. Surely in the latter case there are halfway positions where the Government could retain a measure of oversight without preventing the marketplace and commercial considerations from taking a competitive and cost-effective approach. Not so long ago it was fashionable to talk about the unacceptable face of capitalism. From some of the Government's remarks

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one would think that the marketplace solves every problem in the best possible way. The Victorians pursued that policy and accepted the appalliing exploitation of, for example, child labour. Potentially capitalism and the marketplace are short-sighted and often have other major defects.
What is absurd in the present Government's approach is that they seem to believe that privatisation without adequate competition is per se an improvement which will lead to greater efficiency and lower prices and that it is in the national interest. When there is no competition and there is a captive market, until Parliament intervenes a privatised industry can charge what it likes for the benefit of its shareholders. To prevent that happening the Government have tried to produce formulae governing charges made by the privatised industry. But such simple control cannot ensure that adequate sums are spent for new equipment and, most importantly, renewal of old water mains which are now leaking over 20 per cent. of their throughput, as well as for unsafe sewage mains.
The problems of necessary capital expenditure vary greatly from region to region and cannot be controlled easily if at all by government legislation. If wider powers are taken to deal with the situation, it means at best quite arbitrary judgments and at worst a bureaucratic stranglehold which is little different from the worst in communist states. I earnestly ask the Government to think again on their doctrinal policies. I also ask them whether they are prepared to accept foreign control of some of the water utilities. Such outside foreign control may be justified and even beneficial in fully competitive manufacturing industries where foreign capital and expertise may help the nation, but surely not in this instance.
The solution that the French have adopted may be a good compromise. In France the local authorities have a statutory obligation to supply water to the consumer but they subcontract much of the responsibility and work to contractors under competitive tender. I shall not again suggest the several reasons for the Government's policy on privatisation. Suffice it to say that they usually state the reason for privatisation as consumer interest. That, I am afraid, is only a pious hope in many cases and a small part of their real motivation. What about more open government?
7 p.m.
Lord Grimond: My Lords, I cannot speak with any expert knowledge of the water industry. However, we are all consumers of water. So it is on behalf of consumers that I should like to say a few words. We are indeed most grateful to the noble Lord, Lord Ezra, for having raised the matter. There is no doubt that water is a natural monopoly and an absolutley vital one. It has normally been held to be almost impossible to control such monopolies by competition. We shall be interested to hear whether the Government believe that it can be done in this case.
From the consumer's point of view I should have thought that there is much to complain about. My
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water rate has risen over the last 11 years from £12 to £138. That is a multiple of 11 or so, far beyond anything justified by inflation, and, I suspect, beyond anything that has been done in the way of improving the capital works. It is also at the cost of declining services. The water companies now carry out no repairs.
I do not believe that the consumer in general is well satisfied with the present position. If he is to be saved from being exploited by a monopoly, to my mind the natural course would be to bring the industry more directly under the control of a Minister in Parliament. In my experience the two factors that keep prices down and efficiency up are real competition and a Minister's fear of losing his job. That is a sanction in which the Minister is rather involved. But we are going in the opposite direction.
I share the doubts of the noble Lord, Lord Ezra, about the competition which has been suggested. I very much doubt whether comparison is either possible or likely to he very effective. I was, however, greatly interested in two suggestions that were made. The noble Lord, Lord Ezra, suggested that there might be competitions in cost by contracting out. I have no doubt that the Minister will tell us more about that. My difficulty is that I do not see what the sanction is. 1 understand that the company will he under a statutory obligation, but if the contracting out fails what sanction can be applied to the company?
One sanction mentioned by the noble Lord, Lord Ezra, and by the noble Viscount is the possibility of takeover. That is a very real possibility, including takeover by foreign companies, as the noble Viscount remarked. It would be interesting to know the Government's view. For my part I would be rather doubtful about our water industry being owned largely abroad. I am not at all clear that takeovers always benefit the consumer. They benefit the shareholders and sometimes the directors. However, I am interested in the consumer. I am not clear that the possibility of takeover alone will protect him from exploitation of this natural monopoly.
