§ 7.6 p.m.
§ Report received.
§ Clause 1 [Arrangements for the carrying on of certain activities]:
Lord Mayhew moved Amendment No. 1:
Page 1, line 22, after ("company") insert (", being a company registered under the Companies Act 1985 and
beneficially owned as to 95 per cent. or more of the shares by United Kingdom citizens resident in the United Kingdom and, so far as it is not owned by individuals, by a company or companies which are themselves so registered and owned,").
The noble Lord said: My Lords, I have not put the amendment down in order to divide the House again, although the previous Division in Committee indicated a great deal of all Party support. It is in order to ask the Minister to explain more fully some of the remarks that he made which were designed to reassure us that foreign shareholdings in the contracting country were desirable and were not nominees for Saddam Hussein or Gaddafi. The noble Earl agreed that the Government should and would keep a vigilant eye on the shareholdings of the contracting company. He said:
Indeed it is likely that we may specify in the contract that shares in the … company should not be transferred without the consent of the Secretary of State".—[Official Report, 2/7/91; col. 906.]
The Government thereby admit that there is this problem and claim that they will take powers to overcome it.
§ I hope that the Minister will explain how he proposes to control the transfer of shares, short of cancelling the contract. If the contract is cancelled, one has a new contracting company and the same problem arises. Short of cancelling the contract, how does the Minister propose to prevent, for example, an American bank selling its shares to somebody who is an undesirable shareholder, or to nominees of the shareholder? I think that we are entitled to a reply. It is an important question on which many Members from all sides showed considerable concern at Committee stage. If we do not receive a reply, ill natured noble Lords such as myself may conclude that the Government do not know how to control the transfer of those shares and do not intend to make a serious effort to do so.
§ I wish to put forward another point that was not raised at Committee stage. The defence by the Government was that our amendment rules out American shareholding, which was said to be desirable. We can concede that there is no security objection to American shareholdings. When we look back in history, that is acceptable. However, we ask about the political consequences of having substantial American shareholdings.
§ We have been a good friend and ally of the United States for decades. However, on nuclear matters the Americans can be extremely unsentimental and ruthless, as we learnt soon after the end of the war. The American and Soviet Governments are about to agree to a drastic reduction in their strategic nuclear capability. When that happens the United States will turn to the United Kingdom Government and ask for the Trident programme to be cut. That is for sure. Therefore, may there not be difficulties for the major American shareholders as regards loyalty to the contract and to the contracting company, on the one hand, and not observing the wishes of their own Government, on the other? I shall not repeat the many other good reasons for supporting the amendment which was put forward in Committee. However, I ask the Minister to reply to those points. I beg to move.1569
§ Lord Williams of Elvel
My Lords, naturally I support the amendment tabled by the noble Lord, Lord Mayhew. It is the amendment that I moved in Committee with the support of the noble Lord. The matter was then settled by a Division, but it is the right of any noble Lord to table any amendment that he feels to be appropriate. But we on these Benches respect the self-denying ordinance which the Government also respect—that if a matter is decided at any stage of a Bill we will not seek to revert to it at a later stage.
However, having tabled the amendment the noble Lord, Lord Mayhew, has asked several questions which need a considered reply. He said that he will not divide the House and we respect that decision. But the question is: how do the Government intend to ensure by whatever means available that shares in the contractor company are not transferred in ways that we know not of—there are many ways of which we know —to parties which may have sinister interests? That is the point that the noble Lord makes and that is the point that I wish the Minister to reply to.
§ 7.15 p.m.
§ The Parliamentary Under-Secretary of State, Ministry of Defence (The Earl of Arran)
My Lords, the amendment is identical to that which was debated and voted on in Committee on 2nd July. I do not propose to occupy the House by repeating everything that I said then.
