Lords Sitting of 28 January 1991

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

Cabinet Papers 1960: Future Policy Study
Lord Carver Lord Carver asked Her Majesty's Government:
Why the 1960 Cabinet papers (CAB134/1936 and 937) relating to the Future Policy Study have not been released for access at the Public Record Office with other Cabinet papers of the same dates.
The Lord Chancellor (Lord Mackay of Clashfern): My Lords, records may be retained or closed for periods longer than 30 years under appropriate sections of the Public Records Act 1958, as amended in 1967. It has been the practice of successive Administrations not to disclose the contents of such records or to comment in detail on the reasons for witholding them. I am, however, satisfied that the records referred to are properly withheld in accordance with the established criteria which were set out in paragraphs 24 to 31 of the 1982 White Paper, Modern Public Records (Cmnd. 8531).
Lord Carver: My Lords, I thank the noble and learned Lord for that not wholly unexpected Answer. Is he aware that these papers are of considerable interest to students of contemporary history? The preliminary papers—the 1959 papers—of this study were released on 1st January 1990, and the brief to the then Foreign Secretary on the final report, which summarises the whole report dated 15th March 1960, was released this year. Neither shows that any of the subjects for which papers are normally retained were included in the study. Will he therefore make arrangements to have the retention of the papers reconsidered? Will he further initiate a comprehensive review as to why so many papers are being retained beyond the 30-year limit for reasons which those who are interested in these matters think are of doubtful validity'?
The Lord Chancellor: My Lords, my understanding is that not all the papers relating to this project in 1959 were released in full last year. I understand that Cabinet Papers 134/1936 include papers covering the latter part of 1959. As to the other matters, what I have endeavoured to do is to apply faithfully the published criteria which were set out in the 1982 White Paper. Whether particular documents fall into these classes is necessarily a matter of judgment. However, I believe that that judgment is reasonably exercised. Of the documents which are selected for permanent preservation in the Public Record Office, no more than 2 per cent. are subject to extended closure. It is natural that attention is focused on the ones in respect of which extended closure is claimed, but I am informed that, in percentage terms, that is 2 per cent. of the
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total. It may be that the overall appreciation to which the noble and gallant Lord has referred is not entirely justified by a full examination of the facts.
Lord Campbell of Croy: My Lords, is my noble and learned friend satisfied that the criteria which he mentioned are observed with consistency by those who have to carry out the weeding of these documents as the 30-year point is being approached?
The Lord Chancellor: My Lords, I am assisted in this matter by a team of inspecting officers of the Public Record Office. They endeavour to perform these functions with the degree of consistency that one would expect of a comparatively small team.
Lord Jenkins of Putney: My Lords, can the noble and learned Lord help us a little? Is it not quite understandable that the documents themselves to which these exchanges have referred should be the subject of agreement or disagreement as to whether they should or should not have been released? Is it not desirable that noble Lords who do not know anything about this subject should at least be told what the Question and Answer have been about?
The Lord Chancellor: My Lords, to answer that question requires me to remind your Lordships of the Question on the Order Paper. Noble Lords will see there what the Question is about. I believe that the Answer is reasonably related to that.
Lord Mishcon: My Lords, without being quite so occult as the noble and learned Lord has just been, is it not a fact that the Future Policy Study was set up by Mr. Macmillan, as he then was, in order to see what the position of this country and indeed the world might be 10 years hence; namely, in 1970? In view of the fact that, if my summary is correct, that is what the Question is all about, is it not strange that any papers relating to such a matter should be the subject of security and so on in this year of grace? Does not the noble and learned Lord agree that a freedom of information Act is called for?
The Lord Chancellor: My Lords, the question of whether a freedom of information Act would be helpful in such circumstances is rather different from the Question which appears on the Order Paper. The policy in relation to the application of existing legislation was set down in the 1982 White Paper. We seek to apply that consistently. The fact that a study was set up for a specific purpose does not necessarily mean that matters which were looked at in the course of the study may not fall under those criteria. I believe that has happened in this case.
Lord Teviot: My Lords, is my noble and learned friend aware that I served on his predecessor's advisory council for nine years some time ago? I agree with what he said but, in regard to the noble and gallant Lord's Question, will my noble and learned friend please further explain what are the particular criteria which apply? For example, can he say whether they are of a personal or political nature, or whatever? Such an explanation would be most helpful to the noble and gallant Lord and also to the House.
The Lord Chancellor: My Lords, the criteria applying to Section 5(1) of the Act are: first, exceptionally sensitive papers the disclosure of which would be contrary to the public interest, whether on security or other grounds and including the need to safeguard the revenue. It will not be a surprise for noble Lords to learn that that consideration was relevant to these papers; secondly, documents containing information supplied in confidence, the disclosure of which would or might constitute a breach of good faith. I do not think that that particular criterion applied in the case of these documents. The third is, documents containing information about individuals, the disclosure of which would cause distress and embarrassment to living persons or their immediate descendants. That is a criterion which could well be important in this case.
I should perhaps point out that as soon as the noble and gallant Lord had tabled the Question I invited the relevant official from the Public Record Office to look again at these documents. It is in the light of the advice I received that I remain of the view that the criteria have been properly applied.
Lord Beloff: My Lords, does my noble and learned friend agree that an unusual use—as many people would think—of these powers of withdrawal is all too likely to encourage the clamour for a freedom of information Act, with which I would wholly disagree? Does he further agree that, so long as the United States has a Freedom of Information Act and we are so restrictive about documents other than those concerning national security, it is all too likely that our recent history will be written from American and not British archives, which cannot do us much good?
The Lord Chancellor: My Lords, the considerations to which my noble friend referred reinforce the need to apply the published criteria with care. That is what we seek to do. However, I remind him that I said that of the documents which are selected for permanent preservation in the Public Record Office, no more than about 2 per cent. are subjected to extended closure.
Lord Strabolgi: My Lords, why is it necessary to spare embarrassment to the descendants of the persons concerned when they are not spared such embarrassment in biographies?
The Lord Chancellor: My Lords, it may be that the public should have a higher standard in protecting people from unnecessary embarrassment than some biographers may have. At all events, that criterion is the one which I apply and which is set out in the White Paper. I must say that it seems to me to be a reasonable criterion.
The Lord Privy Seal (Lord Waddington): My Lords, I am aware that the House is enjoying this Question, but 11 minutes have elapsed and perhaps we should move on.

Homelessness
2.50 p.m.
Baroness Fisher of Retinal Baroness Fisher of Retinal asked Her Majesty's Government:
What guidance to assess and deal with homelessness they give to those housing authorities where housing stock has been transferred.
Viscount Astor: My Lords, councils are obliged to assist homeless people under the provisions of Part III of the Housing Act 1985 even when they have transferred their housing stock. However, before the Secretary of State will consent to the transfer of a council's housing stock to another landlord he has to be satisfied that the council will be able to continue to meet its homelessness duties. The code of guidance to the homelessness legislation, to which councils must have regard, helps them carry out those duties.
Baroness Fisher of Rednal: My Lords, I thank the Minister for that Answer. How does a local authority pay for the homeless when the properties that it has transferred are no longer its responsibility? What does the local authority then do with homeless families? Does it cast them on to other local authorities which have not got rid of their housing stock?
Viscount Astor: My Lords, local authorities have benefited from the receipts of council house sales. The noble Baroness will be aware that local authorities can use 25 per cent. of their housing receipts to finance new capital expenditure on renovations, improvements or new homes.
Lord Dean of Beswick: My Lords, how does the Minister suggest that local authorities, most of which have a greatly increasing incidence of homelessness, should deal with their responsibilities now that their housing stock has shrunk due to the Government's housing policy, which includes the withholding of capital assets that the Minister has just mentioned? If local authorities were allowed increased access to those capital receipts, they could once again start to build houses.
Viscount Astor: My Lords, the total housing public expenditure programme remains large. Public expenditure on housing next year, including local authority self-financing expenditure from receipts, will amount to well over £8 billion. Your Lordships will be aware that there is a Question on the Order Paper next week which asks whether the Government will remove the restrictions on local authorities. I expect that during the discussion on that Question, the noble Lord's question will be asked.
Baroness Flather: My Lords, does my noble friend agree that the homelessness pressures are greatest in London and the South East, and that the problem continues mainly because of the over-use of bed-and-breakfast accommodation about which something needs to be done?
Viscount Astor: My Lords, I entirely agree with my noble friend. That is why the Government have targeted £300 million on London and the South East,

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where the worst problems exist, to alleviate the plight of families forced to live in temporary bed-and-breakfast accommodation. The additional resources have been made available to local authorities and housing associations for schemes to bring their empty stock back into use. Our prime objective is, as I have said, to reduce the use of bed-and-breakfast hotels as temporary accommodation for homeless families.
Lord Stallard: My Lords, does the Minister accept that his replies to these questions have been interesting, but that he has not answered the Question on the Order Paper? The Question asks, "what guidance to assess and deal with homelessness" the Government give to local authorities. The Question is not the one that we have asked a thousand times before and to which we have received the same reply about using 25 per cent. of revenue. Will the Minister deal with the Question on the Order Paper?
Viscount Astor: My Lords, a code of guidance is being revised and currently has been sent out for consultation with the local authority associations. The deadline for written comments is 31st January. We aim to issue the revised document shortly. Our experience to date has shown that there have been no problems with regard to local authorities fulfilling their homelessness duties where stock has already been transferred.
Baroness Fisher of Rednal: My Lords, I thank the Minister for elaborating upon his original Answer, but does he accept that two thirds of the homeless families registered with local authorities are located outside London and are spread throughout all of our industrial cities?
Viscount Astor: My Lords, yes, the problem is not necessarily confined to London. However the rural housing programme, announced by the Minister for Housing on 9th November, amounts to £50 million of credit approval for local authorities to provide, through housing associations, houses for rent in rural areas.
Lord Dean of Beswick: My Lords, what advice do the Government give local authorities in rural areas which, because of their political complexion, supported the forced sale of council houses and now find themselves without any stock with which to deal with homelessness, and which are now complaining about the Government's policy?
Viscount Astor: My Lords, the Government welcome the transfers in principle provided they conform to the department's guidelines. They fit in well with the enabling role in housing that the Government envisage for local authorities. They are also in line with the Goverment's objective of providing wider choice in rented housing.

Vietnam: Aid and Technical Assistance
2.55 p.m.
Baroness Ewart-Biggs Baroness Ewart-Biggs asked Her Majesty's Government:
Whether they will increase aid and technical assistance to the Vietnamese government.
Lord Reay: My Lords, the Government are providing financial support to British nongovernmental organisations for projects in Vietnam. We also expect to make a substantial contribution to the major EC repatriation and reintegration assistance programme for returning boat people over the next 2½ years. We have no immediate plans to begin a bilateral aid programme, but we are keeping that question under review.
Baroness Ewart-Biggs: My Lords, while I am grateful to the Minister for the small encouragement he gave in his Answer, does he agree that Vietnam's poverty, underdevelopment and high unemployment are all a result of the United States' trade and investment embargo? Does he further agree that any development aid going to the Vietnamese, with all their talents and abilities, would be constructively used and would also help to strengthen our efforts to liberalise their economic policies? Why do Her Majesty's Government's economic policies towards Vietnam continue to be so closely aligned with those of the United States of America?
Lord Reay: My Lords, I doubt whether the situation can be explained as simply as the noble Baroness suggests. The aid programme with which we are involved is a substantial one. The EC programme will total 122 million units of account—that is to say, approximately £86 million—over the next two years. That is a considerable programme.
Baroness Ewart-Biggs: My Lords, will the Minister answer my question? Why does Britain continue to align its policies with the United States' trade and investment embargo, and its veto on IMF and World Bank loans to Vietnam?
Lord Reay: My Lords, we have our own policy on aid to Vietnam which I have already outlined.
Lord Lyell: My Lords, I understand that Vietnam's population is about 65 million. Despite what was said in the previous question, does my noble friend agree that aid should be channelled towards that possible new market, especially in Ho Chi Minh city, which is of course Vietnam's leading commercial centre?
Lord Reay: My Lords, my noble friend makes two good points. Ho Chi Minh city is a matter that we have in mind although we have no immediate plans.
Lord Molloy: My Lords, the Minister mentioned the boat people. That problem causes Vietnam grave concern. It also causes grave concern to Hong Kong. I was a member of a parliamentary delegation that visited Hong Kong a few months ago. The Hong Kong Government, and their colleagues in Vietnam, are of the opinion that much more assistance should be provided by the United States because it, more than anyone else, created the problem.
Lord Reay: My Lords, I do not answer for the United States' Government from this Dispatch Box. I answer for Her Majesty's Government, and our policy is the one that I have outlined.
Lord Boyd-Carpenter: My Lords, is not this country's capacity to provide overseas aid for Vietnam much restricted by the high cost of our expenditure on the Gulf operations and the paltry measure of support that we are receiving towards those operations from our European friends?
Lord Reay: My Lords, my noble friend is introducing other matters which he will have an opportunity further to pursue later in the week.
Lord Boyd-Carpenter: My Lords, I asked my noble friend whether that high expenditure to which we are committed reduces the amount available in aid for Vietnam. Will he please answer that question instead of reproaching me for raising a different matter?
Lord Reay: My Lords, I have absolutely no wish to reproach my noble friend and have no intention of doing so. The aid which we are committed to give to Vietnam has not been affected by recent events.
Lord Cledwyn of Penrhos: My Lords, we have considerable responsibilities in Hong Kong. Will the Minister confirm that there are already 53,000 economic emigrants from Vietnam in Hong Kong? As I understand it, the number is increasing. In these circumstances, is it not vital, looking towards 1997, that we make a positive approach to the IMF and the World Bank to see whether money can be obtained from that source?
Lord Reay: My Lords, the noble Lord the Leader of the Opposition is correct: there are nearly 52,000 boat people currently in Hong Kong. That is about 10 per cent. fewer than the peak figure. It is extremely important that as many as possible of these people should return to Vietnam. In pursuit of that objective, the aid programme is carried forward.
Lord Cledwyn of Penrhos: My Lords, is it true that the numbers are increasing and that they increased in the last quarter of 1990?
Lord Reay: My Lords, the noble Lord is correct. The total arrivals in December 1990 and January 1991 —this month and last month —were 200 per cent. higher than last year.
Lord Bonham-Carter: My Lords, does the noble Lord agree that the problems to which the noble Lord, Lord Cledwyn of Penrhos, and the noble Baroness, Lady Ewart-Biggs, drew attention, involving refugees and economic under-development as well as poverty, would be greatly alleviated if the United States were to remove their embargo? If, as the noble Lord stated, we have our own policy towards Vietnam, might it not be good for us to bring pressure to bear upon, or at least request, the Government of the United States to change their policy on that matter?
Lord Reay: My Lords, our objective is the repatriation of all non-refugee Vietnamese boat people by the implementation of the comprehensive plan of action that was agreed by the international community. With respect to the United States, Secretary of State Baker has said that they will use their best endeavours to help us achieve that aim.

Riga: Shootings
3.2 p.m.
Lord Hylton Lord Hylton asked Her Majesty's Government:
What protests they have made to the Government of the USSR following the recent shootings of civilians by Soviet forces in Riga, the capital of Latvia.
Lord Reay: My Lords, we have condemned the killings and made strong representations to the Soviet authorities. My right honourable friend the Foreign Secretary summoned the Soviet chargé d'affaires on 21st January to underline our concern and to repeat our call on the Soviet authorities to withdraw their troops and to negotiate seriously with the elected authorities of the Baltic states.
Lord Hylton: My Lords, I thank the noble Lord for his Answer. Does he not find quite unacceptable the combination of 19 deaths, the beating of Lithuanian soldiers in the presence of arrested British journalists, and the new, additional powers for the KGB? Will the Government press for compensation to be paid to the families of those killed and injured?
Lord Reay: My Lords, we deeply deplore the actions of the Soviet troops in Riga and the tragic consequences. We call on the Soviet authorities to refrain from further coercion or repressive measures. Compensation is a matter for the Soviet authorities.
Lord Cledwyn of Penrhos: My Lords, everyone agrees that the way to resolve the problem is through negotiation. In view of the meeting which is to be held between the Soviet Foreign Minister and Secretary of State James Baker, can the noble Lord confirm that Her Majesty's Government are in touch with the United States Administration on the issue? Can he say whether we are also in touch with our colleagues, our partners in the European Community, with a view to making representations directly to President Gorbachev and no one else?
Lord Reay: My Lords, I entirely agree with the first point made by the noble Lord the Leader of the Opposition. We encourage all concerned to put every possible effort into working for a negotiated settlement. As regards consultations with our partners, we and our partners in the European Community decided to suspend implementation of a major part of our co-operation with the Soviet Union in response to the use of force in the Baltic states.
Lord Kennet: My Lords, can the noble Lord say anything about an apparent contradiction in our policy which may cause trouble? On the one hand we, in common with many other countries, never recognised the absorption of the Baltic states into the Soviet Union. On the other hand, we have just signed a treaty, which was also signed by the Soviet Union, stating that borders in Europe may not be changed except by consent. The question arises: whose consent? If the Baltic states were to turn to us and say, "Our consent is sufficient to change the border of the Soviet Union", what shall we say?
Lord Reay: My Lords, the noble Lord raises a question that goes wider than the Question on the Order Paper. We support the right of the Baltic peoples to determine their own future. We call on both leaderships to reach a negotiated settlement.
Lord Hailsham of Saint Marylebone: My Lords, can my noble friend confirm my recollection that originally the three Baltic states were forcibly incorporated and as a direct result of the Stalin-Hitler pact? We have never recognised that incorporation.
Lord Reay: My Lords, I believe that my noble and learned friend is entirely correct.
Lord Stoddart of Swindon: My Lords, does the noble Lord agree that it would be unfortunate if, as a result of the actions of the Soviet Union in the Baltic states, the summit meeting next month did not go ahead or is misunderstood and perhaps affects our operations in the Gulf? Are Her Majesty's Government making any representations to Mr. Bush that he should continue with the summit?
Lord Reay: My Lords, I do not have the answer to that question. I shall look into it and let the noble Lord know the position.
Lord Hylton: My Lords, negotiations have been mentioned both today and last Thursday. Do the Government recognise that negotiations between the Baltic states and the USSR are not negotiations between equals? Will the Government therefore press for the withdrawal of Soviet forces and for a status for the Baltic republics somewhat similar to that of Finland?
Lord Reay: My Lords, as I said, we have called on the Soviet authorities to refrain from coercion or repressive measures. I do not believe that I can go further than that. As to the outcome of any settlement, it is not for us to make any pronouncements on that.
Lord Renton: My Lords, do the Government accept that until 1939 these three small countries were democratic, economically viable, neutral and the people in them happy? Is it the Government's intention to do whatever is within their limited power to restore that fortunate situation?
Lord Reay: My Lords, we are doing everything possible to bring pressure to make sure that there is a negotiated outcome.
Lord Jenkins of Putney: My Lords, is the noble Lord aware that fascism and anti-semitism were rife in the Baltic states and there are currently signs of a recurrence?
Lord Reay: My Lords, that is another Question.

Agricultural Holdings (Scotland) Bill [H.L.]
3.7 p.m.
The Earl of Strathmore and Kinghorne: My Lords, on behalf of my noble and learned friend Lord Fraser of Carmyllie, I beg to introduce a Bill to consolidate the Agricultural Holdings (Scotland) Act 1949 and other enactments relating to agricultural holdings in Scotland. I beg to move that the Bill be now read a first time.
Moved, That the Bill be now read a first time.—(The Earl of Strathmore and Kinghorne.)
On Question, Bill read a first time, and to be printed.

Civil Jurisdiction and Judgments Bill [H.L.]
Lord Mackay of Clashfern: My Lords, I understand that no amendments have been set down to this Bill and that no noble Lord has indicated a wish to move a manuscript amendment or to speak in Committee. Therefore, unless any noble Lord objects, I beg to move that the order of commitment be discharged.
Moved, That the order of commitment be discharged.—(The Lord Chancellor.)
On Question, Motion agreed to.

Caravans (Standard Community Charge and Rating) Bill
3.9 p.m.
Lord Denham: My Lords, I have it in command from Her Majesty the Queen to acquaint the House that Her Majesty, having been informed of the purport of the Caravans (Standard Community Charge and Rating) Bill, has consented to place her prerogative and interests so far as they are affected by the Bill, at the disposal of Parliament for the purposes of the Bill.
The Parliamentary Under-Secretary of State, Department of the Environment (Baroness Blatch): My Lords, I beg to move that this Bill be now read a third time.
Moved, That the Bill be now read a third time.—(Baroness Blatch.)
Baroness Hollis of Heigham: My Lords, this is a curious Bill which should never have been necessary. When the Government introduced the poll tax, three forms of financial liability were available to levy on caravans. Those were the personal community charge, which is rather like the charge paid by the ordinary householder; the standard community charge, which is levied on owners of second homes; and the non-domestic rate, which is the charge levied on commercial businesses.
This is the Government's third attempt to try to get the financial liability on caravans correct. Mr. Chope, the Minister in another place, introduced the first

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version offered by the Government in February 1988. At that time it was suggested that all caravans that were a person's main or sole residence should be liable to a personal charge. Those who inhabited other caravans that comprised second homes or were touring or commercial letting caravans should pay the standard charge; in other words, the line was drawn between residential use on the one hand and leisure use on the other. It was decided that leisure users should pay a standard charge. However, after complaints were received from the caravan society, the Minister drew up a different boundary line. The boundary was no longer drawn between residential and leisure caravans, but between static and mobile caravans. The answer to the question of when a second home is not a second home is when the caravan or its occupants move. However, that decision generated further problems because those caravan residents who paid a personal charge, those caravan residents who paid a standard charge, and those residents who paid a business rate were all on the same site, and caravan residents did not know which charge they had to pay.
In this Bill the Government have tried to draw the boundaries for a third time. It has been decided that if there is year-round occupancy, the residents should pay a personal charge. However, if there is irregular or intermittent occupancy—this applies when a caravan is used as a second home or is let commercially—a business rate should be levied. We do not object to this third attempt to define what caravan residents should pay. However, I suggest to the Minister that the problem of boundaries and definitions will not go away. We said this on Second Reading and in Committee and we are saying it again today.
If the line is drawn between residential caravans, whose owners are liable for the personal charge, and all other leisure caravans, including second homes and holiday caravans whose residents pay a business rate, what grounds are there for not treating holiday chalets in the same way? Holiday chalets may share the same site as caravans. They are the same size as caravans, and they may have the same or a lesser value. They make use of the same limited facilities as caravans, but residents of chalets will pay a standard charge which in many cases will be three or four times higher than the non-domestic rate.
In 1988 the Government promised to brigade chalets with caravans and treat them similarly. However, they have not done so and they are not doing so in this Bill. They are pulling chalets and caravans further apart. It is not good enough to say that caravans are mobile, because many are no more mobile than chalet homes. Nor is it good enough to say that caravans are chattels, because chalets deteriorate in the same way. I suggest that to get rid of one anomaly by introducing another cannot be a sensible way of proceeding.
The first proposal of the Government on this matter was consistent although unfair. The second proposal was fair but unworkable. The third proposal may be workable but I suggest that it is inconsistent and probably unfair. We on this side of the House do
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not oppose the Bill, because it removes a significant financial burden from many elderly people and families on a modest income for whom their caravan is their second home and hobby. However, I suggest that the losers will be the local authorities. Local authorities will lose the standard charge they would have collected from second home caravans. That would have been a useful supplement for that element of the poll tax which they find they are unable to collect. Local authorities under this Bill will not only lose income but will also have to refund the income they have so far collected due to a government change of policy.
Local authorities will have to cover the administrative costs and overheads of adjusting their registers. The loss may be as much as a third of a million pounds this year for one small local authority. That will have to be borne out of the poll tax. The Government are entitled to change their mind three times but they should not expect local authorities to pay for that privilege.
The Government have the parliamentary time to amend the poll tax in this Bill and, apparently, in a second Bill which will appear next week, and in a third Bill on enforcement in a few weeks' time. Therefore I suggest that they should be looking not just at the transitional arrangements that have been announced by the Minister but also at the 20 per cent. payment by students, young people and the elderly, which costs more to collect than it brings in. I further suggest that the Government should consider a non-domestic rate which breaks the link between the local business community and the local authority. The Government should look again at the inadequate central grant, which fails to fund essential services such as education and training, community care or police authorities. The situation in police authorities was referred to in a recent Question.
I suggest that all the tinkering in the world and the Bill this week, the Bill next week and the Bill in a few weeks' time will not make the poll tax a viable, fair and just tax. Its time is up and I hope the Minister will recognise that.
Baroness Blatch: My Lords, I shall try to bring the House back to the Bill we are discussing. The noble Baroness has ranged far and wide beyond the boundaries of the Bill under discussion.
The matter of chalets was raised by noble Lords during our earlier discussion of the Bill and was also dealt with in another place. All the points that the noble Baroness has raised have been dealt with in detail.
We are not seeking to change the boundary between rating and the community charge, merely to correct the specific inadequacy in the present legislation. The question of disadvantaging chalet owners does not arise therefore. The definition of "caravan" to which the noble Baroness referred and to which this Bill applies is set out in other legislation which is not at issue.
As your Lordships will recognise, the Bill is a technical measure which puts right the anomaly created when we amended the local government

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finance legislation in 1988. It has been discovered that our amendment designed to honour an earlier commitment to place holiday caravans in non-domestic rating does not in fact do so. The owners of many holiday caravans—perhaps as many as 100,000 —are liable for the standard community charge.
Our announcement that we would legislate to correct the position and provide that any sums of standard charge already paid would be refunded, was warmly welcomed by the caravan industry and caravan owners in general. The part repayment of any standard charge paid last financial year will also be welcomed in Scotland, together with the powers to extend the derating of caravans, which will continue the process of harmonising rateable values throughout Great Britain. As I have said, all the points that the noble Baroness has raised have been dealt with. I commend the Third Reading to the House.
On Question, Bill read a third time, and passed.