I come to the conclusion that however many regulatory bodies and consumer councils are set up we shall not see what the consumer wants—which is a better and cheaper supply of water. He can stay alive no doubt by buying bottled water. Hence, the boom in the purchase of Perrier and some Highland spring water. And like some of your Lordships, he can, alas, take to alcohol. However, for washing, for flushing the loo, and so forth there is no substitute so far for water.
This matter is of prime importance. As has been said, it is in quite a different category to other privatisations that we have seen. I hope that the Government will explain whether competition is possible, and, if so, how. If they cannot do so, then I question whether this is a suitable industry for the type of privatisation which so far has very much benefited the City—there is no doubt about that—and may temporarily have benefited the public service borrowing requirement. To my mind those are not sufficient reasons for privatisation.

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Privatisation can only ultimately be justified if it assists the ordinary consumer. Do not let me be told that the water authorities have done excellent things in opening up their reservoirs to speedboats. When I consider the couple of spinsters who live in the house next to me and I see at the bottom of their bill that they are charged extra for recreation, I wonder what recreation the authority has in mind. I doubt very much whether they are to be seen water-skiing; and even canoeing is a little beyond them.
There are many people in this country who are beginning to feel the pinch of the public services and who want cheaper and more straightforward public services. They are very doubtful that privatisation as experienced so far, in particular with British Telecom, has given them what they want.
7.7 p.m.
Lord McIntosh of Haringey: My Lords, it is customary from this Dispatch Box to thank the noble Lord who asked the Question and made possible the debate. In one respect I do so wholeheartedly. It is always good to have an opportunity to hear the thoughtful and lucid speeches of the noble Lord, Lord Ezra. In another respect, I am more doubtful. This is a subject which will become very much clearer for debate when the Bill is published in a relatively short time. I was always brought up not to shoot until one saw the whites of their eyes. I certainly do not propose to take this opportunity to expose all the arguments that we have prepared, ready loaded and cocked, against the final publication of the Bill.
However, I shall take advantage of the opportunity that has been given to us by the noble Lord, Lord Ezra, both in his expert demolition of the arguments put forward by the association of water authorities for the case that there can and will be a real measure of competition in the water industry when it is privatised, and, secondly, his own ideas about how to achieve competition. I found his remarks extremely interesting and worthy of very careful attention. I hope that the Minister will be able to give those views careful attention.
I have great confidence in the Minister's ability to respond on his own since I see that his officials arrived only half way through the debate. They cannot have heard what the noble Lord, Lord Ezra, said, and there is little that they can say to him which can be of any value to him.
The demolition job performed by the noble Lord, Lord Ezra, was extremely effective. The noble Lord looked at the various arguments which have been put forward. He analysed them in a way with which I largely agree. He considered the argument about comparative competition. It is certainly true that comparative competition in the circumstances of the privatised WS PLCs—the lovely set of initials that we have to apply to them—will be very largely controlled by regulations. It is nothing to do with price because price will be controlled by inevitably detailed formulae which the OFWAT—another very nasty set of initials—will have to lay down under any legislation that we are likely to see.
The problem of competition by comparison is that as we understand it the price formulae will be
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different for different water authorities. I believe that in the circumstances that is probably inevitable, but it makes realistic comparisons between one water authority and another extremely difficult.
Another difficulty is that it is only the managers rather than the shareholders, OFWAT or the general public, let alone the consumers, who have the realistic data on which to base these comparisons. If we move on from the comparative competition formulae and consider the argument that it is the capital markets which will provide a measure of competition, the argument falls down. The theory is that the managers will produce cost savings which in turn will satisfy the shareholders who will want capital appreciation as well as dividends.
The argument goes on that if a water authority has a poor performance the shares will be at a discount and there will be a danger of takeover so that the existing shareholders will lose out. The noble Lord, Lord Ezra, has much more experience with shareholders than I have, but my guess is that they would be more likely to hold on in hope of a higher offer rather than to dispose of their shares. That would be unlikely to result—even if takeovers were allowed with great freedom, which on the whole is politically unlikely—only in the kind of flexible capital market which can provide the measure of competition which noble Lords seem to want.
