Lords Sitting of 7 February 1991

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

Student Loans: Take-Up Rate
Baroness Hollis of Heigham Baroness Hollis of Heigham asked Her Majesty's Government:
What is the take-up rate of student loans.
The Parliamentary Under-Secretary of State, Department of the Environment (Baroness Blatch): My Lords, by Monday 4th February 1991, more than 89,000 students had applied for a loan to the Student Loans Company Limited.
Baroness Hollis of Heigham: My Lords, does the Minister recall that in December 1989 the former Minister for Higher Education, Mr. Robert Jackson, told another place that student loans were necessary because the pre-grant system was so expensive? However, the latest government figures show that the full public cost including grants of each qualifying student is lower in Britain, and not higher as Mr. Jackson implied, than in Australia, Canada, Denmark, Germany, Italy, Japan, the Netherlands and the USA. Does the Minister agree that Mr. Jackson was mistaken and that student loans could and should be replaced by student grants?
Baroness Blatch: My Lords, the noble Baroness is entirely wrong. The figures that she has given include institutional funding as well as student maintenance. Regarding student maintenance, the United Kingdom is the most generous to its students and pays £735 per student. That figure is not exceeded by any other country in the world.
Lord Gainford: My Lords, can the Minister give any information concerning the repayment of the loans when the student has finished a course at college or university?
Baroness Blatch: My Lords, the repayment arrangements for young people mean that no student is required to repay the loan unless they are earning at or above 85 per cent. of the national average wage. That at present is about £11,530.
Lord Peston: My Lords, can the Minister confirm that the interest rate on the repayment of the first year's loan will be 9.8 per cent. per annum? Therefore, with inflation considerably below that, the Government will have failed to meet the key criterion of the loan scheme; namely, that students will repay at zero real interest rates. Will the Minister confirm that concerning the first year's loan they will be paying positive real interest rates of a considerable magnitude?
Baroness Blatch: My Lords, the noble Lord has raised this issue previously. What is happening is
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entirely consistent with the primary legislation. It is important that when students take up the loan they know the interest rate at which they will be repaying it. Therefore, a particular time of the year is chosen to fix the rate, and this year it happens to be the beginning of the year. It is hoped that with the fall in inflation, next time the rate is fixed it will be much lower.
Lord Peston: My Lords, the Minister knows that I do not believe that the Government's action is consistent with primary legislation. However, can she confirm that this year's students will be repaying at a positive real rate of interest?
Baroness Blatch: My Lords, if a loan were taken out in September, the rate of interest would have been fixed until the next time at 9.8 per cent. Only if the rate falls below that will there be a discrepancy in what is paid. The rate is fixed on an annual basis and therefore when it is fixed next time it may be lower.
Lord Tordoff: My Lords, is it not the case that students will not be in a positive position until inflation begins to rise? I understand that the Government do not intend that to happen.
Baroness Blatch: My Lords, the students will take out the loans on an annual basis. The gap about which we are talking exists between the date on which the loan is taken out and the date on which the inflation rate applies. There will be times when students will gain, and times when students will lose.
Lord Tordoff: My Lords, with respect, is it right that the only time when students gain will be when inflation is rising?
Baroness Ewart-Biggs: My Lords, is the Minister aware that at present many students who are in receipt of a full grant have parents who do not supplement their income and therefore they take on a variety of jobs in order to cover their expenses? Does the Minister agree that the country as a whole would be served better if students spent more time on their studies, but that student loans will not help that situation?
Baroness Blatch: My Lords, the student loans system will help many young people who do not receive any grant from the state but who are supported entirely by their parents. Sadly, some parents do not support their children as well as they ought. However, whether students work during the holidays is a matter for them: we live in a free country.
Baroness Blackstone: My Lords, given the fact that the take up of the student loans scheme has been disappointingly low in terms of the Government's expectation, have they given further consideration to extending the scheme to part-time students who do not qualify for maintenance grants but who face considerable costs in pursuing their studies?
Baronesss Blatch: My Lords, there are no plans to extend the scheme at present. The take up may be disappointingly low this year because the loan and the grant together constitute an increase of 25 per cent. in the grant that they received last year.
Lord Kennet: My Lords, do the Government know how long it takes between a student applying for a loan and receiving it? Is the Minister aware that in some universities students who applied in October have as yet received nothing?
Baroness Blatch: My Lords, we know that by and large the Student Loans Company Limited is responding to applications within the target of 21 days. The reason for not meeting the target may be because forms have been incorrectly completed or processed by the student, the university or both.
Lord Henderson of Brompton: My Lords, does the Minister have any information about the take-up rate of loans for disabled students? How are the special arrangements for student loans for the disabled working?
Baroness Blatch: My Lords, the noble Lord has raised an important issue, but it is too early to make such a judgment. When the provisions were put on the statute book, we promised to review the way in which the scheme was working. I am certain that that point will be taken into account.
Baroness Hollis of Heigham: My Lords, given that often our students are desperately poor, having lost grant, housing benefit and income support; given that the new loans system is expensive, unpopular, has a low take-up rate and is an administrative shambles; given that the loans, where they replace grants, narrow access to higher education (we have fewer students in higher education than almost any other country in Western Europe), does the Minister agree that it is time to scrap the loan system and invest properly in our higher education, in our students and in our future?
Baroness Blatch: My Lords, I profoundly disagree with the premise on which the noble Baroness has based her question. All her assumptions are wrong. By reducing the weight of paying each student £735, and by freeing that money, more funds will be made available to help the expansion of the higher education system.

Gulf War: Media Coverage
3.10 p.m.
Lord Morris of Castle Morris Lord Morris of Castle Morris asked Her Majesty's Government:
What is their policy on the media coverage of the conflict in the Gulf.
Lord Reay: My Lords, the Government's policy on media coverage of the conflict in the Gulf is to allow all reasonable freedom and access for reporting, subject only to constraints essential to protect the security and safety of the operations of coalition forces.
Lord Morris of Castle Morris: My Lords, I am obliged to the Minister for his reply. Since I tabled this Question, the wall-to-wall media coverage of the Gulf war has been mercifully mitigated. However, is he quite satisfied that no information is currently being
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broadcast which is of use or comfort to the enemy, especially when those broadcasts emanate from Baghdad?
Lord Reay: My Lords, we have in force a voluntary arrangement which, generally speaking, is working well. However, we watch matters such as the tone of the coverage and the potential of some material to provide information helpful to Iraq. Where appropriate, we approach the media organisations under the guidance which has been published.
Lord Mayhew: My Lords, is the noble Lord satisfied that so far there have been no breaches of security?
Lord Reay: My Lords, I can only repeat that, generally speaking, the arrangement is working well.
Lord Brougham and Vaux: My Lords, will my noble friend consider the headlines in the Today newspaper of the day before yesterday: "Tie an orange ribbon"? Is it in the best security interests of our troops in the Gulf that it is indicated that every so often the ribbon behind the tanks will be changed so that the allied planes can identify our tanks as distinct from enemy tanks?
Lord Reay: My Lords, I take note of my noble friend's remarks but I do not believe that that is a media question. That is a military matter.
Lord Molloy: My Lords, is not the noble Lord aware that several British commentators have persistently made the point that they can in no way make or give reports which would endanger allied soldiers or allied policy in the future? In addition, very senior British and American officers make statements to journalists. We must beware of the point already made by the Minister that over-keen journalists, particularly those in Baghdad, could let slip some information which could have very serious consequences. As the noble Lord, Lord Morris, said, we must be particularly on our guard against that aspect of the situation.
Lord Reay: My Lords, the noble Lord makes some very fair points. Most media organisations are sensitive to the requirements and are as anxious as we are not to endanger our forces or their operations.
Lord Elton: My Lords, are any steps taken to evaluate the propaganda material sent via our media from Baghdad and, where appropriate, to let that evaluation be known to the British public?
Lord Reay: My Lords, we consider that broadcasters have a special duty to ensure that audiences here are left in no doubt as to the circumstances of film transmitted from Baghdad or other parts of Iraq; in particular, the fact that access to any scene of damage can be stage managed by the Iraqi authorities.
Lord Williams of Elvel: My Lords, can the noble Lord say rather more about the voluntary arrangement which the Government have with the media organisations? For example, does that arrangement stretch across the whole coalition? Do broadcasts from Baghdad by the one cable television network still

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transmitting from there fall within the voluntary arrangements so that nothing is shown on British television which may be damaging to our own troops?
Lord Reay: My Lords, I am not able to answer that question. I shall look into the matter and write to the noble Lord.
Lord Nugent of Guildford: My Lords, can my noble friend explain why almost all national newspapers head their articles with a logo picture of Saddam Hussein which makes him look young, benign and attractive, which is somewhat different from reality? It is clearly a photograph which he designed himself.
Lord Reay: My Lords, my noble friend makes a very good point. I have no doubt that the media organisations will take note of that.
Lord Harris of Greenwich: My Lords, is the noble Lord aware that many of us welcome the unqualified tribute paid in another place by the Prime Minister to the quality of the BBC coverage in the Middle East? I repeat that we welcome very much his expressions of support.
Lord Reay: My Lords, I take note of what the noble Lord says.
Baroness Strange: My Lords, can the Minister draw the attention of the media to an old wartime expression: careless talk costs lives?
Lord Reay: My Lords, my noble friend makes another wise observation.
Lord Morris of Castle Morris: My Lords, can the noble Lord assure this House that Her Majesty's Government are having regular meetings with representatives from the television channels and newspapers in relation to media coverage of the Gulf war? Many of us take this issue extremely seriously when the lives of so many of our servicemen and women are at stake.
Lord Reay: My Lords, I assure the noble Lord and the House that the Government take this matter equally seriously. We are in regular contact with the media. There is considerable contact at both official and ministerial level.

The British Film Industry
3.15 p.m.
Lord Dormand of Easington Lord Dormand of Easington asked Her Majesty's Government:
What further proposals they have to assist the British film industry.
Viscount Astor: My Lords, the Government are pursuing the initiatives to help the film industry which we announced last June. Through a working party chaired by the DTI, we are looking at ways of increasing private sector investment in production. We are also considering proposals for a screen commission and an organisation to promote British films overseas. We have agreed to provide £5 million over three years to encourage co-production with European partners. We are working with the industry
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to secure the maximum advantage from European programmes, including the recently extended "Media" programme.
Lord Dormand of Easington: My Lords, given that this country has some of the best film makers in the world and that sadly many of them have now gone to the United States, will the Minister join with me, particularly in view of his Answer, in expressing deep disappointment at the lack of initiative by the private sector in investing in the film industry? In view of the disastrous decline in film production in this country, will he accept that two essential steps must be taken: first, to return to the industry some of the tax incentives which used to exist; and, secondly, to provide some government money at least to act as a catalyst to private investment? Is the Minister aware that many of our European partners provide a great deal of government money to their film industries?
Viscount Astor: My Lords, we provide money to the film industry. We provide an annual support of over £17 million, including £2 million to British Screen Finance Limited, £1.75 million to the National Film and Television School and £12.75 million to the British Film Institute. My honourable friend the Financial Secretary has met film industry representatives to hear their views. Their proposals are under consideration. Obviously, I cannot anticipate the Budget Statement of my right honourable friend the Chancellor of the Exchequer.
The Viscount of Falkland: My Lords, does the noble Viscount agree that the crux of the matter is that many countries in the world, including European countries, subsidise their cinema to some extent for a cultural reason; namely, they wish to have films in their own language? Our industry is dominated by the American industry. Whether or not noble Lords like it, and whether the American is readily understood, their films are generally welcomed here and we find it difficult to compete with an industry which has economies of scale like those to be found in Los Angeles. Therefore why do we want a film industry and, if there is a reason for having one, in what way do we consider it right to support it?
Viscount Astor: My Lords, I agree with the first part of the rather lengthy question of the noble Viscount. We support the film industry and we look forward to the results of the working party. We shall look at the report very carefully in order to see what steps need to be taken.
Lord Williams of Elvel: My Lords, does the noble Viscount agree that investment in films was £220 million in 1985, £197 million in 1987 and that it went down to £65 million last year? It is set to he even lower this year. Does he further agree that more cash is now spent on television commercials than on feature and TV films put together? Will he accept that only 27 films are being made in Britain in 1991 compared with 40 last year and 54 two years ago? Does that not indicate a crisis in the industry?
Viscount Astor: My Lords, when the working party reports to the DTI we hope that it will offer some

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helpful suggestions, which the Government will consider. It may be possible then to do something to help the industry.
Lord Mancroft: My Lords, is the Minister aware that the American film industry is the most successful film industry in the world and receives no subsidy from the United States Government? Does he not agree that it is about time the British film industry stopped bleating and learnt to stand on its own two feet like any other industry?
Viscount Astor: My Lords, my noble friend makes an important point. However, it is important to help the film industry in this country. We do so and shall continue to do so.
Lord Dormand of Easington: My Lords, the Minister mentioned funds being given to British Screen Finance Limited. He did not say that it was for a limited period. Will he tell the House for how much longer that funding will continue? I suspect that it will be for only two or three years. Further, will he say when the working party is likely to report? Last June a great deal of publicity was given to it, and the emphasis from the former Prime Minister was that it would report very quickly. It has not yet done so. Can the Minister give some indication when it will report?
Viscount Astor: My Lords, we hope to receive the working party report in March or April. In July 1989 the Government announced funding of British Screen Finance Limited of £2 million per year from 1991 to 1993. It would not be appropriate at this time to determine whether there should be further government funding beyond that period.
Viscount Falkland: My Lords, I do not want to press the noble Viscount. However, can he say why he believes that the Government should support the industry in the small measure that he has described?
Viscount Astor: My Lords, the Government believe that it is a good idea to support the film industry, as do many other noble Lords in this House.