Statutory Sick Pay Bill
3.18 p m.
Lord Denham: My Lords, I have it in command from Her Majesty the Queen to acquaint the House that Her Majesty, having been informed of the purport of the Statutory Sick Pay Bill, has consented to place her prerogative and interests so far as they are affected by the Bill at the disposal of Parliament for the purposes of the Bill.
Bill read a third time.
Clause 2 [Small employers' relief]:
Lord Stanley of Alderley Lord Stanley of Alderley moved Amendment No. 1:
Page 2, line 40, leave out from beginning to end of line 16 on page 3 and insert:
("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 shill 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."")

The noble Lord said: My Lords, this amendment seeks to help small businesses such as corner shops or village post offices. In Committee my noble kinsman Lord Henley promised to table an amendment to help these small businesses as he fully acknowledged the need to do so. He did that at Report by tabling an amendment which is now included in the Bill. It relies
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on two factors: first, the amount of national insurance contributions paid by a business in one year, which my noble kinsman indicated would be £15,000; and, secondly, excluding any benefit for a period, which the Government indicated would be eight weeks.
My noble kinsman made great play of the Government's generosity, in particular regarding the suggested figure of £15,000. That was misleading since it included employees' contributions, and the Government gave no indication as to whether the figure might be uprated in the future. The amendment deals with that point, but I shall leave it to the noble Lord, Lord Carter, to explain it to your Lordships.
It is the suggested eight-week delay before the concession to a small employer comes into effect that is totally and utterly unacceptable and makes the concession useless. It is not a concession. It merely takes away what was intimated by the £15,000 limit on national insurance contributions.
If I have the courage of my convictions I should say that there are tricks in all trades except horse dealing and this offer, both of which are all tricks. Why is that so? First, as the noble Lord, Lord Carter, stated at an earlier stage, in 30 years of employing 40 employees he has had only four cases when any employee has been absent for more than eight weeks. I have farmed since 1954—I have never had such a case.
Secondly, my noble kinsman Lord Russell gave an example of all six employees being killed in a car crash. That was ridiculed by our noble kinsman Lord Henley, who missed the point. The point is this. What about the small business, farm or corner shop which employs only one person? Every time that one employee is sick the amendment of my noble kinsman Lord Russell applies, because the employer has lost all of his workforce. As a result, not only does he have to pay statutory sick pay but he also has to find someone to take the place of that one employee.
No large employer is likely to face the problem of his entire labour force being absent simultaneously or even 50 per cent. absence. However, that can and does happen frequently to the small business employing, say, two men. I repeat, when only two people are employed and one is sick that represents a 50 per cent. cut in the labour force. One man sick in a labour force of one represents a 100 per cent. cut in labour force. In both of those cases the Government's so-called concession would not apply until they had been sick for eight weeks—which, as I have already said, never happens.
It is therefore with those two points in mind—the extreme rarity of eight weeks' sickness and the likelihood of a small business having 50 per cent. to 100 per cent. of its employees off sick for less than eight weeks—that we have tabled the amendment. In doing so we have understood and sympathise with the problem that the Government face in trying to control expenditure, and we have tried to give help where help is most needed.
We have reduced the level of national insurance contribution offered by the Government to compensate for shorter periods of recoupment. At Committee stage your Lordships gave widespread support for a shorter period than eight weeks. We have therefore

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reduced that period to six weeks. That is a comparatively minor adjustment. However, as that limit is manifestly unfair to the smaller business whose national insurance contribution in the year is, say, only £10,000, we have reduced the waiting period before recoupment for those businesses to only three weeks. Finally, and most important of all, we have dealt with the very small businesses which pay only £5,000 in national insurance contributions by providing that for them recoupment is immediate.
To sum up, in broad terms the amendment states that those employing an average of five employees should receive full recoupment of statutory sick pay at six weeks. Those employing three people should receive it at three weeks, and those employing only one should receive full recoupment, as they do now, immediately sickness occurs.
In drawing up the amendment we have bent over backwards to recognise the Government's shortage of cash and to direct help where it is most needed. As I have explained, the smaller the business the greater the need for full recoupment of statutory sick pay.
As I did not prepare the amendment—the National Farmers Union did so—I hope that your Lordships will agree that it is ingenious and fair to both government and small employer. Moreover, if the Government can monitor a scheme relating to national insurance contributions of £ 15,000 it is just as easy, or easier, to monitor a scheme for contributions of £5,000 or £10,000. I beg to move.
The Chairman of Committees (Lord Aberdare): My Lords, if the amendment is agreed to I cannot call Amendments Nos. 2, 3 or 4.
Lord Carter: My Lords, I am very pleased to add my name to the amendment and to support it from this side of the House. The House will be aware that we worked extremely hard at Committee and Report stages to devise a means of giving relief to the small employer which would be effective, simple to administer and would meet all of the Government's objectives and objections.
The new clause dealing with small employer relief introduced by the Government at Report stage recognised the need for the relief. However, in our view it is essential that the terms on which the small employer relief is operated is spelt out on the face of the Bill. The amendment does that.
The noble Lord, Lord Stanley, has explained admirably the purpose and effect of the amendment. It will not remove but will reduce the burden on small employers at a time of recession. It will help to reduce the possibility of small employers refusing to employ people with a sickness record or with disabilities. It also meets, but by no means fully, the concerns and objections expressed by the multitude of organisations which oppose the Bill. We have been pressed strongly to make the amendment much tougher, but we have resisted that pressure and come forward with what we believe is a very reasonable proposal.
I should like to return for a moment to the effect of the Bill as drafted on the employment of disabled people. We have been told by the Disability Alliance
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that their rights workers receive numerous calls for help from people who receive or who have had problems in obtaining their statutory sick pay, or, worse still, have been dismissed as a result of a long spell of illness. If those problems are already occurring when employers receive full reimbursement of the cost of administering the scheme, we can only fear what will happen and assume that the problem will become much more widespread when employers have themselves to foot a proportion of the bill. Your Lordships have increased the proportion of rebate from 80 per cent. to 91 per cent., but even at that level we feel that there could still be a problem. That is why the amendment is so important.
The flaw in the argument that we have heard from the Government at various stages of the Bill regarding the employment of disabled people is that it does not deal with the healthy or fit employee who develops a serious condition during his employment. The Disability Alliance points out that its rights service regularly comes across people who have been refused statutory sick pay or who have been dismissed during a protracted spell of illness.
We know that two out of five people with disabilities work in small firms, whose record in terms of good employment practice tends not to be very good. Therefore, in firms of that size disabled people are likely to be even more vulnerable than the average. For that reason, too, we feel that the amendment is important.
I believe we have agreed to group all of the amendments together except the Government's and the drafting amendments. If I may, I will refer also to Amendment No. 2, the wording of which is picked up in Amendment No. 1. Amendment No. 2 would insert after "employer's contributions" the words
"such amount to be reviewed annually having regard to the increase in earnings and the effect of any such increase on the level of employers' contributions".
The amendment deals with a very important point that we touched upon at the Report stage but did not attempt to clarify. The purpose of the amendment is to clarify the situation regarding the level of national insurance contributions used to define a small employer.
Before dealing with the amendment, perhaps I may deal with a drafting point directed at the language of the Bill. I think the Minister will welcome the chance to make this point clear. On page 2, line 46, reference is made to
"the amount of the employer's contributions payments for any prescribed period".
The Minister has already confirmed that throughout the Bill whenever the level of national insurance contributions is referred to it shall mean the total of employers' and employees' contributions. However, I am advised that in view of the way in which the phrase in line 46 is drafted it could be taken to mean the employer's contributions only. I have followed the wording of the Bill in Amendment No. 2, but the wording in Amendment No. 1 is much clearer; it refers to
"the aggregate of the employer's and the employee's contributions".

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I ask the Minister either to explain the point for the benefit of the House or to agree that the Bill would be much clearer if it used the words:
"aggregate of the employer's and employee's contributions".
To return to the burden of the argument on Amendment No. 2, as we know the national insurance contributions are calculated as a percentage of earnings and are paid by employer and employee. It is entirely clear that, although the percentage may not alter, the absolute amount in terms of the pounds of contributions will increase as earnings increase. Obviously, as earnings go up, even though the percentage remains the same, the total amount of employer and employee contributions paid over to the Government will increase. With an upper limit of £15,000 of small employer relief as suggested by the Government at the last stage of the Bill, or indeed the level of aggregate contributions as set out in Amendment No. 1, the Government have only to leave the limits each year where they are—£15,000 or whatever—and more and more small employers will automatically be listed above the limit as earnings increase. That is a matter of simple arithmetic.
In an ideal world the Government would undertake to uprate the limit annually, and we did consider putting down an amendment to achieve that effect. However, continuing the sweetness and reasonableness with which we have behaved throughout our deliberations on this Bill, we have put down Amendment No. 2 which we are sure the Minister will wish to accept. We ask the Government to review annually—not to uprate; and to have regard to the increase in earnings—not to take it into account. Indeed, it is the same procedure as is used on child benefit, which is reviewed annually but as we well know it is certainly not increased annually.
We believe that the Government should have the duty spelt out on the face of the Bill to look at the limit of the national insurance contributions which affects the eligibility for small employer relief. We are not requiring that they uprate it every year, but we feel that they should be asked to review it every year.
The drafting of the amendment may not be perfect because of the haste with which the Bill has been pushed through the House. I had to draft it myself without the benefit of external advice. I understand that it would be difficult for the Government if they accepted the spirit of the amendment, even though the drafting was not perfect, to amend the Bill in another place if the words were not on the face of the Bill. If the Minister agrees with the sense of the amendment, I believe that the House must accept the amendment to enable the Government, if they wish, to redraft with better wording in another place.
With those words, I should like to say that we support Amendments Nos. 1 and 2.
3.30 p m.
Earl Russell: My Lords, I am delighted that my noble kinsman Lord Stanley of Alderley, has tabled this amendment. When we debated the Bill on Report there was widespread feeling in the House that we had not yet done enough for small businesses. Though the House clearly thought that the amendment I then
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moved went too far, I also picked up a considerable sense that the amendment moved by the Government had not gone far enough.
The noble Lord, Lord Boyd-Carpenter, in a delightfully free translation from Horace, described it as a very small amendment. That is exactly right. I entirely agree with everything that my noble kinsman Lord Stanley of Alderley said about the eight-week limit. That will reduce the effect of the government amendment to a level which is in effect nugatory. In addition, for the National Farmers' Union, among others, the national insurance contributions will have rather less effect next year than my noble kinsman the Minister quite rightly said they will have this year. The current pay round will clearly take a number of employees from the 0.4 rate of concession to the 0.05 rate of reduction, so the national insurance reductions will be worth a great deal less.
That underlines the importance of what the noble Lord, Lord Carter, said about index-linking. It also underlines what I have said about the effect of this Bill in creating a wages stop. But I do not need to quantify the smallness of the government amendment; the Government have already done it. The first amendment with which we began in Committee was costed by the Government as likely to be worth £45 million. The amendment of my noble kinsman the Minister was costed as being worth £2 million. That is not half a loaf; it is not quite one-twenty-secondth of a loaf. Indeed, it is small enough to be not even appropriately expressed in fractions of a loaf; it would be better expressed as crumbs from a rich man's table.
I am also particularly delighted by the device of the taper in the amendment of my noble kinsman Lord Stanley of Alderley, because one of the disadvantages of any sudden cut-off point is that it could create for a rising small business a disincentive to expand. The sliding scale concession does not have that effect to anything like the same degree.
If you look at the figures of the risk of exceptional incidence of sickness, they have a taper which I think very closely matches the taper in my noble kinsman's amendment. According to the calculations of the Library in another place, the risk of double the average incidence of sickness in a business of five employees is 25 per cent.; for 10 employees it is 10 per cent.; and for 20 employees it is 5 per cent. My noble kinsman Lord Stanley of Alderley has achieved the effect of making the relief greatest where the risk is also greatest, which seems to me to be exactly what we should have been working for.
Finally, I shall quote from a letter that I received this morning from the Building Employers Confederation who are clearly following the Bill very closely. First, it agrees —I find its agreement here highly significant—with the fears expressed about the disability allowance and the effect of the Bill on the employment of disabled people. That confederation is perhaps better able to judge this matter than any of us. The letter says that:
"There will be a disincentive for smaller employers to take on workers with a perceived poor sickness record thus reducing the employment possibilities of the chronically sick and disabled".

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The building employers appreciate that this will not depend on statistics of which a great many employers may not be aware but on perceptions; and there the effect may be more unfortunate.
Finally, the confederation comments on my noble kinsman's amendment:
"This amendment is not in itself expensive or radical. Its modesty comes in response to the Government's determination not to make a realistic compromise with all those voices which have pointed out the dangers inherent in the Bill as it stands. It is a small measure—but it does offer some measure of security to those most vulnerable".
The confederation seeks your Lordships' support for the amendment; and so, my Lords, do I.
Lord Jenkin of Roding: My Lords, I understand that the House will be considering my Amendments Nos. 3 and 4 in this group of amendments. Perhaps I may add a few words to what has already been said. I begin by thanking my noble friend for responding fully to the requests made from all sides of the House that there should be further consultations with the outside interests before this Bill reaches the statute book. My noble friend has been as good as his word. Among others, Mr. Mendham of the Forum of Private Business spent two hours with my noble friend's officials last Wednesday examining many aspects of the definitions and measurements that we are endeavouring to get right in the circumstances of this Bill for the protection of the smallest businesses. I thank my noble friend for that.
Perhaps I may just add in parenthesis that that meeting discussed an amendment put forward by Mr. Mendham and his colleagues, which does not appear on the Marshalled List. I saw it only this morning although I was telephoned over the weekend and told that it was on its way. The amendment has some attraction and—I hesitate to use the words—is user-friendly.
If I have a complaint about Amendment No. 1 in the name of my noble friend Lord Stanley of Alderley it is that although it may well be administrable by the Department of Social Security, from the point of view of small businesses to have a series of different thresholds and different rates makes it appear very complicated for them. One must bear in mind what my noble friend said about the ability of small businesses even to claim to know about the 1985 relaxation for national insurance contributions on statutory sick pay. That is a factor to which a great deal of weight must be given.
On Wednesday an amendment was discussed which seemed to me to have the supreme merits of simplicity and user-friendliness. I have a suspicion that that amendment may well come before another place when this Bill returns there. At this stage all I ask is that my noble friend and his right honourable friend should consider it seriously and sympathetically because it seems to me to deal with many of the difficulties with which we have been wrestling. In the meantime we have to deal with the amendment tabled on Report by my noble friend, to which a number of amendments have now been put forward.
My Amendments Nos. 3 and 4 are directed to a rather different aspect of how one measures the point
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at which a small employer becomes entitled to 100 per cent. and not just 80 per cent. recoupment. On page 3, in subsection (1D) paragraphs (a) and (b), my noble friend has left himself two alternatives. One is to measure the threshold by reference to the sickness of one employee. Each employee is considered separately and when the employee's sickness reaches eight weeks —or, as my noble friend suggested, six weeks—that should be the trigger that gives 100 per cent. reimbursement. The alternative, in paragraph (b) at line 12, is to consider the employees in aggregate. That seems to me to be infinitely the better solution. If one bears in mind that the recompense and the reduced national insurance contribution happen anyway, and that the statutory sick pay which has to be paid out happens anyway, surely what is important is the point at which that employer finds himself well out of the average and having to pay more than is recouped by the national insurance contribution. The fact that it happens to be spread over two or perhaps three employees, or that it happens to one employee, in the last resort is surely irrelevant. As I said at Report stage, if an employee is off sick for eight weeks that triggers the relief, so from then on the employer gets 100 per cent. reimbursement. What is the difference between that and two employees being off for four weeks? All the other figures are exactly the same but it is not until one of those employees is off for eight weeks that the clause bites and the 100 per cent. rate of reimbursement applies.
In a sense this is a probing amendment because, as I said, my noble friend left himself the option to act through either the individual employee or the aggregate of the statutory sick pay paid. I intend to urge my noble friend, with all the eloquence that I can command, to agree that paragraph (b) is an infinitely preferable solution. I have adopted the mechanism of requiring that it is that paragraph which should be built into the regulations and not give him the option.
The case for my amendment is absolutely overwhelming. Indeed, I am assured that it would be perfectly workable on the forms used by small employers to calculate their net payment to the social security at the end of the month for the full contributions less the reimbursements. There is absolutely no reason why it should not be done on the basis of the aggregate. I beg my noble friend to do that. If he does not, I think that the charges that have been laid against the Front Bench will stick. The Government want to give relief to small firms but the way in which it has been done will not have that effect. It will only be minimal and in only the most exceptional cases will anybody get relief. That charge will be a true one and I shall be sorry to hear it.
There has been agreement from all sides of the House that whatever else happens to this Bill there should be an effective relief for above average sickness experienced by the employees of small employers. If my noble friend can give some reassurance on that point I, for one, will be greatly relieved.
3.45 p.m.
Lord Carter: My Lords, before the noble Lord sits down, although the point that he makes is a good one is it not the case that even if the Government were restricted under paragraph (b), all that they have to do is make the total amount for each individual employee the same as eight weeks sick pay? Surely one is then back with the same problem.
Lord Jenkin of Roding: My Lords, I did not attempt to say what the figure would be. Clearly it would be different for different numbers of employees, but that is the employer's responsibility and there is a limit for that. If it were done by reference to national insurance contributions, in the same way as for the definition of small employers, that would be a perfectly workable basis. However, it seems to me clear beyond peradventure that we cannot take the individual employee, and only when he reaches the threshold. One must consider the experience of the employer with all his employees as a whole in the relevant period.
Baroness Phillips: My Lords, I should like to support my noble friend on the first amendment and again make a plea to the Government on behalf of small shopkeepers. I mix with small shopkeepers a great deal and can assure the House that the high street is rapidly running out of shops. To start with, there is the property tax, which is an appalling imposition on small businesses. Many people, especially older people and young mothers with children, depend on small shops. I remind the Government, as I have done before, that those small shopkeepers are voters who supported the Government. They are the people who believed that the Government were going to help small businesses.
This is yet another illustration of groups of traders who will disappear from business. It is a very sad and serious affair. We plead with the Government to realise that not only will they damage many people but they will damage their hopes in the next election.
Lord Boyd-Carpenter: My Lords, I was interested and glad to hear my noble friend Lord Jenkin say that there have been discussions with the Government about ways of dealing with the acute problem of small employers. My noble friend went so far as to say that floating about somewhere is a possible amendment which might drift into another place. Obviously the possibility of that occurring must have a bearing on the way in which some of us will look at the amendments, if and when they come to a Division. I shall be grateful if my noble friend Lord Henley will confirm whether that is the situation and would tell the House what such an amendment will embody. That factor may affect our judgment and decision in respect of the amendment now before us. It is in the interests of the House and of the Government that we should be told about it. I am sure that my noble friend understands extremely well the fact that Members on all sides of the House feel strongly about the small employer.
Leaving aside the general question, to which we may come on the Motion that the Bill do now pass, in respect of increasing the costs to employers, there is
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the especially acute problem of small employers. I do not need to labour it because it has been emphasised so strongly. Briefly, the problem is that if one employs only one or two people and one or two go sick that is a disaster and will dislocate one's business most seriously. If in addition the Government refuse to refund what must be paid in statutory sick pay, they will really be hitting a man when he is down. That position is acute and is a real problem, particularly in the countryside. The noble Baroness, Lady Phillips, referred to small shops, but the problem applies equally to small farmers. As has already been disclosed, the National Farmers Union is among the many organisations which are distressed by the Bill, in particular by the position of the small farmer.
It is for my noble friend Lord Henley to enlighten your Lordships about the Government's intentions in this respect. I am sure that he has taken on board the fact that many Members of your Lordships' House are reluctant to leave the Bill as it stands without a firm assurance that it will be improved in another place. I shall listen with enormous interest, as always, to my noble friend's reply.
Lord Mottistone: My Lords, there are many provisions that I should have liked to see included in the Bill but in default I support the amendment tabled by my noble friend Lord Stanley of Alderley. Indeed, I like the look of the amendment tabled by my noble friend Lord Jenkin of Roding. However, it cannot be moved if Amendment No. 1 is incorporated in the Bill.
I thank my noble friend Lord Henley for having met with the representatives of the CBI and with Mr. Mendham of the Forum of Private Business to whom my noble friend Lord Jenkin referred. It appears that Mr. Mendham's scheme has not received favourable acceptance because it is not reflected on the Marshalled List. Can the Minister explain the reason for that? Is it because his officials were unable to undertake a full evaluation of the proposed scheme? Might the amendment be included at a later stage of the Bill? The general line of Mr. Mendham's proposal is better than that in the amendments now before the House. However, we might work towards it by accepting Amendment No. 1 in the meantime.
I am grateful to my noble friend for fitting in discussions with the CBI. However, there were only two or three days involved; that was hardly time for anyone to consider anything seriously. I received my brief from the CBI today. Normally I find it helpful to give my noble friend a copy of any brief so that at least his officials can advise him on how best to answer me. I did not have time to do so because the process has been rushed.
It became apparent during the course of the discussions with the CBI last week that the Government intend to lay the regulations in the second half of February. It is almost 1st February and, therefore, we have a fortnight before the regulations are to be laid. I cannot believe that there is time for the discussions necessary in order to ensure that the best interests of the small firms to whom the amendment

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relates will be dealt with. Neither can I believe that the interests of companies generally will be adequately dealt with as a result of this great rush.
I should like my noble friend to answer three questions. Why have Mr. Mendham's proposed amendments not seen favour? Will they see favour at a later stage? Does my noble friend believe that between now and the middle of February he will have the time to take part in discussions with all those people who have serious advice to give?
Lord Rippon of Hexham: My Lords, I wish to follow up the point made by my noble friend Lord Mottistone. I too have received various memoranda from the National Farmers Union and the Forum of Private Business. It appears that more time is necessary for consultation. The more I have listened to the debates the more I have become convinced that the Government would have been wise to listen to my noble friend Lord Boyd-Carpenter and to withdraw the Bill. I shall say nothing about its merits, its effects upon small businesses, or its appalling timing. However, I can see no case whatever for putting before your Lordships what increasingly becomes another welter of chaotic verbiage which, if we are honest, we find great difficulty in understanding as will everyone else. It will provide yet another complexity with which small businesses must deal.
My noble friend Lord Jenkin of Roding referred to the Forum of Private Business and expressed his gratitude to the Department of Social Security for having listened to all the arguments. However, I note that in his letter to me Mr. Mendham states that he fears that the Government have had insufficient time completely to evaluate and cost our proposals. He asks me, as perhaps he has asked other noble Lords, to press the Government to keep an open mind pending the appearance of this little measure in another place. I am sure that many noble Lords agree with my noble friend Lord Boyd-Carpenter, who said that our attitude towards the amendment will depend on the Minister's response.
4 p.m.
The Parliamentary Under-Secretary of State, Department of Social Security (Lord Henley): My Lords, my noble friends Lord Jenkin of Roding and Lord Boyd-Carpenter have referred to a mythical additional government amendment that is floating about. There are no government amendments other than the two which appear in my name on the Marshalled List—
Lord Jenkin of Roding: My Lords, I apologise for having been so obscure as to mislead my noble friend. No one suggested that there was another government amendment. It was suggested that a proposal had been put forward by the Forum for Private Business and discussed with the Government's officials. However, as was said by my noble friend Lord Rippon, the problem is that there has been insufficient time to
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discuss the matter properly before today's proceedings. There is no other government amendment. I had hoped that there would be, but clearly there is not one as yet.
Lord Henley: My Lords, I had gathered that. I was going on to say that I imagined that my noble friend was referring to Mr. Mendham's amendment. I shall make a few brief comments upon that. At this stage I cannot say anything about what another place may do, but earlier in our proceedings I paid tribute to the time and effort which Mr. Mendham has expended in producing his scheme. Although it is ingenious, it would apply to all employers, which we do not believe is the right way forward. As the House will know, my officials met Mr. Mendham last week and we have examined his scheme very carefully. A number of problem areas have led us to rule it out: namely, the difficulties associated with apportioning an annual incidence of sickness on a monthly basis; the fact that the formula does not work well for employers with only one employee; and the belief that the scheme would be perceived as very complicated by many small employers.
I now turn to the amendments which we are discussing. I have listened very carefully to all that has been said. As the House will appreciate, the amendments moved by my noble friends Lord Stanley and Lord Jenkin propose opposite solutions to the method of determining small employers' relief and, hence, entitlement to 100 per cent. reimbursement. Amendment No. 1 in the name of my noble kinsman would relate eligibility to the number of weeks for which an individual employee has been sick and would rule out—I stress that—the aggregate method favoured by my noble friend Lord Jenkin. My noble friend's amendment would provide precisely the opposite. Neither group of amendments would retain the option of the alternative method. There is clearly a difference of view on the method which should be adopted, a difference which I believe extends wider than this House. I shall have more to say about that later in my speech, as I shall about the subject of consultation, because of the difference of views as to which method should be adopted.
First, I shall concentrate my remarks on Amendment No. 1. Although I do not want to make too much of this, I have to tell noble Lords that the first part of the amendment is defective and my legal advisers have informed me that it would be unworkable.
This stems from a misunderstanding by my noble kinsman as to the need to refer specifically to employees' contributions. I recall that on Report the noble Lord, Lord Carter, asked me whether the £15,000 contribution threshold incorporated both the employers' and the employees' portion of the national insurance contribution. The noble Lord will remember that I indicated by nodding that it did.
The noble Lord, Lord Carter, returned to that matter and has drawn my attention to line 46. However, again I give him the assurance as regards the reference in line 46 on page 2 that "employer's contributions" means employer's and employee's.