Neither the capital markets themselves nor indirectly the share prices will provide any useful measure of competition. The noble Lord correctly paid scant attention to the argument that any significant measure of competition was likely through supply to greenfield sites. He might have paid, equally correctly, scant attention to the argument that in areas of the water industry alternative supplies are possible, for example big customers who have the clout to negotiate industrial effluent contracts. After all, one can only have one contract of such a kind, and if discounts are to be achieved by trading around between different local water companies, that can only be to the disbenefit of the consumers who do not have that clout and cannot carry out those negotiations.
The noble Lord went on to the interesting argument that one could achieve competition by contracting out services. He gave examples of sewage treatment or water treatment as services which could be contracted out. He expressed the hope that there might be an obligation in the Bill for water companies to be obliged to contract out, let us say, 10 per cent. of their core business. That is an interesting idea, but there are a number of real difficulties.
The first major difficulty is that, like all other parts of the water business, it will be dominated by the price control formula. Any measure which may be adopted successfully for a particular contracted-out part of the business will be affected overwhelmingly by the interpretation of the price formula regulations which are set down by the Office of Water Supplies.
The other major difficulty that I see is that in any case it will be difficult to make comparisons between one water company and another because of the huge differences in external influences—what economists call externalities or exogenous variables. The

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differences are between one water company and another in terms of the quality of the water they have to treat before making it available to the consumers, and therefore the degree and expense of treatment which will be required—the differences between them in the physical condition of their capital assets. This is a capital intensive business, not a labour intensive business like most contracted-out businesses. There will be differences between them in the workforce which they have to control and in the environmental responsibilities which they will be obliged to adhere to.
All these differences are great even for relatively large water companies covering large areas. Imagine how much more different and how much more dominating they will be in smaller contracted-out services. These will be almost entirely dominated by external circumstances which will make comparisons between one contracted-out service and another or between one contractor and another virtually impossible. I am seriously doubtful about this aspect of the noble Lord's proposals.
Lord Ezra: My Lords, if I may briefly intervene, the point about contracting out was, as I suggested, that it could enable a particular company to make comparisons within its own company area of contracted-out services in some cases and its own provided services in other cases. It is not a question of trying to find comparisons between one company and another but of a company being able to test its own ability against an external contractor. That is what I had in mind.
Lord McIntosh of Haringey: My Lords, I am glad that the noble Lord has anticipated my next objection, which is that the testing of which he speaks can only be testing to destruction. This is not a matter like the contracting out of a school meals service or the contracting out even of refuse services in the London Borough of Wandsworth, where it is well known that it very often does not work and the services have to be taken back again. One cannot risk the water supply not working. One would have to rescue any contractor who took on the responsibility and failed to maintain the service. The service is so ancillary to the core of the business, which is the provision of water, that it is difficult to see how it could have the kind of impact that the noble Lord anticipates.
I am afraid that I am no more convinced by that argument than I was by the previous arguments, much as I should like to see competition in the water industry, privatised or not. That is not the concept I am against.
The fact is that a public limited company in a truly competitive industry can set its own prices. It can decide on its investment levels and vary them if necessary. It can decide on the quality of the product it wants to sell and vary that if necessary. It can refuse to supply if its wishes to any individual or group of customers. It can merge with other public limited companies or divest itself of part of its activities. It can dispose of its assets as it thinks fit. It can go
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bankrupt. None of these basic business options is available in any circumstances that I can see to a water supply company plc, or at least without the most drastic constraint from the Office of Water Supplies. When the differences between the companies operating in this naturally monopolistic market (as every single noble Lord who has spoken has emphasised) are so much greater than those which apply in truly competitive markets, I find it very difficult to see how we can have genuine competitive considerations.
I come to the conclusion to which I am forced and to which we shall return as we debate the Bill itself: that the motivation for the privatisation of water supply is political and not economic. There is no justification in economic terms for the privatisation programme which the Government have announced and are set upon. Since we believe it to be a political matter and—despite what my noble friend Lord Mason says—that those working in t ie industry are not only well informed but are deeply opposed to the proposals, we shall be opposing the Bill when it comes, whatever variation appears to be possible on the Government's plans as so far announced.
7.20 p.m.