Head Teachers: New Responsibilities
3.22 p.m.
Baroness Brigstocke Baroness Brigstocke asked Her Majesty's Government:
What plans they have to help head teachers who, under the new arrangements, have financial and managerial responsibilities, for which they have had no previous training.
Baroness Blatch: My Lords, since 1983 we have supported such training with specific grant as a national priority area. In the current financial year we are providing support for over £10 million of expenditure in this area. We have also established a school management task force to promote further improvements in standards of management training. The task force is currently helping establish regional groupings of local education authorities to review and develop their provision in this important area.
Baroness Brigstocke: My Lords, I thank my noble friend for that Answer. I have a specific concern regarding the head teachers in inner London boroughs. They need help in preparing for the LMS—the local management of schools—which for these head teachers will not take place until April of next year. The whole process will not be completed until 1996.
Noble Lords: Question!
Baroness Brigstocke: My Lords, I am asking a question. I shall get there. Is my noble friend aware that at least one London local authority has closed playing fields used by its secondary schools for decades because it can no longer afford the maintenance and the upkeep?
Baroness Blatch: My Lords, I understand the concern of the noble Baroness. The legacy of the Inner London Education Authority is that because it acted so much as a prop for these schools the management skills simply do not exist. My officials are in touch with all the inner London boroughs and education authorities and are working with them to ensure that they are ready and prepared for 1992, when the system will be introduced in London.
Baroness Seear: My Lords, can the noble Baroness tell the House—I do not suppose she can—how many schools have professionally trained finance officers or bursars even on a part-time basis? Does she agree that it is more sensible to provide professionally trained financial people for the amount of time required than to give training to head teachers? If they had wanted to be accountants they would never have become head teachers.
Baroness Blatch: My Lords, again the noble Baroness makes an important point. Training in management not only concerns understanding finance in schools. Head teachers need training in management. Another point is that an increasing number of schools are using their ancillary points to appoint a bursar. This year the Government have made available £3,000 for every secondary school and £1,000 for every primary school, in addition to their funds, which will help them in that context.
Lord Molloy: My Lords, is the noble Baroness aware that some of us have spent a decade or two in London government, with the responsibilities of London councillors (or, as I was, the leader of a council) and we recognise that the Inner London Education Authority, which included members of the Conservative, Liberal and Labour Parties, was doing a remarkably conscientious job in bringing everything together? It has been to the detriment of London that this Government have once again destroyed something that was valuable to the entire metropolis.
Baroness Blatch: My Lords, I do not know many people who regret the passing of the Inner London Education Authority. However, from my own observations across the country and as a spokesman in this House on education I know that the degree of independence of schools outside the London area is considerably greater than that of schools inside the London area.
Lord Elton: My Lords, is my noble friend aware that some of us who spent a decade or more in teaching recognise that one of the great anomalies of education in this country is that the better one teaches the less one does it? In other words, the better one teaches the more quickly one becomes a head teacher who then administers the school for 90 per cent. of the time. Is she also aware that we, who were recently in or of the profession, welcome the recruitment of bursars in the manner indicated so that the real talent of this country can be used where it is most effective?
Baroness Blatch: My Lords, I am grateful to my noble friend for that comment. Perhaps I could also say that the new education reforms and the new pay arrangements are designed so that teachers who are good teachers are kept in the classroom teaching.
Baroness Ewart-Biggs: My Lords, is the Minister aware that I am a governor of a primary school close to my home? The head teacher there is so overcome by his administrative duties that he fears he will not have time to teach. Does not the Minister agree that that is a worrying situation?
Baroness Blatch: My Lords, I understand that that is a genuine fear among teachers. I like to think that the way in which the system is working is that the teachers will become less afraid of that happening. With good organisation and better management skills it will be possible to both teach and manage schools properly. That distinguishes a teacher from a head teacher.
Lord Pearson of Rannoch: My Lords, does my noble friend agree that the Government's policy of local management of schools is starting to prove very successful in returning our state education system to the people whom it is supposed to serve in the shape of pupils and parents? That is why it is proving so unpopular with noble Lords opposite. Can the Minister assure us that the Government will do everything they can to reduce to a minimum the percentage of funding which local authorities are allowed to withhold from schools?
Baroness Blatch: My Lords, local financial management at school level is working. Schools prefer to be masters of their own establishments and have local control over their own finance. With regard to funds being held at the centre, that is very much a live issue. We are doing all we can to ensure that local education authorities do not hold excessive funds at the centre and that as much as possible of the funding is sent town to school level.
Baroness Blackstone: My Lords, is the Minister aware that the report of the school management task force was published as long ago as March 1990? Progress on the report and its recommendations, many of which were concerned with training, has been extremely slow. Can the noble Baroness be a little more precise in explaining what has been done to implement its recommendations?
Baroness Blatch: My Lords, in terms of training we are in the middle of a five-year programme for preparing both governors and heads for their
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responsibilities. A total of £247 million has been spent over three years and more is promised for 1993. We have made progress in support and training for school governors, management information systems for schools, training for school administration staff, support for local education authorities centrally to help introduce LMS, support for administrative costs in schools with delegated budgets and management training for head and other senior teachers. I could go on.
Lord Denham: My Lords, we have spoken on this Question for a long time. Perhaps my noble friend could ask one more question.
Lord Ironside: My Lords,—
Baroness Fisher of Rednal: My Lords, on a point of order—
Noble Lords, Order!
Lord Ironside: My Lords, teach-ins are being provided for governors of schools, particularly in the case of Kent Education Authority. Can the Minister say whether teach-ins are being provided for head teachers in schools to assist them in financial and management affairs of schools?
The Lord Privy Seal (Lord Waddington): My Lords, I am sure—
Baroness Blatch: My Lords, I can give my noble friend an absolute assurance that teach-ins are happening. The way in which that is done is a matter for the local education authorities.
Lord Waddington: My Lords, I was over-eager to say that I am sure that the House will wish to hear the noble Baroness.
Baroness Fisher of Rednal: My Lords, I wish to raise a point of order. I want to know why I was prevented from speaking the other day. The Chief Whip said "no, no," as did everyone else, but for a Member on the Government side the Chief Whip gave way. What we need is fair play even if we do not get fair answers.
Lord Denham: My Lords, the noble Baroness is accusing me of unfair play. Members on my own side very often accuse me of being extremely unfair to them in that I sit on them far harder than I do Members on the other side of the House.

Business
3.30 p.m.
Lord Denham: My Lords, at a convenient moment after 3.30 p.m. my noble friend the Leader of the House will, with the leave of the House, repeat a Statement that is to be made in another place on the terrorist incident in Whitehall.

Business of the House: Debate, 13th February
Lord Waddington: My Lords, I beg to move the Motion standing in my name on the Order Paper.
Moved, That the debate on the Motion in the name of the Lord Ennals set down for Wednesday 13th February shall be limited to 5 hours and that Standing Order 35 and paragraphs 10 to 13 of the Rules for the Conduct of Short Debates shall apply to the debate with the substitution of "5 hours" for "2½ hours" and "25 minutes" for "20 minutes".—(Lord Waddington.)
On Question, Motion agreed to.

Procedure of the House: Select Committee Report
3.32 p.m.
The Chairman of Committees (Lord Aberdare): My Lords, I beg to move that the first report from the Select Committee on Procedure of the House be agreed to. This meeting was mainly concerned with a review of the 1989–90 Session. As it is of considerable importance to us all, I arranged for it to be available in the Prince's Chamber as well as in the Printed Paper Office. I hope that your Lordships will read it because it covers a wide variety of matters that gave cause for difficulty in the last Session. I do not think that your Lordships would wish me to go through them in detail. They include criticism of officials; speeches on behalf of outside interests; attendance at debate; interventions in time-limited debates; Private Notice Questions; Questions for Written Answer; non-fatal amendments and Motions; Starred Questions and time-limited debates.
In particular I draw your Lordships' attention to two new recommendations. The first concerns Starred Questions where the present guidance in the Companion is that:
"Question Time should normally be concluded in 20 minutes, and should not exceed half an hour".
That has not proved satisfactory and the 20-minute target, as your Lordships well know, is very rarely met. I believe that today it was 30 minutes. The Committee considered that it would be better to have a 30-minute target and to adhere strictly to it even though this may entail more interventions in earlier Questions to ensure that later Questions do not suffer from shortage of time. We recommend that the new guidance should read:
"It is undesirable that Question Time should exceed half an hour".
The Committee emphasises that it is the responsibility of the House as a whole to enforce this limit.
Secondly, we discussed a paper by the noble Lord, Lord Jenkins of Hillhead, on the subject of Time-Limited Debates. The Committee wishes to emphasise that the subject matter of these debates should be limited in scope if reasonable time is to be allowed to each speaker. We recommend as an experiment greater flexibility in the timing of those Short Debates which are arranged by a Business
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Motion, which is not those chosen by ballot. At present such debates are limited to either one five-hour debate or two, two-and-a-half hour debates. The Committee suggest two other alternatives—that is to say, either one four-hour debate or one three-hour debate and one two-hour debate. I beg to move.
Moved, That the first report from the Select Committee be agreed to.—(The Chairman of Committees.)
Following is the report:
ORDERED TO REPORT:—
REVIEW OF SESSION 1989–90
1. The First Report of the Procedure Committee (Session 1987–88) endorsed a recommendation of the Group of the Working of the House that the Committee should conduct an annual review of procedure, to determine whether any difficulties occurred which warrant report to the House. The Committee has now completed its review for session 1989–90. It has concluded that the attention of the House should be drawn to the matters discussed below.
Criticism of Officials
2. Some confusion arose last session concerning the convention that officials should not be criticised in the House. Criticism of the Government should be directed at Ministers, who take full responsibility in Parliament for the actions of their departments. Criticism of officials, who cannot defend themselves, is undesirable.
Speeches on Behalf of Outside Interests
3. The Companion (page 44) makes it clear that Lords speak only on behalf of themselves:
"When speaking in the House, Lords may indicate that an outside body agrees with the substance of the views that they are expressing; but they speak for themselves and not on behalf of outside interests."
Lords should therefore take care to avoid the impression that they are representing outside interests in the Chamber.
Attendance at Debate
4. The Companion (page 38) is also clear on the subject of attendance at debate:
"A Lord who is taking part in a debate is expected to attend the greater part of the debate. It is considered discourteous for him not to be present for the opening speeches, for at least the speech before and that following his own, and for the winding-up speeches. A Lord who leaves early cannot expect to be answered by the Minister."
Lords who fail to respect this guidance are committing a grave discourtesy to the House.
Interventions in Time-Limited Debates
5. The Committee's First Report (Session 1989–90) concluded that a Lord might be justified in refusing to give way to an intervention during a time-limited debate. But a Lord who has just spoken has little or no control over interventions "before the noble Lord sits down". It is therefore particularly important for Lords to use their discretion when seeking to intervene "before the noble Lord sits down" in time-limited proceedings. Lords attempting to intervene in such circumstances may find that the sense of the House is against them if time is short.
Private Notice Questions
6. Some confusion was apparent last session concerning the correct procedure for Private Notice Questions. The reason for this confusion may be that Private Notice Questions asked in the House of Commons are often repeated in the House of Lords as Ministerial Statements. On those occasions, the procedure for Statements is followed.
7. A Private Notice Question originating in the House of Lords and allowed by the Leader of the House should be treated as an additional Starred Question, with the same procedure applying. Hence Ministers should answer Questions from the opposition front benches in turn, not after

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both opposition front benches have spoken. The Committee recommends that the following should be added to the Companion guidance:
"Proceedings on Private Notice Questions should follow the rules for Starred Questions. In particular, supplementary questions should be short and confined to not more than two points. Comment should be avoided."
Questions for Written Answer
8. The Committee recommends that a new practice should be followed concerning the printing of answers to Questions for Written Answer. Since the beginning of the session, Written Answers have appeared in the Official Report at the end of each daily part, rather than at the end of each day's proceedings. This has the advantage that, when the report of proceedings has to spill over into a second daily part, answers can be published more quickly, and found more easily.
Non-Fatal Amendments and Motions
9. Some confusion arose last session when Lords moved amendments or motions expressing criticism of Government legislation, notably subordinate legislation, without challenging it directly. There are two different ways in which Lords can table amendments or motions with this effect.
10. First, an amendment or a separate motion may be moved regretting some element of a bill or a statutory instrument but in no way requiring the Government to take action. This gives an opportunity for critical views to appear on the Order Paper, and be divided upon, which would otherwise simply be voiced in the debate. Even if carried, the motion or amendment has no practical effect. Such motions are used as an invitation to the House to put on record a particular point of view at the same time as the legislation is agreed.
11. Second, a motion or amendment may be moved calling upon the Government to take some specific action. In particular, such motions have been used to invite the Government to amend subordinate legislation, thereby obviating the need to divide on such legislation itself. If carried, the effect of such a motion is to invite amendment of the subordinate legislation in question.
12. In all cases where there is a likelihood of a division on a motion or amendment concerning subordinate legislation, the House should be given adequate notice.
Starred Questions
13. The Committee also considered the length of Question Time. The Companion currently states that "Question Time should normally be concluded in 20 minutes, and should not exceed half an hour". This guidance was consistently breached during the past session, and its ambiguity makes it difficult for the Leader of the House and other Lords to judge an appropriate moment to intervene. The Committee therefore recommends that the Companion guidance (page 81) should be revised as follows:
"It is undesirable that Question Time should exceed half an hour."
It should be noted that the strict application of this guidance may entail more interventions early in Question Time, to prevent all the pressure to conclude within the half hour falling on the third and fourth questions‥
14. The Committee is aware of the danger that this limit, too, may be breached. It stresses that responsibility for drawing attention to any transgressions should not fall exclusively on the Leader of the House. It is the responsibility of the House as a whole to secure observance of the limit.
Time-Limited Debates
15. The Committee noted that on some occasions, Lords wishing to speak in the Short Debates chosen by ballot find that they can each speak for only a few minutes. It therefore wishes to draw attention to the convention that the subject matter for Short Debates should be limited in scope.
16. The Committee's Second Report (Session 1983–84) recommended that the House should be able to time limit debates by the application of a business motion. The balloted Short Debates are automatically time-limited and need no
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business motion. At present, business motions are applied ad hoc to limit debates chosen by the parties or the cross benches to 5 hours, or to limit two such debates to 2½ hours each.
17. The Committee considers that there may be occasions when greater flexibility would be appropriate. It therefore recommends that, on an experimental basis, the options should be extended to allow for one 4 hour debate, or one 2 hour and one 3 hour debate. There remains a responsibility on the business managers to ensure that the motions applying the limits are put down in good time, so that Lords wishing to take part are aware of the length of the debate.
Lord Shackleton; My Lords, I am a Member of the Committee. I am concerned about Private Notice Questions. I blame myself for not raising this issue. If the noble Lord answering the Question is the responsible Minister—and there is recognition for this in the Companion—then to treat it as if it were a Starred Question would be mistaken. There was an occasion when I answered for the principal Minister on a matter concerning Aden. The Secretary of State allowed me to do so. That may happen in the House. To limit the House to two supplementary questions would be wrong.
I am not opposing the provision now. I ask the noble Lord the Leader of the House to bear in mind the circumstances before he seeks to apply this restrictive rule, which is applied in theory to Starred Questions but not in practice. I am strongly in favour of the Government showing firmness on this matter to both sides of the House. This is a real problem. Perhaps the Chairman can look at the matter again. We could even talk about it at another meeting of the Procedure Committee. In the meantime I ask the noble Lord the Leader of the House to be tolerant on such an occasion.
The Chairman of Committees: My Lords, I shall certainly take into account what has been said by the noble Lord, Lord Shackleton. I am very grateful to him.
Lord Boyd-Carpenter: My Lords, at the moment I am not a Member of the Committee, as I have rotated-off in the ordinary way. I understand that during recent discussions the question was raised of amendments at Third Reading. A little bird tells me that the Committee was of the view that the present rules were all right, provided that they were strictly enforced. I ask the noble Lord the Chairman of Committees whether that is so and, if it is, why was it not included in the report? Overt reference in the report would presumably make it easier for those who have strictly to enforce the rule.
Lord Bruce of Donington: My Lords, paragraph 2 of the report from the Select Committee draws the attention of the House to the convention that officials should not be criticised in the House. I believe that most of us would support a continuance of that convention. Will the noble Lord the Leader of the House confirm that the protection offered by the observance of this convention does not extend to members of the European Commission? They go well outside the terms of their appointment and functions as set out in Sections 155 to 163 of the Treaty of Rome. They enter into party politics and criticise individual Ministers within member states and also individual governments. Will the noble Lord confirm

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that any Member of this House or of another place who ventures to reply to these entirely unauthorised strictures in kind will not be regarded as having broken the convention as endorsed in paragraph 2?
Lord Prys-Davies: My Lords, I also wish to ask a question about paragraph 2 of the report. I understand the basis for the convention in that it is there to protect the confidentiality of the relationship between Ministers and officials. I have always understood that where the subject matter of the complaint is purely administrative and not a matter of policy, a Member can complain of the conduct of an official, provided that he does not name the particular official. Can the noble Lord the Chairman of Committees confirm that that is a point at which the Committee can have another look or that we can have guidance as to whether officials are to be protected from criticism in the context to which I have referred?
The Chairman of Committees; My Lords, with the leave of the House, perhaps I may say to the noble Lord, Lord Boyd-Carpenter, that there was some consideration of the question of Third Reading amendments. It was felt that the present guidance is as far as we can go and is much easier to enforce than going any wider. At the moment it is only when a decision has been taken that an amendment cannot be put down at Third Reading. This can be easily interpreted by the Clerks or by the House. It is open for further discussion at Third Reading if it has only been discussed at previous stages. We are of the opinion that the present guidance should remain unaltered.
Lord Boyd-Carpenter: My Lords, will my noble friend deal with the point that I raised? Why was this not in the report so as to aid those who would have strictly to enforce it?
Lord Tordoff: My Lords, if the noble Lord will forgive me, surely it is not the intention of a report of this kind to reinforce everything that has gone before with which we agree. We do not have to report on everything that does not need changing.
The Chairman of Committees: My Lords, I agree with the noble Lord, Lord Tordoff. We came to no decision other than that the present arrangements should stand. That is why it is not brought out in the report.
I confirm to the noble Lord, Lord Bruce of Donington, that the same convention does not apply to officials of the European Commission. They are not responsible to Ministers here. It is where a Minister here is responsible for a department that it would be wrong to criticise the civil servants.
Perhaps I may say in answer to the noble Lord, Lord Prys-Davies, that the convention has always been that Ministers are responsible for their departments—both for the policy of their departments and the administration of their departments. It would apply equally to administrative matters as well as policy matters.
On Question, Motion agreed to.