I remind the House that the Government have no intention of letting the AWE contract to a foreign firm. I am sure that, no other country would put itself in that position; neither shall we. I have assured the House unequivocally that the contractor will be a UK-based and UK-controlled company. There is no doubt about that. The question then arises: in view of those assurances, why not accept the amendment and put the matter on the face of the Bill? Perhaps I may answer that a little more fully.
First, the amendment is unsuitable and inadequate from the point of view of national security. Security is a much. wider matter. Share ownership does not entitle shareholders to be told the company's secrets, let alone the company's customer's secrets. In the case of sensitive defence information, access to such information within industrial companies, just as within the Civil Service, is carefully controlled on an individual basis in accordance with the requirements of MOD security authorities. Stringent vetting procedures must be undergone before anyone can receive such information. Even among security cleared personnel, such information is restricted to those who have a proven need to know it.
These procedures are important because if a hostile intelligence agency trying to get at our secrets could bribe or blackmail an employee into passing information, that would be an effective way of spending money. It would be far more effective than buying shares in the vain hope of obtaining sensitive information in that way. Alternatively, if hostile foreign interests really thought that they could obtain information or influence via a shareholding, they could simply find a British sympathiser, give him some 1570 cash and get him to buy the shares and tell them anything that he finds out. Although ineffective as a way of gaining information, that would be an easy way around any statutory restriction on foreign share ownership. That is one reason why the amendment would be hopelessly inadequate as a means of protecting national security. A far more stringent security regime is required, and that is what we shall ensure through our security procedures.
I have of course explained that our security concerns will include taking a close look into any foreign connections that a potential AWE contractor may have. That would include anything which might possibly render its personnel open to undesirable influences, foreign or otherwise. I hope that noble Lords will forgive me if I do not go into great detail about our security vetting procedures for personnel with access to highly-classified defence information. But I can assure the House that they are strict and apply just as much to contractor personnel as to civil servants.
The second main strand of the argument is whether there should be a statutory requirement by amendment to this Bill to bind the Secretary of State to do his duty, as the Government have promised. The Secretary of State's duties are not limited to ensuring that the AWE contractor is UK owned. Surely he has many other duties. What about ensuring that the AWE contractor is not owned by or connected with UK nationals who happen to be IRA terrorists? There is not a word about terrorism in this Bill. Should we have an amendment to bind the Secretary of State to choose a contractor with no connections with terrorism? To take another example, there is nothing on the face of the Bill about choosing a contractor who is competent to fulfil the task. Clearly it is essential that the chosen contractor is competent. Why not, therefore, have a clause in the Bill to provide that the Secretary of State must on no account choose a contractor who is not up to the job? It would be an extremely long Bill if we expanded it so as to compel every future Secretary of State to do his duty in every essential respect and to honour every commitment made to this House by Ministers in the course of this Bill. Hence we would prefer to follow the normal practice and put in the Bill only those things which need to be provided in fresh legislation.
During the debate on 2nd July a number of noble Lords asked whether other capitalist countries with nuclear weapons would allow foreign ownership of shares in their atomic weapon manufacturing. Perhaps, therefore, your Lordships would find it helpful if I described the arrangements which operate in the United States.
There are no fixed limits on foreign ownership of US nuclear weapon contractors. Instead, US companies are required to disclose any foreign ownership when bidding for management contracts to operate a Department of Energy nuclear weapon facility. Any level of foreign ownership would be referred to the US security branch for investigation and assessment of risk regarding the handling of classified information. In other words, the system operated in the US is very much the same as the one 1571 which we intend to operate at AWE. I might add that this system has proved satisfactory over the many years during which the US nuclear weapon industry has been operated on a GOCO basis.