The Earl of Arran: My Lords, I have listened with great attention and not inconsiderable interest to the debate that has taken place this evening. I know that the House will be grateful to the noble Lord, Lord Ezra, for providing an opportunity to examine carefully one of the central issues of the coming privatisation of the water industry. There have been expert contributions from all sides of the House. As a newcomer to the topic, I reply with some diffidence and a consciousness of the long experience in the water industry of some noble Lords who have spoken.
As I hope to assist my noble friend the Minster in future debates on the subject, one might call this a "baptism of fire", except that the element which we are discussing is more appropriate for a baptism. I look forward to my imminent and total immersion and I do not step back with any apprehension at the thought and prospect of the noble Lord, Lord McIntosh, seeing the whites of my eyes.
This has been something of a Second Reading debate without a Bill. I do not propose to give a detailed account of the legislation which is in preparation. As the noble Lord, Lord McIntosh, has said, there will be an opportunity for the House to discuss that soon enough. The Question tabled by the noble Lord, Lord Ezra, is a good one and well deserves a separate debate, although in the time available it will be something in the nature of a prelude.
The water industry is a classic natural monopoly and a monopoly in private hands gives rise to some very justifiable questions which merit the closest possible attention. We believe that in preparing the details of our legislation the challenge of this central fact of the industry—that there can be little choice at the tap—has been faced squarely and constructively. Although the product of the industry is in many ways a monopoly we do indeed intend to inject a full and

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stimulating measure of competition wherever the circumstances make that possible. Our emphasis must be to ensure that there are pressures on the industry to be efficient and dynamic. It will be my submission this evening that our privatisation proposals will put in place a sound and constructive framework which will enable the industry to deliver improved standards—I may say, exacting standards—effectively, efficiently and well. It will be very far from the complacent and exploiting monopoly which has been described this evening.
We have heard repeated again tonight the charge that there are no real arguments for privatisation, a charge levelled by the noble Lords, Lord Ezra and Lord Mason. I shall give you the central argument, and it is this. The privatised industry will be in a much better position than now to do its job effectively, and to see that the public gets the water quality standards, the standards of service and the environmental benefits which we all agree are vitally important. We believe that progress in improving these standards will be faster as a result of privatisation. This will be due in no small part to the end of one sort of competition from which the industry will at last be spared. I refer to the competition with other public services for public sector resources.
Improvements in drinking water quality, the drive to set and achieve higher standards for the quality of water in our rivers, the need to clean up bathing beaches all come down in the end to a large and sustained investment programme. I know that noble Lords opposite will argue that that is no reason for privatisation. They say that the money should be found, that the Treasury should be put in its place and that the industry need not leave the public sector in order to achieve a sustained and adequate investment programme.
Lord McIntosh of Haringey: My Lords, will the Minister permit me to intervene? I sympathise with a great deal of what he has said about the need for investment. Will he remind the House that at the moment over 90 per cent. of the investment in the water industry comes from revenue sources rather than from borrowing?
The Earl of Arran: My Lords, I shall come to deal with that point in a moment. Returning to the argument with which I was dealing, perhaps I may pick a hole in it by pointing out what has happened to the level of investment in the water industry over the past 15 years. Since 1979 my right honourable friend and his predecessors have fought the industry's corner pretty well. Investment by the 10 water authorities in England and Wales has already grown by 50 per cent. since 1980-81. Plans for a further 20 per cent. increase were announced by my right honourable friend the Chancellor in the Autumn Statement last week. Noble Lords opposite may wish to know how this compares with the preceding five years. I shall tell them. There was a 30 per cent. decline in capital spending in real terms from 1974 to 1979. So much for putting the Treasury in its place.
I say that not to make a party political point in any way, but to illustrate how rare it is for a public sector
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industry to be able to plan a long-term and stable level of investment so that it can get on with the job that needs to be done and spend what it needs to spend in the way that management considers best calculated to achieve its objectives. After privatisation it will be for management to manage the water industry. We shall see profitable private investment in objectives which we all agree to be crucially important. That is one of the most exciting prospects in the privatisation exercise, and I hope noble Lords will agree that it is good news.
The framework, then, is in some senses a simple one. The public sector will set standards. The privatised water and sewerage plcs with have the task of ensuring that the standards (which will be properly enforceable) are met. In what sense can a measure of competition be introduced into that task?