Terrorist Incident, Whitehall
3.41 p.m.
Lord Waddington: My Lords, with the leave of the House I shall now repeat a Statement on the terrorist incident in Whitehall which is now being made in another place by my right honourable Friend the Home Secretary.
"Shortly after 10 a.m. a white transit van was driven up and parked on the corner of Whitehall and Horse Guards Avenue. At about eight minutes past ten three mortars were fired from the vehicle, either by remote control or with a timing device, in the direction of Downing Street. One of the mortars landed in the back garden of No. 10 Downing Street and exploded. The other two landed on Mountbatten Green behind the Foreign and Commonwealth Office. One exploded but the other failed to do so, disgorging its contents on the Green. One official and one police officer were injured: we believe their injuries were not serious and a number of other people may have had very minor injuries. It is indeed fortunate that there were no worse injuries. Several windows at the back of No. 10 were shattered but no structural damage is apparent.
"The police and emergency services arrived rapidly on the scene. The whole area was cordoned off and explosives officers searched the scene for further devices. The whole House will wish to thank the police and emergency services for their immediate response and for the skill and courage which they showed.
"Mortar attacks are, sadly, not unknown in Northern Ireland, but this is the first time that terrorists have attempted such an attack on the mainland of Britain. The terrorists constantly change their methods of attack in an attempt to catch us off our guard. We must all be on guard at all times against attacks from a variety of sources.
"The Government have a range of contingency plans against the terrorist threat and countermeasures are kept under constant review. We are assessing urgently the significance of this morning's attack and its implications for security. We will be looking again at the physical security of the whole Westminster and Whitehall area. It must be made as safe as humanly possible for all those who live or work in the area as well as the millions who visit or travel through it.
"We must, of course, take all reasonable security measures. That means continuing police efforts; and public vigilance in support of them. But there is a limit to the kind of defensive measures that can be taken. In a democracy people wish to be free to go about their business. To disrupt their lives any more than we need to would be a concession to terrorism.
"This attack bears all the hallmarks of the violence perpetrated by the Provisional IRA, who have killed so many people and caused so much injury and suffering in Northern Ireland, on the

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continent of Europe and on the mainland of Great Britain. We must be thankful that in this instance the terrorists were unsuccessful.
"The whole House, the whole country, will condemn utterly this deliberate and ruthless attempt to injure or kill members of the Government, officials, and indeed anyone who might have been in the vicinity of such a reckless and cowardly attack. The House will need no reminding that many visitors, families and children visit Downing Street, and it is only by chance that no group was there today. The House will want to be reassured that the Cabinet met to conduct business as usual. The machinery of government and our democratic process were not, and will not, be disrupted by such terrorist attacks. Today terrorists have attempted to strike at the heart of our Government. They failed".
My Lords, that concludes the Statement.
3.46 p.m.
Lord Cledwyn of Penrhos: My Lords, we are grateful to the noble Lord the Leader of the House for repeating the Statement. We also condemn and deeply deplore this act of terrorism and hope that the perpetrators will be brought to justice very soon. We recognise that we live in a dangerous time and that we are dealing with people who have no respect for human life, no respect for democracy and no respect for the rule of law. By their attack on the Government of this country they have shown that they have no respect for the workings of democracy. We sympathise with those who have been injured but we must be thankful that there is no serious casualty on this occasion.
We are glad to understand that all steps are being taken to increase security in the area and that contingency plans are under constant review. We note particularly what the noble Lord said about the physical security of Whitehall and of this building. Does the noble Lord think that security in this House is as tight as that in another place? We agree with the observation that all of us in a democracy wish to be as free as possible to go about our daily business, including the affairs of this Parliament.
Finally, we are all grateful to the police and emergency services for their prompt and efficient reaction to this murderous act.
Lord Harris of Greenwich: My Lords, we too thank the noble Lord the Leader of the House for repeating the Statement. I join the noble Lord, Lord Cledwyn, in expressing our admiration for the prompt response of the police and emergency services to this incident and also in expressing our gratification that this contemptible attempt to murder Ministers and officials failed.
Does the noble Lord agree that if the weather today had been different it is highly likely that many innocent members of the public would have lost their lives? I have one further question, which was touched on by the noble Lord, Lord Cledwyn, and which relates to physical security in the Westminster and Whitehall area. Is the noble Lord aware that cars are
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still unfortunately allowed to park outside a number of government departments which could be terrorist targets? I am not pressing him on this question but I hope very much that this matter will be looked into urgently.
Finally, is the noble Lord aware that there is not the remotest prospect that terrorist outrages of this character will in any way deflect us from our policy towards Northern Ireland?
Lord Waddington: My Lords, I am sure the whole House is grateful for the remarks made by the noble Lords, Lord Cledwyn and Lord Harris of Greenwich. It is important that people should get the message that those who perpetrated this attack certainly have no respect for democracy. All steps are being taken to reinforce the security measures which are already in place. It is right that I should make it plain that security in the Whitehall area was already at a high level, but the acting Commissioner is considering urgently what further steps may need to be taken.
The noble Lord, Lord Cledwyn, will know that a number of measures have been taken by the authorities both in another place and here. However, it is right that we should examine whether it is necessary for us to take any further measures. I have no reason to believe that the measures which have already been taken are not adequate to meet the threat; but it is right that we should look again at all of them.
If I may say so, with respect, the remarks made by the noble Lord, Lord Harris of Greenwich, are entirely apposite. Had the weather been different, there may well have been a number of parties in Whitehall at the time, and—who knows?—if the aim had been just slightly different, many people may have been killed; that is, innocent people, children, and people visiting Whitehall at the time. I am sure that the acting Commissioner will heed what the noble Lord said about the parking of cars in the area.
3.52 p.m.
Lord Stoddart of Swindon: My Lords, I thank the noble Lord the Leader of the House for repeating the Statement. Perhaps I may make two points. First, every Thursday morning the people of this country, and the world, are informed that the Cabinet will be sitting at 11 o'clock. Moreover, in these days, we are told that the War Cabinet will be sitting at 11 o'clock; sometimes we are even told what subjects they will be discussing. That information gives the terrorists the time as well as the place to attack. Therefore, would it not be as well, in the proposed security review which will undoubtedly take place, for the Government to consider varying the times of the Cabinet meetings? Let us make no mistake about it, the whole of the Government are present at one place at one time, and everyone, including terrorists, knows that they will be there at that particular time. I hope that the Government will take that factor into account.
Secondly, I should like now to follow on from a point made by the noble Lord, Lord Harris of Greenwich, about parking vehicles in Whitehall. Vehicles are still parked outside the House of Lords

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car park on a daily basis. That represents a security threat not only to the House but also to the whole area. I sincerely hope that the noble Lord the Leader of the House will take that fact on board. Parking in the area should be avoided.
Lord Waddington: My Lords, I cannot say any more about the parking of cars than I have already said. One must bear in mind the point made earlier by the noble Lord about the timing of Cabinet meetings. However, one has to keep a sense of proportion in the matter. It would be a bad thing if the terrorists were to gain the impression that, as a result of their activities, they were succeeding to the extent of interrupting the business of government. That message must not go out from this place.
Lord Colnbrook: My Lords, I should like to join other noble Lords and express my total condemnation of this ruthless attempt on the lives of Her Majesty's Government. As has already been said, it is clear that the perpetrators have no respect for any kind of human life; indeed, they may easily have killed hundreds of people who had nothing to do with them. Should it not therefore be made clear to anyone who is minded to support this organisation, whatever it may turn out to be, that total ruthlessness is the only weapon that such an organisation has. People should be made to realise that if the terrorist organisation concerned was to succeed in its aims, then that would be the way that it would run its affairs. How anyone could support an organisation which pursues such methods to achieve its aims, and would continue to do so if it achieved them, passes my belief.
Lord Waddington: My Lords, my noble friend has spoken from his own personal experience of the IRA threat and with his background of having fought it so bravely over the years. I am sure that the House is grateful for his remarks.
Lord Blease: My Lords, I too join those who have praised the efforts being made by the police and other custodians, sometimes at the risk of their own personal safety. The noble Lord the Leader of the House made reference in the Statement to public vigilance. We should concentrate very much on associating ourselves with all the efforts which are being made by the police and others in this respect.
Sometimes public vigilance is much more lax than we would wish it to be. In particular, when the police and others are attempting to carry out what are considered to be necessary safeguards, they should be treated with courtesy by the public. Such measures are often seen by the public as interfering with their liberty. However, such safeguards are always carried out in the interests of their personal safety. As I said, I believe that the police and other custodians who are carrying out such duties should always be treated with courtesy.
Lord Waddington: My Lords, I am sure that every sensible person in this country realises the enormous debt that we owe to the police for the work that they carry out in countering terrorism. The noble Lord is so
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right to draw attention to the need for public vigilance. The fight against terrorism cannot take place just as a result of putting more police officers on the streets; indeed, it must be a matter of good intelligence and real co-operation by the public with the police.
Lord Montagu of Beaulieu: My Lords, does my noble friend agree how right the former Prime Minister was to allow the gates to be erected at the entrance to Downing Street on security advice, and how wrong were those who criticised such action?
Lord Waddington: My Lords, I entirely agree with my noble friend. A direct attack on Downing Street has taken place. It would have been absurd if the previous Prime Minister had not heeded the security advice she received that there might be such an attack.

Statutory Sick Pay Bill
3.56 p.m.
COMMONS REASON FOR DISAGREEING TO A LORDS AMENDMENT AND COMMONS AMENDMENTS TO ONE OTHER OF THE LORDS AMENDMENTS
[References are to the Bill as first printed by the Lords (H.L. Bill 11): the Commons reason and amendments are printed in italics]
The Parliamentary Under-Secretary of State, Department of Social Security (Lord Henley): 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 Henley.)
On Question, Motion agreed to.

LORDS AMENDMENT
1 Clause 1, page 1, line 14, leave out "80" and insert "91"
1A The Commons disagreed to the above amendment for the following reason—
Because the said amendment affects charges on public funds, and the Commons do not offer any further Reason trusting that this Reason may be deemed sufficient.
Lord Henley: 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 1A.
The intention behind this amendment agreed to in Committee by your Lordships was to substitute 91 per cent. instead of the Government's proposed 80 per cent. as the SSP reimbursement rate for employers from April 1991. As such, it would have had a public expenditure cost of £100 million. The Commons have now considered this amendment and have disagreed with it. The reason for their disagreement is a privilege reason.
It would not be right for me to seek at this time to repeat the Government arguments against this amendment, which I put forward during Committee and which my right honourable friend the Secretary of State has given in another place. It is of course entirely a matter for the authorities in that place, and not a

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matter for the Government, as to whether an amendment made in this House involves financial privilege.
The Government have given careful consideration to all the amendments made in this House, and noble Lords will appreciate that the amendment passed deleting the power to make further changes to the reimbursement rate by order has been accepted. Should any such change be contemplated in the future, it would be necessary to do this by primary legislation.
Although I would not wish to prevent noble Lords from putting their views on the merits of Amendment No. 1 it is inescapable that in the final analysis the matter must be decided on the single point of the financial privileges asserted by another place. I do not think I can usefully make any further comment.
Moved, That the House do not insist on their Amendment No. 1 to which the Commons have disagreed for the reason numbered 1A.—(Lord Henley.)
Lord Carter: My Lords, the reason given for the Commons rejection of the amendment which this Chamber accepted may be deemed sufficient on the grounds of constitutional convention. We fully understand that fact. However, it will certainly not be sufficient reason for those employers who will face substantial extra costs while they are struggling to cope with the worst recession in the economy since that induced by this Government in 1981.
We explored all the arguments in depth when your Lordships accepted substantial amendments to the Bill, and I do not intend to repeat them today. Many noble Lords will have seen the joint letter sent to the Secretary of State on 1st February. Perhaps noble Lords on the Benches opposite may care to reflect upon the wisdom of a Bill which unites the Association of British Chambers of Commerce, the Association of Independent Business, the Confederation of British Industry, the Forum of Private Business, the National Federation of Self-Employed and Small Businesses, the Institute of Directors, the National Chambers of Trade, the National Farmers Union, the Union of Independent Companies and also the Labour Party, the Disability Alliance and the Institute of Personnel Management.
The Government have continually claimed—and their words are always chosen with care—that occupational sick pay schemes are used, in the words of the Secretary of State,
"by employers responsible for more than 90 per cent. of the work force".—[Official Report, Commons, 5/2/91; col. 179.]
The implication is that 90 per cent. of the employees are covered. In fact only about 50 per cent. of the workforce is eligible for occupational sick pay schemes, in other words, half the workforce has statutory sick pay only on which to rely in times of sickness. Incidentally, The Times editorial on Tuesday, which your Lordships may have seen, managed to get that point completely wrong. We wish that those who write The Times editorials would have
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a word with their parliamentary correspondents to explain these complicated matters to them in a way that they can understand.
Your Lordships will also remember that no fewer than 5 million employees have had their entitlement to statutory sick pay reduced by the Government amending the various rates and thresholds in the past two years.
For the last time, perhaps I may deal with the argument that the Bill is necessary to help pay for improvements in other social security benefits. That argument was comprehensively destroyed by the Secretary of State in another place on 5th February, at cols. 176 and 177 of Hansard, although I do not think that that was his intention. Mr. Newton identified three related elements: the reduction of the rebate to 80 per cent.; ending the reimbursement of national insurance contributions on statutory sick pay; and (it was the Secretary of State who linked them together) the reduction in employers' national insurance contributions. As we are well aware, those three elements broadly cancel out in cash terms. To be fair to Mr. Newton—because he is a very fair man—he went on to include in the package the failure to uprate the higher rates of statutory sick pay and the raising of the limit at the lower rate of pay, and that is worth £100 million to the Government. That is where the money for improvements in child benefit and the rest come from.
As a final word, of course we welcome the acceptance by the Government of the so-called Henry VIII amendment, which means, as the Minister says, that the Government will have to come back with a Bill if they wish to change the rebate percentage. I have a funny feeling—I do not know why—that it may be some time before the Government again present a Bill to amend statutory sick pay.
The Bill has been a textbook exercise in how not to introduce and handle legislation. We can only hope that the Government have learnt something from it.
Lord Boyd-Carpenter: My Lords, I am afraid that I must echo some of the words of the noble Lord opposite when he says that this is a textbook example of how not to handle legislation. I am bound to say that I also agree with a great deal of what he said about the demerits of this measure.
Having said that, I do not believe that your Lordships' House would be wise to press the matter further now that another place has invoked parliamentary privilege. On that point I must agree with my noble friend Lord Henley. I have a word of warning to utter about this matter. Until about a year ago this would not have been a case in which financial privilege could have been invoked, because financial privilege, as I understand it, arises only where one is concerned with a charge on the Consolidated Fund. Until the Social Security Bill of a year ago the charge would not have fallen on the Consolidated Fund at all but on what I used to call the National Insurance Fund, which is now called the Social Fund where, as I understand it, financial privilege does not arise.
On 22nd January last year, when the Social Security Bill was going through another place, my right