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There is no need to identify these separately because the definition of "employer's contributions payments" in the main legislation is:
"any payments which the employer is required to make in discharge of any liability in respect of primary or secondary Class 1 contributions".
It does, therefore, encompass both the employer's and employee's elements of the contribution. The same point relates to Amendment No. 6 in the name of the noble Lord, Lord Carter. However, I appreciate the time constraints that applied in tabling amendments for consideration today and I understand the intention behind the amendment.
Amendment No. 1 would preclude the use of the number of employees as the definition of a small employer. As I made clear on Report, the Government have a strong preference for using the contribution threshold in this respect and I am delighted that in moving this amendment noble Lords have accepted that approach. But it seems only fair to ensure that the House is aware that one of the effects of this amendment would be to remove the enabling power permitting the regulations to relate the definition to the number of employees. I shall have something to say towards the end of my remarks about the Government's proposals to consult on the content of the regulations and—despite the Government's preference, which was endorsed by the House on Report—whyit might be worth while to keep all our options open in the primary legislation.
I now move on to the substantial point made by the noble Lord, Lord Carter, in relation to the annual review of the contribution threshold, which we propose should determine whether an employer falls to be treated as a small employer. In this case perhaps I may speak also to Amendment No. 2.
Of course the Government accept that the value of the £15,000 threshold—I use the figure I gave on Report—will decline in real terms unless we raise it. This is precisely one of the reasons why we are taking power to change the amount in regulations rather than in primary legislation. We do not think, however, that it would be helpful to employers to commit ourselves to increasing the limit each year mechanically in line with an index if that gives an awkward figure. It would be much more sensible for the threshold to rise when appropriate to some rounded sum; for example, a multiple of £1,000.
Another factor is that we may not necessarily want to restrict any change to the contributions threshold; it may be that there are other elements of the scheme which we shall wish to look at—something which any statutory requirement relating solely to the threshold could pre-empt us from doing. We need to keep a flexible approach.
Having said that, I was minded to accept Amendment No. 2 in the name of the noble Earl, Lord Russell, the noble Lord, Lord Carter, and my noble friend Lord Stanley of Alderley. However, I am advised that it is defective and would not achieve its intention. By relating the amendment to "such amount" it places a duty on the Government to review the amount of national insurance contributions paid
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by employees and employers rather than the threshold which determines whether an employer can be treated as a small employer. That is obviously not the intention. Therefore, I cannot advise the House to accept the amendment. However, as I said, I certainly undertake that the threshold will be reviewed every year.
The second subsection of Amendment No. 1 provides that the regulations should prescribe the point in time at which small employer's relief should click into operation for employers, by relating this to a prescribed number of weeks during which a particular employee has been sick. The House would not expect me to disagree with this. Clause 2 already provides for that at paragraph (1D)(a). I welcome this but, as I said earlier, it rules out the possibility of using the aggregate method based on the workforce as a whole as advocated by other amendments. In their turn, they rule out the method of relating that to the number of weeks for which a particular employee has been sick.
The third paragraph, the new subsection (1E), of the amendment sets out the meat of the proposals. As my noble kinsman has explained, under these proposals small employer's relief would begin to bite at different stages of an employee's sickness depending on the amount of contributions payments in the previous year. Where that figure was below £5,000 per annum, the employer would be able to recover 100 per cent. of all the SSP paid out; where it was between £5,000 and £10,000, after an employee had been sick for three weeks; and where between £10,000 and £15,000, after sickness had lasted six weeks.
I appreciate that noble Lords have sought to meet a number of the points that I made on Report by structuring the provision in this way. The intention is to assist particularly the smaller employer and the Government have made it clear that is also our intention. Indeed, subject to certain provisos which I will come to directly, we are not against a graded system of this kind if it is perceived by the small business interest generally as the best way to proceed.
My noble kinsman, my noble friend Lord Stanley and some of the organisations representing small employers have asked whether the Government are prepared to agree to a shorter number of weeks—that is, shorter than the eight weeks which I said the Government had in mind—if the contribution threshold was pitched at a level lower than £15,000. We should certainly look at any scheme put to us and, subject to financial and operational constraints, the Government do not rule out that possibility after the consultation process has taken place. Our minds are not closed to such a possibility. I may come to this when I refer to the consultation exercise later.
Turning to the probing amendments of my noble friend Lord Jenkin, I should like to give the assurance for which my noble friend asked: we have not ruled out using the aggregate payment of SSP as the determining factor. That is why the power to do just that remains in Clause 2. Indeed, we have been looking at possible schemes. I know that my noble friend appreciates that it would not simply be a matter of setting a threshold of 'x' amount of the SSP and

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once that had been reached the small employer would qualify for 100 per cent. reimbursement. That would be manifestly unfair. It could mean that the very small employer would have to reach an excessive number of weeks before he qualified.
Turning to the question of consultation, as I have said, there are a number of different possible approaches that we intend to pursue. That is why we intend to engage in a consultation process. During Report stage my noble kinsman Lord Russell said that the Government had not decided what we wanted to do, and he suggested that it might be better if I could come back to the House at Third Reading when we had decided. It is not that the Government are being indecisive. I have clearly stated our preferences, and I stress that they are only preferences. But it is clear that there are strong differences about which would be the best course to take. These have shown themselves in this House, with some noble Lords favouring a scheme based on number of weeks of sickness per employee, as in Amendment No. 1, and others a scheme based on the aggregate number of weeks of sickness, as in my noble friend Lord Jenkin's Amendments Nos. 3 and 4. There have also been variations suggested in other places on both schemes. A similar uncertainty is also being manifested outside the House. Some noble Lords may know that since the Report stage either I or my officials have seen a number of organisations, as I am pleased to say my noble friend Lord Jenkin stressed. We have seen the CBI, the Forum of Private Business, and the National Farmers Union, and have spoken to others on the telephone.
Although time is of the essence, as has been said many times on this Bill, which is why I fear the consultation process will be a short one, the Government feel very strongly that it would be unwise to write precise provisions in the primary legislation in the way that my noble kinsman's amendment does. We must leave it open for those to be prescribed in regulations so that we can get a system which is user-friendly—to use an expression of my noble friend Lord Jenkin—not just for the department, important though that is, but much more importantly user-friendly for the small businesses so that they can have a system that they can operate. There is no point in bringing forward a concession for small businesses if the concession is unusable by the small businesses themselves.
We have been giving careful consideration as to the representations made since the Government's proposals for small employers were announced. We have taken into consideration the arguments from all sides that there should be more consultation with the relevant organisations before the regulations are made. Therefore, the Government have decided to run what I must describe as a short consultation exercise. Our intention is to put forward alternative schemes, one based on weeks of sickness per employee and one using the aggregate sickness of the workforce as a whole. We shall be asking for comments on both preference and practicality. It is important that the scheme must be user-friendly. I stress that we want to
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provide, within financial and other constraints, the simplest and most practical scheme for employers to operate.
A number of your Lordships—in fact, I think I could fairly say many Members of this House—have criticised the Government for not consulting business in advance of this Bill. Both my right honourable friend the Secretary of State and I have explained why that was not possible. But we believe that there is time, albeit that such time will be very short as the regulations will need to be laid next month, to have some limited consultation on the small employer's relief scheme. I hope that the House will agree that this is the best way forward.
I have given a number of reasons why the Government cannot accept my noble kinsman's amendment or that of the noble Lord, Lord Jenkin, not least of course the decision to consult on alternative schemes which I have just announced. In the light of that I hope that my noble kinsman will feel able to withdraw his amendment.
4.15 p.m.
Lord Stanley of Alderley: My Lords, I do not think that I have ever heard in your Lordships' House such a statement from the Minister showing that he had not made up his mind and could not make up his mind. Perhaps I may deal with a few points made earlier.
First, my noble friend Lord Jenkin pointed out that he would like some form of aggregation. The snag with that is that if someone employs only one person he cannot aggregate. However, I agree with my noble friend that the Government should compensate the small employer who suffers above average sickness. As I have said, eight weeks is too high. We believe that average sickness, or excessive sickness with respect to small employers, is somewhere around three weeks.
My noble friend Lord Boyd-Carpenter mentioned the mythical amendment which we have not seen. I understand the point that he has made. My noble kinsman Lord Henley referred to it. Certainly, if the Government find in another place that this is an acceptable way forward I see no reason why they should not do that there, but at present the Government have done nothing to make your Lordships feel that they will look at this problem, apart from consulting, which so far has produced absolutely nothing, as is evident from the remarks made by my noble kinsman Lord Henley.
I entirely accept the point made by my noble friend Lord Rippon that it would have been much better if the Bill had been sent back to where it came from and redrafted so that we could have got it right, but unfortunately that is not the position. We are left here with no concession whatever to the small business. It would be irresponsible of us not to insert something to make the Government concentrate their minds in another place. I do not wish to go into my village shop having done nothing about this.
My noble kinsman brought out one or two other points, one of which concerned the defectiveness of the first part of the amendment. The noble Lord, Lord

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Carter, dealt with that. It can perfectly well be put right in another place, and my noble kinsman is making a mountain out of a molehill.
Finally, my noble kinsman went back to numbers. I almost cried. We suggested numbers to start with and my noble kinsman said at Committee stage, "No, we won't have numbers. We'll have National Insurance contributions". So I have to leave the farm, go off and look out my advisers, and go back to National Insurance contributions. Then my noble kinsman said today, "No, I think we might have numbers now". Really, I sometimes despair. I will not continue, because we have been on this matter for long enough, but if the Government cannot make up their mind your Lordships should make up their mind for them. They can change the amendment in another place, but let the other place have a chance to look at the problem of the small employer.
By supporting the amendment noble Lords will be helping the very small employer. We must remember the village shop, the post office and the small farmer. The village shop and the post office do more than just sell baked beans and stamps; they perform a social service to the community. If your Lordships support that, I hope that your Lordships will follow us into our Lobby. I commend the amendment to the House.
4.19 p.m.
On Question, Whether the said amendment (No.1) shall be agreed to?
Their Lordships divided: Contents, 128; Not-Contents, 84.

Division No. 1

CONTENTS

Acton, L.

Graham of Edmonton, L.

Addington, L.

[Teller.]

Airedale, L.

Grey, E.

Allerton, L.

Grimond, L.

Ardwick, L.

Hampton, L.

Auckland, L.

Hanworth, V.

Aylestone, L.

Harris of Greenwich, L.

Birk, B.

Hatch of Lusby, L.

Blackstone, B.

Hayter, L.

Bonham-Carter, L.

Henderson of Brompton, L.

Bottomley, L.

Hollis of Heigham, B.

Boyd-Carpenter, L.

Holme of Cheltenham, L.

Brain, L.

Houghton of Sowerby, L.

Brightman, L.

Hunt, L.

Broadbridge, L.

Hutchinson of Lullington, L.

Bruce of Donington, L.

Hylton, L.

Carter, L.

Hylton-Foster, B.

Cledwyn of Penrhos, L.

Jeger, B.

Clinton-Davis, L.

Jenkins of Hillhead, L.

Cockfield, L.

Jenkins of Putney, L.

Cocks of Hartcliffe, L.

Kearton, L.

David, B.

Kennet, L.

Dean of Beswick, L.

Kilbracken, L.

Derwent, L.

Kinloss, Ly.

Donaldson of Kingsbridge, L.

Kinnaird, L.

Dormand of Easington, L.

Kirkwood, L.

Ellenborough, L.

Knollys, V.

Elliot of Harwood, B.

Lauderdale, E.

Ennals, L.

Leatherland, L.

Erne, E.

Listowel, E.

Ewart-Biggs, B.

Llewelyn-Davies of Hastoe, B

Ezra, L.

Lloyd-George of Dwyfor, E.

Falkland, V.

Longford, E.

Fisher of Rednal, B.

Lovell-Davis, L.

Galpern, L.

Lucas of Chilworth, L.

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Malmesbury, E.

Russell, E.

Margadale, L.

Sainsbury, L.

Masham of Ilton, B.

St. Albans, Bp.

Mason of Barnsley, L.

Salisbury, M.

Mayhew, L.

Saltoun of Abernethy, Ly.

Mersey, V.

Serota, B.

Milverton, L.

Shackleton, L.

Mishcon, L.

Shaughnessy, L.

Molloy, L.

Shepherd, L.

Monckton of Brenchley, V.

Stallard, L.

Monson, L.

Stanley of Alderley, L. [Teller.]

Morton of Shuna, L.

Stedman, B.

Mottistone, L.

Stoddart of Swindon, L.

Mulley, L.

Strathspey, L.

Nelson, E.

Taylor of Blackburn, L.

Nicol, B.

Terrington, L.

Ogmore, L.

Thomson of Monifieth, L.

Orr-Ewing, L.

Thorneycroft, L.

Palmer, L.

Thurlow, L.

Peston, L.

Tordoff, L.

Phillips, B.

Turner of Camden, B.

Pitt of Hampstead, L.

Underhill, L.

Porritt, L.

Varley, L.

Rankeillour, L.

Wallace of Coslany, L.

Renton, L.

Walston, L.

Richard, L.

Whaddon, L.

Rippon of Hexham, L.

White, B.

Rochester, L.

Wilberforce, L.

Roskill, L.

Williams of Elvel, L.

Ross of Newport, L.

NOT-CONTENTS

Alexander of Tunis, E.

Hives, L.

Arran, E.

Hood, V.

Astor, V.

Hooper, B.

Barber, L.

Howe, E.

Belhaven and Stenton, L.

Jenkin of Roding, L.

Beloff, L.

Johnston of Rockport, L.

Belstead, L.

Killearn, L.

Bessborough, E.

Kimball, L.

Bethell, L.

Long, V.

Blake, L.

Luke, L.

Blatch, B.

Lyell, L.

Blyth, L.

Mackay of Clashfern, L.

Boardman, L.

Macleod of Borve, B.

Borthwick, L.

Mancroft, L.

Brabazon of Tara, L.

Merrivale, L.

Brigstocke, B.

Mountevans, L.

Brougham and Vaux, L.

Mowbray and Stourton, L.

Butterworth, L.

Munster, E.

Campbell of Alloway, L.

Nugent of Guildford, L.

Campbell of Croy, L.

Onslow, E.

Carnegy of Lour, B.

Oppenheim-Barnes, B.

Carnock, L.

Orkney, E.

Cavendish of Furness, L.

Pearson of Rannoch, L.

Clanwilliam, E.

Peyton of Yeovil, L.

Constantine of Stanmore, L.

Reay, L.

Cottesloe, L.

Renwick, L.

Crickhowell, L.

Skelmersdale, L.

Davidson, V. [Teller.]

Slim, V.

Denham, L. [Teller.]

Stevens of Ludgate, L.

Eden of Winton, L.

Strange, B.

Elibank, L.

Strathmore and Kinghorne, E.

Elliott of Morpeth, L.

Sudeley, L.

Erroll of Hale, L.

Swansea, L.

Glenarthur, L.

Thomas of Gwydir, L.

Gray of Contin, L.

Trefgarne, L.

Grimthorpe, L.

Trumpington, B.

Hailsham of Saint Marylebone, L.

Ullswater, V.

Vaux of Harrowden, L.

Hankey, L.

Waddington, L.

Harmsworth, L.

Wade of Chorlton, L.

Haslam, L.

Whitelaw, V.

Henley, L.

Wolfson, L.

Hesketh, L.

Resolved in the affirmative, and amendment agreed to accordingly.
4.27 p.m.
[Amendments Nos. 2 to 4 not moved.]
Lord Henley Lord Henley moved Amendment No. 5:
Page 3, line 16, at end insert:
("(1E) 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."").
The noble Lord said: My Lords, in moving Amendment No. 5 I shall speak also to Amendment No. 7.
The House will recall that at Report stage my noble kinsman Lord Stanley successfully prevailed upon me to accept his amendment making all the regulations made under the powers of this section subject to the affirmative resolution procedure, instead of only the first of such regulations.
At the time I said that I reserved the right to come forward with the Government's own amendment should my noble kinsman's amendment prove defective. As I explained to him by letter, the parliamentary draftsman has advised that this is indeed the case and has redrafted the provision as Amendment No. 5. This is in substitution for my noble kinsman's amendment, which is deleted from the Bill by Amendment No.7.
I apologise to my noble kinsman but do, of course, assure him and the House that the amendment I have now brought forward meets the intentions of his amendment. I beg to move.
Baroness Turner of Camden: My Lords, I rise from these Benches to thank the Minister for presenting this amendment this afternoon. We are grateful to him for tabling the amendment, which complies with the promise that he gave to the House at Report stage.
On Question, amendment agreed to.
[Amendment No. 6 not moved.]
Lord Henley Lord Henley moved Amendment No. 7:
Page 3, line 26, leave out subsection (4).
On Question, amendment agreed to.
4.30 p.m.
Lord Henley: My Lords, I beg to move, That the Bill do now pass.
Moved, That the Bill do now pass—(Lord Henley.)
Lord Carter: My Lords, when the Bill was introduced it was a one-clause Bill. I wonder whether the Government then imagined the kind of trouble that they were going to run into when the Bill was hastily introduced following a deal between the Chief Secretary of the Treasury and the Secretary of State for Social Security.
The Government must be congratulated. It is a feat of political skill to get the CBI, the Institute of Directors, the NFU, the National Federation of the Self-Employed and the Small Businesses, the Forum of Private Business, the Disability Alliance, the Labour Party and a substantial number of Government Back-Benchers in the same lobby against the Government. I stated at Second Reading the Bill is a bad one and that it should be withdrawn.
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However, this House has improved the Bill to some extent. The rebate in statutory sick pay has been increased from 80 per cent. to 91 per cent., which will give some help to employers. The removal of the infamous Henry VIII clause is a very satisfactory constitutional improvement. Today we have helped to concentrate the mind of the Government on small employer relief.
The Bill is a rather forlorn relic of Thatcherism, combining a lack of consultation in the early stages with ramming the Bill through both Houses at breakneck speed. I cannot understand the need for such speed. The Government's programme is not overloaded and they are looking round for things to do; yet the Bill has taken only a few days between each stage in this House, and in the other place there was one day between Second Reading and Committee. Only two to three weeks has been left for the consultation period. We should be told the reason for the breakneck speed with which the Bill has been handled. The Government could demonstrate that they have turned over a new leaf by accepting the amendments.
My strictures concerning the Bill do not extend to the noble Lord, Lord Henley. He has been courteous and helpful. Problems with the timetable and delays in producing information were not his fault. All noble Lords know, especially with the number of lawyers in this House, that any advocate can handle a good case, but it takes a very good advocate to handle a bad case. The noble Lord has borne up remarkably well considering that nearly all noble Lords, with the possible exception of the noble Lord, Lord Jenkin of Roding, have been critical of the Bill and have asked the Government to withdraw it. In our view, the Bill is a bad Bill, but it is leaving here in better shape than when it came to us.
Earl Russell: My Lords, we all know that speaking is like swimming: it is a lot easier to do it with the tide than against it. My noble kinsman the Minister throughout the passage of the Bill has been speaking against the tide. He has discharged that responsibility with distinction, grace, good humour and every merit permitted within the limits of his brief. I congratulate him.
I have been delighted to work on the Bill with my noble kinsman Lord Stanley of Alderley. I hope that my noble kinsman will not misunderstand me, but I was reminded of Adam Smith in the clerihew:
"who was disowned by all his kith but backed through thick and thin by all his kin."
The Bill has been very considerably improved. I am pleased that the question of small businesses will be referred back to another place for further consideration. I am not convinced that any of us have got the matter right. This is the best amendment that I have seen, but I should like to see a larger exception than that which has been considered by the Government. We have given them a chance to think about that matter and I hope that they will do so.
I was delighted to see the amendment moved by the noble Lord, Lord Mottistone, in relation to increasing the amount of statutory sick pay to 91 per cent. The

477
Government are left with a dilemma. They can either pass the Bill in a form which is acceptable to this House or they can pass the Bill in a form which achieves its original purpose. They cannot do both. It is clear what conclusion they ought to draw from that situation.
I am particularly pleased to see the amendments relating to the deletion of the Henry VIII clause. This House used to be known as the watchdog of the constitution. It is a function to which it is well suited. I hope that not only will the amendment be accepted but that we shall get fewer such clauses in the future. More thought should be given to the recommendation of the Donoughmore Scott Report, that there should be printed with the explanatory memorandum an explanation of why such a clause is necessary. Like the notices that state, "Is your journey really necessary?" one can ask: is the Henry VIII clause really needed?
I fear that I must blame my honourable friend Mr. Bellotti for the Bill. It is the result of a certain concession that was made in relation to child benefit, in order to claw back some of the spending. The chronology of the matter strongly suggests that the concession on child benefit was the result of the victory of my honourable friend Mr. Bellotti at Eastbourne. My honourable friend had the distinction of getting 1 billion pounds out of the Treasury before he had even made his maiden speech, a distinction that might make most of us green with envy and one which makes it difficult to argue that a vote for the Liberal Democrats makes no difference.
In that context, if we are victorious in relation to the amendments in another place I hope that we will not have to face this argument again in relation to another benefit. I agree with the argument that used to be put by the late Lord Seebohm, who will be much missed in this House. He stated that one of the strongest arguments for uprating child benefit is the argument for fiscal equity between those with children and those without. Therefore, the proper way to finance increases in child benefit is by taxation to the point where the concession becomes fiscally neutral, where it achieves an equitable effect between people with children and people without.
The Treasury has been much mentioned in the Bill. The Treasury represents something that is very deep in our national culture. I should like to tell the House a story in order to illustrate the point. A certain American senator, a former Rhodes Scholar and millionaire, regularly received letters from his American alumni association. He did not open them because he was a busy man, but sent them cheques for 30,000 dollars. He wondered why he never received such letters from his English college at Oxford. He finally received a letter from Oxford, reached for his chequebook and was just about to write a cheque for 30,000 dollars when he thought that he should look to see what the going rate was. He opened the letter, which was a dunning letter from the college bursar for a buttery bill of two shillings and sixpence that dated from his undergraduate days. He wrote them a cheque
478
for thirteen pence. That is the culture from which the Treasury grows; it is penny wise, pound foolish. The Bill is a very good example of that point.
We should think about what the Bill has told us about our political system. I hesitate to say that the Bill has been carried through another place by the votes of the Conservative Party because it seems to me to offend the principles of the Conservative Party as deeply as it offends the principles of the other two parties. The noble Lord, Lord Boyd-Carpenter, speaks as eloquently for Conservative principles as anyone I know, and having listened to the noble Lord I am encouraged in that conviction. It would be more accurate to say that the Bill was carried through another place by the votes of the Court and Treasury party.
In fact, ever since the 18th century the influence of the Executive on another place, exercised through the means of patronage, has been a great deal stronger than English mythology leads us to believe. It is a Treasury Bill. The Prime Minister has taken on the job of proving that he is his own man. I wish him luck with it, but he needs to prove it, not only in relation to his predecessor but also in relation to the department in which he has served almost all his ministerial career. He needs to prove that he is not the Treasury's poodle. At some time he must do that by a dramatic gesture: what better gesture than by withdrawing this Bill?
My Lords, 1066 and All That commented on speculation about the reasons for the execution of Sir Walter Raleigh, that he was executed for being left over from the previous reign. That is what I hope the Prime Minister will do to this Bill.
4.45 p.m.
Lord Boyd-Carpenter: My Lords, I look upon this Bill at this stage more in sorrow than in anger; sorrow because to me, an enthusiastic supporter of our present Administration, it is singularly disagreeable to have to exercise a vote against one of their measures. I say that frankly. The substance of the Bill and the way the Government as a whole have handled it make it difficult for any of us to justify our support for it. Such support would seem inconsistent with our duties as a revising Chamber. The House would not have been doing its duty had it left unamended the Bill as it came to us.
I shall not bore the House by recapitulating what some of us have said at earlier stages of the Bill. However, what has emerged particularly clearly this afternoon is the complete lack of consultation with those concerned before the Bill was introduced. Indeed, my noble friend Lord Henley said that it was not practical to have consultation before then. We all know that it was introduced during the expenditure round as part of a deal between my right honourable friend the Chief Secretary to the Treasury and my right honourable friend the Secretary of State for Social Security. Having served for quite lengthy terms in both those offices, I have some understanding of their problems. However, in a desire to adjust expenditure figures—a very proper and reasonable