I have referred previously to our view that, although we should look closely at any foreign connections that a potential contractor may have, United States connections would be acceptable in view of the long history of Anglo-US nuclear co-operation. That does not mean that we intend letting the contract to an American company. It does not even mean letting the contract to a consortium involving an American company. What it means is that we should not rule out minority participation by a British firm which happens to have a US parent. That is in fact already the case at AWE. The interim management contractor is Hunting-BRAE, a consortium (properly called a joint venture company) involving Brown and Root (UK), the "BR" of Hunting-BRAE, as a substantial minority shareholder. Brown and Root (UK) is British in terms of operating and being registered in the UK. It is a significant company within the British defence industry but its parent company is Brown & Root Inc of the USA.
I remind the House that Hunting-BRAE is operating AWE under an interim management contract while the staff remain for the time being within the Civil Service; that includes the 20 Hunting-BRAE staff who are on secondment to the Civil Service. The effect of the amendment proposed by the noble Lord, Lord Mayhew, would be to rule out Hunting-BRAE from the competition for the full AWE contract next year. I cannot imagine anything more unreasonable or disruptive than a statutory ban on the incumbent contractor at AWE forbidding him from competing in future. For that reason I strongly urge your Lordships not to vote for the amendment.
The noble Lord, Lord Mayhew, asked about the share ownership of the contractor. If, as will almost certainly be the case, the contractor is a company set up for the specific purpose of fulfilling the AWE contract, we shall include a provision in that contract to the effect that the share ownership of the contractor should not change without the consent of the Secretary of State.
As regards parent companies, we would require the company to inform us of the identity of all significant shareholders and in particular any foreign shareholders. That would include any new shareholders buying into the company. The Secretary of State would have the right to terminate the contract if a parent company were to be taken over. With those assurances, I hope that the noble Lord will not press the amendment.
§ Lord Mayhew
My Lords, I am most grateful to the noble Earl for the concluding part of his speech. For a long time I felt that he illustrated how unwise it is to table an amendment which has already been discussed in Committee because he repeated at great length the arguments which he used then and which did not carry conviction with many noble Lords.
However, towards the end of his remarks he answered directly the question which I asked; namely, how the Secretary of State will control the transfer of 1572 shares. He said that in the contract the Secretary of State would look at all the existing shareholders, would survey them and make sure that they are not nominees for, for example, Mr. Gaddafi or Saddam Hussein. Thereafter, each share transaction would come to his attention and he would approve or disapprove it.
That is a considerable advance on the position of the Minister at the beginning of our discussions. I do not know how the system will work. It seems to me rather difficult and elaborate and easy to circumvent. However, I thank the Minister for the latter part of his speech and beg leave to withdraw the amendment.
§ Amendment, by leave, withdrawn.
§ Lord Williams of Elvel moved Amendment No. 2:
Page 2, line 8, at end insert:
("( ) In pursuance of the arrangements made hereunder the Secretary of State shall establish a funded redundancy provision for employees of any company which shall be equivalent to those presently embodied in the Principal Civil Service Pension Scheme.").
§ The noble Lord said: My Lords, this amendment has been retabled following our discussion in Committee on the redundancy scheme for employees.
§ In the debate which we had in Committee the Minister claimed that our amendments showed a misunderstanding of the concept of redundancy. We do not believe that that is right. It is perfectly possible for a separate fund to be set aside to guarantee that in all circumstances the employers' redundancy obligation will be met. That has been the practice in the past and should be the practice in this case.
§ The present position is that the staff at AWE are civil servants and as such their redundancy provisions are guaranteed by statute. Uniquely, the principal Civil Service pension scheme also covers redundancy. The argument which I put forward is that that guarantee should continue in the future and that staff should be no worse or better off than they are at present.
§ The Minister replied to the amendment in Committee, but there are two difficulties in respect of his reply. The first is that the contractor may seek to worsen the redundancy provisions if he were in financial difficulties. The Ministry of Defence has said that the requirement for redundancy compensation at Civil Service terms as a minimum will be written into the contract. However, we have not seen the contract and in Committee we learned that it will not be available until towards the end of 1992. Furthermore, the noble Earl said in Committee that the contract would be a classified document. Therefore, we simply do not know what will be the terms of the contract. We are seeking ministerial assurances that the contract will contain what we require.