I believe that the Government have made their intentions consistently and plainly clear ever since we first introduced our proposals in the White Paper, Privatisation of the Water Authorities in England and Wales, in 1986. In the first section of that White Paper, under the heading, "Why Private Ownership?" we set down 11 reasons for believing that privatisation of the water authorities would benefit customers and their employees. Three of those reasons bear directly upon this debate. We said, first, that the financial markets would be able to compare the performance of individual water authorities against each other and against other sectors of the economy. This will provide the financial spur to improve performance. Secondly, we believe that private authorities will be better able to compete in the provision of various commercial services, notably in consultancy abroad. Thirdly, we suggest that privatised authorities will be better able to attract high quality managers from other parts of the private sector.
Before I expand upon these various facets of competition I should like also to bring to your Lordships' attention two other facets of competition: the first is alternative supplies and the second competition for appointments to supply and service green-field sites. There are thus significant ways in which competition will be fostered in the privatised water industry.
I should like to dwell for a short time upon each of these elements of competition. First, under the heading "Financial Markets", there will be 10 privatised water authorities which will be directly comparable with each other in the services they provide, and those 10 companies will additionally be comparable in the provisionof water supplies with 29 statutory water companies. The financial markets provide what is, in effect, a running commentary on performance on what has happened and what is expected to happen in the future. The share price will move in accordance with shareholders' expectations and, other things being equal, the companies which make more efficient use of their resources will be distinguished by their higher ratings and in a virtuous circle will have cheaper access to capital.
The better run companies will be able to expand more readily and the benefits of good management will become self-reinforcing. There will be

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competition for the ownership of companies. The pressures to displace weak management and the returns for shareholders in well-managed companies will be a constant spur to efficiency and improved performance. The noble Lord, Lord McIntosh, asked whether shareholders will sell if shares go down. Whether or not they sell them there will be pressure on the board and the noble Lord would be unwise to underestimate that pressure to do better.
Another facet of comparative competition will be the ability of the companies' customers, and perhaps most importantly the Director General of Water Services, to make direct comparisons between companies as to their standards of service, their efficiency and their potential, with the consequential effect in the system of regulation which will operate on the customer's behalf.
Secondly, as regards diversification, when we presented our White Paper in February 1986 we singled out competition in the provision of consultancy services abroad as a commercial service that would paticularly benefit. We should not forget that the water industry embraces many forms of expertise. The privatised authorities will be well placed to compete, for instance, in the provision of plumbing services; they could offer special treatment processes for water to be supplied or wastes to be treated; and they are expert in the field of chemical analysis and some forms of biological analysis to give just a few examples. And their expertise can be used as a springboard for new enterprise.
Several noble Lords, including the noble Lord, Lord Grimond, expressed concern about the intervention of foreign buyers. We have heard worries about the interest of French water companies in some of our statutory water companies. No doubt we shall be debating in future the pros and cons of special shares and the form of other controls on mergers and takeovers in the privatised industry. Noble Lords would not expect me to go into the policy options now. But it would be blind indeed to ignore the lesson for the future of English water companies in the size, strength and diversity of those successful French water companies.
They have an annual turnover in some cases of the order of £5 billion. Their interests are worldwide. They have diversified from their initial business interests into other municipal services, into housing, into communications, into cable television and into various forms of manufacture and construction. It does not need a wild imagination to see a similarly exciting long-term potential for the privatised English water industry in England and Wales. Let there be no mistake that the French companies are successful because they spring from a home base where the structure of the industry has encouraged enterprise, diversity and competition.
These are opportunities which have simply not been available to the nationalised water authorities or the statutory water companies. Equally, the water industry will be able to benefit from services offered by the competitive commercial world and will have to justify to its shareholders its decisions on whether to provide in-house services or to buy in services.
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At this point the noble Lord, Lord Ezra, and the noble Lord, Lord Grimond, commented on the cost of competition and contracting out. Water companies will be free to contract out services or to use their in-house services. They will have a strong incentive to choose the most efficient solution.
As regards competition for staff, these new commercial pressures will also bring a challenge into the management of the water industry and if it is to succeed it will have to pay a competitive price for managers who are able to cope in the commercial world.