479
desire—it was quite extraordinary to ignore the fact that outside organisations would be interested and would expect to be heard in advance.
The result has been—certainly as reflected in my postbag —a larger amount of criticism of the Government from a larger number of organisations than I personally have received in the 19 years I have been a Member of this House. That criticism has come from organisations as widely dispersed as the CBI, the NFU and the National Association of Citizens Advice Bureaux. All kinds of organisations have protested. While those protests owe something to the substance of the Bill, they also owe a great deal to the fact that the normal procedure of consultation before introducing a controversial Bill was not followed. I hope that what has happened to the Bill in this House will serve as a warning to my right honourable friends in another place and to my noble friend that legislation of this kind should not be introduced without prior consultation with those whom it will affect.
Of course in the end the Government must make a decision. They can ignore the views of those who have been consulted, but it is clear that if one simply fails to consult and launches a measure of this kind upon an unwitting world, one generates more ill feeling and opposition than otherwise would be the case. I hope my noble friend Lord Henley will take back that lesson to discuss with his colleagues. I acquit him at once of any involvement in the matter because, as I have said, we know the history of it only too well.
My basic objection to the Bill, apart from the hardship it will cause in some cases, is that it will increase the costs of employers and of industry. That is beyond dispute. The only argument has been on the degree of increase that will be involved. It has been said already—I will say it once again—that this is the worst time to introduce such an increase in the costs of industry. Whether we are technically in recession or not I do not know, but there has been, understand-ably, some downturn in economic activity. To choose this very moment to increase the costs of industry is an extraordinarily unwise thing to do and flies right in the face of what the Government are doing to industry.
I am only consoled by the fact that the Government as a whole do not apparently share the view expressed by this Bill. Noble Lords may recall that last Wednesday my noble friend Lord Strathmore and Kinghorne answered questions from the noble Lord, Lord Dormand of Easington, about unemployment. I put a supplementary question which produced an interesting reply from my noble friend. I asked:
"My Lords, do not these figures indicate, however, the importance that nothing should be done to increase industrial costs, either by way of trade union action or legislation?" My noble friend replied most satisfactorily:
"My Lords, I can only agree with what my noble friend says". —[Official Report, 23/1/91; col. 222.]
So at least one member of the Government does not believe in increasing industrial costs; and, if I may say so, it is greatly to his credit.
Having said that, I agree with the noble Lord, Lord Carter, about the way in which my noble friend Lord
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Henley has handled this difficult Bill. The House knows that he had nothing whatever to do with its origination but he has handled it with a patience, a skill and a physical stamina which have excited the admiration of all noble Lords. I say to my noble friend that if I were to be charged with a criminal offence of which I was plainly guilty, I would rather be represented by him than by anybody else.
Lord Simon of Glaisdale: My Lords, as noble Lords who preceded me have pointed out, the Bill has been substantially improved both in its social and economic impact and its constitutional aspect. I merely venture to add that that emphasises the importance of your Lordships' constitutional role as a Chamber of Parliament. It is also worth remarking apropos the Henry VIII clause that the amendments which have been agreed could not have been made if the measure had been carried through by regulation, as of course was the effect of the Henry VIII clause.
In many ways the discussion on this Bill has been unsatisfactory. I say that because, as has been pointed out, it really involves a shift of resources in the social security budget; that is, a trade-off between child benefit on the one side and statutory sick pay on the other. However, it is only the latter that we have been able to discuss.
I was pleased that the noble Lord, Lord Jenkin of Roding, reminded us that the social goods are almost infinite but that the funds available to satisfy them are definitely finite. Nevertheless, I did not feel that there was any satisfactory answer given to the noble Lord, Lord Boyd-Carpenter, who said that, whatever the merits of the shift in funds might be at other times, this was an extremely bad time to do it, adding as it does to the costs of industry and commerce.
There is another important factor. In dealing with only one side of the matter—the debit side, so to speak —the noble Lord in charge of the Bill was placed in an extraordinarily difficult position. He was left in solitary command, as it were, of the sullied end of the stick while other noble Lords, quite happily, tugged in succession on the clean end. I am glad that tributes have been paid to the patience shown by the noble Lord.
Perhaps I may say a few words about the constitutional aspect of the Bill. I shall deal first with the Henry VIII clause. It was highly objectionable in itself, all the more so in view of what lay behind it. During the time between the publication of the Donoughmore Report in 1932 and two Sessions ago, there was no attempt to reintroduce Henry VIII provisions. However, suddenly, two Sessions ago Henry VIII provisions were reintroduced in three Bills. These came under strong attack from Lord Elwyn-Jones during discussion of the Children Bill. My noble and learned friend the Lord Chancellor hastened to make concessions. Nevertheless, during the following Session the Courts and Legal Services Bill was introduced and was full of Henry VIII provisions. Again, the Government were forced to make concessions. The two most objectionable provisions were removed and the others were acceptably modified. It is most important to remember what my noble and learned friend said

481
during the proceedings on that Bill. He said that the Government certainly took fully into account the Donoughmore Committee's recommendations.
Under those circumstances, it is extraordinary that such a provision should have reappeared. I hope that what has taken place will be registered and that we shall see no more of these objectionable provisions. Like the affirmative/negative resolution provisions which have also fallen under scrutiny, they represent a tendency to minimise parliamentary control of legislation. I should add that parliamentary counsel should not be blamed for the provisions. The Minister in charge of a Bill is responsible for the Bill, both as regards content and form. I cannot conceive of the Henry VIII provision in this Bill having been introduced, as it was, unless it appeared in heads of instructions to the draftsman.
I should also like to mention the contrast between the negative and the affirmative resolutions. There, again, persistent attempts have been made to minimise parliamentary control. At any rate, the Bill has drawn attention to the recommendations of the Joint Select Committee on Delegated Legislation of 1972 and 1973, which were accepted by the government at the time. I trust that we shall not see those recommendations flouted again in future legislation.
Having said all that, it merely remains for me to say how beneficial and enjoyable it has been for one sitting on the Cross Benches to hear a highly technical Bill of this kind so skilfully debated by experts in the field of social and economic endeavour.
Lord Jenkin of Roding: My Lords, I venture to differ from the noble and learned Lord, Lord Simon of Glaisdale; I do so with the utmost diffidence. I must point out that a Henry VIII clause was introduced in 1965. The then Minister of Power was Fred Lee, who later became Lord Lee of Newton. He introduced a Bill which contained such a clause. As a very new Member of Parliament sitting on the Back Benches, I protested and quoted the Donoughmore Committee's recommendations. Unfortunately, Mr. Lee thought that I was referring to His Majesty's matrimonial affairs, as the Hansard report of the proceedings in Committee records. However, if I remember rightly, we managed to effect a change in the legislation and the Government made a concession.
As the third former Treasury Minister to speak in succession, I should like to take up a point made by the noble Earl, Lord Russell. I am not much given to forecasting, but I think that I can safely say that the noble Earl is most unlikely ever to become a Treasury Minister—Mr. Bellotti notwithstanding. I have but two points to make in this respect, the first of which is an obvious one. Treasury Ministers must ensure that the sums add up. During discussions on earlier legislation in this Chamber there has been much criticism of Treasury intransigence, Treasury limits and the effects of cash limits. However, at the end of the day, it has to be said, as has been recognised on all sides of the House, that the Treasury has somehow to make the books balance. It has to determine the amount of debt which the Government need to repay or the amount that they can afford to borrow. As I have already made clear, I believe that the
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Government were justified in looking for savings from the social security budget. My noble friend Lord Boyd-Carpenter assured the House that he would not rehearse all the arguments. That is also my intention; but, unlike him, I really will not do so.
I move straight to my second point, which is that we have become accustomed—it is something which is now increasingly challenged—to the concept of Budget secrecy. That secrecy stems originally from the days when the Budget's primary interest was increases or reductions in the rates of indirect taxation and the need to prevent people pre-empting the Budget by making substantial purchases and so to that extent frustrating the Chancellor's intentions. One can understand that idea. But over recent years Budgets have frequently introduced major tax reforms. Early examples are the introduction of VAT and the 1971–72 reform of corporation tax. A more recent example is the taxation of husbands and wives. No Chancellor since the noble Lord, Lord Callaghan—he is not in his place—would in his senses announce major taxation changes without publishing his proposals in consulta-tive form and having one or two years of widespread consultations, including perhaps Select Committees from another place, before introducing legislation.
I took part in the debates on VAT and corporation tax. One has followed what has happened since then with husband and wife taxation. There have been many other examples. Even in the Budget field, anticipating major changes by giving opportunities for substantial consultation is now widely accepted. What we have seen here is that the public expenditure round has almost become a matter of quasi-Budget secrecy: nothing must be allowed to get out until the Chief Secretary or the Chancellor stand up in the other place and make a Statement. Even when major changes in legislation are called for, they somehow have to be kept under wraps. That never used to be the case, and I do not believe that it is right. If there are some over-riding reasons why secrecy must be maintained, the Exchequer must recognise that what it announces in November cannot happen by 6th April if controversial legislation is required. The Bill is an example of that difficulty.
Having originally introduced the proposal for a statutory sick pay scheme in return for a reduction in national insurance contributions, I most assuredly do not quarrel with the principle of the Bill, but clearly as the debates have shown—not least those on the relief for small businesses for which I hope I can claim some of the credit —close consultation is required with all the organisations likely to be involved. The problem has arisen because the Government want the savings to take effect from 1st April, 6th April or whenever it is. The regulations must be made shortly so that they can take effect then. I believe that the cost has been greater than the advantage.
I fear that the Government now face some difficult decisions over what to do with the Bill in another place and what to bring back here. Please, let us not elevate the public expenditure round into a second Budget. If

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legislation is required, and that legislation requires consultation, the timing must take account of those facts or the last date becomes worse than the first.
I believe that I hold the record of being the only Back Bencher who has supported the Bill's main principle. I have not broken that duck yet. Nevertheless, I believe that that factor has been at the heart of the trouble. People will accept what they do not like if they have a chance to talk it through. They may then reluctantly feel that if the proposal must happen at least it is happening in a way that they can live with.
5 p.m.
Lord Mottistone: My Lords, I agree with the closing remarks of my noble friend Lord Jenkin. The trouble over the Bill has arisen from the error of judgment made by Ministers and, I believe, officials. Legislation like this involves not just an extra charge on industry but an administrative process in which industry shares the labour with government. That is a concept about which there was a great deal of consultation during the earlier stages and the intermediate stages in 1985. However, it was not a matter that could be used as part of the negotiations with the Chief Secretary to which my noble friend has just referred.
We are mucking about with industry's chances of balancing its books. It is all very well to say that the Treasury must balance its books, but Treasury officials are not sacked in the same way as are people employed by a company that goes bust. I happen to know that there are small firms, some of which I am closely associated with, that are struggling to keep alive at the moment and on which such added costs will bite. They are involved in high-tech industry, and so all the amendments designed to help small businesses will probably not apply to them because of the employees' levels of salaries.
The world is a real one. There has been an error of judgment. The best thing would be to take away the Bill and to start again next time; but on the assumption that our friends in another place do not do that, I implore the Government to stick to the amendments we have put into the Bill and not try to ease them away and think, "Oh, well, we can put it under the carpet and we can have consultations even though there is not enough time for them to be done properly". I desperately hope that the message will be heard not just by my noble friend who I believe has done a good job under difficult circumstances but by his right honourable friend the Secretary of State and the officials in all government departments whose affairs affect industry.
There are many of them. For example, the Home Office is seeking to have pay deductions for maintenance orders enforced statutorily. That is another activity—it may not be a cost—that industry is being required to undertake on behalf of the Government. We cannot continue with such legislation and expect industry to say, "It is all right. We shall do the work. We shall go on helping government", because it will not. Such activities take
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time and labour and cost money. It is important that governments do not ride roughshod over industry. I hope that such a thing will not happen again.
Lord Stanley of Alderley: My Lords, I have never previously spoken in a debate on the Bill do now pass, but on this occasion I feel that I must thank my noble kinsman Lord Henley for his calmness and good temper, which have been in sharp contrast to mine. All I can say is that I do not believe that I can possibly have been as unpleasant to him as my great aunt, Rosalind Carlisle, was to his family a few years back.
Lord Rippon of Hexham: My Lords, perhaps I may make a brief if not so amusing comment. By any test, constitutional, financial, economic or quality of draftsmanship, the Bill reached the House as a thoroughly bad Bill. The extraordinary thing is that it seems to have gone through the other place with hardly any comment. It must be a matter of concern to us that that can happen in another place. It underlines the responsibility that the House has to consider such matters. It may be a better Bill now, but it still needs a great deal of improvement.
I associate myself with everything that has been said about my noble friend Lord Henley. He has done the best that he can. Anyone who has been a Minister in another place is aware how bereft of support Ministers in this House may sometimes be. They are thrown into battle by their departmental Ministers and told to get on with the job and see the Bill through with the words, "We do not want any trouble."
There has been a great deal of trouble over the Bill, and for good reason. It has been attacked by those whom I call "the old loyalists" and, as I might believe them to be, the "new loyalists" as well. I regard the Bill as a project of an old regime. We have been promised a change in the style of government. That means two things to me: first, more consultation with people who may be affected by legislation before the Second Reading of a Bill ever takes place, because we are aware that after the Second Reading of a Bill the Government are immediately on the defensive. They try to defend every point while being forced into making changes by hostile amendments or, sometimes, even by amendments that are intended to be helpful. We must have more consultations with interested parties, as speaker after speaker has said, before legislation affecting them deeply is ever introduced.
The second improvement we must have in the style of government is in the quality of legislation. I entirely agree with everything that the noble and learned Lord, Lord Simon of Glaisdale, said on that subject today and on previous occasions. It was pointed out that it was not just in the Children Bill that Henry VIII clauses were introduced. They have become increasingly common in recent years. The noble Lord, Lord Williams of Elvel, will know that in relation to financial services and local government legislation these points have been made again and again.
There have been too many Bills in the past; I hope that there will be fewer in future. The difficulty is that when a Bill comes before the House it attracts the attention of a certain section and speakers raise points

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in relation to their own measures. However, they do not see the same problem happening over and over again in one field after another. The significance of the Children Bill was that the Henry VIII clause drew the fire of the late Lord Elwyn-Jones and the noble and learned Lord, Lord Simon of Glaisdale. Since then, more and more of your Lordships have been conscious of the importance of the constitutional point and of the inherent dangers in this type of legislation.
I entirely agree with the noble and learned Lord, Lord Simon, when he said that it is astonishing to some of us that, after the discussions that took place on the Courts and Legal Services Bill, the noble and learned Lord the Lord Chancellor did not seize on the point. I believe it is because the noble and learned Lord no longer chairs the legislation committee of the Cabinet which is regarded as a political instrument to get political measures through.
Therefore it is important that we press upon the noble and learned Lord the Lord Chancellor his responsibilities in the matter, the need for him to give effect to what was promised at the time of the Courts and Legal Services Bill that this would never normally happen again. He should have regard to the Donoughmore Report; implementing that report is one way of dealing with the matter. I hope that your Lordships will also consider the suggestion that I have made from time to time that we follow the Australian precedent and set up a committee to examine the legislation from a drafting and constitutional point of view, without considering its politics or its merits, before it comes to the House. Then a wider number of noble Lords would know the issues at stake. That is my final point.
I believe a heavy responsibility now lies upon the noble and learned Lord the Lord Chancellor to examine the legislation with greater care than has apparently been the case in the past.
Lord Harmar-Nicholls: My Lords, I know that it is almost unforgivable for someone to walk into the House towards the end of the discussion on a subject and then to make a contribution. That is what I am doing. It is because nowadays we have no control over transport, the means of reaching the House, as we used to, when our timing could be good. If I had been a former Treasury Minister, no doubt I should not have had thick enough skin to go against protocol and all that goes with it. However, as a former Minister of Works, I am used to getting the job done and wanting it done properly rather than always keeping rigidly to standards.
I am sorry that I was not here in time to contribute on the amendments which have been passed. The only reason I wished to intervene was that I wanted to be certain that, even at this late stage, my noble friend will take into account the recommendations put to him by the Forum of Private Business. We wished to table an amendment but, because of the speed of the passage of the Bill, we missed the opportunity.
However, there is still time before the Bill becomes a statute for the recommendations made by the Forum of Private Business to be taken into account. Members
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of the forum had a worthwhile meeting with my noble friend's officials and they had every reason to believe that there was a certain sympathetic reaction to the point they tried to make. That is of particular help to people owning very small businesses. It meets the problem I tried to describe when I contributed at the Committee stage of the Bill.
The point of my intervention—breaking the rule of not being so presumptuous as to intervene—is that I wanted on the record even at this late stage the assurance in the winding up speech that if the recommendations of the Forum of Private Business are not covered by the amendment passed before I entered the Chamber, in the framing of the regulations and in any further amendments that may be suggested in another place, those recommendations are taken into account. If that is achieved, then it has been worth breaking the rules with the risk of incurring the displeasure of noble Lords.
5.15 p.m.
Lord Henley: My Lords, this Bill has proved an interesting experience for me. During its course, I have been described as standing at the burning Dispatch Box whence all but I had fled—I think that came from my noble kinsman Lord Russell. He now suggests that I dive overboard and swim, either with or against the tide.
I repeat what I said at Second Reading, that this is a modest Bill in its size and effect, even though it leaves the House somewhat larger than when it arrived. Bearing in mind what I said about the previous amendment which was carried against my advice, possibly the Bill leaves us in need of some further improvement. Also, I stress that it is modest in what it seeks to do, although I have received the impression this afternoon and on previous days that not everyone in the House would be in full agreement with me in saying that.
Many Members of the House have spoken during our debates and I thank all of them, if not for their support then for their contributions. I thank my noble friend Lord Jenkin for his steadfast support throughout the debate. Obviously, I cannot mention all those who have contributed, but perhaps I may mention my noble friend Lord Boyd-Carpenter. I am not sure what to make of the praise he offered me in extolling my skill as an advocate. I trust that he will never be charged with an offence of which he is obviously guilty. I am also grateful for the interventions of my noble friend Lord Mottistone and my noble kinsman Lord Stanley on this side of the House and my noble kinsman Lord Russell on the other side. On the Benches opposite, I thank the noble Lord, Lord Carter, and the noble Baroness, Lady Turner.
I wish to pay tribute to the persistence of a number of outside organisations which have taken every opportunity to put their views across to me and my honourable and right honourable friends in another place. Despite their opposition to the main provisions of the Bill, our discussions have invariably been constructive. I have already mentioned Mr. Mendham of the Forum of Private Business who expended a

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great deal of thought and effort in producing his proposed scheme. I explained why I thought that the proposal had problems, but perhaps I may say to my noble friend Lord Harmar-Nicholls that we have looked at it. I explained what I thought was wrong. It must be a matter for another place and its procedures as to whether it considers such a scheme or not.
I thank the CBI, the National Federation of the Self Employed and Small Businesses and the National Farmers Union which have also been heavily involved in putting proposals to me and meeting myself and my right honourable friend the Secretary of State. I hope they will all respond to my offer of consultation on the concession of small employers. I take it that the amendment that the Government brought forward has been somewhat changed but the Government's position must remain open. We shall institute consultation on whatever scheme emerges from another place as soon as possible.
We have had some very full and constructive debates on this short Bill and I do not intend to rehearse all the arguments in detail again now. I accept—that is why the Government brought forward their amendment—that there is a genuinely felt worry about the effect of the proposals in the Bill on employers, particularly small employers with low earners among their employees. That is why my right honourable friend proposed the reductions in national insurance contributions.
Some concern has also been expressed about increased costs for employers. This has been mentioned again and again but I wish to stress once more that the increases concerned are very small. As my noble friend Lord Boyd-Carpenter has said, this is a time of recession. I believe the point has been overplayed that the increases would impose untold additional burdens on the business community.
Some concern has also been expressed about the implications for employees. I wish to stress once more that the measures in this Bill will have no direct effect whatever on employees. I reject the suggestion that employment prospects of disabled people will suffer or that employers will discriminate against their employees. I am confident that there will be no adverse effect for employees as a result of the changed reimbursement proposed in the Bill. However, as I made clear to my noble kinsman on Report, the Government will continue to monitor the situation. I take this opportunity to stress to employers and to the world at large that disabled people do not have a bad attendance record at work.
I repeat that this is a modest Bill. As I have said, it makes small changes to the rate of reimbursement of statutory sick pay. As my noble friend Lord Jenkin has stressed, those small changes have allowed my right honourable friend to make some not insubstantial improvements in other areas of social security provision. However, I do not intend at this moment to be drawn into a debate on the general subject of child benefit. As I have said, my right honourable friend has made some not insubstantial improvements in other areas of social security provision. That is what the
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Government have sought to do in bringing forward these changes in statutory sick pay. I commend the Bill to the House.
On Question, Bill passed, and returned to the Commons with amendments.

Research and Development: ECC Report
5.22 p.m.
Lord Shepherd Lord Shepherd rose to move, That this House takes note of the report of the European Communities Committee, A Community Framework for R&D (17th Report, 1989–90, HL Paper 66).
The noble Lord said: My Lords, no one would question the importance of research and development to the national well-being, or to the Community as a whole. Sub-Committee B decided it would undertake an inquiry into the Commission's proposals for the third Community framework programme for research and development. I trust that report has been helpful to the Government.
I wish to express appreciation to the Select Committee on Science and Technology for allowing three of its members to sit on Sub-Committee B. Those members provided a great deal of information and wisdom during our inquiry. I wish to mention in this regard the noble Lords, Lord Butterworth and Lord Sherfield, and the noble Baroness, Lady Lockwood. I also wish to express my appreciation to our specialist adviser, Professor Roger Williams of Manchester University, and to our clerk, Simon Burton. I hope that, having left that committee, he will find satisfaction in his new responsibilities.
I wish to thank in particular all the witnesses who provided us with the highest quality of evidence. The House is indebted to those witnesses for the information and evidence that they provided.
As I am no longer the chairman of Sub-Committee B, I hope I may say a few words about the quality of the reports that are produced by Select Committees and the way in which your Lordships' House treats them.
The report we are discussing was printed on 26th June—I hope noble Lords will listen to what I have to say. As I have said, the report was printed on 26th June of last year. It comes before the House on 28th January, some six months later. In December I was offered a debate on this report as the first item of business on this day. I do not object in any way to the nature of the business which has preceded this debate. Having been a chief whip some 26 years ago, I understand the difficulties and strains that are placed upon the chief whip in the ordering of business. However, I believe the position of this debate raises a question about what I would call the status of Select Committee reports.
The European Communities Committee has a duty to scrutinise all the proposals of the Commission. That is a heavy task. Taken at its easiest level, it requires a mass of reading to be undertaken. Some proposals can be cleared relatively quickly and the committee can offer rapid support for such measures. However, some of the Commission's proposals