§ It is also the case that when the contract arrives, which we are told will be towards the end of next year, it will be between the Ministry of Defence and the contractor. Trade unions will not be a party to the contract and trade unions could not bring any action if the contractor breached the terms of the contract. In response to that point in Committee the noble Earl said that it is always possible for an individual to bring a case for breach of contract if its terms were changed 1573 without agreement. That is true; nevertheless, it is an extremely difficult case to bring for an individual employee if he or she should deem that there has been a breach of contract.
§ The second major problem is that the Government have said that the Secretary of State could bring back the employing company—and we understand from our discussions in Committee that the employing company may be different from the contracting company—into sole ownership (ownership of the Secretary of State) if it got into difficulties. Although the Secretary of State could do that, there is, first, no guarantee that he would and, secondly, no guarantee that the Ministry of Defence would take the view that the contractor should seek to get out of any difficulty by reducing overheads. In other words, there is no guarar tee that the Secretary of State is underwriting the Civil Service arrangements which are in place at present.
§ I adduce as a further argument for a funded redundancy scheme that Civil Service pay has for many years been abated to take into account the provisions of the principal Civil Service pension schema:. That may be right and proper. The Civil Service pension scheme is relatively generous. However, it includes redundancy. In that way civil servants at AWE—and at present they are civil servants—have effectively contributed towards their future redundancy provisions. For that reason, because there has been an abatement in their salaries and they have contributed to the fund, money for future redundancies, if there are any, should be guaranteed in a separate fund. I beg to move.
§ The Earl of Arran
My Lords, this amendment is similar to an amendment moved in Committee by the noble Lord, Lord Williams. It seeks to provide the transferred staff with equivalent redundancy benefits as they have at present and to provide some protection for those benefits by means of the Secretary of State establishing a funded redundancy provision.
I explained in Committee that a new redundancy payments scheme will be set up that will, when taken together with the pension scheme benefits, provide redundancy conditions at least as good as at present. The Government have already said categorically that this will be so and I am happy to repeat that assurance. This requirement will be written into the contract and the contractor will be obliged to comply. I believe that this assurance is potentially more beneficial than that proposa1 in the amendment, which seeks only that redundancy benefits should be "equivalent" to the present arrangements.
The amendment also proposes a funded redundancy provision. There are two aspects to that: first, the possibility of the contractor being unable to meet his obligations, possibly through bankruptcy and, secondly, substantial redundancies arising through government decisions to reduce the workload at AWE. Redundancy payments in the former situation would be safeguarded because the Bill already allows the Secretary of State to take back the employing company into his ownership, thus safeguarding pay and redundancy.
In the event of substantial redundancy payments 1574 arising from a reduction in the nuclear programme, I am also pleased to assure your Lordships that the redundancy costs would be fully funded. I understand the reason for the noble Lord wishing to obtain an assurance about this aspect, especially in view of the article about defence options in the Guardian newspaper of 9th July 1991 written by a senior trade unionist, who happens to be the chairman of the AWE National Union Co-ordinating Committee. He recommends a review of our strategic nuclear force. That presumably would impact upon the AWE order book, and thus jobs.
In summary, we have already given assurances that redundancy conditions will be at least as good as at present. There is no need for fresh legislation on this point, the requirement for which will be written into the contract.
In addition to some of the points which the noble Lord, Lord Williams, raised, I can assure the noble Lord that it is normal for an employer to meet redundancy payments from cash flow rather than from a previously established fund, as in the case of pensions.
The noble Lord indicated that he would like an amendment to the Bill in order to control through the law the levels of redundancy payment, but the law already does that. The contract will specify that civil servants' redundancy payment levels must be continued. That will be binding in law. In any case it would be unlawful for the employer to breach the individual's contract of employment by reducing his redundancy payments without his consent.