It has often been said that the water industry is the natural monopoly par excellence. That is true in the sense that it will be wasteful and disruptive to lay down systems of pipework to give domestic consumers a choice at the tap. But the industry will find that not all its potential customers are bound to accept its services. Many industrial companies are able to turn to alternative supplies: triey provide a spur to the privatised water industry. That is my fourth reason for competition.
Fifthly, as regards competition for greenfield sites, Professor Littlechild's report in 1986, in an interesting chapter on the scope for competition, identified the opportunities for direct competition between water services plcs, for example on development sites along the borders of two companies where there is to be a new town, a shopping centre, an industrial estate or a factory development. In such areas it seems to the Government that it would be feasible for a new company to bid for the right to provide the services. We are therefore developing the concept of inset appointments for greenfield sites. We see this as a means of ensuring competition in development areas. We intend to encourage such competition in a way which recognises and does not discourage the need for sensible planning and anticipating investment by the established company in each area which will hold the main appointment.
The noble Lord, Lord Mason, expressed concern and made considerable mention of the National Rivers Authority. The Government's efforts to introduce competition will not be confined to the water utilities. In the Statement on the National Rivers Authority which we published in December 1987 we made it clear that the NRA would be expected to maximise the amount of work which it contracted out consistent with the effective discharge of its functions. It will not be just the utility companies that will be encouraged to tender: other firms in the private sector will also be invited to tender for NRA business. In no sense will the NRA be abrogating its responsibilities: it will have to ensure that the work is performed satisfactorily and in some cases, such as the routine analysis of samples, the NRA may need to exercise control on a day-to-day basis. This encouragement of the NRA to contract out what work it can follows the principle that public bodies should use competitive tendering to increase efficiency.
I should tell the noble Lord, Lord Mason, that the NRA will be given effective powers to do its job. It will be an important advance that environmental

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standards will be policed by an independent national body and not by the water authorities themselves.
A number of noble Lords have pressed the case for privatisation of the water authorities to be in the model of the statutory water companies, perhaps combined with efficiency audits, arguing that a public service should not be making profits to benefit shareholders but should plough money back into the business for the benefit of customers. But the Government believe that their mechanism for charges control through appointments monitored by the Director General of Water Services will provide the same protection for customers as they have now and the operation of the capital market will provide a permanent discipline for the privatised utilities which will be much more effective than any system of efficiency audits. I know that statutory water companies have sought efficiency, and I do not wish to disparage the achievements of the better companies.
Before my closing remarks, I am aware that there may be some points which I have not been able to pick up this evening. However, I should like to dwell on a few points made by noble Lords. My noble friend Lord Elliott of Morpeth was concerned that there may be too few water undertakers. If there appears to be a danger of over-concentration, it will be possible to make a reference to the Monopolies and Mergers Commission.
The noble Earl, Lord Russell, was concerned about spare capacity and the possibility of drought. We intend to carry forward existing provisions for drought and expect companies to plan ahead. It also makes sense to maintain arrangements to transfer bulk supplies between undertakers and for water
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resources to be carefully managed. I hope that when the Bill comes to your Lordships' House the noble Earl's fears will be allayed.
The noble Lord, Lord Grimond, mentioned that the consumer wants better and cheaper water. It has already been made clear in another place by my right honourable friend the Secretary of State for the Environment that better water and higher standards of water and sewerage services will cost money and charges must rise irrespective of inflation.
Another point made by the noble Lord, Lord Grimond, concerned bringing the industry under the direct control of a Minister. The advantages of giving the job to a strong and independent watchdog with teeth—the Director of Water Services—is that the industry will be free from variable political interference but will be supervised in a way which protects the interests of consumers.
As I said, I apologise if I have been unable to cover all the points raised this evening. However, I hope that I have gone some way towards persuading those of objective mind that there are real and lasting advantages to come from privatisation and that the planned machinery of regulation and standard setting is well designed to prevent any natural dangers in the privatisation of a natural monopoly. Those who remain to be persuaded can rest assured that these arguments can be revived both here and in another place when the major legislation which will give effect to our proposals is presented. The answer to the Question of the noble Lord, Lord Ezra, is a confident yes, and we look forward to further debate.
House adjourned at nineteen minutes before eight o'clock.