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honourable friend, the present Secretary of State for Social Security, spoke about the change he was effecting. It was a change that provided that in these cases the Consolidated Fund should refund the money lost by the Social Fund as a result of the repayments. I should like to remind your Lordships of what was said in another place on 22nd January 1990:
"I should make it quite clear to the House that this change does not in any way alter the present or future benefit entitlement of any individual. It will not affect the way these benefits are, administered by the Department. It will not affect the current arrangements whereby employers recoup the cost of statutory sick pay and statutory maternity pay from their national insurance contribution payments. We will simply ensure that the national insurance fund will be reimbursed from general taxation".—[Official Report, Commons, 22/1/90; col. 640.]
Assurances were given to outside interests that the change was merely a bookkeeping change. However, if noble Lords look at the matter they will see that it is that change which enables financial privilege to be invoked in respect of your Lordships' amendment. In effect it has only been so for just over a year.
I think that your Lordships will want to be a little vigilant in future to see whether further extensions of the financial privilege of another place—and therefore further limitations of the powers of this House—are introduced. Whether it is deliberate or per incuriam I would not know, but in either case your Lordships might wish to be extremely vigilant in this matter
One other point to which my noble friend and the noble Lord opposite referred was the famous Henry VIII clause. It is a matter of great pleasure to all that Her Majesty's Government have had the good sense to drop it. I hope and believe that the good advice of my noble friend Lord Henley may well have contributed to that happy end.
Lord Mottistone: My Lords, sadly my amendment has been rejected on grounds of financial privilege, a point to which both the noble Lord, Lord Carter, and my noble friend Lord Boyd-Carpenter referred. I think that that is a rather cowardly way of tackling this situation. Your Lordships backed me splendidly when this matter came through, but sadly we cannot repeat the exercise because of the conventions which apply.
I should like to take up the point that my noble friend Lord Boyd-Carpenter has just been making. Vulnerable to the same process are statutory maternity pay and industrial injuries compensation measures, which were both moved at the same time. I wrote to my noble friend about that matter after the last stage of the Bill. I should be most grateful if he would give us some assurance, when he comments on what we had to say, that the Government have no intention of playing the same sort of trick on industry with those two schemes. It is very important that the Government should learn that one cannot create a situation whereby one asks another body, whether it be industry, as in this case, or other organisations, to help do the job that the Government have to perform and then expect that body not to mind if its financial and administrative contributions are being taken advantage of.
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I should be grateful if my noble friend would give us some indication as to whether the Government have learnt that they have used the wrong machinery for introducing the changes which now sadly we have to accept.
Baroness Seear: My Lords, I wish to say first, unusually perhaps, how much we agree with the point made by the noble Lord, Lord Boyd-Carpenter, who warned us of the dangers arising to the position of the House if the Consolidated Fund were not to be used as the source of the invoking of privilege by another place. It is obvious, is it not? that many of the issues which go through the House have financial implications. If they are to be interpreted widely, as appears is being done in this case, then what the House can do by way of amendment will be gradually, but inevitably, severely limited in the future. We should be grateful to the noble Lord, Lord Boyd-Carpenter, for pointing out that danger so clearly.
The Government's failure to recognise what they are doing by rejecting our change from 80 per cent. to 91 per cent. shows how little they understand the position of small businesses at present, or business as a whole, because the matter does not just relate to small businesses. This is not a small amount of money. The Government cannot have it both ways. They cannot say that the provision will save the Exchequer £100 million and then say that the sum is so trifling that industry can carry it and not even notice that it has happened. That is a type of argument that cannot stand up for two minutes. It is a marginal charge. At present, when a great many businesses, large and small, are teetering on the brink of going down the drain, that can be the last straw. The Government must not continue to say that it is a trifling matter and that the difference between 91 per cent. and 80 per cent. is of no real significance.
I should also like to challenge again the fact that the change has to be made because the money has to be found for child benefit. That may be a deal that has been done by the Treasury and the department, but at the end of the day those moneys have to come out of taxation in one form or another, as we are all aware. There are many other ways in which the Government could have raised the money to ensure that those charges were not placed in the way that they are, without taking it from child benefit. That is a narrow interpretation of the way in which the financing of this scheme could be done. We much regret that the Government have decided to proceed along the lines that they have.
Lord Simon of Glaisdale: My Lords, perhaps I may say a word about the Commons grounds for claiming privilege, and therefore disagreeing with your Lordships' amendment. The Bill, as your Lordships are aware, is concerned with the reimbursement to employers of the sums that they spend by way of statutory sick pay. The Bill reduces the reimbursement from 100 per cent. to 80 per cent., and that clearly imposes a charge upon the citizens and also—this is the ground of the Commons disagreement —affects charges on public funds.

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I venture to think that the noble Lord, Lord Boyd-Carpenter, who is a formidable expert on financial business, nevertheless takes too narrow a view as to what is the proper sphere of the Commons financial privilege. In my view it extends to charges on individual citizens, but we have in his place today one of the three former Chancellors of the Exchequer who grace your Lordships' House. Perhaps he will feel impelled to intervene at this point—it does not look as if he will at the moment.
I do not believe that it is contested that as of today the claim to privilege is well founded, and so perhaps it is not necessary on this occasion to explore what should be its constitutional limits. However, I wish to say a word about the effect of that claim on Clause 1(2) which was the subject of Amendment No. 5 made by your Lordships. The amendment has been accepted by the other place, but in terms to which I wish to refer. First, I mention the direct effect of Clause 1(2), (the Henry VIII clause). The mere fact that financial privilege is now claimed on the grounds that the provision affects public funds demonstrates how outrageous—I use that term advisedly—it was to introduce a Henry VIII clause, whereby the Minister by ministerial decree (by order) could alter the 80 per cent. upwards or downwards, as he chose. It is not just that: that order was subject only to the negative procedure as to its validation.
Your Lordships are well aware that one of the disadvantages of the negative as opposed to the affirmative procedure is that in the other place negative orders are all too often never reached, and when they are considered, they are often considered at a highly inconvenient hour. Yet, what is now claimed, rightly in my view, as amounting to a charge on public funds was made the subject of a Henry VIII clause, and that, too, subject only to the negative procedure. I hope that we shall never see anything of that sort again.
So I turn to the other question; namely, the effect of the amendment on the Henry VIII clause. When the matter came before the other place, the Deputy Speaker advised the Chamber that all the amendments (Amendments Nos. 2 to 7, and therefore including Amendment No. 5 dealing with the Henry VIII clause) were the subject of privilege. It would not be proper to question that matter. It is a matter purely for the other place. It does not appear in the communication from the other place to your Lordships, although it does appear in the Hansard of the proceedings of the other place and it is reflected on the Order Paper of the other place, it being denoted and signified that the House of Commons waives privilege in the matter.
It should not go completely unobserved that that claim to privilege may not be entirely valid. It is questionable. For example, on the Local Government Finance Bill (the community charge Bill) there was a claim to privilege which was questioned. I believed that the Commons were right to claim privilege on that occasion, but I am far from convinced that it is a correct claim to privilege in respect purely of a machinery provision such as the Henry VIII clause. One can test the matter in this way: as your Lordships
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are aware, that clause, as originally introduced, was subject only to the negative procedure, but the Government undertook to rectify that in your Lordships' House by making it subject to the affirmative procedure. Is it not rather odd that a matter which was subject to Commons privilege should be rectified in your Lordships' House? Let us suppose that was done, and your Lordships had changed the negative to the affirmative procedure, could it reasonably be said that that was a matter of financial privilege?
It would be improper on a matter that is not formally before your Lordships' House to question the advice that was given to another place, even if it were consonant with the relationship between the two Houses. However, it should go on record that that claim for privilege might be questionable if it were ever reiterated. I hope that the occasion will never arise as I trust there will be no further attempt to introduce Henry VIII clauses on financial matters.
Lord Tordoff: My Lords, I hope I may intervene at this stage and apologise for the absence of my noble friend Lord Russell who unfortunately is on his sick bed. I am sure he would have wished to intervene at this stage. I thank the noble and learned Lord, Lord Simon of Glaisdale, for his intervention as I believe my noble friend would have wished to make a similar point. He might also have drawn your Lordships' attention to the fact—he is a much better historian than I am—that the last occasion on which a provision of that kind came back from another place to your Lordships' House was in 1642. I understand that that is the previous precedent. On that occasion the House of Lords was very rude to another place and dealt with the imposition accordingly.
We on these Benches are grateful that the noble and learned Lord, Lord Simon of Glaisdale, has raised this important issue; though that is difficult given the business on the Order Paper. The noble and learned Lord has laid down an important marker in relation to the job that your Lordships have to do with special reference to Henry VIII clauses. I, too, hope this is the last occasion that this situation will arise.
Baroness Phillips: My Lords, I am not a legal expert, but as a Catholic and a woman I reject anything to do with Henry VIII; just as I reject anything to do with Arabs because they do not have the right approach to women. That is totally irrelevant, but I make those comments as a retort to my good friend who is present today.
There is a certain arrogance about the Commons reason which states:
"The Commons disagreed to the above amendment for the following reason—
Because the said amendment affects charges on public funds, and the Commons do not offer any further Reason".
I believe the noble Lord, Lord Boyd-Carpenter, has shown us that the Government have shifted the boundaries in a year. There is an underlying factor here. This House is constantly under challenge. The press does not help as it describes us as a lot of elderly souls who are half asleep and Members in another place as being full of vitality and youth. We now have a young Prime Minister aged 47. However, there is no

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doubt that noble Lords in this House are the epitome of wisdom. They have backgrounds and skills in many areas. This kind of amendment epitomises the challenge that faces this House in its relations with another place.
The noble Lord, Lord Boyd-Carpenter, knows a great deal both about the monetary and the constitutional aspects of this matter. I have received some marvellous letters from owners of small businesses in which I have been complimented on my pleading on their behalf. It is not for me to tell the Government how to obtain votes. However, this is exactly the kind of behaviour which will lose them credence with those people who are their friends.
I am happy to take issue with the reason given by the Commons for disagreeing with the amendment. I take issue with another place all the time. The reason given is not very convincing. Every Bill that comes before us contains a reference to money. One cannot draft a Bill without indicating how much it will cost. Will the Government continue to shift boundaries, as they have done with this provision? I plead again with the Government to state that they will meet the terms of the provision. If they made such a statement it would be far more valuable to them in terms of good will than in terms of cash.
Viscount Caldecote: My Lords, I am sure that we should take the advice of my noble friend on the Front Bench and not oppose the wishes of another place on this matter. Nevertheless, this measure will cause further difficulties to industry. Industry is already in a gravely difficult position as it is experiencing a deep recession. Will my noble friend on the Front Bench make representations to his right honourable friend the Chancellor of the Exchequer to the effect that this further damage to industry should be alleviated as far as possible in the Budget proposals that will be submitted shortly?
Lord Milverton: My Lords, I hope Her Majesty's Government will take note of what has been said in connection with the effects on small businesses of the statutory sick pay provision. A couple running a small business in Bath recently communicated with me. They are good, honest, hardworking people but they have had to sell their business because of rates and the poll tax. Will Her Majesty's Government not show that they have a greater appreciation of the difficulties that small businesses face? I hope this horrible trend of small and large businesses closing down will stop. If Members of the Government met some of the owners of small businesses who are facing difficulties they might adopt a different approach. As my noble friend Lord Mottistone said, the difference between a 10 per cent. and a 20 per cent. margin for the owners of small businesses is great. A clergyman can appreciate that situation because it is only in recent years that clergymen have started to receive a reasonable remuneration.
Lord Henley: My Lords, as I said, I do not wish to prevent Members of the House from putting forward their views on this amendment. I have certainly
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listened to everything that has been said but I do not believe it would be worth rehearsing all the arguments that have been put forward. However, I shall make a few comments on the points that have been made.
My noble friend Lord Caldecote asked me to make representations to my right honourable friend the Chancellor of the Exchequer. I am sure my right honourable friend will take on board what my noble friend said. It has been argued that extra costs have been placed on industry at the wrong time. That should be put into perspective. As we have said before, we are talking about a figure of £100 million on a total wages bill of £300 billion. That figure represents a mere 0.03 per cent. of the wages bill and should be considered in that perspective.
Lord Tordoff: My Lords, I am most grateful to the Minister for giving way. Does he not realise that the figure we have been discussing should not be related to the total wages bill but to the profit of the individual companies concerned? That is where the money comes from.
Lord Henley: My Lords, I accept that point but I repeat that we are talking about a very small figure. We should put that figure into perspective in terms of the total wages bill.
The noble Lord, Lord Carter, mentioned the coverage of occupational sick pay schemes. I am sure the noble Lord accepts that it is indisputable that 91 per cent. of employees work for employers who provide occupational sick pay schemes. However, the noble Lord said that only about 50 per cent. of employees were covered in this way. I accept that not all employees are necessarily covered immediately. However, we know that some 50 per cent. of private sector schemes have no exclusion clauses at all. Where there is an exclusion clause, length of service is the most common factor affecting entitlement. The period in question is commonly only three to 12 months. The other most common exclusion clause is hours of work. However, we believe that a significant number of people—and certainly more than the 50 per cent. that the noble Lord referred to —are covered by exclusion clauses.
Lord Carter: My Lords, it would be helpful to know why the Government insist on this curious statistical approach. They always state that 91 per cent. of employees work for firms which have occupational sick pay schemes. The Government then state that the employees are covered by occupational sick pay schemes. The Times has been misled by the Government on this point. Why do the Government not say that 50 per cent., or 60 per cent.—or the figure which they must know—are eligible for sick pay schemes?
4.30 p.m.
Lord Henley: My Lords, I said 91 per cent. are covered because 91 per cent. work for firms which are covered by the scheme and will in time receive full coverage once they go beyond the time limit of three months to 12 months or whatever the limit may be.
I turn now to the question of financial privilege. That was raised by my noble friend Lord