The noble Lord said that there was no guarantee that the Secretary of State would use his undoubted power to take back possession of the employing company if the contractor ran into severe financial difficulties. I must point out that if matters reached that stage the Secretary of State would have little choice but to take action in order to keep AWE a going concern.
I hope that with those reassurances the noble Lord will feel obliged not to press his amendment.
§ 7.30 p.m.
§ Lord Williams of Elvel
My Lords, I am most grateful to the noble Earl for that statement. It takes us some way—I believe, a long way—towards what we are trying to achieve, which is protection of the workforce in case of redundancies. Nevertheless, there remains the question of whether there should not be a separate fund which should be run by separate trustees divorced from anything that the contractor may produce. We have not yet seen the contract and we shall not see it until the end of the 1992 if we are to believe the noble Earl's assurances in Committee. If we are to believe that this is to be done in a contract, all I can say is that we have to wait and see whether the contract is as the noble Earl describes.
I see no reason why there should not be a redundancy fund put into the Bill. Nevertheless, at this stage I shall read and take advice on what the noble Earl has said. I beg leave to withdraw the amendment.
§ Amendment, by leave, withdrawn.1575
§ Lord Williams of Elvel moved Amendment No. 3:
Page 2, line 21, at end insert:
(""premises" means any buildings that are fit for the purpose for which they are constructed.").
§ The noble Lord said: My Lords, we had a long discussion in Committee about the premises, and we were really talking about the premises at Aldermaston, Burghfield and the other two establishments concerned in AWE. Following that discussion the noble Earl was kind enough to write to me and to my noble friend Lord Kennet in certain reassuring terms.
§ I move the amendment to ensure two things. The first is that the Government, who are going to retain ownership of the establishments in question, will make absolutely certain, indeed a governmental responsibility, that the premises to be used for the production of nuclear warheads and for ancillary and connected purposes will be up to the same standards as they have been hitherto under wholly government-owned and government-operated conditions.
§ Secondly, assuming that we have that strong assurance from the Government, who is to pay for the necessary maintenance provisions and no doubt future construction that will be necessary in order to keep the establishments up to date and in proper working order with the appropriate security? If the Ministry of Defence is to pay, we need to know that. If the contractor is to participate in the payments, we need to know that. That is the reason for my re-tabling the amendment at this stage.
§ The Earl of Arran
My Lords, the amendment states that the premises to which this Act would apply would be any buildings that are fit for the purpose for which they are constructed. The noble Lord, Lord Williams, explained that the intention of the amendment is to ensure in particular that those specialist buildings at AWE which are intended for the use or storage of radioactive materials are fit for such purposes.
I have previously summarised to the House the history of the Aldermaston capital programme. This is a £1 billion programme of investment in new buildings and facilities, the centrepiece of which is the new A90 building for the manufacture and processing of fissile components for nuclear warheads. These matters were considered in detail in successive reports by the Public Accounts and Defence Select Committees in another place.
I do not propose to burden your Lordships again with the detailed background. It is complicated, and many of the versions publicised by the Government's critics—other than noble Lords opposite—have been highly garbled, confusing all sorts of different aspects together. I can, however, confirm, in answer to points raised in Committee, that the Property Services Agency had a major role in the AWE capital programme, before NNC Limited was appointed as the facilities project management contractor. The divided responsibility between PSA on the one hand and MoD/AWE on the other was considered to be a factor in the problems experienced with the capital programme in the mid-1980s. As I explained in Committee, the capital programme is now in much 1576 better shape. That is notwithstanding the corrosion problem identified in the new treatment plant for radioactive liquid waste. The building, known as A91, is built but not yet commissioned. The commissioning programme for A91 has been successful in detecting points of corrosion in stainless steel, thus enabling the Ministry of Defence to investigate the problem and solve it before A91 comes into operational use. Although the investigation is not yet complete, we are confident that a safe and effective solution will be found. The building will not be used for radioactive materials—indeed the commissioning of it will not be resumed—until such a solution has been identified.