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require an inquiry. Such an inquiry may last days and sometimes weeks. The proposal that we are discussing today required an inquiry that lasted for months.
The House should be indebted to noble Lords for the way in which they support Select Committees. However, the witnesses are the major contributors to reports. They not only give their time but they also involve themselves in considerable expense in the preparation of their evidence. It is also right to say that Select Committees incur the expenditure of considerable sums of public money. Not all the reports of Select Committees are submitted to your Lordships' House for debate. Only those that are considered by the Select Committee in question to be of major public importance are debated in this House.
I suggest most strongly that Select Committee reports should be given a higher status in relation to discussion on the floor of the House. In a sense the reports are treated adversely when compared with Starred Questions. At least Questions are subject to a date which is a spur to government departments to reply to them. I hope that the Minister will convey my suggestions to the noble Lord the Leader of the House, I suggest that we should ask the Procedure Committee to establish a rule which would give these reports a higher status. I make two suggestions in that respect. First, I suggest that in the minutes of your Lordships' House there should be a separate heading for the reports. I believe that at present they are lost in the list of debates for which no day has yet been named. Secondly, and more importantly, the reports should be debated within one month of their publication. There is a duty placed upon our committee to scrutinise the Commission's proposals. If that scrutiny is to have any real effect on Ministers, a debate, if required, should be held at the earliest opportunity. It should not be held, as in the case of this report, some six months later.
The report before the House relates to the Commission's proposals for the third Community framework on research and development. The framework is of a wider compass than previous programmes. The details of the six strategic lines are set out in paragraph 6 of the report. We considered these strategic lines and we agreed with them. I understand that they have been approved by the Council of Ministers. The details of the strategic lines have also been considered by the committee. We reviewed them all with the exception of energy. We have corresponded with Ministers and have obtained a satisfactory response. Consequently, the Council of Ministers has now agreed to those details.
The process of inviting for tender can now proceed. The committee is glad that the programmes are now proceeding along the lines of the report.
In regard to funding we have no dissent. The Commission wanted more; the CBI wanted more; Her Majesty's Government wanted less. Therefore, it must be about right.
In its evidence the Commission advocated that there should be provision for research into the Community's economic and social cohesion. That is
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an important area for research but your committee has serious reservations. We note that funds are available from structural funds. In the view of the committee that is right. However, if they are to be included within the framework programme we strongly recommend that any project should be tested and judged against the scientific and technical excellence of the proposal. I trust that the Government share that view.
The committee examined the administration of the programme, which is set out in Parts 2 and 3. It is a complex web of consultation and decision making between the Council of Ministers, the Commission and the European Parliament. On the face of it it looks cumbersome and bureaucratic. However, in my view it is hard to see how it could be otherwise although we believe that some areas of improvement are possible.
The committee fully supported the criteria for co-operation, under which it is open to industrial companies, universities, and public and private research institutes to make bids together. However, two member states have to be involved and in some specific programmes EFTA countries may be involved provided again that two Community states are involved.
That creates some difficulty. In order to provide a tender to justify funding a great deal of detail is required. There was evidence before the committee that in some cases that is very time-consuming and costly to those who apply and fail to obtain support, a particular cost being that of travel. Your Lordships' committee therefore strongly recommended that a system of pre-screening based on broad outlines should be instituted. If the Commission is interested greater detail could then be provided to justify funding. We believe that that would encourage smaller organisations to apply.
We spent some time considering evidence regarding the criteria on which the Commission would adopt projects. There was some division of opinion among the witnesses, based more on priorities than on direction. However, in the end a consensus emerged. The committee concluded that the Commission should support projects that fell within the following categories: first, those directed towards the development of common standards; secondly, those aimed at solving Community and international problems such as those of the environment; thirdly, those too costly for any member state to undertake on its own; and, fourthly, those projects in respect of which there would be an added value in performing them at Community level rather than at national level.
The reasons for those conclusions are set out in paragraphs 84 and 89. I would isolate only one; namely, the question of common standards, which increasingly becomes critical to the single market. We reported on it previously in our earlier reports and stressed the need for common standards, most recently in our report on air traffic control equipment. I hope that the Government support those recommendations.
Your Lordships' committee also expressed much concern about what is called "near market research." We understood the Commission's and the Government's anxiety that funding on research should not be seen as a subsidy, which would be contrary to the Rome treaty. However, we feel that the calls of industry on this matter should not go unheeded. The problem is that there is no clear line to distinguish near market research from other research. The committee rejected the rigidity of the Commission's definition (set out in paragraph 36) that funding should be cut off at least three years before the project was ready for the market. We urged the case for more flexibility. The Commission has stated its intention to support demonstration projects and should be encouraged to do so. I understand the Government's anxiety, but this is an important industrial matter. It is very complex. I urge the Government not to have a completely closed mind on the subject and to understand the anxieties of industry and the Community interest as a whole.
Your Lordships' committee also took evidence on procedures and the evaluation of projects. Anyone who has been involved with the research councils knows what a difficult subject this is since research is not exactly finite, and very large sums of money are involved. The programme we are now discussing amounts to some £4.2 billion. The Commission admitted that in the early days it was open to severe criticism. However, much has been done to improve the standards and procedures. However, in paragraph 104 we thought it right once again to draw the Commission's attention to the continuing need for proper evaluation, for keeping projects to plan, for closing down projects not proven worthwhile and directing funds to more promising areas. The committee strongly recommended that 1 per cent. of Community research funding should be set aside to provide a proper base for the cost of that evaluation. Again, we should like to have the Government's reaction.
The committee approved the setting up of a committee to provide advice. However, in our view evaluation is best performed by what is called peer review.
I should like to make one last point on procedures. The committee has already acknowledged the steps being taken by the Commission to tighten up its procedures. We welcome the appointment of expert committees and have made some recommendations regarding membership. We believe that more scientists should be employed by the Commission. The committee would welcome assurances that recruitment procedures are sufficiently flexible to attract scientists at all levels of administration.
We believe that the Commission would also gain much by a closer relationship with the various research councils. The present informal arrangements are set out in paragraph 111. There is a case for a more formal relationship between research councils and the management committees. Government officials clearly have a place there, but the committees should be
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strengthened by the appointment of members drawn from industry and the scientific community. Here again we should like the Government's reaction.
From time to time, as a consequence of evidence placed before it, your Lordships' committee has found it necessary to report on matters which may appear domestic—in this particular case how the Government and the Treasury treat funds received in the United Kingdom for various reasons and purposes connected with research and development. That subject has been raised before in this House. In the course of the inquiry we became very disturbed about the effect on research and development in future years should the Government's present policy be continued.
In trying to ascertain what happens the committee came upon two related principles—additionality and attribution. The principle of additionality as it relates to structural funds is enshrined in Community law which states:
"In establishing and implementing the Community support frameworks, the Commission and the Member States shall ensure that the increase in the appropriations for the funds provided for in Article 12(2) of Regulation (EEC) No. 2052/88 has a genuine additional economic impact in the regions concerned and results in at least an equivalent increase in the total volume of official or similar (Community and national) structural aid in the Member State concerned, taking into account the macro-economic circumstances in which the funding takes place".
This provision is intended to ensure that receipts from Community funds, in this case structural funds, are in addition to public expenditure, not in lieu of it; nor should the allocation of Community funds lead to a cut in public expenditure.
The Court of Auditors keeps a watchful eye on additionality, and when considering the case of funding for transport infrastructure in its 1988 report, it concluded:
"In the FR of Germany, Ireland and the United Kingdom, however, the Court's enquiries showed that there was no demonstrable link between the receipt of Community funds and higher spending on transport infrastructure projects".
On the other hand, the principle of attribution is not enshrined in Community law and its interpretation is therefore more subjective. It appears from evidence summarised in Part 3 that the Treasury attributes funds received under Community research and development programmes to individual departmental budgets and in the following annual public expenditure round adjusts those budgets to take account of those Community funds.
Each department has to decide for itself what to do to make the adjustments required by the Treasury in order to take account of the Community funds. Thus, a body which receives Community support can find that if it also receives support from central government in the year following the receipt of Community funds the support received from central government is reduced. In turn, that can have an effect on additionality, but such a reduction can mean that the Community funds received are not fully additional to those national government funds available to individual applicants and may not be additional at all.
The committee has considered carefully the evidence given by HM Treasury and others concerning the principle of additionality and the practice of attribution. The committee concentrated on those issues as they arose in the United Kingdom because it is not clear what the practice is in other member states; though the committee is aware that both tine Court of Auditors and evidence given to the previous inquiry into transport infrastructure identified particular member states in addition to the United Kingdom where there had been criticism concerning these issues.
The most disturbing aspect of the system operated by the Treasury is that it is not independently monitored. The Treasury has made a number of assertions: for example, that in anticipation of Community receipts destined for the public sector, departmental budgets are set higher than they would otherwise have been and that 30p to 35p in every pound of Community funding for research and development is truly additional. But such matters are dealt with under the public expenditure survey procedures and are not open to scrutiny by Parliament or any other external body.
The committee see two problems arising from the Treasury operating in this way. First is the Treasury's claim that attribution is an institutional matter. The Treasury is treating attribution of Community funds as if it were solely a matter for Whitehall, but any matter involving the United Kingdom's relationship with the law-making machinery of the Community deserves scrutiny, notably by Parliament. Whether the arrangement is appropriate in terms of domestic public expenditure is also a matter for scrutiny by Parliament; most suitably by the House of Commons in its scrutiny of departmental votes. Such "inter-nalisation" of the attribution of funds destined for projects supported by research councils also undermines the principles under which research councils operate at arm's length from central government.
The second problem with the Treasury system is that it can often seem to recipients of Community funds that a non-additionality principle operates. Their success in obtaining such funds will appear to lead to a subsequent cut in the budget of a department from which they may—I stress, may—also receive money and possibly a cut in their receipts of United Kingdom public funds, via what the Treasury calls a cascade effect.
The committee is grateful to the Treasury for attempting to explain the system in evidence before it, but a great deal of work still needs to be done to convince the research councils and universities that they will not be substantially disadvantaged by the operation of attribution. In fact, there is no general understanding of how the system operates, or even recognition that it operates at all. The Treasury must make good that failure to communicate, perhaps by organising a series of meetings at key centres of research across the country but, above all else I suggest, before Parliament itself.
In addition to doubts about the Treasury's explanation of additionality and attribution, the committee is seriously concerned by the system itself.
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The Treasury appears not to have taken into account how little it is able to shape policy in Brussels and is insufficiently sensitive to the limited influence that the United Kingdom has as only one voice among twelve. The Treasury does not appear fully to recognise that as successive framework programmes become more important existing public expenditure controls may lead to a growing distortion in the science and technology budget, despite the best efforts of industry, universities and the research councils. One example would be when a university receives Community funds for a project but subsequently finds that central government funds for a project judged to be of higher national importance are cut. Thus, the ability of the science community to set priorities for projects will steadily diminish.
There are also doubts about the effective level of additionality of Community funds. The Treasury suggested that in the case of research and development 30p to 35p in the pound is truly additional, but has given no evidence to justify its choice of this or any other particular figure. In my view the Treasury should produce evidence if that figure is not to be seen as completely arbitrary.
The committee is also concerned that, according to the Treasury, it is a global figure, which implies that for some projects no Community funds are truly additional. The committee notes that the figure was given in relation to those funds primarily going into the private sector, as much of the money under the research and development programme surely will. It finds curious—I should like to hear the Minister's explanation—the Treasury's decision that the private sector includes universities. I find that very difficult to understand.
The Committee is also concerned to find that the situation may well be just as bad in the public sector, for which the Treasury has produced no comparable figure of the level of Community funds which are truly additional. But there is at least one case in the public sector where the level of additionality is unsatisfactory. That is reflected in the Court of Auditors' report which concluded that Community aid for transport infrastructure in the United Kingdom was treated as "appropriations in aid" of the Department of Transport Vote.
One final unsatisfactory feature of the present system is that the Treasury has not interested itself in how other countries handle these matters. There may be little occasion in general for the Treasury to be aware of foreign practices in regard to public expenditure controls, but the case is altered when practices in other countries bear on circumstances in the United Kingdom, as happens with the framework programme. The committee urges the Treasury to remedy that situation by investigating practices elsewhere, in so far as they touch upon the additionality question, and to publish the results.
The committee believes that these matters have not previously been so fully ventilated before a committee of Parliament. The confusion and worries brought out by the evidence to the committee are likely to grow as the Community programme, including framework

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programmes, increases in importance. More importantly, the committee strongly disapproves of the Treasury practice, on its own figures, of only allowing 30p to 35p per £1 of Community funds for research and development to be truly additional. There is clear evidence that research and development in the United Kingdom is already under-funded, as the Select Committee on Science and Technology pointed out. The Treasury's policy only makes matters worse, thus operating against national interests and the needs of industry.
Although the committee accepts that Community funds may not be 100 per cent. additional, in the view of your Lordships' committee the present figure appears to be far too low. This is a matter on which we wish to hear from the Minister. It is a matter of the gravest national concern, in particular for those concerned in research and development. I beg to move.
Moved, That this House takes note of the report of the European Communities Committee, A Community Framework for R&D (17th Report, 1989–90, HL Paper 66).—(Lord Shepherd.)
5.53 p.m.
Lord Butterworth: My Lords, I was one of the three members of the Select Committee on Science and Technology who assisted Sub-Committee B in its inquiry into the framework programme. I should like to express my appreciation of, and admiration for, our chairman, the noble Lord, Lord Shepherd, and congratulate him on the excellent way in which he steered our committee over what proved on some occasions to be a remarkably complex subject.
I should like to confine myself to two areas: first, the choice of subjects to be covered by the different framework programmes; and, secondly, the procedures and practices of the Treasury in dealing with those problems. While there is a general conviction that we ought to be involved in European research programmes, some scientists, frequently very able ones, consider that applications to the Community are not always worth the candle and are too much hassle. First, one has to find a European partner. Secondly, one can only receive a proportion and generally not more than 50 per cent. of the grant needed to carry out a piece of research. Thirdly, overheads are not adequately covered. Finally, the success rate of applications is small, much smaller than the success rate of applications to the major research councils.
On the other hand, the European Community programmes will increase United Kingdom research effort by at least £250 million over the next seven or eight years. Generally, research councils and researchers are anxious that the best value for money should be obtained. Scientists and institutions should use their best endeavours to obtain grants from Brussels, not only because over the years the amount of research money allocated by the Community is likely to be an increasing proportion of the total of public money spent on research, but also because European projects will increase the opportunity for
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interaction with European colleagues in the selected fields and open up an important entry to additional research data. Therefore it is important that we should become more fully involved, making the system as efficient as possible and obtaining the maximum assistance and support from it.
Concern was expressed to the committee that scientists and research councils do not have sufficient influence in identifying the areas to be covered by the different framework programmes. The Community prefers to work through civil servants—its own and those of individual member governments—for it wants to be seen to be acting independently and not simply projecting a consensus of the opinions of different funding organisations. There are plenty of contacts between our scientists and the officials at Brussels at an informal level but a more effective impact could be achieved if the research councils were formally represented on the different advisory committees; for example, CODEST, one of the most important committees, where at present the members are all chosen on an ad hominem basis.
As the noble Lord, Lord Shepherd, explained, Sub-Committee B on a number of occasions recommended and continues to recommend that the Commission must employ more scientists at all levels. A consensus emerged in the committee that projects should fall within four broad categories. The essential point about those categories is that all are attempts successfully to apply the principle of subsidiarity. It is important in the selection of the areas to be supported that the principle of subsidiarity should be applied. On the other hand, it was the view of the committee that in certain areas the framework programme went too far. The committee recommended that the funds should be applied to small and medium-sized enterprises and should promote the Community's economic and social cohesion. I shall return to those words "economic and social cohesion". They are quite important.
The support of small and medium-sized firms is economically important. There are special funds in the Community earmarked for small and medium-sized enterprises and for economic and social cohesion. Those of us who take an interest in the Community recognise the phrase "economic and social cohesion". It is European nonce language for the possibility of establishing funds—I shall not call them slush funds—for the poorer member states of Europe, for stimulating convergence as a prerequisite of economic and monetary union and, as some would add, as one of the steps towards a European federation.
Under the heading "objectives" I wish to mention near-market research. It is rigorously excluded from the aims of European research. Professor Fasella interestingly defined near-market research by stating that the cut-off point in time is at least three years before the project is ready for the market or, in money terms, when one must invest in the final development at least as much as one has already invested to reach that point.
The Commission does not support such research because Article 92 of the treaty on state aid prohibits subsidy disguised as research funding. In Britain our

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policy is not to support near-market research because we consider it to be the responsibility of industry. It is our view that industry should be encouraged to spend much more money on research. Your Lordships have already heard that our committee did not accept the European definition of near-market research. It considered that the Commission should be more flexible having the power to undertake near-market research so that it could deploy funds in that way when appropriate.
That view has important economic consequences. If member states refuse to support near-market research, and if industry—perhaps because of the cost—does less than it should, the ability of the Community to compete with the United States or Japan may be impaired. Perhaps we in the United Kingdom also have been too harsh in the extent of our withdrawal from near-market research. Perhaps our research policy should also become more flexible in that respect, enabling appropriate projects to receive government support even though they are near-market.
I turn briefly to the rules and practices of the British Treasury because they may exert an important influence on the whole planning and strategy of British research. The Community considers that the research funds which it makes available to member countries should be additional to their expenditure and not in lieu of it. Additionality applies to all research grants received from the European Community. In the application of the structural funds a regulation of 1988 specifically makes that requirement.
Our Treasury treats receipts for research from the framework programme differently from the way in which it treats receipts from the structural funds. Therefore, as regards grants from the framework programme full additionality is not allowed. The Treasury justifies that different treatment on the ground that:
"the Government needs to control the public expenditure consequences within the same system and according to the same principles as apply to all other forms of public expenditure; for all public expenditure comes from the same pool of resources and represents the same burden upon domestic taxpayers".
In pursuing that objective the Treasury varies the nature of public expenditure controls according to whether European Community receipts go to the public or to the private sector.
Community receipts for research and development come almost wholly from the framework programme. The UK contributes about 20 per cent. of the total of that programme, which is approximately the same as its contribution to the Community budget as a whole. We receive about 20 per cent. of the total distribution of the framework programme and, therefore, roughly break even. However, approximately 90 per cent. of what is received goes to the private sector. For that purpose the Treasury classifies universities as being within the private sector. It states that for this reason additionality in the framework areas must be treated differently from the way in which it is treated in the structural areas.
The Treasury witnesses assured us that receipts from the structural fund are taken into account when
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departmental programmes are set. Provision for a department which has received a grant from the structural funds can, therefore, be maintained at a higher level than would otherwise be afforded. To that extent true additionality is recognised in its consideration of structural funds. However, when funds are received from the framework programme the Treasury applies the principle of attribution; it attributes such funds to a specific government department. Presumably, funds received by higher educational institutions for basic research are attributed to the DES and funds for industrial research are attributed to the DTI.
In the year in which funds for particular research are received they are truly additional to the researchers. But in the public expenditure round of the following year the government department to which the funds have been attributed may find that its grant is reduced. In fact, the Treasury witnesses confessed to the committee that as regards the framework programme the system is designed to claw back between 65p and 70p in every pound of funds received. Therefore, only 30p to 35p in the pound is truly additional as far as the government department is concerned. The Treasury witnesses emphasised that the clawback is discretionary. At the public expenditure round the relevant government department can always argue that if the clawback is operated hardship and difficulties may be created.
However, because present Community research policy puts more emphasis on pure and basic research, our research councils fear that if the system is operated with full vigour the DES may lose so much grant that it may have to recoup by passing on the cuts to the research councils. Therefore, it could happen that the greater the success of our scientists in obtaining European funds, the more likely it is that British research programmes and their priorities may be blighted and warped. The greater the difference between our research priorities and those of the Community, the greater the danger of the disruption of domestic science priorities.
A very important point is that because this system—preventing full additionality in the case of research grants —is part of the public expenditure round, it is operated, as it were, behind a curtain. It is a bureaucratic exercise not subject to normal parliamentary checks or control and not within the scrutiny of the Comptroller and Auditor General. Your Lordships will find in the Treasury's supplementary written evidence to us a splendid sentence which states:
"This is an institutional matter involving discussions between the Departments concerned, the Treasury and the Cabinet Office".
That is, behind the curtain.
The Treasury was not aware of how other European countries applied additionality to research grants. Certainly in France civil servants often helped scientists to prepare their applications to Brussels and anything received is regarded as truly and properly additional.

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The man on the Clapham omnibus would expect that the contributions made by HMG to Europe would become vested in and owned by the Community and that any grant made by the Community to a British scientist would be truly additional. My friend on the bus would be surprised to learn of the existence of Treasury rules, the operation of which are subject to no democratic controls and are designed to claw back from government departments a large part of the funds which the Community has made available for British research with the object of reducing the burden on the British taxpayer—the man on the Clapham omnibus.
6.12 p.m.
Lord Kirkwood: My Lords, I should like to comment mainly on two aspects of the report: on the funding of research projects in the Community framework programme and on the quality of the work. Before doing that, I should like to say how welcome will be this third framework programme to the scientific community if the funding is indeed additional to domestic funds. I speak as a technologist who has been involved in obtaining a research grant in the second framework programme. There appear to be some important improvements with successive programmes, most notably in the attempts to evaluate the completed work. I understand that the UK has been much involved in trying to rectify that.
I do not think one can quarrel with the criteria used in selecting projects. Among those is the requirement that the work should be too costly for one member state to undertake alone, and that there should be some added value in performing it at Community rather than member state level. On the question of added value, I know this was intended to refer to the technical and scientific content of projects, and that must always be of the highest priority. However, given that, I feel we should not disregard the more intangible benefits as being of added value which can arise from individual scientists, technologists and engineers from different member states coming together, getting to know one another better, and getting to know each other's strengths and weaknesses in a partnership which allows strengths to be drawn upon and weaknesses supported or overcome. This can be to their collective benefit. What is true of individuals, may also be true of institutions from different states. Therefore, the total benefit obtained is greater than the sum of the parts. This is described in the report as strengthening economic and social cohesion in the Community, as we have already heard, and to my mind it is too much underplayed as a valuable objective for the framework programme.
I wish now to turn to funding and the terrible twins—additionality and attribution about which your Lordships have already heard. There is apparently confusion among everyone, even among those directly involved, as to exactly what the terms mean and how they are applied by the Treasury. Given the serious consequences they might have for research in the UK, especially in universities and polytechnics, it is vital that their operation is understood and is transparent
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—a point raised by the noble Lord, Lord Butterworth—and that any misunderstandings are removed. The concepts of additionality and attribution are summarised in the Select Committee's report in paragraph 26. Very simply stated that paragraph appears to mean that Community research grants successfully obtained by UK participants are attributed to the budgets of the appropriate government department. This attribution will cascade down within the department to lower levels, such as research councils, and so reduce the amounts they can spend on their own projects. Consequently, EC funding is not fully additional to those funds already made available for UK research by the Government.
To the extent that there is attribution, there is no additionality in funding. As the present chairman of SERC, Sir Mark Richmond, remarked in evidence to the committee:
"The principle leads to research councils being debited for a programme that they played no part in assessing."
That is a very good summing-up of the situation. Not only is this bad politics, it offends against a basic principle of good management.
There is a further problem in funding, as regards the universities and polytechnics. This is what has been called "the double jeopardy situation" by NERC. It refers to the fact that EC grants never cover 100 per cent. of research costs, and such grants to HEIs would have to be topped up from the UK science budget—that is, by the research councils themselves for projects they may not have supported.
The other question that I wish to discuss arising from the report is the quality both of the assessment of the programme and the projects submitted to the Commission, and the evaluation of the results from the work done. There have been widespread complaints that the scientific and technological community has had little input into the programme. Politics plays too large a part in establishing the direction of research and in the success of particular research proposals. I feel that there are grounds for concern here, even if the problem is more perceived than real. For that reason I would support the Select Committee's recommendation for more scientists to be involved on the advisory committees. The Commission must be encouraged to elicit views from a wider scientific audience, not just from research councils but from scientific and engineering institutions and from individuals. This could also help in the communication of the Community's research programme to the general scientific public. There is much misunderstanding and ignorance about the activities of the framework programme among the scientific public.
There has also been some criticism that the refereeing of projects in the framework programme is of a lower standard than in the research councils and in SERC in particular. Whether this is true or not, it would certainly help to restore confidence if there were a wider pool of referees and the names of those referees were known. There is always suspicion when there are referees whose credentials are not well-established.

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The report also recommends that research councils should have a formal input into the advisory committees responsible for developing the framework programmes. This would seem to make good sense in order to establish some co-ordination of national and European research strategies, particularly if attribution is developed to any extent. However, it has been pointed out that if the same people are allowed to dictate programmes both in the national and in the European arenas, a degree of plurality is lost in the source of research funding. There is always the danger that proposals in areas of unfashionable science, even those of intrinsic merit, can be rejected by the same people at Swindon and then at Brussels. This must be guarded against.
I believe that your Lordships' Select Committee has produced a useful report which highlights important issues of which this House should take careful note.
6.21 pm
Lord Beloff: My Lords, the noble Lord, Lord Shepherd, went out of his way to ask me to take part in this debate, obviously searching for someone who was neither a scientist nor a European to give, as it were, the ordinary Back-Bencher's view of the distinguished labours of his committee. I am pleased to begin by congratulating him and his colleagues upon their achievement.
The delay in our discussing the report, to which the noble Lord, Lord Shepherd, referred, has enabled the report to be overtaken or supplemented by another document from the other place, the Report of the Select Committee on Education, Science and the Arts entitled Science Policy and the European Dimension. Many of the issues, and most of the witnesses, which appear in the report of your Lordships' committee appear again in that volume. As a student of British government rather than of science, I find the comparison between the two documents of very considerable interest.
It is clear that the capacities, scientific background and knowledge of members of your Lordships' committee were very much superior to those available to the other place, with one or two exceptions. On the other hand, the habits of another place—the way in which it operates—make it easier for Members of that place to challenge outright some of the more absurd claims of official witnesses. The trouble with your Lordships' committees is that they are composed not only of specialists but of specialists with very good manners. We are in an area where good manners may actually be a disadvantage.
That aspect becomes obvious in the case of the behaviour of the Treasury, to which all the previous speakers have referred. In the past few years there has been a great deal of research by historians and social scientists as to the reason for Britain's relative industrial decline. I have spent the last 20 or 30 years of my professional life in research relating to that topic. The conclusion to which I came some time ago—I think it has been imparted to your Lordships before, but it is relevant today—was that we can dismiss the usual Correlli Barnett stuff. It is not the fault of the trade unions, the public schools, or the
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hereditary aristocracy; the main drag on Britain has been the Treasury. The Treasury control of the machinery of government in Britain is the main reason why, as the noble Lord, Lord Shepherd, reminded us, science is underfunded, as it was between the wars, and one of the main reasons for our weakness in defence.
As was shown in the report—it has been referred to by my noble friend Lord Butterworth and other speakers—one finds the Treasury claiming that its particular rules for controlling public expenditure behind the backs of Parliament and the public are themselves not subject to challenge; they are something which must be taken for granted, like the law of gravity or the law of diminishing returns. There is no reason for that. No doubt successive generations of Treasury civil servants are indoctrinated with this kind of belief from the moment they enter the portals of the Treasury. They are also indoctrinated—and I thought this was even more shocking in the case of the Treasury's evidence—with the belief that knowledge is not important, that only the rules are important.
The question of what other countries do with funds which come from a common source—whether they practise additionality or attribution, or steal the lot and put it in the pockets of some Minister or his favourite—is of vital concern to the British taxpayer as well as to the British scientific community. Having been asked this question, first, by your Lordships' committee and later on—and therefore with plenty of warning—by the committee in another place, for the Treasury to say that it knows nothing about what goes on abroad is so scandalous that I think it should be noted by your Lordships' House, and I hope it is noted by my noble friend the Minister.
There is an obvious remedy. I hope that one day this House might have a select committee to look at the Treasury, which would be a very good subject for investigation. I have formed the view that no one should be admitted to a senior post in the Treasury who has not had experience of some duration in another walk of life, someone who has met a payroll, to use an American phrase, who has run a business or acquired serious scientific or technical qualifications. As long as we let young administrative trainees imbibe, first, the rules, and then the view that they do not need to know anything, we shall have this kind of situation.
As noble Lords have pointed out in this connection, the main problem arises from the dispute about additionality and attribution, and it is particularly serious because of the absolutely absurd claim that the universities are part of the private sector. There is only one private university, and I happen to have taken part in founding it. All the other universities receive most of their money from the Government and could not operate without grants both from the University Funding Committee and from the research councils. Therefore, for the Treasury to argue that it is putting money in the private sector as though it were somehow or other adding to the profits of some joint stock company is a piece of nonsense which it should never have been allowed to get away with.