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Boyd-Carpenter and the noble Baroness, Lady Seear. I would not argue with my noble friend on the issue, but again I must stress that whether financial privilege can be claimed is a matter for another place. He took, as did the noble and learned Lord, Lord Simon, a very narrow view as to how another place should claim its financial privilege. He said that it was only recently that statutory sick pay had been made a charge on the Consolidated Fund. There is a very good reason for making statutory sick pay a charge on the Consolidated Fund and not on the National Insurance Fund. It is not a contributory benefit and therefore should instead not be a charge on the National Insurance Fund but should instead be a charge on the Consolidated Fund.
Lord Boyd-Carpenter: My Lords, will my noble friend allow me to intervene? What he said is apparent logic, but why was it for a considerable time—I believe since 1982—a charge on the National Insurance Fund?
Lord Henley: My Lords, I cannot answer that question. All I can say is that because it was not a contributory benefit, it was quite rightly changed from being a charge on the National Insurance Fund to being a charge on the Consolidated Fund.
I turn to the speculation by the noble and learned Lord, Lord Simon, as to whether another place could have claimed financial privilege on what has been called the Henry VIII clause. I cannot comment on the matter because it must always be a matter for another place whether it claims financial privilege. I noted the remarks of the noble and learned Lord, but I add that in the event there was no need to worry on that account because the amendment striking out the Henry VIII clause was accepted by another place.
Now to some points made by my noble friend Lord Mottistone: I can assure him that I shall write to him as soon as possible. My right honourable friend the Secretary of State has made it quite clear in his up-rating statement that the considerations underlying the. SSP proposals, and in particular the spread of occupational coverage, are not seen as applying equally to statutory maternity pay. Indeed, he said that one advantage of his proposals was that it enabled him to treat SMP on its own merits and make a real increase in the standard rate over and above the normal RPI up-rating, thereby giving extra help to some 260,000 women. Obviously, no Minister can give an undertaking that no consideration will ever be given to further change to the balance of this or any other social provision regardless of all other aims and circumstances. I have dealt with some of the points that have been made.
Lord Mottistone: My Lords, in connection with the point that my noble friend has just raised, I asked merely that if the Government consider making changes to statutory maternity pay or industrial injury compensation, they will consult first and decide afterwards. That is all I asked. I did not say that they should never even think of changing the rules.
Lord Henley: My Lords, my noble friend will not expect me to give an assurance on that point. Bearing
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in mind the opinions expressed during the passage of the Bill through the House, of which I have been on the receiving end, I can say that some note will be taken of the point raised by my noble friend.
I have answered some of the points and later I shall deal with the amendments relating to the concessions to small businesses. In the final analysis, all I can say is that the issue must be decided on the single point of financial privilege asserted by another place.
Lord Elton: My Lords, before my noble friend sits down, and arising from what he has just said, can he confirm that his earlier remarks about privilege which sounded rather like strictures—do not mean that Members of Her Majesty's Government in this House feel that when the extension of privilege of another place means the reduction of privilege in this place, Members of this House are not right to keep an eye on the matter and should not be free to comment? I know that his brief, as I remember mine did when I sat in his place, indicates that the word of the authorities in another place is final; but I should not wish that view to extend to the rest of the Members of the House who must guard its privileges jealously.
Lord Henley: My Lords, I accept what my noble friend said. It is a matter for this House how it reacts to the financial privilege claimed by another place. As I said, in the final analysis this particular matter must be decided on that single point of financial privilege asserted by another place. I do not believe that I can usefully make any further comment.
On Question, Motion agreed to.
LORDS AMENDMENT
2 After Clause 1, insert the following new clause:
Small employers' relief
".—(1) In section 9 of the Social Security and Housing Benefits Act 1982, before subsection (2) (meaning of "contributions payments") there shall be inserted—
"(1B) For the purposes of this section, a payment of statutory sick pay which an employer is liable to make to an employee for any day qualifies for small employers' relief if the employer is a small employer who has before that day been liable to make such payments of statutory sick pay as entitle him to relief in respect of that payment.
(1C) For the purposes of this section, "small employer" shall be defined by regulations by reference to the aggregate of the employer's and the employee's contributions payments for any prescribed period, such aggregate to be reviewed annually having regard to the increase in earnings and the effect of any such increase on the amount of contributions payments.
(1D) Regulations shall prescribe the payments of statutory sick pay that entitle a small employer to small employer's relief in respect of any particular payment, and that entitlement shall be determined by reference to the number of weeks for which the employer has been liable to pay statutory sick pay in respect of the employee in question in a prescribed period.
(1E) The first regulations made under this section shall prescribe that the amount of the aggregate of the employer's and the employee's contributions payments, and the number of weeks for which the employer has been liable to pay statutory sick pay in respect of the employee in question shall be in accordance with the following table:—

Aggregate contributions in the previous contributions year

Number of weeks before small employers' relief applies

less than £15,000

6

less than £10,000

3

less than £5,000

0

(1F) A statutory instrument containing (whether alone or with other provisions) regulations under subsection (1C) or (1D) above shall not be made unless a draft of it has been laid before Parliament and approved by a resolution of each House."
(2) In subsection (2) of that section (meaning of "contributions payments" in subsections (1) (a) and (1A)) for the words "and subsection (1A)" there shall be substituted the words "and subsection (1C)".
(3) In Part II of Schedule 5 to the Social Security Act 1986 (questions for the Secretary of State) in paragraph (b), after sub-paragraph (v) there shall be inserted the words "or
(vi) the amount of an employer's contributions payments for any period for the purposes of regulations under section 9(1C) of that Act." "
The Commons agreed to the above amendment with the following amendmentsߞ
2A Line 7, leave out from 'day' to end of line 35 and insert: 'which forms part of a period of incapacity for work qualifies for small employers' relief if—

(a) on that day the employer is a small employer who has been liable to pay statutory sick pay in respect of that employee for earlier days forming part of that period of incapacity for work; and

(b) the aggregate amount of those payments exceeds the entitlement threshold, that is to say an amount equal to

W x R, where—

W is a prescribed number of weeks; and

R is the appropriate weekly rate set out in section 7 above;

and regulations may make provision for calculating the entitlement threshold in any case where the employee's entitlement to statutory sick pay is calculated by reference to different weekly rates in the same period of incapacity for work.
(1C) If the Secretary of State by order so provides for any tax year, the following subsections shall have effect for that tax year in substitution for subsection (1B) above—
"(1BB) For the purposes of this section, a payment of statutory sick pay which an employer is liable to make to an employee for any day in a tax year qualifies for small employers' relief if—

(a) on that day the employer is a small employer who has been liable to make payments of statutory sick pay for earlier days in that tax year in respect of any employees of his; and

(b) the aggregate of any such payments for those earlier days exceeds a prescribed sum.

(1BC) In any case where—

(a) an employer is liable to make two or more payments of statutory sick pay for the same day in a tax year, and

(b) by virtue of the condition in subsection (1BB) (b) above, none of those payments would qualify for small employers' relief, but

(c) that condition would have been fulfilled in relation to a proportion of the aggregate amount of those payments, had he been liable—

(i) to pay as statutory sick pay for an earlier day in that tax year, instead of for the day in question, the smallest part of that aggregate that would enable that condition to be fulfilled, and

(ii) to pay the remainder as statutory sick pay for the day in question,

he shall be treated for the purposes of subsection (1BB) above as if he had been liable to make payments of statutory sick pay as mentioned in paragraph (c) above instead of as mentioned in paragraph (a) above.

(1BD) If, in a case not falling within subsection (1BC) above—

(a) an employer is liable to make a single payment of statutory sick pay for a day in a tax year, and

(b) by virtue of the condition in subsection (1BB) (b) above, that payment would not qualify for small employers' relief, but

(c) that condition would have been fulfilled in relation to a proportion of that payment, had he been liable—

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(i) to pay as statutory sick pay for an earlier day in that tax year, instead of for the day in question, the smallest part of that payment that would enable that condition to be fulfilled, and

(ii) to pay the remainder as statutory sick pay for the day in question,

he shall be treated for the purposes of subsection (1BB) above as if he had been liable to make payments of statutory sick pay as mentioned in paragraph (c) above instead of the payment mentioned in paragraph (a) above.";
and, without prejudice to section 45(1) below, the Secretary of State may by regulations make such transitional or consequential provision or savings as he considers necessary or expedient in connection with the coming into force of an order under this subsection or the expiry or revocation of any such order and the consequent revival of subsection (1B) above.
(1D) For the purposes of this section, "small employer" shall have the meaning assigned to it by regulations, and, without prejudice to the generality of the foregoing, any such regulations—

(a) may define that expression by reference to the amount of an employer's contributions payments for any prescribed period; and

(b) if they do so, may in that connection make provision for the amount of those payments for that prescribed period—

(i) to be determined without regard to any deductions that may be made from them under this section or under any other enactment or instrument; and

(ii) in prescribed circumstances, to be adjusted, estimated or otherwise attributed to him by reference to their amount in any other prescribed period.

(1E) If and so long as regulations under subsection (1D) above prescribe an amount which an employer's contributions payments must not exceed if he is to be a small employer for the purposes of this section, the Secretary of State shall in each tax year consider whether that amount should be increased, having regard to any increase in the aggregate amount of all primary and secondary Class 1 contributions payable in Great Britain and such other matters as he considers appropriate.'.
2B Line 37, leave out 'regulations under subsection' and insert 'any regulations or order under or by virtue of subsection (1B),'.
2C Line 43, leave out '(1C)' and insert '(1D)'.
2D Line 49, leave out '9(1C)' and insert '9(1D)'.
2E Line 49, at end insert—
'(4) The first regulations made under section 9 of the Social Security and Housing Benefits Act 1982 by virtue of this section shall—

(a) specify 6 as the prescribed number of weeks for the purposes of subsection (1B) (b) of that section; and

(b) without prejudice to subsection (1D) (b) of that section, define a "small employer" as an employer whose contributions payments for the tax year preceding the one in which the day of incapacity for work in question falls did not exceed £15,000.

(5) Any day of incapacity for work falling before 6th April 1991 shall be left out of account for the purposes of subsection (1B) of that section.'.
Lord Henley: My Lords, I beg to move that the House do agree with the Commons in their Amendments Nos. 2A to 2E to the Lords Amendment No. 2.
This group of amendments sets out the Government's proposals, as inserted in another place, for assisting small employers who experience abnormal levels of sickness in their workforce. It enables such employers to revert to 100 per cent. reimbursement after an employee has been sick for a specified period.
As the House will appreciate, the amendments make changes to the amendments moved by my noble

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kinsman Lord Stanley and passed by this House at Third Reading. That amendment in turn had amended the Government's proposals which I put down at Report stage. As I made clear during our earlier debates the reductions in national insurance contributions, which have been weighted in favour of the small employer, will more than offset the extra SSP costs to most small employers providing they do not experience significantly above average sickness loads. Both I and my right honourable friend in another place have given numerous examples of the effects on employers of varying sizes. I do not intend to go over that ground again.
However, the Government recognise that the situation may be very different for small employers who have employees absent from work for a protracted period of sickness. That is why we came forward with an amendment at Report stage in this House aimed at assisting such employers. I explained then that the Government's preference was for a scheme which defined a small employer in relation to the national insurance contributions he had paid in the previous year and which would come into operation once an employee had been sick for eight weeks.
However, because we were also receiving representations on other methods—notably from my noble friend, Lord Jenkin of Roding—we did not rule out alternative possibilities at that stage. At Third Reading therefore I proposed that the Government would consult on different schemes in order to take account of industry's views on the best way forward. In the event, noble Lords decided that they wished to insert precise provisions in the Bill before it left this House. I make no complaint about that. But it did of course radically change the position on consultation. The Government have therefore come up with our own firm proposals; although as I shall explain shortly, we have built in a degree of flexibility which was not present in the amendment passed by this House. The Government's proposals were accepted in another place and the amendment carried by this House has been amended accordingly.
The Government's Amendment No. 2A looks very complicated and it may be of assistance to the House if I concentrate first on the two key provisions. I shall then perhaps spend a shorter time on the detail of the draft amendments.
The first key provision is the definition of a small employer and I do not think I need spend long on that point. As the House knows, the Government believe that the fairest and simplest method is to define a small employer by reference to the level of his contribution payments in the previous tax year. The amendment passed by this House followed that course. The Government's amendment sets the threshold at £15,000 At Third Reading, I gave examples of the scale and the size of workforce that would come within that definition. All told, we estimate that some 700,000 employers would potentially be eligible. The threshold of £15,000 was also the maximum figure in your
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Lordships' amendment, although subject to a graded system depending on how long an employee had been sick.
That conveniently brings me to the second key provision—how long an employee has been sick before a small employer can qualify for 100 per cent. reimbursement. The Government's amendment now sets this at six weeks, compared with the eight weeks I mentioned in our earlier debates. The House will recall that I gave the cost of an eight week scheme as of the order of £1 million to £2 million. I am able to tell the House that moving to six weeks will cost around £3 million.
Six weeks also featured in your Lordships' amendment but only for small employers with contribution payments of between £10,000 and £15,000. Where the payments are between £5,000 and £10,000 that amendment proposed that the trigger would come after only three weeks, and where it was less than £5,000 there would be no waiting period at all and 100 per cent. reimbursement would apply to all SSP payments.
As I explained during Third Reading, it is this part of the amendment with which the Government cannot agree. My noble kinsman Lord Stanley and the noble Lord, Lord Carter, made the point strongly that in their view very few employees would be sick for as long as eight weeks. Indeed the noble Lord, Lord Carter, cited the experience in the small businesses with which he is personally involved. But, the rationale behind the Government's proposals is to assist small employers who have abnormal sickness within their workforce. Setting the trigger at three weeks, or indeed having no trigger at all, clearly goes much further than this.
I have already made reference to the advantage small employers will get from the reduced national insurance contributions. The Government cannot accept that it is right to ignore this factor. Setting the trigger for 100 per cent. reinbursement at six weeks—and the House will appreciate the Government have moved from eight weeks—is in our view the right level to pitch it. I will give an example. An employer with five employees all earning £170 per week who had one employee away for six weeks (that is twice the normal average of sickness) would have a total extra cost in SSP of £164.82, but his savings in national insurance contributions over his workforce as a whole would be £176.80; thus he would still be £1198 to the good. And that assumes not only 80 per cent. reimbursement of SSP but also that the employer makes up the difference between the lower and higher rates of SSP. It therefore looks at the most costly scenario from the employer's point of view. As I have said, this employer would be just under £12 in profit after an employee had been sick for six weeks. But he would go into deficit if SSP lasted more than six weeks. That is when the Government propose small employers relief and 100 per cent. reimbursement should apply.
I have spent some time over this, but I recognise that the number of weeks of sickness was the major element which was worrying the House on our previous discussions. I will now try to go a little more

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quickly through the somewhat daunting amendments on the Marshalled List. The amendments to subsection (1B) in Amendment 2A set out the formula for determining whether a small employer is entitled to small employers relief. At first glance this may seem complicated, but it is in fact quite simple.
By multiplying the prescribed number of weeks, which as I have indicated it is proposed will be six, by the weekly rate of SSP, this ensures that all days of SSP, including odd days, count towards the calculation. I would also like to mention one additional refinement, which does not appear in your Lordships' amendment. This is that by relating the provision to periods of incapacity for work, that enables linked spells of SSP not separated by more than eight weeks to be taken into account in calculating the six weeks. This will, of course, prove particularly helpful to the employer who has an employee who is away for a number of comparatively frequent short spells of sickness.
Subsection (1C)—which I appreciate looks even more complicated—will not in fact be used at all when the scheme first comes into operation. Indeed it may never be used. It provides an alternative approach to the system of triggering small employers relief by relation to how long an individual employee has been sick.
As the House will readily recall, my noble friend Lord Jenkin proposed a system which would be triggered by the amount of SSP in the workforce as a whole rather than an individual employee. As I mentioned earlier, the Government had originally intended to consult on the merits of the two approaches. In the event, the amendment which your Lordships passed at Third Reading ruled this out. But we think it worthwhile retaining the power to substitute that method should experience suggest that it might have been the better approach. It is that flexibility which subsection (1C) gives us. The House may be relieved to know that I shall make no further attempt to explain it.
Subsection (1D) contains the power which enables regulations to define a small employer by relation to contribution payments. The House may also wish to note that the power contained here will enable us to make special provisions for new employers to ensure that they get the benefit of small employers relief even though they were not trading in the previous tax year. I am sure the House will agree that this is an important consideration for small employers just starting up.
Subsection (1E) meets the point made during Third Reading about the need to review the contributions threshold. It requires the Secretary of State to consider annually whether the threshold should be increased.
Subsection (1F), to which amendment 2B is a minor amendment, reproduces the requirement that all regulations should be subject, as we agreed earlier, to affirmative resolution. Amendments Nos. 2C and 2D are drafting amendments, and finally Amendment No. 2E lays down that the first regulations, as I have already confirmed, will provide that the prescribed
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number of weeks for which SSP is paid shall be six, and the contributions threshold set at £15,000 in the preceding year.
My Lords, I fear I may have spoken somewhat too long, but it has certainly been made very clear to me how strongly many of your Lordships feel about the need to get this provision right. The Government have listened to the representations made and we believe that Amendment No. 2, as amended in the other place, does just that by concentrating the help on small employers who experience abnormal sickness. I beg to move.
Moved, That the House do agree with the Commons in their Amendments Nos. 2A to 2E to the Lords Amendment No. 2.—(Lord Henley).
4.45 p.m.
Lord Carter: My Lords, may I begin by saying that we welcome the flexibility that the Government have shown with subsection (1C) which enables them to consider the alternative approach that we have discussed in the course of the Bill. One can only say that if only the Government had shown the same willingness to listen from the beginning, perhaps they would not have been in the trouble that they have been with the Bill.
Having accepted the principle of small employer relief as a result of the powerful arguments developed in this House, the crucial element in the government amendment is the coverage it will give to small employers—how many will benefit. The Minister makes the point that 700,000 employers are eligible if we measure on the £15,000 national insurance contribution scale. But then of course the coverage is substantially reduced by prescribing six weeks as the qualification period of sick pay.
The Minister has explained that the cost now is some £3 million as compared to the £2 million with the Government's previous approach. I have to say that that figure clearly indicates that the benefit to small employers will be minimal. Perhaps I may say in passing that it will be more than swallowed up in this year's increase in the unified business rate alone.
I do not apologise for returning to a point that I made at Third Reading, and I know that other of your Lordships have made. Very few employees will experience a period of sickness over six weeks. In the two firms with which I have been involved, one with a payroll of 30 employees and one with a payroll of 40, we can only think of a handful of employees who have been sick for that sort of period. I do not think that it is an abnormal sickness pattern that the Government are describing; I think that, if there is such a thing, it is a super-abnormal sickness pattern.
Lord Jenkin of Roding: My Lords, I wonder whether the noble Lord would give way? Has the noble Lord taken account of the quite significant change that the Government have made of allowing separate periods of sickness to be linked if the gap is eight weeks or less? It seems to me that that represents an improvement which goes half way to meeting the