Clearly, the matter of corrosion in A91, and any costs it may involve, are not matters for the future AWE contractor, who has not yet been chosen. The future contractorised AWE will be the operator of AWE facilities, old and new. This is separate from MoD's use of building contractors, equipment contractors, installation contractors and so forth involved in the AWE capital programme and collectively project managed by NNC Ltd. as the facilities project management contractor.
I was also asked in Committee about the compliance office's function in the context of the capital programme. That is not the context in which we see the compliance office functioning. The MoD compliance office at AWE will basically be concerned with the way the contractorised AWE complies with its contract, not with how other MoD contractors comply with theirs. For instance, if a problem was identified relating to performance under an MoD contract to which the overall AWE contractor had not been a party, then it would not be a matter for the compliance office. It would be a matter for whoever in the MoD procurement executive was concerned with that contract.
I have spoken about new buildings, including those not yet in use. I should also say that AWE's production work in existing buildings is proceeding well and in good time for Trident's entry into service in the mid-1990s. I must emphasise that existing buildings for production of components using radioactive materials at AWE have been updated wherever necessary, and safety standards maintained. The same applies to the research building from which there was a small release of tritium gas last February. I gave reassurance during Committee that neither the workforce nor the general public were at risk from that release.
Finally, let me say once again that ownership of building and facilities at AWE will remain with MoD. Buildings at AWE are fit for their intended use.
Further to the two points raised by the noble Lord, Lord Williams, I can assure him that the Government will make absolutely certain that premises will be kept up to a totally safe standard. As regards who will pay for future maintenance construction, it will be the Ministry of Defence, as now. I hope that those reassurances will have gone some way toward enabling the noble Lord, Lord Williams, not to move the amendment.
§ Lord Williams of Elvel
My Lords, I have already moved the amendment but I do not intend to press it 1577 to a Division. I shall be grateful if the noble Earl will explain to the House how, if the MoD is to be responsible for keeping the establishment—by that I mean all the extensive high technology and the difficult security arrangements for the buildings and all the paraphernalia that goes with them which the taxpayer has to pay for to be kept up to the proper security standards that we all want—how will the burden be split between the taxpayer and the contractor? Will the contractor get the benefit of the entire investment made by the taxpayer or will the contractor hear part of the burden? That is the question that I would like the noble Earl to answer when he has a little more time to consider the matter in furl her detail.
§ The Earl of Arran
My Lords, as I have said already, the ownership of the new facilities and other capital assets will remain with the MoD. The actual operational user of the facilities will be the contractorised AWE. The detailed arrangements for future new buildings post-1992, including that part of the capital programme which will not be complete by vesting day, have not yet been finalised. The detailed arrangements between the facilities project management contractor, NNC Limited, and the overall AWE contractor have yet to be determined. We shall ensure that the arrangements are clear and unambiguous and do not lead to divided responsibility in the problematical sense that occurred between the MoD and th29PSA in previous times. The burden will not be split. The contractor is running the establishment for us. I hope that that has helped to explain the situation.
§ Lord Williams of Elvel
My Lords, it has helped partially to explain the situation. As always, we have to wail for the contract, which we are not allowed to see because it is classified. The assumption is that the MoD will continue to put taxpayers' money into ensuring that the establishments, taken in the round, are kept up to date and properly secure and that the contractor will not pay any of that burden. I would find that rather difficult to accept if we were going in for a C OCO arrangement. However, I do not wish to detain your Lordships. I shall study what the noble Earl has said. In the meantime, I beg leave to withdraw the amendment.
§ Amendment, by leave, withdrawn.
Loki Williams of Elvel moved Amendment No. 4:
After Clause 1, insert the following new clause:
§ ("Inspection of accounts by Comptroller and Auditor General
§ Subject to section 1(2) above an account of the contractor shall be open to the inspection of the Comptroller and Auditor General.").