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However, we are not here to improve the way in which our affairs are run; we are here to look at the impact the framework will have on the scientific community. If the financial arrangements are such that those who ultimately receive research funds, earmarked by the Community for research projects of a European interest, are liable to lose funds for projects to which they or the research councils would attach greater importance, then it raises the question whether we should contribute 20 per cent. to the European fund or whether it would not be better to have the financing of research in the hands of our own research councils. Where a piece of research clearly required a European partnership the research council could initiate that partnership. There is not much point in taking money out of one pocket and putting it in the other if the other pocket receives very much less than what was put in the first one.
I do not dispute that there must be matters where a partnership between a British and a continental institution for research—whether inside or outside the Community is another matter—is likely to be important. Skills are different; knowledge is different in different countries; expertise is different, and there may always be areas where such trans-national research is important. However, after reading the report and the evidence to the committee I feel that the attitude of the Commission—not staffed by scientists, as has been pointed out—indicates that research is a good thing across the borders; that in some way it contributes to what one might call the European mood. That is a matter for politicians, perhaps for civil servants or the media; it is not something which scientists, who are concerned to discover the truth and find out its practical applications, should rank very highly.
My final point relates to the references made to the bureaucratic difficulties of applications to Brussels, and especially the difficulty of being unaware whether the proposal is likely to result in a grant until a very late stage, to which I attach considerable importance. That is a specific problem. Although I am not a scientist, some of my best friends are and, as anyone who knows scientists knows, a great deal of their time is spent filling in forms applying for grants rather than at the bunsen burner or whatever it is they now use. Anything which cuts down the necessity for heads of departments or of research institutions being taken away from their research and which can help to minimise bureaucratic formalities should be considered with the greatest care.
In the report the committee have raised matters of great concern, both to those worried—as we all should be—that we rank so low in the list of advanced industrial countries regarding expenditure on scientific and technical research; and those who believe—which is why I began with my King Charles' head—that the only way to keep our governing institutions right is to point to weaknesses wherever and in whatever field they appear.
6.35 p.m.
Lord Ezra: My Lords, I associate myself with the tributes rightly paid to the noble Lord, Lord Shepherd, for the way in which he presided over the inquiry whose report we are presently debating. I have the honour to succeed him as chairman of Sub-Committee B and he has set a challenging and daunting standard.
I support what the noble Lord said in his preliminary remarks, which were also echoed by other noble Lords who have spoken, regarding the length of time it has taken before we are able to debate this important report. In making my final preparations to speak in the debate, I was astonished to find that the evidence we heard from the responsible Minister was given in 1989; we are now in 1991. I should have thought that the recommendations made in reports of this kind should be debated by the House within a limited period of time.
The question to which the sub-committee first needed to address itself was the validity of conducting research at the European level. We were not in any doubt about the importance of that. To that was attached the principle of subsidiarity, to which the noble Lord, Lord Butterworth, specifically referred. In other words, the research that we do at Community level should be such that it is better done there than at national level.
The amount of research expenditure as between Community and national level demonstrates that the great proportion of the research we do is at national level—over 90 per cent.; the remaining 10 per cent. is largely at European level, and a small proportion is at what one might call the global level.
There is little doubt that we can gain considerably, particularly with the approach of the single market, from more European research. The committee was right in relating most of its inquiry to facilitating that research once it had been agreed upon. There was general agreement also on the six strategic lines that were selected for the third framework programme. There was agreement that the programme should have started before the second framework ended to ensure some degree of continuity. I was personally concerned that the one area in the third framework programme in which research expenditure seemed to have diminished was energy. The way in which the energy scene has developed and the environmental implications of the improved use of energy indicate that that is an area to which more effort should be given.
The timescale is also important. When we asked Mr. Hogg, the Minister, about this in November 1989 he said, "Yes, but we devoted more expenditure to energy when the crisis was on". Of course he was referring to the last crisis. By the time we debate the report we are in another crisis, and there will be many more crises before we are finished. Therefore, we should look carefully—especially in present circumstances—at the proportions provided for energy research.
There has been some criticism, no doubt partly justified, regarding the so-called Brussels bureaucracy.

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In any distribution of funds, whether done at national level by the Treasury or at European level by the European Commission, there is bound to be the intervention of paperwork. The amount of that paperwork should be reduced as much as possible.
I was struck by a remark made by Sir Mark Richmond, Chairman of the Science and Engineering Research Council, to the House of Commons Select Committee, to which the noble Lord, Lord Beloff, referred. He stated that those who took the trouble to learn the Brussels system found it a rewarding place in which to gain support.
A certain amount of criticism is levelled at Brussels by those who do not take the trouble to learn the system. I can speak from my own experience when I was involved in the affairs of the coal industry. We had to contend with the European steel and coal community and I used to make special efforts to understand the Luxembourg system as it then was. I used to go there frequently and those visits paid off considerably. We were not consulted as to how the system should operate at that time because we were not part of the Community and we might have had different ideas, but we were faced with the fact that it existed. It is important to understand the system and ensure that it works properly.
I do not wish to repeat what has been stated so cogently and vigorously by noble Lords who have spoken on the problems of the additionality and attribution systems. All that I can say is that the Treasury experts admitted that the system can give rise to confusion. I do not know whether it gave rise to confusion in their minds, but it certainly gave rise to a good deal of confusion in the minds of everybody else. The Treasury has many qualifications and qualities and one of them is the ability to devise inoffensive words to describe unpleasant operations. That can be likened to the practice of the ancient Greeks who used to use pleasant words to describe unpleasant natural phenomena in order to placate the gods. Here, the simple word "attribution" means that what we had committed ourselves to provide in addition, we shall remove. That is what the matter comes down to as far as I can see.
We cannot tell whether the calculated 30 pence or 35 pence in the pound finds its way into additional research because the operation is done behind closed doors, as has been mentioned. One might ask why the amount is only 30 or 35 pence. Why is the remaining 60 or 65 pence taken away and where is it taken to? A Select Committee in the other place looked at that question. It was pointed out that the effect of the practice of attribution on UK research priorities could contribute to the cumulative underfunding of research in the UK. In other words, there is an arrangement within the Community to which all countries contribute. We contribute 20 per cent.; we get back approximately 20 per cent. Instead of that 20 per cent. flowing into the research effort in addition to what is voted for national research, a large part of it disappears. The seriousness of that situation has been
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emphasised and I hope that the noble Lord, Lord Hesketh, will be able to explain how this very odd system can be justified.
The problem with which this matter is connected is the general level of UK expenditure on research and development. Some years ago an excellent report was presented by the noble Lord, Lord Sherfield, on the subject of civil research and development in the United Kingdom. Many noble Lords will have taken part in that debate. What then emerged very clearly was that we were lagging noticeably behind our competitors in Western Europe, let alone in other parts of the world, in the proportion of funds that we devoted to research. It was pointed out that whereas the Federal Republic of Germany, France and the Netherlands devoted 1 per cent. of GDP to research, in the United KIngdom it was 0.7 per cent., and that figure included a large amount of defence research.
In July 1990 the SERC compared UK research with the German and French research effort and it found that the amount of expenditure in the UK amounted to no more than three-quarters of that conducted in France and no more than half of that conducted in Germany. Therefore, in the intervening period we do not appear to have caught up. In order to bridge the gap to some degree we ought to have respected entirely the additionality principle to which the UK is totally committed—and yet that commitment has been breached. Therefore it becomes a very serious matter.
The noble Lord, Lord Beloff, in his admirable speech, referred to the fact that the phenomenon of underfunding of research is not a new one. He mentioned the situation between the wars. The situation goes back further than that and could be prolonged into the future. I should like to quote from the Royal Society's year book 1903.
"Expenditure by the Government in scientific research and science institutions, on which industrial prosperity so largely depends, is wholly inadequate in view of the present state of international competition".
I hope that when the report is written in 2003 the same words will not be used, but I fear that in the very little time that is left, that might be the case.
6.45 p.m.
Lord Williams of Elvel: My Lords, the House will be grateful to my noble friend Lord Shepherd, first, for chairing the committee that has produced such a distinguished report and, secondly, for his work over the last three years as chairman of that committee. He is retiring by rotation and the noble Lord, Lord Ezra, will be taking over that position. It is only proper that your Lordships should mark with a certain amount of gratitude the work that my noble friend has undertaken on behalf of your Lordships.
I am sympathetic—I shall say no more—with my noble friend's remarks on the status of the report of your Lordships' committee. It is somewhat odd that there has been such a time lag between publication of the report and the debate. I have been penalised by the system of publishing reports—and I have drawn the matter to the attention of the noble Baroness who is at present sitting on the Woolsack—because a Motion

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appeared under No Day Named but the report which had a number, and which I wanted in order to quote in a debate was not available because it was reserved for a press release. As a Member of this House I thought that I was being deprived of a document that I should have had. Therefore, I am sympathetic to what my noble friend said about according reports from committees of this House a somewhat special status.
The background to the report and to the debate has been described by a number of noble Lords. The noble Lord, Lord Beloff, mentioned the fact that we have been overtaken by a report from a Select Committee of another place which shows that domestic spending on civil scientific research was planned for—and that fact is confirmed by the Cabinet Office review in July 1990. As the noble Lord, Lord Ezra, pointed out, it shows that civil research and development in the United Kingdom is still badly underfunded compared to that of our European competitors. Indeed, the chairman of the Science and Engineering Research Council made the same point both to the Select Committee of another place and our own committee. By way of background, it is worth noting that, although funding of research and development domestically may be falling in real terms, United Kingdom financial support for the European framework programme is growing. We are starting to shift resources from domestic research to the European framework supported research. Admittedly, only about 7 per cent. of government expenditure on civil research and development goes into the European Community programmes, but that expenditure is nevertheless growing while our domestic programme is in decline. There is a lesson to be learnt from that.
I come to the report itself. We join the noble Lord, Lord Ezra, in welcoming the third framework programme. We believe that there is a body of research which is best done at European level. We respect the principle of subsidiarity but we believe that some things are properly done at Community level and by the Community as a whole. The CBI is on record as saying that that role should be larger than it is at present. However, as my noble friend Lord Shepherd said, others believe that it should be smaller. Perhaps the balance is about right, but we shall see.
I accept the criticisms of the noble Lord, Lord Beloff, about bureaucracy. It is much better that we should have less rather than more bureaucracy. On the other hand, I believe, along with the noble Lord, Lord Ezra, that the Brussels system is not well understood by some of our people, particularly scientists and the research councils. I agree with the Select Committee of another place that if the scientific community were closer to the corridors of power in the Commission the results would be very much better and to its advantage. Our research councils could conveniently be part of the advisory process that forms part of decision making in the Commission. That would be to our advantage.
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Many noble Lords have discussed the position of the Treasury. When listening to the noble Lord, Lord Beloff, I assumed that in attacking the Treasury he was, in the proper traditions of the House, attacking Treasury Ministers rather than Treasury officials. It is wrong of us to attack officials. There is parliamentary accountability. Indeed, I have not noticed the noble Lord, Lord Beloff, withdrawing his support from any Chancellor of the Exchequer over the past 12 years, although Chancellors of the Exchequer have been responsible for the Treasury, against which the noble Lord takes such umbrage.
On attribution and additionality, I have nothing to add to the arguments brought forward both by your Lordships' Select Committee and by the Select Committee of another place. The noble Lord, Lord Kirkwood, summed it up very well. He said that, to the extent there is attribution, there is no additionality. The Government appear to have baffled both Houses of Parliament. I have no doubt that the noble Lord, Lord Hesketh, will be able to explain in words which are comprehensible to all your Lordships exactly how the principles of attribution and additionality work and how they will be to the general advantage of the Community and ourselves. We look forward with great interest to his explanation. The report is absolutely right in saying that Parliament must be given powers to scrutinise what is happening. That cannot take place behind closed doors. It is far too important for that.
I turn now to the procedures for the evaluation of projects. I am not entirely convinced about the principle of peer review as recommended by the report. It may be the right system, but I do know that in the accountancy profession in the United States peer review is the way of assessing performance. However, it gives rise to enormous problems of professional jealously and professional nit-picking. I wonder whether that is the right framework in which to evaluate procedures under the framework programme. I accept that there must be an allocation for set-aside for evaluation procedures. Perhaps 1 per cent. of the funding is the right amount.
The noble Lord, Lord Butterworth, referred to near-market research. I have spent just over a week finding out exactly what is meant by that term. The more I look at near-market research the more I come to the conclusion that it is an extremely complex and difficult subject. We should be more flexible, but it occurs to me that it is almost a question of being flexible product by product or project by project. For one product there may be a three year gap between the research point and the market point. For a second product there may be a 10 year gap and for a third a one year gap. All I am saying is that we should look at the possibility of flexibility. Let us not draw a total line at three years. I would not wish to advance any major conclusion without a much more serious study of the subject.
The report also raised the question of the wide range of government departments involved in relationships with the Community. The noble Lord, Lord Hesketh, as a Minister at the Department of

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Trade and Industry, is responsible for the European programmes. The Department of Education and Science has responsibility for the domestic programmes. The DES is the lead department on some of the projects under the framework programme. Indeed, a number of other departments are involved.
The Select Committee of another place recommended that when the Minister from the DTI goes to Brussels to discuss these matters, he should be accompanied by a Parliamentary Under-Secretary of State from the Department of Education and Science. I wonder whether that is the right way to handle the matter. Perhaps we should look again at the possibility of having a Minister for Science with an umbrella role over the multitude of research operations and the five research councils.
A major problem was pointed out by my noble friend Lord Shepherd and the noble Lord, Lord Butterworth. It is a problem with which we shall have to grapple more and more as the Community programme grows larger. The problem is causing a great deal of debate within the scientific community. How do we dovetail the European priorities in research with the national priorities in research? That is a fundamental problem which we need to discuss very seriously. If research councils are to be obliged to cut their budgets on what they regard as being priority projects in order to receive funds on what the EC regard as priority projects we shall certainly face trouble, European Community projects, even framework programme projects, may not fit in with our national priorities. It is an issue which your Lordships, Members of another place and those in the scientific community will have to debate at some length. I do not see a way of getting that dovetailing right at the moment. I am sure it will be a problem for us in the future.
We must return to where we started. The proportion of our gross domestic product devoted to civil research development is insufficient. Civil R&D has been consistently underfunded. Until we have grasped that political fact and until the Chancellor of the Exchequer, who is responsible for the Treasury, grasps that political fact we shall continue to decline as an industrial society.
I conclude by quoting John Mulvey of Save British Science, who welcomed the report of the committee of another place. He said:
"It illustrates that everyone who looks at these problems, be it ourselves, the Royal Society, the House of Lords or now a House of Commons Committee, all come to the same conclusion. How many more reports have to be written before something's done and before it's too late?"
7 p.m.
The Minister of State, Department of Trade and Industry (Lord Hesketh): My Lords, I have listened with great interest to the debate. I should like to respond to the remarks made by the noble Lord, Lord Shepherd, in introducing his most thorough presentation of the issues as he saw them. He referred to the fact that we are debating the issues today even though several months have elapsed since the publication of the report. He most generously referred to the
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difficulties experienced by Chief Whips. I very much appreciate the point that he and other noble Lords made with regard to the position of debates and the priority which such reports are given. I do not believe that the noble Lord would expect a Minister of the Department of Trade and Industry to try to supersede the Procedure Committee of your Lordships' House or the wisdom and enterprise of the Chief Whip's office. Therefore, I do not intend to follow either course. I shall simply pass on the message.
A number of important and stimulating points have been made. The Government welcome this opportunity, albeit a rather belated one, to discuss the report by the European Communities Committee on the EC's research and development framework programme. I beg the indulgence of the House. I intend to take some time to respond to the report as this is the first opportunity that the Government have had to do so. It would therefore be appropriate for me to congratulate the committee on its thorough and painstaking inquiry into the European Community dimension to R&D.
Events have moved on since the publication of the report last June. Detailed negotiations are now well under way on the substance of the specific research programmes. These will put into effect the provisions of the third framework programme, which is the main focus of the committee's inquiry. Although these negotiations have lasted longer than one would have hoped, there is now a good possibility that all the programmes will be adopted and calls for tender issued by this summer. Common positions on three programmes—environment, telematics and marine sciences—were agreed by the Council on 21st December. The UK has participated actively in the negotiations in order to try to ensure that the content and management arrangements for the various programmes reflect our own priorities and objectives as far as possible.
A number of themes have emerged from the discussion this afternoon: the scale and size of the framework programme; the balance between Community research and national programmes; and the effectiveness of EC collaborative research in increasing the Community's industrial competitiveness. I shall try to deal with these in due course, after I have outlined the Government's response to the key conclusions and recommendations of the report.
The aim of funding R&D programmes at the Community level is, of course, to promote greater collaboration between member states' organisations —both industrial and academic, private sector and public sector—and thereby to contribute to the added value of research and development carried out in the Community. A number of the most important programmes are aimed specifically at increasing the EC's industrial competitiveness. I welcome the report's conclusion that the third framework programme should help to achieve that goal. I also welcome its statement that the level of funding for the third framework programme is pitched at a satisfactory level and that the split in funding between the various fields of research reflects priorities which match our national priorities.

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Europe's international competitiveness will only be improved by funding the best projects which Community researchers can deliver. In view of the finite resources available, the Government believe that the overriding criterion for approving project proposals must be that of scientific and technical excellence. In addition we must avoid the unnecessary overlap or duplication of work conducted by member states themselves or through other international means. The provision of funds to organisations from the less favoured regions in the interests of so-called economic and social cohesion in the Community must therefore, as the committee rightly recognises, be subordinate to this objective, especially since there are separate mechanisms for assisting the weaker areas of the Community.
Likewise, small and medium-sized enterprises (SMEs) should not automatically expect preferential treatment, though they certainly have a part to play in the carrying out of highly innovative research. As a result, the Government encourage firms of all sizes to participate in EC framework programmes. We also support the actions which the Commission has taken to promote the participation by SMEs in the framework programme, where it is appropriate for them to do so.
As to whether the Community should support near market research, which many noble Lords mentioned, we have consistently held the view that framework funds should be used for pre-competitive research; in other words, for research into technologies which will underpin the development of whole families of products, rather than to help firms with the actual development of commercial products or processes. That includes demonstration projects. But these should primarily be designed to prove the capability of a particular generic technology or have a connection with the development of common standards or codes of practice. Near market research should be principally a matter for individual firms themselves. In any case, there already exists the EUREKA mechanism which, with the aid of government support, encourages trans-European collaborative research nearer to the market. It is important that the roles of the Community and of national governments are not confused and that their activities in support of R&D are not duplicated. The Government accordingly do not share the committee's view that near market research should be funded under the framework programme and explicit reference is made to this in the Framework III decision.
I should like now to deal, not least in my capacity as Treasury spokesman in this House, with the criticisms in the report directed at the way the budget for EC R&D is attributed to individual departments. After today's debate, I could suggest that it is possibly the reformation and renovation of the Treasury that has been proposed from certain sides of the House.
The main thrust of the committee's concern is that public expenditure control—which the committee and witnesses who appeared before Sub-Committee B recognise as being important—may have a harmful effect on our R&D effort; and that these controls may
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distort the priorities of the scientific community. I hope to explain to the House why the Government do not accept that this is so; and I shall, of course, also deal with each of the more specific conclusions of the report.
There is a very basic reason why the Government cannot accept the committee's conclusion that public expenditure control of the cost of EC R&D worsens the funding of R&D in the United Kingdom. It is that the 1990–94 framework programme will result in at least an additional £250 million of publicly funded support for our national R&D effort.
However, before I deal with that issue—namely, the issue of attribution—it is important that I should give more detail. I recall the points made in the supplementary explanatory memorandum which my predecessor as Minister with responsibility for Community R&D submitted to the committee on 22nd November 1989 and which the committee published with its report. The bottom line is that resources are finite. The United Kingdom's contribution to R&D expenditure financed through the Community budget comes from the same pool of resources and represents the same burden on domestic taxpayers as does direct funding of R&D by government departments.
The approach which the Government have adopted is therefore designed to ensure that public expenditure resulting from EC activities is evaluated and controlled on the same basis as other public expenditure and to contain the consequences for UK public expenditure of significant pressures for growth in Community spending. By doing so, and by placing responsibility on departments for Community expenditure on R&D, our aim is to maximise the quality and value for money of EC R&D; to seek as effective control as possible of spending at the Community level; and to ensure, as far as possible, that the Community's R&D effort complements rather than duplicates domestically funded R&D.
Community R&D has been a particular area of growth, as several noble lords pointed out. As was explained in evidence to the committee, the fundamental principle of public expenditure is that departments are required to bid, and to make a case on value for money grounds, for any expenditure in excess of planned, predetermined levels. Contributions to European Community programmes are no exception to that principle.
The case for additional spending is considered in the annual public expenditure survey. It may be helpful if I outline what is involved, in view of the committee's concern about the basis for the Treasury's evidence that the 1990–94 framework programme will produce £250 million of additional support for R&D in the UK over the next seven to eight years. The attribution arrangements establish the extent to which our contribution to Community R&D has risen above predetermined levels. That means, first, establishing a benchmark against which growth of EC spending—and of our contribution to it—can be measured. The benchmark is, broadly, the level of spending in 1984.