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points that I think the House has made. I wonder whether in his own two firms he has looked at it in that light?
Lord Carter: My Lords, that certainly helps, but if we return to the cost of it, which is £3 million, that surely sets the scene of how much it will benefit, because that is the cost to the Government of the scheme. But of course that is a flexibility that will help in the measurement of the period of sick pay.
It is a clear sign of the haste with which the Bill was presented originally, and the lack of consultation, that the Government had to come forward now with this extremely complicated amendment at this stage of the Bill. However, this House can be content that it has at least secured something, however minimal, for the small employer, even if I may quote from the Forum of Private Business note, which I received this morning, which says:
"the Government's alternative to the Lords' small business relief amendments to the SSP Bill is expensive, complicated and only of limited benefit to a small minority."
The Forum:
"anticipates that the benefits of this concession will be outweighed by its cost, complexity and likely level of take-up by the small business community."
I fear, my Lords, that that says it all.
Lord Stanley of Alderley: My Lords, when your Lordships discussed the small employer amendment at Third Reading, I believed, and indeed said, that it was correct for your Lordships to send the clause back to another place for their further consideration, not least because I have always understood that one of the main purposes of your Lordships' House is as a revising Chamber. It is not your Lordships' job always to follow slavishly the directions of my noble kinsman the Chief Whip, or indeed any other Chief Whip, despite their crocodile tears or not crocodile tears at certain times.
As a result of your Lordships' decision, the Commons have been able to look at this Bill again and have produced, as noble Lords have said, the series of compromises which we have before us. I believe that, having performed our constitutional duty to send it back, we should let the matter rest.
Baroness Seear: My Lords, half a loaf is better than no bread, and we are glad that the Government have gone some way to meeting the points put forward. I still believe that the Government are confusing the fact that there is an average gain to employers through the adjustments to national insurance, but that does not do a great deal to help the small employer with six people who has half his staff out, which will be a very expensive business indeed. Although it is an important change, that the Government have allowed the number of days' absence to be spread over a period of time —I think it is a year—
Lord Henley: My Lords, if I may intervene, it will be under the existing rules for periods of incapacity to work. If the distance of time between the two spells is greater than eight weeks, they will get a separate period of incapacity. But if the period between the two sicknesses is eight weeks or less, they will be linked.
Baroness Seear: My Lords, that is an improvement on what we had before. Even so, if you take it for a whole year, that is 30 days of sickness absence. That is far above the average and a very great many small employers will pay the whole amount and get no benefit. This is better than nothing, but it is a very great pity that the other place was not able to accept the amendments put forward by your Lordships' House.
Lord Boyd-Carpenter: My Lords, in public life one must be used to being grateful for small mercies. Probably this amendment comes under that heading, for it is an improvement, but a very small improvement, which will give only a moderate degree of relief in an area where noble Lords in all parts of your Lordships' House thought that this Bill would cause great trouble; that is, the area of the small employer. But one must be thankful that the Government have moved at all in that direction and we are grateful for it.
The one aspect that troubles me still about it is its complexity. Will the ordinary small employer understand the provisions embodied in this amendment? They are important to him and there may be many who will understand. But I can think of some small employers of my own acquaintance who may have great difficulty in understanding the amendment. I should be grateful if my noble friend could say whether the Government contemplate giving some explanation—for example, a simple explanatory leaflet—to be circulated to all concerned, so that they will know when they can take advantage of the concessions embodied in this amendment. Otherwise I fear that it may be a gesture of goodwill, which will have very little practical effect, because it will not be understood and the proper application may not be made. Perhaps my noble friend can deal with that point when he replies.
Lord Jenkin of Roding: My Lords, it is a very happy fact that at the last stages of this Bill I am able to endorse every single word that my noble friend Lord Boyd-Carpenter has said. I am grateful for the concessions that have been made. I am particularly grateful that the Government have retained the power in subsequent years to move to the aggregate basis of the threshold, because I still believe that that must be the right way of proceeding. But like my noble friend Lord Boyd-Carpenter, I am very concerned indeed about the complexity argument.
Ministers have relied heavily on the fact that 25 per cent. of employers never claimed the additional 7 per cent., despite massive efforts to draw their attention to it. The reason was explained to me very firmly by the chairman of the Forum of Private Business which, may I say in parenthesis, has done an absolutely magnificent job in advising Members of both Houses on the effect of this change, and in putting forward a variety of possible solutions for overcoming the difficulties.
But the complexity of the rules goes beyond the ability of small businesses not just to understand, but to get to the point of trying to understand. The whole thing looks so complex that it is not worth trying to

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understand, and employers may prefer to go out and sell a few more widgets, or try to find a few more customers. That is a much better way of spending their time and the exercise becomes pointless.
Nevertheless valuable concessions have been made and the linking and the proposal of eight weeks are welcome, so far as they go. But I very much endorse what my noble friend has said. This change has to be explained to small employers in as simple and straight forward a way as possible.
I hope that Ministers will instruct their officials, who handle these matters in the local offices of the department, to acquire the skill of explaining it in person—and perhaps a number of visits will be necessary—so that employers can try to get the best advantage of the reliefs that have been offered. Otherwise one will feel that it is just another chalk-up, with another administrative hassle, that the Government have put on small firms. Having said that, I welcome the concessions and I hope we shall accept the amendment which has come back to us from another place.
Lord Mottistone: My Lords, I, too, should like to thank the Minister for small mercies for there is something here. But there are two points which I should like to make. One is that this is so complex. The other is that, as the amendment is worded, there is no room left for consultation with those who understand this subject, such as the CBI and the many other organisations that the noble Lord, Lord Carter, mentioned earlier, who are supporting it. As I understand it, the only time when consultation is possible will be in a subsequent year, by which time all sorts of damage may well have been done.
As we are now talking at the end of the first week in February and this is to come into force in about six weeks' time, it would be very reassuring if there could be room for flexibility. There could then be consultation with the people whom the Government have already consulted. My noble friend said, the last time he spoke, that there was to be room for further consultation. If that were possible, we might be able to improve on what stands now. I hope that my noble friend will be able to give us an indication that that is possible.
Lord Henley: My Lords, I am most pleased that noble Lords are grateful for the concessions with which we have come forward. If I may touch briefly on the question of complexity, raised by my noble friends Lord Boyd-Carpenter and Lord Jenkin, they have both had responsibility for social security legislation in the past and they will know that such legislation is by definition complicated.
Obviously, at no point do we expect small businesses to be able easily to make sense of the amendment as drafted. That is a job for lawyers. But we will certainly issue a leaflet to businesses explaining how this works, and I hope that we shall make sure that the document is comprehensible.
Perhaps I may just blow my own department's trumpet. Although in the past there have been
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complaints about the comprehensibility of social security documents, we won an award from the Plain English Society a little over a year ago for one of our documents. So that shows that some of them are comprehensible. I also stress that my department has an employers' panel on which businesses, both small and large, are represented. They come to us to give advice on documents and say how easy they are to comprehend.
The document that I have in mind will be distributed towards the end of the month, along with other material on the changes in contribution and SSP rates.
The noble Lord, Lord Carter, said that the relief will be minimal and implied that £3 million was nothing. The provisions in the amendment are intended to apply to those who experience abnormal levels of sickness. Those who do not will benefit from the reduced employers' contributions. The relief is needed only by those who experience abnormal levels of sickness.
I turn to the point raised by my noble friend Lord Mottistone. Clearly there will be no time for consultation this year. We drafted the clause as it stands in order to provide room for consultation about whether in future years it might be better to use the aggregate level of sickness as opposed to the individual employee's level of sickness. We shall consult on that matter and take note of the advice of industry about the system it finds easiest to use. I hope that I have dealt with all the points raised in this short debate.
On Question, Motion agreed to.
Food Protection (Emergency Prohibitions) (Radioactivity in Sheep) Order 1991
Food Protection (Emergency Prohibitions) (Radioactivity in Sheep) (England) Order 1991
Food Protection (Emergency Prohibitions) (Radioactivity in Sheep) (Wales) Order 1991
5.1 p.m.
The Minister of State, Ministry of Agriculture, Fisheries and Food (Baroness Trumpington)The Minister of State, Ministry of Agriculture, Fisheries and Food (Baroness Trumpington) rose to move that the three orders which were laid before the House on 11th January be approved.
The noble Baroness said: My Lords with your permission I intend to move the three orders en bloc. They have the effect of consolidating and replacing, with amendments, previous orders relating to post-Chernobyl sheep controls in England, Wales and Scotland. The same provisions apply throughout

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Great Britain and in Northern Ireland, although the Northern Ireland order is subject to separate statutory procedures and is not therefore being debated today.
The main difference between the present consolidated orders and their predecessors lies in a rationalisation of mark and release arrangements by the introduction of a fixed timetable for what is now a routine annual cycle of releasing particular cohorts of marked sheep from slaughter restrictions. While these arrangements follow a broadly similar pattern each year, the exact timing of the changeover from one colour mark to another has tended to vary depending on market conditions and demand for remonitoring. However, experience of operating mark and release over the past four years has indicated that the adoption of a fixed calendar of colour changes would be both practicable and helpful to all concerned. Since radioactivity levels in sheep fall very quickly once they have left the designated area, we are now, after applying a cautious safety margin, able to allow all animals in each colour cohort to be block release three months or more after being marked and leaving the restricted area.
Since January this year, therefore, the three different colour marks will be applied during three fixed, four-month periods each year; for instance apricot from January to April, green from May to August and blue from September to December inclusive; and Article 6(2) of each order lays down a fixed timetable for release from slaughter prohibitions throughout the United Kingdom. Under this timetable any apricot, green or blue marked sheep is automatically released from slaughter restrictions three months after the date when that particular colour mark was last used. Owners wishing to have marked sheep released sooner, however, must still apply to have them re-monitored and ear-tagged in the usual way.
These arrangements apply to sheep permanently leaving the restricted areas. However, we also use a fourth colour, red, to mark sheep temporarily leaving these areas for breeding or over-wintering. As this colour is in constant use, and because red marked sheep may re-enter the designated areas and thus become re-contaminated, red marked sheep are only released after being individually re-monitored and ear-tagged.
As I have already indicated, the differences between the new orders and their predecessors are largely technical. There is, however, one very welcome change of substance; that is, a reduction in the size of the English, Welsh and Scottish designated areas themselves. Since 1986 we have been keeping a very close watch on radioactivity levels, both by special monitoring surveys and by studying data from sheep live-monitored under mark and release. I should like to put the scale of the problem with which we are dealing into perspective. In England and Wales the number of animals failing the live-monitoring test under mark and release is now very low indeed. For example, in Cumbria in 1990, less than 0·2 per cent. —or 160 out of 106,000 sheep—failed the live-monitoring test. These figures, together with our regular scientific surveys within the designated area,
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confirm that only a relatively small number of sheep is now responsible for the continuing need for restrictions. The problem, however, is that these failures are not concentrated in a few individual flocks but are fairly widely scattered throughout an area of open fell with few natural or man-made boundaries, making it very difficult to devise any simple system of progressive derestriction.
However, I am pleased to say that our systematic approach to the collection of live monitoring and special survey data has enabled us to identify two well-defined sub-areas within the Cumbria restricted area which have produced no mark and release failures in the past two years and, therefore, no longer justify continuing restrictions. A similar situation exists in Wales and Scotland. To be absolutely sure that this conclusion was not dependent simply on current marketing practices by the farmers concerned, agriculture departments undertook an extensive scientific survey of all sheep in those areas in the months last summer when radioactivity levels would be highest. Testing was carried out within 24 hours of the animals being brought down off the fells and demonstrated that radioactivity levels were now low throughout these areas and that restrictions could safely be lifted from 23 complete and 16 part holdings in Cumbria, six complete and 12 part holdings in Wales; and 10 complete and three part holdings in Scotland. These holdings and parts of holdings have, therefore, been excluded from the areas designated by Section 3 and Schedule 1 of the orders now before your Lordships' House.
Since the explosion at the Chernobyl nuclear power station in 1986, the Government have retained the strictest controls over the movement and slaughter of sheep from those upland areas most heavily affected by radioactive deposition. As noble Lords will recognise, our major aim has been to ensure that consumers remain fully protected at all times. At the same time, affected farmers have benefited to date from nearly £8 million paid in compensation to offset the economic effects of the controls. This is in addition to the considerable investment which we continue to make in Chernobyl-related scientific research and shows how seriously and responsibly the Government take all questions relating to the safety of our food supplies.
In conclusion, I should like to acknowledge the help and co-operation which we have received and continue to receive from people in the farming community. The present reduction and streamlining of controls is a positive development for them and one which I hope noble Lords will welcome. I beg to move.
Moved, That the Food Protection (Emergency Prohibitions) (Radioactivity in Sheep) Order 1991 laid before the House on 11th January 1991 [7th Report from the Joint Committee]; the Food Protection (Emergency Prohibitions) (Radioactivity in Sheep) (England) Order 1991 laid before the House on 11 th January 1991 [7th Report from the Joint Committee]; the Food Protection (Emergency Prohibitions) (Radioactivity in Sheep) (Wales) Order 1991 laid

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before the House on 11th January [7th Report from the Joint Committee] be approved.—(Baroness Trumpington.)
Lord Gallacher: My Lords, we are grateful to the noble Baroness for explaining in detail these three orders, which continue to reflect the Government's considerable effort to deal with the grave problem which arose following the accident at Chernobyl. If my comments are brief, that does not minimise our appreciation of what the noble Baroness has said or, indeed, our acceptance of the improvement which is now reflected in these orders.
In that these are consolidating orders, we have no comment to make. However, we particularly welcome the reductions in the size of the designated areas to which the noble Baroness referred and, similarly, we welcome the easements in all three countries described at paragraphs (b) and (c). We join with the noble Baroness in expressing our appreciation to the farming community for the manner in which it has dealt with what must for its members have been a major disaster. We appreciate also its co-operation with the authorities in dealing with the problem in order to protect not merely its members' livelihoods but also their reputation as good sheep farmers.
Finally—and I am sure rather unfairly—I should like to ask the noble Baroness whether she cares to hazard a guess as to the date on which we may see the termination of all restrictions on the assumption that present rates of progress are maintained uninterrupted.
Baroness Trumpington: My Lords, I am most grateful to the noble Lord for the welcome which I hoped he would give. I should not like to hazard a guess because I believe that through our caution we have been totally prudent and have had regard for the safety of consumers. It would be a mistake perhaps to give an absolute date. However, this limited derestriction is encouraging.
On Question, Motion agreed to.

General Lighthouse Authorities (Beacons: Hyperbolic Systems) Order 1990
5.12 p.m.
The Minister of State, Department of Transport (Lord Brabazon of Tara)The Minister of State, Department of Transport (Lord Brabazon of Tara) rose to move, That the draft order laid before the House on 20th December 1990 be approved [7th Report from the Joint Committee].
The noble Lord said: My Lords, the order defines the Loran C radionavigation system as a beacon for the purposes of the General Lighthouse Fund. Its effect would be to enable the general lighthouse authorities to establish such a system in the United Kingdom. The order would, however, only take effect if we became a party to a proposed international agreement to establish the Loran C as the regional radionavigation system in North West Europe and the North Atlantic. The order is thus a conditional one.
My right honourable friend the Secretary of State for Transport expects to take a final decision on this important issue before the middle of the year.
Britain is of course already very well served by the Decca navigator system, which is technically similar to the Loran C system. Decca has long served mariners well, and it continues to do so. It is much respected by its many users. The possibility of change reflects no shortcomings in the Decca system, but comes about from the opportunity to join a system which has potential for expansion.
For some time now a number of European countries have been considering the possibility of developing a regional civil Loran C system when the United States relinquish its European military Loran transmitters in a few years' time. The Americans have offered to transfer these stations—in Norway, Greenland, Iceland, the Faroes and Germany—to the host nations as a basis for a civil system. France has also offered to include her two existing Loran C transmitters in such a system. Completion of the civil system requires new transmitters in the United Kingdom, Ireland and Norway. It is also dependent on a cost-sharing agreement being reached for establishing and running the system.
The Government published a detailed consultative document in 1989 seeking the marine community's views on the future of radionavigation in United Kingdom waters and on the possibility of adopting Loran C as part of this international system. We gave very careful consideration to the responses to that consultation. These were both constructive and helpful, though there was an understandable mixture of support for each of the two systems. In April last year, my right honourable friend's predecessor announced his conclusion in principle that, on technical and cost grounds, the balance of advantage would be to join the international Loran C system. In reaching that view, we were conscious of the high regard which many mariners have for the Decca system. The fishing industry in particular sets great store by Decca, and over many years fishermen have established detailed Decca fixes to record their favoured fishing grounds.
I accept that there is an understandable reluctance to contemplate change, and we have not approached this lightly ourselves. But I am sure that if we do join the proposed international agreement all mariners will be equally well served by Loran C and will grow to appreciate its merits. The particular problems of the fishermen are well understood. But we believe that, with the propagation modelling techniques now being developed, it will be possible to produce data to assist the fisherman to convert his daylight Decca positions to Loran C fixes.
Adoption of Loran C will mean cost savings as compared with the Decca system, and this will be beneficial to all payers of light dues once the system is fully established. Loran C also offers some technical benefits in its greater range and more consistent coverage. Further, it suffers much less from seasonal and night skywave effects, which means that locations can be revisited with much greater confidence regardless of the time of day or the season. Against

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these positive advantages, we cannot stand aside from the opportunity now offered of establishing a regional international system covering such a large sea area. We have to take account here too of the interest in Loran C now being shown in the Mediterranean and around the Iberian Peninsula. There is also interest in the possible links in the Barents and Baltic seas between Loran C and the similar Russian Chaika system.
Nonetheless, as I said earlier, our decision at this stage is conditional on the reaching of an international agreement with the other countries concerned in the proposed North West Europe and North Atlantic system. Our April decision was one in principle only and its confirmation depends on a number of conditions being met.
First, the international agreement must be acceptable in terms of the share of the system costs to he attributed to the United Kingdom. Progress is being made on these negotiations, and there now seems a better prospect of agreement. But that final agreement has yet to be reached.
Secondly, we need to reach such an agreement by mid-1991 if we are to ensure for United Kingdom waters an adequate period when both the Decca and Loran C systems would operate alongside each other. This is essential for a smooth transition. And it is particularly important for the fishing community, which would like to see as long a transition as possible in order to convert its records. The timescale for this also reflects the fact that the existing contract for the Decca service cannot continue beyond 1997. So we have a finite window for a decision.
Furthermore, before making a commitment to the agreement, we need to be sure that sites for the essential new transmitters in Britain and Ireland are available and have the necessary clearances. Again progress is being made, but the process is as yet incomplete.
The final condition laid down in the Secretary of State's April announcement was that Parliament should have approved the necessary extension of the General Lighthouse Authorities' powers to establish and operate Loran C in the United Kingdom. The order before the House today relates to that requirement. Its effect is to define Loran C as a "Beacon" for the purposes of Part XI of the Merchant Shipping Act 1894, so that the system would come within the meaning of the "lights, buoys and beacons" which are managed by the authorities at the expense of the General Lighthouse Fund. A similar order was approved by this House in 1986, when responsibility for the Decca system was transferred to the lighthouse authorities.
Approval of the order before the House today will fulfil one of the conditions stipulated by the Secretary of State for Transport. This is a necessary preliminary to his reaching a decision later in the year on a final commitment to sign the international agreement. If that agreement were not reached for whatever reason the order would have no effect, since it is conditional on the agreement, and in that event my right honourable friend's predecessor indicated that the
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Government would consider whether to arrange for modernisation of the existing Decca system and its continuation beyond 1997.
The House's approval of the order will enable the preparatory work on the Loran C proposal to continue, and will also be evidence of our good faith to our partners in the international discussions. I beg to move.
Moved. That the draft order laid before the House on 20th December 1990 be approved [7th Report from the Joint Committee].—(Lord Brabazon of Tara.)
Lord Underhill: My Lords, I am sure that the House will appreciate that I do not have the technical knowledge of the Loran C equipment. For that reason, noble Lords will appreciate the outline of the position given by the Minister in defining the improvements. This is a statutory instrument determined by affirmative resolution and therefore it would be wrong for us not to indicate that anything that improves the efficient use of equipment and helps the safety of shipping will receive our full approval.
In paragraph 2 the Minister commented on the international agreement. Perhaps he could indicate with whom the international agreement is made. Of the nations concerned, does it have to be unanimous or could there be partial agreement? The order makes no distinction and does not define the position of the international agreement at all.
Lord Brabazon of Tara: My Lords, I am grateful to the noble Lord, Lord Underhill, for his reception of the order. The countries which are in progress on this matter are Canada, Denmark, Germany, France, Iceland, the Republic of Ireland, the Netherlands and Norway. Agreement needs to be reached with all those countries regarding the cost sharing arrangements. I shall not go into the details of cost sharing; there is an upper limit above which we will not go.
On Question Motion agreed to.

Community Charges (Substitute Setting) Bill
5.22 p.m.
Baroness Blatch: My Lords, I beg to move that the Bill be now read a second time.
This is a short Bill but it is an important one. Its purpose is to protect chargepayers by guaranteeing that they benefit fully from any budget reductions arising from charge capping. It will ensure that when such budget reductions are made there are commensurate reductions in community charges. Thus, if, as a result of capping, an authority's budget were reduced by, say, £50 per chargepayer, this Bill would ensure that the reduction is passed on to chargepayers in full by way of a £50 cut in the charge.
The need for the Bill was graphically shown last year when the London Borough of Lambeth exploited a loophole in the existing statutory provisions for setting substitute charges. The council took advantage of this when it had to reset its charges after my right honourable friend capped its excessive budget for the 1990–91 financial year.

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What happened in Lambeth was that when the council reset its charges in August after capping, it increased its estimate of non-collection; that is, its estimate of the number of people liable to pay the charge who do not in the event do so. The council changed its estimate from the 10 per cent. it had assumed when it set its original charges back in April, to 15 per cent. By increasing its estimate for non-collection, Lambeth deprived its chargepayers of some £29 each. That is over half the charge reduction implied by the cuts it had been forced to make in its excessive budget. This left Lambeth's new charge at £521–63, which enjoys the dubious distinction of being the highest community charge in the country.
The courts found that Lambeth, on the facts of its particular case, was entitled to do that. The legality of the council's behaviour is not in question. What is seriously in doubt is the equity of denying hard-pressed local people the full reductions in charges they might reasonably have expected to receive after the council had gone to the length of setting a new, lower budget and reducing its spending following capping.
I might point out that even after capping Lambeth's budget is still almost 19 per cent. above its standard spending assessment, that is, above the level of revenue spending that the Government considers appropriate. Whatever the council's views on the level of the cap itself, there was no justification whatever for doing other than passing on in full to chargepayers the benefit of the budget reduction which the council itself had made.
The simple purpose of the Bill therefore is to plug what I might term "the Lambeth Loophole". Let me dispel any notion that there is anything vindictive about the Bill; that we are in some way proceeding out of spite. Nothing could be further from the truth. If there has been any vindictiveness, it is in Lambeth's decision to deny its chargepayers the full benefit of having reduced its budget. Our sole concern with this Bill is to give chargepayers the protection which should be theirs.
The Bill thus has a narrow objective, which it achieves by amending the existing law relating to the setting of substitute charges in Section 35 of the Local Government Finance Act 1988. The Bill is not about the community charge in general. Nor does it affect the Secretary of State's powers to cap budgets which are in his opinion excessive or represent an excessive increase over the previous year. My right honourable friend has made it absolutely clear that if he needs to use those powers for next year he will do so. As I told the House on 22nd January, the Government stand by the intended criteria for charge capping announced on 31st October last year.
Although short, the Bill is a technical one; and I am conscious that at first sight it may appear to be complicated. The Bill has been drafted so as to achieve its objective in as robust and watertight a way as possible, and to ensure that the new provisions mesh in satisfactorily those in the existing legislation. Let me assure the House that the overall result is very simple. In essence, what the Bill does is to ensure that
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each authority's charges after capping are reduced by the amount of the budget reductions secured by capping, expressed in pounds per adult. It may help your Lordships if I now run through the provisions of the Bill.
Clause 1 is the key provision. It provides that substitute charges set because of capping have to be set on the basis of one of the formulae specified in the clause, not in accordance with the current provisions of Section 35 of the 1988 Act. The formulae do not apply to substitute charges set under that section where capping is not involved. As your Lordships may have observed, there are three formulae. One deals with the situation where a precepting authority, such as a county council, is capped. Another caters for the capping of a charging authority (other than a special authority); this category includes district councils and London boroughs. The third formula is for a special authority. There is only one special authority and that is the City of London.
By prescribing by means of formulae exactly how the substitute charge is calculated, we can ensure that authorities will no longer be able to take advantage of having to reset charges after capping to increase their allowance for non-collection, thereby denying their chargepayers the full benefits of capping. Authorities will have no flexibility or discretion to do other than pass on to local people, by way of commensurate reductions in charges, the full amount of the budget reductions achieved by capping.
But let me make it clear that this formula approach, designed to protect chargepayers, in no sense penalises capped authorities. Nor is it at odds with the statutory requirement for an authority to balance its books. The Bill does not change that requirement.
All authorities have to make their best estimate of income and expenditure at the beginning of the year and live with the consequences. An authority's actual income and expenditure is bound to differ, if only marginally, from its estimates so that at the end of the year its collection fund will be in surplus or deficit. So if the actual number of chargepayers turns out to be lower than the authority estimated when setting its charges, it will incur a deficit.
No authority can increase its charges part way through the year just because it realises that its estimates were wrong to begin with. The statutory arrangements are that any deficit has to be allowed for when setting the next year's charges. The Bill makes sure that capped authorities are in the same position as all other authorities.
I now turn to Clause 2. This clause defines the terms of the formulae specified in Clause 1. In essence, the formulae provide that the new charge must be derived by subtracting from the old charge ("A" in the formula) the difference between the old budget and the new budget (that is, "B" minus "C"), divided by the area's adult population ("D" in the formula). To repeat the example I gave earlier, if a budget were reduced by capping by, say, £50 per chargepayer, the charge likewise must be cut by £50.
In the case of the City of London there is an additional factor ("E" in the formula), to be prescribed by order, to ensure that the proportion of

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the budget reduction from which chargepayers benefit through reduced charges reflects the proportion of the City's budget funded by them rather than by business ratepayers under the City's special arrangements. It may help if I say that on the basis of this year's arrangements the "E" factor would have been 0·01.
Clause 3 provides a safeguard by making sure that authorities do not get round the formula by setting a further higher charge. Thus it provides that no substitute charges set under Section 35 may be higher than those for which they are substituted except in certain highly exceptional circumstances, all stemming from illegality. These are where a precept or a Section 95(4) calculation has been quashed or an original precept is issued late. The clause is consistent with the traditional local government finance principle that charges may not be increased part way through the financial year, except in these very exceptional circumstances.
Clause 4 is designed to ensure that if a charging authority has more than one obligation to set substitute charges—for example, if both it and an authority precepting on it were capped—it does not have to send new bills to its chargepayers and so on until all its obligations have been discharged. Under current provisions these and other actions are triggered by the setting of a substitute charge. It would be obviously ridiculous if an authority had to send out several sets of bills. Under this clause they will not have to and the bills issued would reflect the charge reduction resulting from the capping of both the charging authority and the precepting authority.
The remaining provisions of the Bill, Clauses 5, 6, 7 and the schedule, together deal with consequential amendments and repeals, timing of effect, citation and extent. On timing, I should point out that, although the provisions of the Bill will apply in relation to 1991–92 and subsequent years they will, for 1991–92, apply only in relation to things done after enactment. In other words, the Bill, if enacted, will not be retrospective.
In conclusion, the Government are determined to ensure that what Lambeth did this year cannot be repeated in future. We are simply not prepared to let the benefits of the Government's intervention on behalf of local people be undone by local authorities which have scant regard for their chargepayers. That is why we introduced this Bill in another place in November; a Bill which has reached your Lordships' House unamended.
This then is an important measure to protect local people. In future, chargepayers can be confident that reductions in their charges after capping are not dependent on the whims of local authorities. Indeed, as a result of the formula approach, such reductions can be predicted with pinpoint accuracy. Chargepayers in capped authorities will know exactly where they stand. I commend the Bill to the House.
Moved, That the Bill be now read a second time.—(Baroness Blatch.)
5.32 p.m.
Lord McIntosh of Haringey: My Lords, the kindest thing that can be said about this nasty little Bill is that it is a waste of parliamentary time. It is a confession of failure on the part of the Government. Noble Lords who took part in the process of the Local Government Finance Act 1988 and the Local Government and Housing Act 1989—as I did for my sins—will remember that above all it was the provisions concerning the poll tax that we found most objectionable. They revealed that the Government did not believe in the poll tax which they were introducing. They did not believe that it would achieve accountability, which was virtually the only real claim made for it.
The accountability theory implied that a new system of local government finance would so directly relate to the expenditure of local authorities and the charge that they made on the inhabitants of their areas, that the local people would rise up in anger if there were overspending. The theory was that they would be happy and contented if there were prudent management of local authority finances which would be reflected in the ballot box. Therefore, we would be getting away from what was claimed to be the indirect and imperfect relationship between the expenditure of local authorities and the charges which they made on their inhabitants in the form of rates.
That was the theory, but it clearly has not worked. Before it was introduced the Government reneged on that theory. Right from 1988 they introduced the principle of capping. There are many quotations that I could produce from distinguished members of the Conservative Party about capping and the iniquity of the Government imposing their own views on local authorities as to what their budgets should be when they had spent so much time trying to avoid that eventuality. I shall not do that except to quote Mr. Michael Heseltine whose comments appeared in The Times on 9th May 1990. Before he became a Secretary of State he said that community charge capping will "negate responsibility". He also described it as an,
"act of centralised political power".
He denounced it roundly. It is significant that Mr. Heseltine did not take part in any way in the debates on this Bill in another place. It is not just that this Bill is a confession of failure on the part of the Government to get their sums and legislation right. It is the unfortunate case that even since the Bill was introduced in another place last November the situation has become worse and the justification for this Bill, such as it is, has been reduced.
Since that time 1.2 billion or more of public money has been found to keep down the poll tax. Since then the Audit Commission has reported that another of the fundamental principles of the poll tax system is totally unsatisfactory; namely that everybody should pay something if only 20 per cent. We said that it was totally unsatisfactory right from the very beginning. It costs more to collect that 20 per cent. from many of the people most in need than is obtained in revenue. The Audit Commission recommended that that minimum 20 per cent., should be abolished.