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The Government are prepared to accept that the Exchequer should bear that cost. The discussion in the survey is about the spending over and above that level.
The consequence of our agreement to the 1990–94 framework programme—a decision which required unanimity—was an increase of £750 million over planned levels of public expenditure, because of an increased contribution to the Community budget; but £250 million of that new public expenditure can be met within the benchmark which I have mentioned; and the Government are prepared to accept at least an increase in public expenditure of that level. The reason why that £250 million is the measure of the minimum increased spending on R&D in the UK is merely that we can expect to receive about the same amount from the framework programme as we contribute to it—about £750 million. That addition must be set against the possible reduction, at the outside, of £500 million in direct spending on R&D by government departments.
Thee figure of £250 million—or, as is sometimes said, 30p to 35p in the £1—for additional spending on R&D in the United Kingdom relates solely to the 1990–94 framework programme. That framework programme was the subject of the committee's inquiry. But, as the 1990–94 framework programme comes on stream, it will overlay spending which will continue from the 1987–91 framework programme. The United Kingdom is concurrently contributing to and receiving the benefit of that programme. So, in addressing the committee's conclusion that 30p—35p in the £1 is too low a figure for additional spending on R&D, it may be better to consider the impact of Community spending, and of the attribution arrangements, in relation to framework programme expenditure as a whole rather than in relation to the 1990–94 programme alone.
On that basis, in 1991 the United Kingdom's total contribution to Community R&D expenditure is, in round terms, some £200 million. The contribution which the Government are prepared to accept without corresponding adjustments to domestic expenditure — what I referred to earlier as the Treasury benchmark —is currently about £100 million a year. Of the further £100 million which we currently contribute to the Community's R&D, about £40 million reflects expenditure which is not tied to any department's special responsibilities, or which is offset by receipts by public sector bodies. The discussion in the survey, therefore, concentrates on the extent to which we should meet the remaining £60 million a year cost by an adjustment to departmental expenditure. It is by no means a foregone conclusion that there would be a reduction of that amount. But, on an annual basis, the additional overall spending on R&D in the United Kingdom is in fact much more than the 30p—35p in the £1 which the committee concluded was too low.
Lord Ezra: My Lords, we are much indebted to the Minister for his long, detailed and careful response. It is difficult to follow and we shall all have to read it. If the 30–35p is not correct, can we be told why the figure was given to us by the Treasury?
Lord Hesketh: My Lords, I did not say that it was incorrect. I said that there was an assumption that the figure could be better.
It has been the practice of successive governments not to go into the detail of survey discussions and I hope that your Lordships will understand that I do not intend to go down that path, but it is worth pausing for a moment on the science budget. As the committee, and witnesses who appeared before it, are keenly aware, the 1990–94 framework programme will involve more Community support for research in the area of basic science. It follows from the attribution arrangements that the implication of that growth for the domestic science budget would have been an important factor in the Government's consideration in the 1990 survey of the appropriate size of that budget. The outcome of those deliberations was published in the Autumn Statement. The outcome was that the 1991–92 DES expenditure plans for science (including expenditure financed by EC receipts paid directly to research councils but excluding non-voted public expenditure by the Institute of Plant Science Research) will be £928 million, an increase of £28 million over the equivalent figure for this year. A sizeable element in this year's expenditure relates to the heavy concentration on special items of capital spending. When that factor is taken into account, the expenditure plans for 1991–92 allow provision for science to be maintained in real terms.
In addition to the scale of spending, the committee expresses concern at the risk of distorting the priorities of the scientific community. I note that the burden of the evidence given to the sub-committee concerned the potential distortion of priorities rather than any actual distortion which has taken place, and that there was acknowledgement of the justification for the public expenditure arrangements. However, in considering the risk of distortion we should note also the considerable correspondence between domestic and Community priorities for R&D and that the arrangements for attributing to departments responsibility for particular aspects of Community research are designed to ensure that any adjustments which need to be made as a result of EC expenditure will take place, as far as possible, in the areas which are benefiting from that Community expenditure. That is not to say that there will not be occasions when there is conflict between domestic and Community priorities and the potential for distortion of those of the scientific community. The Government are alive to the risk. It is for just that reason that the public expenditure arrangements provide the scope and flexibility, within the public expenditure survey, for a thorough consideration of the implications for domestic expenditure of Community R&D.
It is because of our public expenditure control arrangements, which place financial responsibility on departments, that we have framework programmes which correspond with our own domestic priorities for R&D. Departments have been closely involved with the development and negotiation of framework programmes. That close involvement by the United Kingdom has been successful in securing successive framework programmes which involve a level of

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spending which we could agree, and a balance of spending which broadly corresponded to our R&D priorities. Having secured that outcome, it seems to me to be entirely reasonable that we should consider whether there should be some adjustment to domestic expenditure to ensure that domestic and community spending complement rather than duplicate each other. Not to have such an examination, with the possibility of the scaling back of direct domestic support for R&D, would be a recipe for duplication and waste.
The committee is concerned that the public expenditure arrangements might lead to applicants who successfully bid for Community funds having their central government grant cut. That view seems to be based in large part upon a belief that the arrangements for attributing part of the cost of Community R&D are connected to the receipt of Community funds and to an adjustment of departmental programmes to take account of those receipts. As was made clear in evidence to the sub-committee, and as I have explained today, public expenditure control is directed to the cost of the UK's increased contribution to the EC budget as a result of the framework programme, rather than to the UK's increased receipts. At the global level, both public and private sector receipts are available to be spent in full. They more than offset any reductions in central government expenditure which might be made because the UK's contribution to the EC budget in respect of R&D exceeded predetermined levels. Thus, there is a powerful incentive to seek Community finance. The evidence is of UK researchers both seeking and receiving substantial support from the Community budget.
Perhaps I may pick up the point which the Committee make about universities being treated as within the private sector. The noble Lord, Lord Beloff, also drew your Lordships' attention to that point. There is no special treatment here. Although they receive substantial support from central government and from the Universities Funding Council, the universities are independent institutions and are classified to the private sector for all purposes in national accounts.
With regard to information requirements the Committee consider that the arrangements have not been explained clearly to interested parties and that the Treasury should explain the operation of the attribution arrangements more widely. The Treasury, in fact, circulates substantial, detailed guidance annually to departments about the operation of the arrangements and the expenditure consequences for departments. The Treasury is always ready to provide such further explanation as departments require. I am sure that the Committee's inquiry and report will also go a long way towards explaining the overall working of the public expenditure arrangements which apply to Community research and development.
However, at the end of the day it is for departments, not the Treasury, to decide the allocation of expenditure in their programmes and the detailed implications of the public expenditure arrangements
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for research institutes. I know that sponsoring departments are always ready to provide considerable guidance about sources of EC funds and applications for them.
As to the Committee's concern about the monitoring of public expenditure control, I have explained that the consideration of the implications for the framework programme is a part of the public expenditure survey process. The Government's decisions on the appropriate levels of public expenditure are published in the annual Autumn Statement. Further detail is given in the departmental reports which this year will replace the departmental chapters of the public expenditure White Paper. The annual review of government funded R&D gives more detailed information about public expenditure on R&D including, from the 1990 review, the indicative UK contribution to the EC budget in respect of R&D.
On the spending side, therefore, there is a great deal of information. The same goes for receipts from the Community. Public sector receipts are normally brought, intentionally, to Parliament's attention in departmental Votes. Indeed, it was just this practice which gave rise to the Court of Auditors' criticism of transport infrastructure receipts, to which the Committee refer, as did the noble Lord, Lord Shepherd. The Court mistakenly concluded that the treatment of these receipts as appropriations in aid indicated that they were not additional. In fact, as was explained to the Court of Auditors and to the sub-committee, gross expenditure on the Vote had been set at a level which took account of EC receipts. To allow a further increase in expenditure, on account of the receipts, would therefore be double counting. Recording the receipts as appropriations in aid, in keeping with normal practice, identifies for Parliament the extent to which the gross expenditure on the Vote is financed by the Community budget.
Finally, in relation to Treasury matters, the committee's report asked specifically about other member states' practices; a point also referred to this evening. It is not at all obviously or necessarily the case that practice in other member states has a bearing on circumstances in the United Kingdom, though I can assure your Lordships that the Treasury is not uninterested in practice elsewhere. But the fact is that there are differences in the circumstances of member states; and detail about the full scale of receipts from the EC budget, and their treatment in other member states is difficult to come by. There is great diversity in member states' planning and control mechanisms. Indeed, some member states appear to be content to operate on the basis of broad targets for the public sector deficit and have a much less detailed planning and control system than our own.
However, it is noteworthy that the majority of member states treat receipts from the EC budget in a way which is at least similar to our own treatment of them; that is, in one way or another they are taken into account in setting domestic programmes which, as a result, are higher. As for contributions to the EC budget, no other member state has a formal mechanism for considering whether increases should lead to reductions in domestic spending. But if they do

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not have a formal mechanism for doing so it still seems that a number of member states allow for just such a possibility.
For example, in France there is no formal mechanism but increases may be taken into account in decisions about domestic spending, particularly in areas of the budget where France can expect to benefit from EC funding. That possibility also exists at least in Germany, the Netherlands and Belgium. In the case of Belgium, there is no formal mechanism, but the initial calculation of departmental budgets involves foreseen expenditure on EC programmes leading automatically to a corresponding reduction in domestic spending on the sector for which the additional contribution was destined. So, in spite of greatly differing circumstances, UK practices in fact find interesting similarities and parallels in other member states.
Those practices are designed to ensure that there is proper examination of the consequences of growth in the Community budget in the proper context for such an examination—the survey. The Government would not accept that they should do otherwise. I suggest that there are signal benefits in that approach. They include rigorous examination of Community spending, encouragement to departments to seek value for money from the EC budget, and to try to shape that budget in ways which meet our own priorities.
What our arrangements do not mean is a worsening of the support for R&D in the UK. On the contrary, there is substantial additional support for it. Nor is there any automaticity in reductions in departmental programmes, but there is a cutting out of duplication and waste. While the onus is on departments to make the case for additional spending, the survey arrangements mean that the Government can look very carefully at the domestic implications of EC spending, including any mismatches which may arise between domestic and Community priorities for R&D.
The report also refers to the need for the European Commission to improve and streamline its procedures for the selection of projects. We entirely agree and have been pressing the point for some time. It is clearly imperative that bureaucracy is kept to the minimum, consistent with ensuring the thorough and objective assessment of project proposals. The Commission is well aware of the importance of making the procedures as clear and simple as possible; to this end they have made substantial efforts to produce publicity and guidance material.
The report raises the crucial issue of project evaluation which was also mentioned by various noble Lords this afternoon. The United Kingdom has taken the lead in insisting that that should be given high priority. There are encouraging signs that the Commission recognises the need to adopt a more rigorous approach than perhaps has been the case in the past. I am sure that the noble Lord, Lord Kirkwood, will be pleased to hear that.
I should also like to say a few words about the report's suggestions for improving the scientific advice available to the European Commission. Again, the noble Lord, Lord Kirkwood, and others, drew this to
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your Lordships' attention. It is right that the Commission should have adequate and up-to-date scientific information so that it can establish sensible priorities for the R&D programmes. However, I am not aware that the Commission is suffering from a lack of specialist advice in this respect. A host of formal and informal channels exist through which the Commission obtains this information. The director general of the Commission which has main responsibility for the programme also employs a significant proportion of scientists and technical experts. The head of one of them is himself a scientist.
Perhaps I may touch very briefly on a few of the points which I have not yet covered and move on to the universal criticism that all noble Lords have placed before your Lordships' House this afternoon. It was best summarised by the noble Lord, Lord Beloff, who to some extent insisted that the Treasury was the root of all evil. He went so far as to make a clear statement that, given the choice between knowledge and rules, there is only one answer. In his case, and I believe in that of many other noble Lords in the House this afternoon, knowledge is better than rules and the nation would be a better place for it.
The noble Lord, Lord Williams of Elvel, pointed out that for 12 years the noble Lord, Lord Beloff, had supported Chancellors who may have paid too much attention to the rules. However, I like to think that the Chancellors of this Government are learning from the advice of the noble Lord, Lord Beloff, and attend to knowledge.
In summing up, I reiterate that this report has made a most useful contribution to the debates surrounding the role of Community R&D and the United Kingdom's interest in this programme. However, it is often the case that even constructive criticism, such as is contained in this report, can overshadow what is already being achieved. The Government are grateful for the report and are grateful that your Lordships have expressed today their feelings and the findings of the report.
7.30 p.m.
Lord Shepherd: My Lords, I propose to be brief. I thank all noble Lords who have participated in this afternoon's debate. It has been most useful. I wish to thank the noble Lord, Lord Hesketh, for his contribution from the Dispatch Box. I hope he will understand when I say that I am a simple fellow. I was confused by the Treasury evidence, even after reading it two or three times, and I am still confused by it. However, I shall read the Minister's speech to see whether the new figures that he mentioned make any difference to the Treasury evidence.
I am grateful to the Minister for the undertaking he gave as regards the comments I made at the beginning of the debate about the way Select Committee reports should be treated. On the complexity of his argument in regard to attribution and additionality, it is interesting that, had the Select Committee sent this report to the House for information, we would have received a reply from the Government, but as we have brought the report before the House for a debate—we have waited six months to do so—we have had to wait

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for an announcement and a defence by the Minister of the Government's position. In such a complex matter we should find some way by which the Government's response to a Select Committee's report could be made available prior to the debate. That would result in a much more satisfactory debate and a much more satisfactory understanding of the Government's position. I shall say no more on that matter. It is a matter for the House itself to take up. The matter will not go away and I leave it to the noble Lord, Lord Ezra, and Members in another place to pursue this important subject. I hope that the House will accept the Motion.
On Question, Motion agreed to.

Physical Education and Sports in Schools
7.33 p.m.
Lord Dean of Beswick Lord Dean of Beswick rose to ask Her Majesty's Government whether they are satisfied with the present level of physical education and sports activities being provided in educational establishments and, if not, what plans they have to deal with the situation.
The noble Lord said: My Lords, I have used the vehicle of an Unstarred Question to bring before your Lordships' House a debate on a subject which I believe has not been adequately dealt with in either House due to the pressure on time. I hope that the Unstarred Question may open the door to a wider discussion in a national context.
Noble Lords may recall that on 16th January I tabled a Starred Question on this subject. Unfortunately I was unable to be present in your Lordships' House on that date and the Question was asked by my noble friend Lady David. She dealt with the Question very adequately and I make no criticism of the Minister who replied on that occasion and who is replying again tonight. However, having looked through the replies that the Minister gave, it is obvious that we were almost chasing our own tails.
One of my main criticisms of the Government in a non-political context is that they do not seem to have given educational establishments at any level any kind of central directive as regards sports activities. I have before me a copy of recent Questions for Written Answer and Oral Questions that have been tabled in another place.
I wish to express my thanks to the Central Council of Physical Recreation for the wide-ranging brief it has sent me on sporting activities, including swimming and athletics. Every sport appears to be covered in that brief. The council sent a document to the National Playing Fields Association on the use of green field areas for sport. That use appears to be diminishing at a rather disturbing rate.
I shall restrict my remarks to two or three points. If the Minister cannot reply to those points tonight, I hope he can transmit the concern of noble Lords on this matter to the Government. Quite recently an article appeared in one of the responsible newspapers on the subject of sport in state schools. The article was
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entitled Crisis on the playing fields but it went far wider than that issue. The article provided some of the most alarming statistical evidence on what we as a nation —not the Government—are allowing to happen at present. The article stated:
"Last year, three times as many school-age children drowned as in 1988 and fewer children have swimming in their curriculum than ever before".
I submit that there must be a relationship between a decrease in swimming lessons and the appalling statistics on deaths by drowning. If we allow the future seed corm of our nation to suffer such a situation, we are entitled to be criticised.
I do not wish to criticise the new Prime Minister. However, the borough of Merton where he was educated will in the near future no longer provide swimming lessons for school children. The newspaper further states:
"as John Major contemplates the death of swimming in his old school, he might care to reflect that Italy has three times as many swimming pools as we do, France seven times and Germany 20 times".
There must be something wrong when we, as a so-called forward looking nation, allow that kind of diminution of facilities to occur.
During my formative years in the early 1930s in Manchester, I lived within a short distance of three public swimming baths. I would be surprised if any of those swimming baths still remained, bearing in mind the deterioration in facilities that has occurred and the lack of funding for new equipment.
When some of the larger comprehensive schools were built 15 to 20 years ago, it was almost standard practice to include a swimming pool for the use of pupils. However, that facility is no longer standard practice because those kinds of schools will no longer be built as the resources are no longer available. That is another area where swimming pool provision is drying up. The newspaper article continues:
"Three years ago, pupils did just over two hours physical education a week. Now it is less than 90 minutes. By the time changing, showering and moving to game facilities is taken into account, they probably spend no more than 70 minutes a week in actual physical exercises. A Government committee have recommended that students should do at least two-and-a-half hours, and most of our European competitors, like Germany and France, do as much as three hours a week".
There is at present a fallacy that the Labour Party is opposed to competitive sport among children. That is absolute nonsense. It is a view that has been expressed by a few people but I believe that competition among children is very healthy and desirable if youngsters are to achieve anything.
The report continues:
"Even if more time was allocated, there is just not the facility. Ten years ago the Government laid down regulations saying schools should have playing fields which can be used for at least seven hours a week. But 15 per cent of schools do not have access to such playing fields and, worse still, as Nigel Hook of the Central Council of Physical Recreation, says: 'Local authorities have continued their policy of selling playing fields and converting them into supermarkets'."
That may be a criticism which can be levelled at local authorities. However, why are they doing that? Because, in the context of what is happening today in education with each school taking on an increasing share of the burden of its financing, land is a valuable asset. Therefore they shortsightedly dispose of the

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land in order to maintain the standard of education. It is sad when local education authorities are placed in such a position.
That problem has a geographical basis. The report says that independent schools in the private sector come out rather better and that there has been an increase in their sports facilities rather than a diminution. The reason is very much like the position regarding council houses. Those living in the best areas will choose that option because the money is available. However, you will not see that happening in the areas controlled by ILEA, or in the centre of Manchester or other conurbations where, unfortunately, deprivation is still rife. Wherever there is a surfeit of land it will be disposed of, to the detriment of the schools. That is a shortsighted policy.
The article mentions a report from South Wales concerning people who studied for and obtained educational qualifications in the teaching of sport. Last year in South Glamorgan, which is a large education authority, 35 students took the teacher training course but only 5 went on to teach the subject. It is strange that 35 people take a course with a view to training people and only five opt to go down that road. What they have been trained for cannot be attractive.
I suspect that the Government have a case to answer here in their general approach to the teaching profession as a whole. A succession of Ministers have got it completely wrong. Unfortunately they have regarded teachers as one of the drawbacks of the education system. Now, however, even the Government are saying that in his unfortunate stewardship of the education of the nation Mr. Kenneth Baker got it completely wrong. Now they are having to discard most of the national curriculum as he saw it.
Only today I received information from students at universities, polytechnics and technical colleges. They asked that they be provided at least with a broad base or support for the type of sport that they want to take part in, whether it is athletics, weight training, squash, tennis or whatever. They also said that despite an increasing student population the available resources are gradually falling.
It is no good any government—whether it is this Government or the next—standing aside and expecting the situation to improve without some specific increase in funding for sport in general. If educational establishments find that allocations from government and the funds they can raise locally are being severely restricted, the first casualty will be sport and physical education.
I could have developed the theme of sport in schools and educational establishments, but this is not the time to do so. This is an Unstarred Question and allows for only a short debate. I am merely trying to start a debate on the wider issues. However, it may be that as a result of what we say tonight the question of sport in our educational establishments will be raised higher up the pecking order and people will begin to talk about it.
I should like to talk about the World Student Games, which are scheduled to take place in Sheffield.
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I shall not prepare a defence of the way things have gone wrong financially in Sheffield. There may have been some miscalculations by the local authority. So far as I am aware, this is the first time that the World Student Games have been attracted to Great Britain. There is no doubt that the games will be a show-piece. I am not making a political point against the Government because I understand that in the other place an all party delegation from Sheffield, including Members of Parliament, saw the Government to ask whether they could provide some form of financial assistance to save the games from collapse. There is a serious danger that they will collapse if some help is not forthcoming.
The issue is rather wider than the Sheffield student games. Anybody who read the sports press at the weekend will see that the FA is starting the machinery to attract a future World Cup competition, with all the money that that brings in, to Great Britain. There has already been one bid from Great Britain to stage the Olympic Games—that submitted by Manchester. I have no doubt that there will be another British bid. There is competition as to who will make that bid. Manchester hopes that it will be Manchester. Mr. Sebastian Coe hopes to launch a London bid. However, if as a nation we let the student games programme for Sheffield fall by the wayside, shall we have any chance at all of getting the World Cup or Olympic Games for this country in the near future? Anybody who thinks that we shall is living in cloud-cuckoo-land.
In your Lordships' House one does not normally speak in absentia. However, the noble Lord, Lord Mulley, who was a member of Parliament for Sheffield for a number of years and is still deeply interested in that city, would have liked to speak in the debate but unfortunately cannot be present and has asked me to convey to the House his views on the subject. I do not know whether the Government can find a vehicle to provide help. Perhaps that could be done through the Sheffield Development Corporation. I ask the Minister to plead with the Ministers in another place who hold the purse strings to look at the matter seriously.
In my opinion, there is no point in expecting our young men and women to compete in future as they have done over the years at European, international or Olympic level with their counterparts from other countries, because it is a well-known fact that, in terms of support from the Exchequer —I am not particularly blaming this Government; it has always happened—we set our sights much lower and dig much less deep into our pockets than our competitors do. I do not believe that it is fair to expect our youngsters to compete unless the resources they are provided with are somewhat similar to those available to their competitors.
I have spoken for long enough in what is a miniature debate, but I hope that what I have said will give the Government, and perhaps the wider public, some thought about what is happening today. To go back to the first point that I made, it is an appalling state of affairs that three times as many children were drowned last year as the year before. I do not know

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whether it is time we looked into the question of compulsory swimming lessons and took away from head teachers in some establishments the right to decide yea or nay.
I hope your Lordships think that my introduction has been worth while, and I look forward to hearing the other noble Lords from various parts of the House who are to speak on this subject.
Lord Lyell: Before the noble Lord sits down, I was interested to hear that he referred to a proposal that the World Cup might be held in Great Britain in, I think, in 1998. I imagine that he was referring to England, because I certainly hope that there will not be a Great Britain football team by 1998.
Lord Dean of Beswick: I did not put any date on it, and I think the noble Lord is being a bit parochial in talking just about the English FA. I know that it is the English FA which will probably make the bid, but I hope that they will have the support of the Scottish and Irish FAs. I am sure that my approach is more likely to attract their support than that of the noble Lord, which is just an English approach, because if there is any way to get a Scotsman's, Welshman's or Irishman's back up it is to tell him that we are talking only about England; he will go elsewhere.
7.48 p.m.
Lord Addington: My Lords, when referring to sport I have something of an advantage over many noble Lords here, in that I am still young enough to go out and get my knees kicked on Saturday afternoons.
Sport in education is a subject which is dear to my heart, having only fairly recently left university where I was very active in Rugby Union football. Rugby Union is a very good example of how sport can get squeezed, for the simple reason that it is a dreadfully complicated sport. It does not have rules but laws which change every two or three seasons in very important respects. Rugby Union is also one of the many national sports we have in this country. It requires at least 30 people to play it properly. You need to have at least one official watching you; you cannot have a little knockabout in Rugby Union; you need to have it controlled.
I would like to refer to some other sports we play in this country. To play Association Football we need a mere 22 players. We need at least one official but, better still, three. We have always played team games and sports in this country and they are hideously complicated to organise. Thus, when the noble Lord says that we spend only 70 minutes actually playing sports in this country, I suggest we look at the matter. It takes 90 minutes to play a game of Association Football; it takes 80 minutes to play rugby under either code. Possibly that describes what the game is like. I hear a comment from the noble Earl, Lord Longford, who sits on my left, to the effect that in schools one can play a shorter game. However, the full game ultimately has to be practised over a full period of time or one will not achieve the best results. I appreciate that in Rugby League football, for
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instance, there is a game of mini-rugby for the younger players but once again it takes time to drill and time to train people.
The point was also made that generally public schools have better sports facilities. That is because state schools are being squeezed in a variety of ways. Teachers are now starting to count their hours. They give less time by the voluntary donation of their lunch hours to out-of-school activities and teaching sport. The noble Lord also mentioned how very few people who have been trained as PE teachers go into teaching PE. I know of six people who in the past four or five years were trained as PE teachers. Three of them now sell sports equipment; two are working in the City and only one is involved in teaching, and that is in a public school. At the moment teaching does not attract many people.
PE teaching has never been the most prestigious profession. I am afraid it has been suffering recently from a great lack of prestige. It is generally coming through that we do not pay teachers enough. If sport is to be properly coached, professionals should do it. We should remember that just because someone is an enthusiastic cricketer it does not mean to say that he can coach well. If we are to compete we need to give people a good basic grounding in skills. We do not want someone else's bad habits to be passed on. That is often seen. I have seen it in my own sporting activities. The weaknesses of one particular teacher's game were reflected in the schools' sides that he coached. We need professionals who can analyse the game and coach it properly.
The Earl of Longford: My Lords, perhaps I may ask the noble Lord a question. Is he suggesting that in schools the boys should be taught by professionals? Would the masters not do it?
Lord Addington: My Lords, I was referring to professional teachers and professional players. In some games if professional players are available and have coaching qualifications I can see no reason why they should not be used.
Higher education does a very good job in reflecting what happens lower down in the schools. The noble Lord referred to swimming. Indeed, the National Union of Students, the British Polytechnic Students' Association, the British Students' Sports Federation and the British Universities Sports Federation all describe not only a great increase in demand for sporting activities and for the use of sporting facilities but also a greater demand for coaching in basic sporting skills such as swimming, how to hold a squash racket properly, and so on. Swimming is a particularly good example because it is not only a sport but a part of physical education that can save one's life. I suggest that not being able properly to hold a squash racket may be quite tiresome, but being unable to swim may be life-threatening.
The same general point can be made that people who are interested in and enjoy a sport will keep themselves fit and able to play that sport. The current fad for aerobics, for instance, if it is a fad, has moved into a competitive area. People are talking about

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holding competitive aerobics. There is some form of judging involved in sport. Aerobics would become a sport if there were some form of judgment involved. But there again, people like to assess themselves.
I suggest that sport will keep people fitter, although there are always people who will burn themselves out playing sport. I have always thought that human bodies are a little like car engines: if abused and pushed too hard, they will burn out but if used sensibly they will last a long time. If we manage to keep people fit, it will mean that we are taking part in preventive medicine. One should keep pushing forward.
In higher education, where new demands are being made, there is an influx of new university students which the universities cannot quite handle. Students are therefore being put in gymnasia. That is a condemnation of the forward planning of various governments of different hues which have felt that there is a need for a greater number of students in higher education. I suggest that it also compounds a problem. Generally speaking, sporting activity is part of a person's social life and affects his quality of life. It is very much so regarded by the younger generation, at least at the moment. We are compounding a situation where there are too many people in higher education establishments for the available facilities. As more students enter higher education there is a greater need for facilities to cope with their demands in their educational life. One also tries out new sports at university—at least that was the case until very recently.
The financial resources available in educational establishments are also becoming the subject of competition. Sport is having to compete with new library books and laboratories. I suggest that a head of faculty quite rightly regards textbooks as slightly more important than a new gymnasium. I remember my noble friend Lord Russell once saying that textbooks were more important than anything up to and including lecturers. I agree that in most cases that is true. However, there comes a point at which the whole standard of student life deteriorates; fewer sporting activities is a reflection of that deterioration.
I support the remarks made by the noble Lord, Lord Dean, on the World Student Games. The World Student Games have traditionally been a springboard for athletes to go forward to higher levels. In the game of rugby—I ask your Lordships to forgive my obsession with the game—we find ourselves using student competitive activities as a springboard to higher sporting levels. The student games are undoubtedly the most prestigious of all such sporting events. Student athletics is probably one of the most prestigious ways forward to international athletics. It has often been the case that new athletes have given a good performance in student games which has given them a way forward.
I suggest that not only is sporting activity beneficial to those who compete in it but it is beneficial to all future students, as it is held up as something in which as a student one ought to compete. Students who have to compete with people who are older than
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themselves, who are more experienced, better technicians and physically better developed than they are, become dispirited. I have mentioned the sport of rugby many times. It is a very good example of what I describe. One needs technical skills. For instance, a forward is not at his best until he reaches his late 20s or early 30s. If students are allowed to play against other students, they benefit from testing themselves against their equals. That means that they can decide whether to go on to compete with others against whom they should be judged. If a player is exceptional at a young age, in playing as a junior against a senior side, it will show. But it should not be only the exceptional player who is encouraged to go on. It should be for everybody to go on and for everybody to take part. Everybody should be able to enjoy sports and physical education.
As a result of developing the ideal of competing against one's equals, we have established the great bastion of free time—Wednesday afternoons. That is being attacked in nearly all educational establishments. Pressure to do well academically, and in some cases shortages of staff, mean that people want to use Wednesday afternoons for teaching. Saturday is the day when most other forms of sport are practised, particularly the forms of sport traditional in our country such as the various codes of football—Rugby Union, Rugby League and Association Football—and in summer the weekends are usually dominated by cricket. The main schools sports in this country, it is suggested, should be moved to Saturday afternoon. On Saturday afternoon most of the more able students will be playing not for their university side but for a local club or even a large national club. A move to Saturday afternoon will deprive students of the advantage of competing against their peers in a group. Once again the exceptional student will be okay. He will go forward. But only one in a hundred will do well at that level and one in 30 may find somewhere good to go to. But how many of the rest of that great number of students will become completely disillusioned with the whole process as a result of having to compete with people who are more polished than they are?
For example, in a team game—we are a country that plays team games—when competing as students against senior people they can organise for longer periods of time together. If they are members of clubs they will not have established themselves at the beginning of the season. The start of the sporting seasons always overlaps with university term times. As most students are not based at home, they have little chance to build up a continuous relationship with a single sporting body or club. I suggest that we must at least provide some backing for that to allow students to carry on in competition with students.
I have spoken for rather longer than I intended and ranged fairly widely. However, I should like to press the noble Lord—I gave him notice of this—to act over the financial arrangements and financial support to be given for the World Student Games. I believe that it is probably the most important sporting event that any