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In defending the Bill, Mr. Portillo wrote a letter to the leader of Lambeth Council in which he said that the Bill was,
"concerned with neither the community charge in general, nor our charge-capping powers".
If it was not, it should have been. If ever there was a time when a fundamental review was needed of the poll tax legislation, it is now and before the damage which was done last year is extended to next year and the year after. I have said that the kindest thing to say is that this Bill is a waste of parliamentary time. But it is much worse than that. The principle of capping on the budget, however objectionable it may be, can at least be defended on the basis that the budgets of local authorities are public expenditure. That is the function which central government are seeking to control. They set the standard spending assessment on the basis of the needs, resources and costs of local authorities which is reflected in the budgets which the local authorities are expected to adopt.
This Bill now extends that control, which is designed to protect public expenditure, to the individual level of poll tax charged. In other words, the fig leaf of the control of public expenditure is thrown away. What we have left is a straightforward, naked political attempt to affect the way in which public expenditure is demanded. It is simply not true to say that local authorities like Lambeth are denying their inhabitants the benefits of the capping system.
There are good reasons why local authorities which are capped may find it impossible or undesirable immediately to pass on to the poll tax payers the reductions in their budgets. The simple fact has been well demonstrated in 1990. First, the very fact of capping causes confusion, delays in the sending out of the poll tax demands and a reduction in the collection rate. There is therefore a shortfall in the revenue of local authorities. It is the principle of in-year capping —that is to say, not doing it in advance, but after the rate has been set—which we attacked vigorously when the original Bills were going through. It is that fact which reduces the revenue of local authorities and hinders collection of the poll tax. That makes it impossible to pass on the so-called benefits.
They may do so, secondly, because budget cuts which take place in the course of the year are very often delays in expenditure rather than real cuts in expenditure. There has to be delayed expenditure. Local authorities have to put off to a future year things which need to be done. This means that the local authority has to maintain a higher level of reserves than it would otherwise do. As the capping formula for 1991–92, which was announced on 31st October last year, is based partly on the increase in the budget from year to year, if authorities do not provide themselves with adequate reserves to deal with the things they can no longer delay, then they will be caught by capping for another year.
The situation for such local authorities is quite impossible. There is no way in which they can pass on to their inhabitants every single penny that is cut from their budgets without betraying the principles of
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sound financial management. Although the Minister presents the Bill in a very competent and helpful way —I am grateful to her for that—but also in a very bland way because she seeks to present it really as a technical measure, I have to tell her that the Opposition treat this Bill extremely seriously and will be treating all stages of the Bill extremely seriously. We shall be proposing a series of amendments which will attempt to minimise the dangers we see in the Bill. We shall be using this opportunity to see to it that the Bill does not make the already bad situation of the poll tax worse.
We shall put forward five groups of amendments. First, we shall seek to ensure that implementation of the Bill is delayed until after the Government have completed their existing review. If, by the way, the Minister wants to repeat her offer to me to take part in the review, I accept that offer. I shall be glad to do so, provided that she withdraws the Bill. That is the only way her offer makes any sense. There is no point in my taking part in a general no-holds-barred review of local government finance if Bills like this are going to go forward.
The second group of amendments will be very businesslike. They will be concerned to ensure that local authorities are able to use the latest information available to them if they are capped in order to decide what the level of the poll tax should be. No sensible private business would dream of making a business plan except on the basis of the latest information available to it.
The third group of amendments will seek to ensure that local authorities, even where the information does not change, can exercise their latest and most up-to-date judgment on what that information means. It could well involve the later experience of collection rates.
The fourth group of amendments will seek to ensure that, whatever happens, capped local authorities are not forbidden for financial reasons from carrying out their statutory duties. We are already hearing screams of pain from police authorities and fire authorities—it is happening not only in Labour controlled areas—about what will happen to their budgets if they are forced down by the threat of capping to below the level which is necessary to maintain these essential emergency services.
The fifth group of amendments will be concerned with the realistic assumptions which should be made in the formulae about population, collection rates and so on. It can therefore be seen that the Committee and later stages of the Bill will not simply be formal or technical; they will be a good deal more serious than the Government would wish them to be.
The Bill is in some ways deliberately obscure because the Government do not wish us to know how deeply embarrassed they are by the failure of their own poll tax legislation. Many in the Conservative Party and indeed at the highest levels of government know the truth. It is an insult to this House that we should be presented with a Bill which pretends that we do not know the truth.
5.45 p.m.
Lord Meston: My Lords, this appears as a small Bill with an uninspiring Title. The introductory memorandum blandly states that it has no financial implications. The noble Baroness, in her helpful introduction, said that at first sight the Bill might appear rather complicated. It appears rather complicated to me not only at first sight but at second and third sight. Indeed, to the reader of average intelligence its contents are almost unintelligible, including the algebraic formulae which are becoming increasingly popular in legislation. There are moments when I think that I have grasped the structure of this legislation but they do not last. In that context I am grateful not only for the exposition of the noble Baroness but for the commentary provided by the relevant government departments.
In reality the Bill reflects a number of factors of broader importance, upon some of which the noble Lord, Lord McIntosh, has touched. First, it reflects the view that the courts took of the existing legislation. The courts held that as the law stood Lambeth was reasonable to allow for its predicted percentage of non-payment. That might strike one as analogous to any responsible business making a form of bad debt provision. The problems exposed in the Lambeth case arose from the way in which the legislation was drafted whereby the Government did not give themselves power directly to set charge levels, only to prescribe expenditure levels.
In that context, as I understand it, Lord Justice Mustill said in the Court of Appeal:
"In the lengthy conflict between central and local government for control of local taxation, central government had the whip hand, since it had the power to enact legislation which the court must seek to enforce in spirit as well as in letter; but, here, as it had been impossible to discern the spirit of Section 35(5) the court had to adhere to the written word".
On that basis, it was held that Lambeth was entitled to take into account the kind of information that it did.
Lord Justice Bingham said that it must be assumed that it was intended that a,
"genuine power of decision was to continue to reside in the elected members of the authority".
That assumption will no longer hold when this Bill is enacted. The fiction of accountability for local spending will go.
Secondly, this Bill and the problems which have given rise to it are the product of a system, a system outlined by the noble Lord, Lord McIntosh. It requires local authorities to make estimates which can include expenditure already incurred in a preceding year as well as anticipated expenditure in the following year before funds become available. Thirdly, the Bill is the product of a system of local government finance dependent on centralised control. The Bill increases that control by reducing matters to yet another formula.
Finally, the Bill and the case law leading to it are the product of the difficulty and expense of collection of the charge of which the Government had fair warning. It was well said that the community charge simply replaced one unsatisfactory form of taxation with another. The Secretary of State has now initiated a review of the community charge. The party to which
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I belong has been participating in that review and has put forward constructive proposals for reform in what we hope will continue to be a constructive debate, going to both the structure and the financing of local government. If there is not reform, the community charge will continue to be a source of dissension. Confidence in government, both local and central, will be undermined and the courts will continue to be required to hear political arguments dressed up as points of law, finding gaps to be corrected by unsatisfactory legislation such as this.
5.50 p.m.
Lord Skelmersdale: My Lords, as my noble friend on the Front Bench so clearly explained, this narrow, technical and necessarily complicated Bill is before the House solely to close a loophole in the existing law on community charge capping. I understand the strictures of the noble Lord, Lord McIntosh, on community charge capping per se and I shall, perhaps, have a word to say about that aspect of the matter later. However, contrary to the views which he expressed and which represent the party opposite, I have absolutely no doubt that it is both necessary and desirable to take such action. Nevertheless, I agree with him in a view which he did not quite express. To my mind, nothing demonstrates more clearly the breakdown of relationships between central and local government than this Bill.
The noble Lord, Lord Meston, may feel that one enters the field of local government finance at one's peril. Neither he nor I have taken that advice. Since relinquishing responsibility for local government finance, I have been a firm believer in what I call the pure milk of the community charge. I say "since" because I was not involved in the formulation of that policy. The idea that virtually every voter pays something towards the 25 per cent. of local authority expenditure that is raised locally must mean that every voter has an interest both in what is raised through local taxes and in what it is spent on. When my right honourable friend finishes his review, I hope that that central criterion will not be lost from whatever he recommends to Parliament.
The fact that the community charge is so high in many authorities must have come as a nasty shock to the one-third of voters who did not pay rates and to the other people living in houses where the rateable value produced a rate which was lower than the average community charge. Like many noble Lords, I await the electoral results of this shock with considerable interest. That is precisely why the Government have decided to have a proper in-depth review with, as we have heard so often, "nothing ruled in and nothing ruled out". That is certainly what is needed to change a method of local revenue raising that has caused widespread concern resulting in a significant number of people behaving illegally. I utterly condemn those who are refusing to pay the community charge and those who have in the recent past been involved in the so-called "poll tax riots".
It would indeed be tempting—and both previous speakers have sailed pretty close to the wind in this respect—to turn this debate into a general survey of

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current and future methods of financing local government services and of whether in this day and age local government is actually being asked to provide the right services. However, that is not what the debate on the Bill is about. In passing, perhaps I may say how glad I am that the usual channels have found time for a debate on that matter, which I believe to be crucial at this time, on 27th February.
In the meantime, we are left with the level of community charge in a period where there have not been enough local elections to bring about the vital synergy between the voter and the raiser of the money. I accept that we have seen some changes in councillors during the past year in such places as Brent, Trafford and Derby. But my answer to the noble Lord, Lord McIntosh, is that until there is a full raft of local elections under the community charge regime or its successor, we must, as a responsible party of government, help the chargepayers who until then will be unable to help themselves. When I voted for that provision, I saw it—and I still do—as a temporary one, probably for five years, after which time the right thing to do would be for it to lapse and ultimately disappear from the statute book.
I believe that it was George Bernard Shaw who said that it took 20 years to get an idea into the heads of the British people and a hundred years to get it out again. As I said, I do not believe that community charge capping will take as long as that—nor should it. But I hope that that will be the position for the successor to the community charge or, as may be the case, the revamped community charge. Having said that, it has to work and to work fairly according to a stated set of criteria.
Last year the Government decided to cap 21 local authorities because they increased their community charge significantly more than the average of all local authorities in the same group. Twenty of those authorities complained to the courts, believing that the Government did not have the legal powers to achieve their objective. That challenge was ultimately thrown out by your Lordships' House sitting in its judicial capacity. It is true to say that 20 years ago, or perhaps even 10, that would have been the end of the matter and the charge cap would have been passed on to the individual chargepayer, as was clearly intended by Parliament when it passed the Local Government Finance Act 1988.
I understand from local press reports that Lambeth Council —why does it always seem to be Lambeth which kicks so hard against the pricks?—caused disgraceful scenes in the council chamber on 1st February when it decided for reasons best known to itself to waste money and debating time on a noisy discussion about something which had absolutely nothing to do with local government; namely, the withdrawal of the United Kingdom from the Gulf Alliance. However, I turn now to deal with Lambeth in the context of this Bill. The council decided that it would not pass on the full savings which it had made—for a saving it was, albeit an enforced one—to the chargepayer. After further legal argument, it was established that Lambeth was legally correct and that
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it did not have to pass on such savings. However, morally, Lambeth was totally and absolutely in the wrong. The Government acted with speed and this Bill is the result. This time, I hope that they have got it right, as sooner or later it will surely be challenged in its turn in the courts.
However much some noble Lords dislike the community charge per se and however much they dislike community charge capping—and we have heard quite a lot about that—while they remain part of the law of the land, this Bill will be required, and rightly so. That is why I support it, though the reasons for it are disgraceful and shoddy. That criticism is not, I hasten to say, aimed at Her Majesty's Government. If certain local authorities are so profligate that they feel the need to levy charges on their chargepayers so excessive that they stick out from their group like a sore thumb and, more importantly, make the community charge wildly exaggerated in one local authority as compared to another without the will of the local electorate having been expressed, the Government have no option but to cap them. The result of the capping should be a reduction in the levy on individual chargepayers; in other words, those savings should be passed on. As I have already said, I believe that that was the original intention of Parliament.
If we examine the Bill as closely as we do most Bills in this House in their subsequent stages, I am convinced that chargepayers will breathe a little more easily knowing that we have protected them from exorbitant community charges. It is not a complete answer—indeed, it is not an answer at all—to the wider problem of who should pay for what services, wherever administered. But it does ensure that, where the worst excesses of local government are reined back, the benefit is passed on to the individual chargepayer. That is what is required of Parliament now.
5.57 p.m.
Baroness Blatch: My Lords, I thought for one moment that I would be able to accept the noble Lord's offer to participate in the local government review. I would happily welcome such an offer, but certainly not with the condition which he put upon it. However, on the same subject, I can say that we welcome the participation of the Liberals in this debate, and we look forward to hearing their submissions.
The Bill before us is not about the merits or otherwise of the system of capping; nor, as I said in my opening speech, is it concerned with the powers of the Secretary of State to cap local authorities. Similarly, I should point out that the Bill is not obscure, as was described by the noble Lord, Lord McIntosh. It is a specific Bill and it addresses a particular device used by Lambeth to deny chargepayers the full benefit of a reduction made as a result of an authority being capped.
The noble Lord, Lord McIntosh, suggested that we should delay the Bill while the local government review is taking place. I do not believe that the Bill

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should be delayed. It is needed in order to help chargepayers from next year by plugging a loophole which was exploited this year by Lambeth.
As I said when I opened this debate, this is a short Bill with a narrow and simple purpose. That does not in any way detract from the importance of the measure, which is designed to protect charge payers by ensuring that authorities cannot deny them the full benefits of charge capping. It amends the existing law by prescribing exactly how charges must be set after capping, thereby guaranteeing that the cuts an authority must make because of capping will lead to commensurate reductions in charges. Thus, the Bill complements the Government's existing powers to cap local authorities, which I have indicated we shall not hesitate to use again next year if we have to do so.
The Bill is about giving local people the certainty that, if their local authority were capped, they are not
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at risk of being put in the same position as the unfortunate people of Lambeth this year. In future, chargepayers will know that they will be fully protected if their local authority chooses to budget excessively.
I welcome the comments made by my noble friend Lord Skelmersdale. I should tell him that we believe we have got the Bill right. We also believe that it will withstand the challenge to which he referred.
The Bill is an important measure to protect local people by guaranteeing that they derive the full benefit of the Government's intervention on their behalf to curb authorities' excessive budgets. I call upon the House to give the Bill a Second Reading.
On Question, Bill read a second time, and committed to a Committee of the Whole House.
House adjourned at six o'clock.