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part of Great Britain will host in the next few years. I look forward to hearing what the noble Lord has to say.
8.6 p.m.
Lord Taylor of Blackburn: My Lords, I too am delighted that the noble Lord, Lord Dean of Beswick, has brought this Question before the House tonight. I go back to the Question on the Order Paper, which is to ask whether Her Majesty's Government are satisfied with the present level of physical education and sports activities being provided in educational establishments and, if not, what plans they have to deal with the situation.
No government would be satisfied with what we have. Any government always want more. It is a question of priorities. I shall deal with a different side of the Question than has been discussed so far by noble Lords on this side of the House. I hope that when the Minister comes to reply he will very seriously take account of all that I say.
I believe that today there are more young people participating in sport than ever before. Certainly, on Saturday and Sunday afternoons I see more people participating than watching. I cannot prove the figures, but when I go down to the fields there seem to be more youngsters playing football. There are now more swimming pools in my part of east Lancashire. That is because, a few years ago, a very enlightened chairman of the local education committee persuaded the Department of Education and Science to provide a swimming pool in more of our schools.
Many schools have playing fields, swimming facilities and gymnasia that they did not possess before the war. But are we getting the best from those facilities? The average school sits for 190 days per year from 9 a.m. to 5 p.m. Much of its equipment and facilities will not be used by the community which lives around the school. No industrialist would think of sinking into an undertaking the amount of capital that we sink in schools. The average sixth-form entry school costs between £8 million and £10 million to build and there is all the equipment in it to provide as well. Are we getting the best out of such facilities? An industrialist would not think of using his facilities for only a limited amount of time; that is for 190 days per year and a limited number of hours each day. He would wish to get the maximum out of his facilities. Many schools are closed at weekends when the facilities could be used for the benefit of the community. The schools have fences around them displaying signs which say, "Keep out". Many such facilities cannot be used because of the groundsmen, the caretaker, the head teacher—
Lord Dean of Beswick: My Lords, if such a restriction is placed on facilities surely that is due not to the groundsman or the headmaster but to the local authority?
Lord Taylor of Blackburn: My Lords, I have had a great deal of experience in local authorities. Many such attitudes boil down to the local people and not to the local authority, but I shall deal with that matter
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later. I am also worried by the fact that in urban areas children play football in the streets and on waste ground while such facilities are available across the street. I could carry on with this argument for a long time.
Changes are now taking place in education with the local management of schools and new governing bodies. I hope, therefore, that there will be a little more enlightenment. It might be said that because such facilities are increasingly being used more money is required. However, if one opens playing fields, swimming pools and the gymnasiums for the use of the community one must pay a little more to the caretaker and other people involved in their supervision. One must achieve the right balance. I believe that local authorities, governing bodies and the Sports Council can assist in that respect.
I have been putting forward that argument for some time. The Sports Council agreed to take part in an experiment with the local authority and the schools in the North-West of England, my part of the country. Where there were arguments about who was responsible for supervising certain establishments the Sports Council said, "We shall be responsible for the supervision if we can use your facilities". The local authority told the schools that it would spend a little more money on insurance in case damage occurred. There was a partnership of the three bodies.
I should like to see the DES using facilities in that way a little more often. It should encourage greater co-operation among the schools, the local education authorities and the Sports Council. I should like to see more facilities but we must ensure that we are making the best use of those we have at present. That would help a great deal with the problem that we now face.
8.13 p.m.
The Earl of Longford: My Lords, my noble friend Lord Taylor made a more practical contribution to the debate than I am likely to make. However, that does not diminish my desire to speak in support of my noble friend Lord Dean. In particular, I support his proposition that there should be more government encouragement for sport of all kinds.
This House is well endowed with leading sportsmen, although not all are present tonight. The noble Lord, Lord Porritt, is an Olympic medallist. The noble Baroness, Lady Burton, would have been an Olympic runner had there been women's games at that time. The right reverend Prelate, the Bishop of Liverpool, captained England at cricket and the noble Lord, Lord Williams, captained Oxford University which is almost as good. There are many eminent athletes including the noble Lord, Lord Aberdare, who was a champion at tennis. I understand from my son-in-law who was at school with my noble friend Lord Peston that the noble Lord was a useful quarter miler. Perhaps we may hear more about his exploits this evening.
My noble friend Lord Dean has produced some disquieting facts about swimming, for instance. We must investigate those facts closely. However, all is not wrong with sport in Britain at the present time. I

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speak tonight as a British representative—my Irish connection can stand to one side. English boxing is going well and we have some world champions. In recent years we have had a fine quota of athletes who have become Olympic champions. We appear to be as good is any other country at golf. With a little luck in soccer we would have won the World Cup. I speak with deference in the presence of the noble Lord, Lord Addington, who is the only Member of this House now playing in first-class rugby.
Lord Wakefield captained England at rugby but he was older when he came to this House. The noble Lord, Lord Addington, can speak with great authority about rugby. No doubt he will look down on me who did nothing more than captain Aylesbury. During the first year in which Aylesbury had a team there were only 15 players. Now there are six teams and, therefore, I do not believe that there is anything wrong with rugby in that part of the world. The British team is immensely powerful. The only danger is that its members are over-keen emotionally. At the end of a match they are unable to meet the press. However, perhaps that sign of their over keenness should be counted as merit.
Cricket, however, is a different case. The last day of the test match will soon be upon us and I understand that we must score 470 runs to win. It must be remembered that last year the captain, Mr. Gooch, scored 330 runs in one innings so nothing is impossible. However, it must be admitted that cricket is not a flourishing game at that level. I think that we take the sport a little too seriously. I hope that the noble Lord, Lord Addington, does not believe that one must live and die for sport because a sportsman is a national hero one day and a national villain the next. For instance, Mr. David Gower, a most gifted cricketer of his time, is now treated as a delinquent. He flicked at a ball outside the leg stump and was caught. Now people treat him almost as though he had committed rape. That is overdoing the enthusiasm for winning at sport. Generally speaking, sport in this country at both the top and lower levels is flourishing compared with any other period during my life.
The only sport in which one has seen a terrible decline at the top level is tennis. In 1930 I saw England win the Davis Cup in Paris. I saw Perry win at Wimbledon. I do not believe that at present there is an Englishman among the top hundred players. Tennis has declined and it is worth asking ourselves why that is so. We all like tennis in theory and love Wimbledon and so forth, but this country has sunk into a low position. Some people say that it is due to the weather. The weather was just as bad in the 1930s so that is no explanation. After all, the weather is not so hot in Sweden and yet their tennis players do so well. That is one aspect of the matter.
This House is well equipped to discuss these matters. There are many sporting people working in this building. Not far from here is a gentlemen who works in the attendants' office who weighs 16.5 stone and is a prop forward who is the terror of the East Sussex circuit. A few yards further along is a lady working in one of the party offices—and I shall not say which one—who scored 60 goals in netball in one
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afternoon. That takes some doing. Also, one of the doorkeepers is a world class mountaineer. Therefore, this building is full of world class sportsmen and women. So we can be cheerful. However, I agree with my noble friend Lord Dean that we should do even better if the Government were wiser and more generous.
8.21 p.m.
Lord Peston: My Lords, I thank my noble friend Lord Dean for asking this Question. I shall not delay your Lordships by going over all the ground again but there are additional points which I should like to make. However, I agreed with one particular point made by my noble friend. This subject is not at all political and I shall not approach it in that way. However, I am disappointed that, given the importance of the topic, no noble Lords from the opposite Benches have found time to speak in the debate this evening. That is rather disappointing.
One specific aspect which I should like to raise is that physical education is a foundation subject in the National Curriculum. As such, it is compulsory and, if I understand the matter correctly, must be assessed. I should like to ask the Minister how much progress is being made on the development of the physical education curriculum and its assessment. Because this subject is part of the National Curriculum, I take it for granted that it will be taught by qualified teachers in exactly the same way as are all the other subjects. Merely because it is called physical education does not mean that it can be taught by anybody. It is no less important and would not have been given a role as a foundation subject had it been less important. That means that it must be taught by trained teachers. I ask the Minister whether appropriately trained teachers are forthcoming in that subject.
I realise that the Minister will not necessarily be able to answer all my questions immediately. However, he will be aware that his right honourable friend the Secretary of State made what I thought was a rather important speech on the National Curriculum as it applied to 14 to 16 year-olds. Essentially, the Secretary of State adopted the view which those of us who took part in the debates on the Education Reform Bill argued in the first place; namely, that the so-called core subjects should be compulsory and there should be greater flexibility in the rest of the curriculum. That was rejected at the time we debated the Bill. However, the Secretary of State now takes that view.
I should like to ask whether, within the more flexible National Curriculum, any thought has been given to making sure that for key stage 4 physical education will still have some emphasis to it. Although I agree that with physical education the earlier the investment the better, one does not wish it to become the kind of subject about which all pupils say, "Now I am 14, I can give it up." Therefore, while I do not withdraw from my view that we need to be flexible, a balance must be achieved between flexibility on the one hand and making sure that proper priority is given to subjects like physical education on the other.

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In that connection, I repeat the question which arose when we discussed this matter a few days ago. Within the education Act I thought that physical education meant something called physical education which was different from sport. It never occurred to me that they were the same. I should like to ask whether they are the same. Secondly, when we were discussing the Education Reform Bill, were we told that sport was part of physical education? My recollection is that we were not. I do not say that there is a hard and fast answer but I should like to know more about that.
En passant, I am delighted that the Minister for Sport is now at the Department of Education and Science. I think that is a good place for him to be. I know him and I have every hope that, apart from doing his job in the narrow sense, he will work hard to ensure that sport receives proper priority in DES thinking.
On the Secretary of State's proposal to introduce more flexibility on key stage 4, my reading of Section 3(4) (a) of the Education Reform Act is that the changes can be made by the affirmative resolution procedure. We specifically wrote that into the legislation. I should be interested to know whether we can be given any indication of when the relevant orders will be laid before both Houses of Parliament, because we shall want to discuss key stage 4 generally at considerable length. That represents a major change in the Act.
Another aspect of the subject which noble Lords have alluded to but at which we have not looked in detail is Section 106 of the Education Reform Act. That is the section which leads on to the question of charging in maintained schools. That must apply not only to ordinary education but also to physical education. As noble Lords are aware, the difficulty is —and I take one example—that local authorities may have to use swimming facilities which they do not necessarily own, or, if they own them, for which a charge is still made. The same rules on not charging pupils still apply. That produces difficulties because it may be argued that it is appropriate to charge young people for swimming lessons. It could be argued that it would be better for them to make a contribution rather than have no swimming lessons at all. That is the nature of the problem. Difficulties as regards charging certainly apply to physical education.
I am well aware of the difficulties and I do not say that the Government are wrong and the rest of us are right. However, as regards local management of schools, which I favour, when under pressure schools which are given budgets will ask themselves what comes first, second and so on. The worry is that it will be decided that the easiest thing to give up—and the noble Lord, Lord Addington, referred to this—is physical education or sport. The noble Lord, Lord Addington, made the point that it is harder to give up text books than almost anything else. I am not criticising the Government in any crude sense. I am aware that if one favours devolution of power one has to accept the consequences of it. Nonetheless, it is a difficult matter, and one that concerns me.
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I was not going to go into the details of any other sports, but since the noble Lord, Lord Addington, referred to—what is the game called?—rugby and he referred to the laws, I wonder whether he remembers the oldest joke about rugby. A sample survey was done on rugby players, asking them about the latest change in the laws. The answers were as follows: 1 per cent. favoured the latest change in the laws, 1 per cent. were against the latest change, and 98 per cent. did not know there were any laws.
My final point concerns the fact that when I was at school most of what was done under the heading of sport was a voluntary activity on the part of teachers. If I may reiterate a point I made when we were discussing the Education Reform Act when it was a Bill, we should not be surprised that if the Government decide to run public services with a business ethos, and also if at the same time they restrict public sector pay in real terms, the outcome will be a decline in voluntary activity. People will cease to do things because they think they should do them. Instead—and this is the weakness of the Government's philosophy, at least of the 1980s although I hope it will change in the 1990s—people, including school-teachers, will simply do what they are paid for. If we are talking about sport, or even about physical education, an ethos of "I'll do what I'm paid for" could come to dominate all this, and we will lose a lot on the sporting side which we had for nothing from voluntary support.
The same applies to me as has applied to all other noble Lords: there is so much more that one would like to say, but, as it is 8.30 this evening, I feel I have said enough. Perhaps I may therefore again thank my noble friend Lord Dean for introducing the Question and say how much I look forward to the Government's Answer.
8.30 p.m.
Lord Cavendish of Furness: My Lords, to say that my sporting career was undistinguished both at school and subsequently would be something of an understatement. Despite that, I do not for one moment underestimate the significance of this evening's debate.
I have listened with considerable interest to the wide range of points made on this important subject. The interest shown by your Lordships demonstrates the concern felt by many people. I can assure your Lordships that the Government also attach great importance to the position of sport and physical education in our schools. I am therefore grateful to the noble Lord, Lord Dean of Beswick, for having raised this matter for debate. Perhaps I may begin by reminding your Lordships as I did a few days ago, and as has been mentioned by the noble Lord, Lord Peston, that the Government's commitment to improving the provision of physical education and sport in schools was recently demonstrated by the move of the Minister for Sport to the Department of Education and Science. I might add, without having any authority to do so, that I think that my right honourable friend the Prime Minister is also

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enthusiastic in this area. I am confident that this closer link between the worlds of sport and education will be of great benefit to both sides.
I find it interesting that the noble Lord's Question refers both to physical education and to sporting activities. It may therefore be helpful if I were to take a few minutes to clarify our terms. I hope this will be of help to the noble Lord, Lord Peston.
The physical education curriculum of schools will always include a significant amount of sport, but PE goes much wider than that and relates to the overall physical development of pupils. It may also include elements not normally associated with sport, such as dance and outdoor pursuits. Physical education also serves to inform young people of the long-term benefits of a healthy lifestyle and regular exercise.
However, many sporting activities take place outside normal school hours. Such activities may rely on what takes place within PE lessons to provide pupils with the necessary skills, but this extra-curricular sport is not part of the formal school curriculum. Its success therefore depends on the willingness of both staff and pupils to participate.
Turning now to the position of physical education in schools, PE is a foundation subject in the new National Curriculum for all maintained schools in England and Wales. This means that it will for the first time be a compulsory part of the curriculum for all pupils aged between five and 16. My right honourable friends the Secretaries of State for Education and Science and for Wales have recently confirmed the place of physical education as part of the compulsory curriculum for pupils in the last two years of compulsory schooling. This decision has been very widely welcomed.
Schools in England and Wales have been required since autumn 1989 to teach physical education to all pupils aged five to 14 for a reasonable time. The Government plan to introduce the statutory requirements for physical education from autumn 1992. These are to be more flexible and less prescriptive than the requirements for other subjects. Nonetheless they should ensure that the pupils receive a balanced programme of physical education throughout their time at school. The National Curriculum Working Group on Physical Education, established last July, is advising the Government on attainment targets and programmes of study for physical education.
I should like to say a word about the working group, the membership of which I believe to be very impressive. It is chaired by the distinguished scholar and sportsman, Mr. Ian Beer, once captain of Combined Universities Rugby Football Club and winner of English rugby caps. His working party includes Steve Ovett and John Fashanu of Wimbledon Football Club fame, as well as industrialists and representatives of the education service. Other members include teachers in primary and secondary education who have personal experience of PE.
On the matter of flexibility that the noble Lord, Lord Peston, raised, the final answer emerges as a result of the findings of that working party. The
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working group's interim report is with Ministers and will be published shortly. I am sorry to say I cannot say more than that. The group's final report is to be submitted to my right honourable friends by the end of June. Indeed, having heard this debate, I am minded to send the working group a transcript of this evening's discussion, if that is in order.
The noble Lord, Lord Dean of Beswick, asked whether the Government were satisfied with the current level of physical education in our schools. As the noble Lord, Lord Taylor of Blackburn, said, no government is ever satisfied with the level of any type of education in our schools. We must always want it to be better. In the case of PE, some schools provide it to an extremely high standard. At the same time, we have to acknowledge that in others both the quality and the quantity of physical education are not as we would wish. But the National Curriculum is all about bringing the standards in all schools up to those of the best. I am confident that this will also apply to physical education in the National Curriculum.
I should like to refute the suggestion that sport as part of physical education has declined in recent years. The nature of the sports themselves may have changed, with diversification into more indoor games and individual and small team sports, but sport still occupies the pre-eminent position in physical education.
The Government are concerned to ensure not only that PE and sport are firmly based within the school curriculum, but also that opportunities for young people to take part in sport outside school hours continue to develop. A number of your Lordships have expressed concern about the decline in extra-curricular sport. The Government accept that this is an issue which needs to be addressed. Indeed, we are addressing it. We are undertaking a wide-ranging review of sport policy. One of the major issues under consideration is the question of the further measures that may be needed to encourage sports participation by young people.
However, before we can provide the answers we need to get to the root of the problem. We have to recognise that over the years there has been a reduction in the amount of time that teachers feel able to devote on a voluntary basis to providing sports opportunities outside school hours for their pupils. That is not to say that this activity has disappeared completely. On the contrary, many teachers continue to be heavily involved, and I pay generous tribute to them.
Nonetheless, there has been a reduction in such activity. There appears to be no single reason for that. In some cases teachers who stopped organising extra-curricular sport during industrial action in the mid-1980s have not started again. In other cases, teachers have been greatly preoccupied with the introduction of the General Certificate of Secondary Education and the National Curriculum. However, we expect that factor to diminish as the National Curriculum settles down.

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The introduction of teachers' directed time increased calls for teachers to be paid for undertaking extra-curricular activities. Traditionally, teachers have been involved in extra-curricular sport on a voluntary basis. We see no reason why that should not continue. However, the Government have given local authorities, and where appropriate school governing bodies, the power to award teachers who take on extra responsibility one of five incentive allowances worth up to £5,500. Organising and supervising sporting activities may be one such responsibility and the opportunity exists for financial recognition to be given.
Another factor may be the pupils. There is now a wide range of opportunities available to young people. Many have Saturday jobs; others take advantage of local community schemes or join the junior sections of their local clubs. We do not wish to discourage those activities, but we must recognise that they may militate against pupils taking part in school-based activities.
The way forward is not to try to turn the clock back to the days when the sporting activities of our young people were the sole responsibility of schools. We need to encourage even greater diversity of provision involving local sports clubs, local industry and organisations such as the Sports Council. I have already referred to our review of sport policy which will be addressing all those questions. Many organisations are contributing their ideas to the review and we intend to publish our conclusions in the summer.
I turn to the specific points raised in the debate. The noble Lord, Lord Dean of Beswick, introduced the debate by saying that we were chasing our tail. The noble Lord may not be entirely satisfied by my remarks, but I hope he feels that we are earnest. I was grateful to the noble Lord for giving me a copy of the Guardian newspaper article. It has some valid points and I take them to heart. On the other hand, it was largely anecdotal. I give it credit also for putting part of the argument for the other side and not painting an entirely pessimistic picture.
With regard to swimming provision, the noble Lord compared Britain with Italy, France and Germany. Another noble Lord compared Britain unfavourably in regard to the hours devoted to sport. I have been unable to verify the facts in the case of swimming provision. I can only speculate. In the case of Italy and France, because of the weather it is more cost-effective to have a swimming pool in the school than it would be here.
The noble Lord, Lord Dean, said that it was Labour policy to favour competitive games. In a Question last week I rather waspishly pointed out that it had not been.
Lord Dean of Beswick: My Lords, I am grateful to the Minister for giving way. I did not have time to make the point that a survey was carried out among local Labour-controlled education authorities. The
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overwhelming majority of replies showed that they were not against the competitive element in school sports.
Lord Cavendish of Furness: My Lords, I thank the noble Lord for that clarification. From my own experience in the 1970s and 1980s I found that it was, for a period, predominantly Labour-controlled councils which were against competitive sport. I do not make a political point. The general change of attitude in favour of competitive sports is something about which we should all be pleased.
The noble Lord, Lord Dean, spoke of the Student Games, as did the noble Lord, Lord Addington. The Government made it clear from the outset that we would not provide direct assistance for the Games. However, the Sports Council, which is funded by the Government, is to contribute £3 million towards them. The Government's clearly stated position has been that, as with other major sporting events, promotional and diplomatic assistance is available but not direct funding. The DoE has already made available £26 million in indirect assistance for projects associated with the Games which met with the normal criteria for the grant. My understanding is that there is no question that the Games will not take place. I would join other noble Lords in being greatly disappointed if they did not go ahead. We hope and expect them to proceed in some form.
The final and most important point made by the noble Lord, Lord Dean, and other noble Lords, concerns swimming and safety. Mr. Moynihan established a working group in May 1990 to look at water sports safety. The group is likely to report in May of this year and it is expected to recommend that all young people should be taught to swim within PE at school. The interim report of the National Curriculum PE Working Group, to which I referred, is also likely to make the same recommendations. It is not for me to say whether there will be funding recommendations made at the same time. The Government recognise the value of swimming being taught as part of physical education. Should either of the working groups make specific recommendations on swimming instruction, these will naturally receive our closest consideration.
In regard to the tragic deaths which occur from drowning, the most up-to-date figures show that in 1989 50 young people died between the ages of five and 15 in accidents compared with 18 in 1988 and 35 in 1987. The Royal Society for the Prevention of Accidents pointed out that the 1989 figure is probably due to that year experiencing an unusually hot summer. It is believed that the underlying trend is still downwards. Another factor I should mention is that it is often the competent and confident swimmer who is most prone to get into trouble. The idea that everyone being able to swim will reduce accidents is not necessarily valid. Young people properly take risks, and that is a factor to be borne in mind.
I was delighted to hear from so expert a participant, especially one so eloquent and well-informed, as the noble Lord, Lord Addington. I have dealt with his

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questions but I shall read carefully what he said and I hope that the report of the debate will be passed to the working group.
The noble Lord, Lord Taylor of Blackburn, spoke of the three-sided angle. I do not believe our department considered the third angle. I shall be pleased to pass on his remarks. He implied also the advantage of dual use of schools generally. The Government have been fully committed for many years to the dual use of sports facilities. As long ago as 1970 Circular 2/70, A Chance to Share, advocated that existing arrangements should be reviewed to ensure that every possible opportunity for dual provision was fully explored. The circular gave guidance also about the way in which schemes could be formulated.
The Government encourage dual use of facilities in schools because it creates closer ties with parents and the local community. It may also be a way of obtaining additional facilities of benefit to pupils outside the education sector and it often generates income and encourages present and former pupils to retain their interest in sport.
The noble Earl, Lord Longford, with characteristic eloquence, added flavour to the debate with vignettes of sporting prowess to be found among Members of your Lordships' House and outside. He mentioned the late Lord Wakefield, who was a neighbour of mine. He must be one of the toughest men I have ever met in my life. I not only saw him water skiing on Windermere in winter in his eighties but I remember also meeting him
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one afternoon when he said that he must go down to the doctor to have six stitches inserted in his forehead before he could dine.
Finally, the noble Lord, Lord Peston, asked about the progress on the curriculum. I believe I have given as much of an answer as I can. He asked if the subject was going to be taught by qualified people. The position will be no different than for other subjects. I hope that I have answered the flexibility point in relation to key stage 4. I am not able to say whether or not an affirmative act is required. I will be very pleased to write to the noble Lord.
Against the argument that local management discourages sport in schools, since LMS is based on numbers of pupils, schools must remain attractive to pupils and parents. A broad spectrum of sport would help that situation and provide an inducement, although I recognise the problems mentioned by the noble Lord.
I hope that I have demonstrated the commitment of the Government to improving provision of physical education and sport in schools: for example, the move of the Minister for Sport to the Department of Education and Science; physical education as a foundation subject in the National Curriculum; and the review of sport policy. Those three highly significant developments will act greatly to the benefit of physical education and the sporting opportunities of young people in our schools.
House adjourned at nine minutes before nine o'clock.