The noble Lord said: My Lords, this amendment again refers to a discussion that we had at Committee stage. When replying to the amendment, the noble Earl made one or two statements which I found to be rather odd. I wish to take up the statements again in order to obtain clarification. He said:
If, however. the amendment is seeking a wider remit for the Comptroller and Auditor General in respect of the contracting company, to enable him to see all their internal papers, then I must say that I believe it would be wrong to attempt such an effect".—[Official Report, 2/7/91; col. 946.]
I note what the noble Earl said on that occasion and I dispute it. I do not believe that it would be wrong to attempt such an effect; it would be wholly right to do so. A few sentences later the noble Earl continued:
the contractor's accounts will be published in accordance with the requirements of the Companies Act".
I assume that that refers to the Companies Act 1985 as amended by the 1989 Act. The Act is quite clear on the matter: a private company—which presumably the company will be because it will not be a quoted company—will file its accounts with the appropriate companies' office. Those accounts will be available for public inspection. That is certainly true. But there are 18 months between the requirement to file the accounts and the time when the DTI takes action to make sure that companies are filing them.
§ Furthermore, the accounts of the contractor will be of a consortium nature. It is a private company and it is perfectly entitled to file unconsolidated accounts. Therefore, the information that is available either to the Comptroller and Auditor General or to the public will be limited. Noble Lords will know that anyone who relies on company accounts filed in the company registration office is whistling in the wind.
§ We believe that this contractor will be in a very special situation. After all, he will be the contractor who is to produce our nuclear warheads. Special situations require special remedies. The special remedy that I propose is that the contractor should be subject to rather more stringent requirements on his accounts than are normal in the case of any other company operating in the United Kingdom. That is why I am suggesting that the Comptroller and Auditor General should be able to go into the contractor's accounts and find out exactly what is happening in financial terms. If we have to wait for years before accounts are properly filed, then there is no control over them. I beg to move.
§ 7.45 p.m.
§ Lord Ironside
My Lords, when the noble Lord introduced the amendment in Committee he said that the AWE was involved in government work only. That is true, as we know. He said that the MoD is the sole purchaser. I do not believe that that is true. AWE carries out forensic activities for the Home Office and it probably does other work for other budget holders and support agencies. Therefore, it is not quite true that it only works for the MoD.
The noble Lord also said that the new contractor is not just any other defence contractor, as he will have no other business whatsoever which, in his view, justifies having the Comptroller and Auditor General audit the accounts. I support my noble friend Lord Arran in what he has already said, in that the accounts will be available. But I shall be interested to hear what he has to say about the point raised by the noble Lord, Lord Williams. The Comptroller and Auditor General has access to all the documents anyway and the contractor should not be put in a different position just because he is at AWE.
I declare an interest again which I declared at Second Reading. I hope that the House will accept it as a hands-on, informed and responsible interest, in 1579 that I am closely involved with the Trident programme. We have come a long way with that programme. I believe that the House should look at the AWE enabling arrangements in a way that reflects the needs of project management in defence, if there is to be a successful conclusion, within the framework of new management strategy.
In 1954 the naval section of AWE was launched, with secondment of people from Rolls-Royce. That was to look at the nuclear steam-raising plant. In 1957 a contractor's team, with Crown servants, was assembled at Rolls-Royce at Derby. In 1959 Rolls-Royce and Associates was formed and in 1965 it became the delegated design authority, nominated supplier and operator of the Vulcan reactor at Dounreay.
The position was that the Government wanted Rolls-Royce and Associates to be seen to stand in a special relationship with MoD. In 1982 Rolls-Royce and Associates was allowed to take on non-naval work. Rolls-Royce and Associates is now 100 per cent. Rolls-Royce and earns fees based on ascertained costs. The fees are assessed on achievement of milestones and this has proved to be a very successful basis on which to operate. No doubt negotiations also take place with the review board for government contracts based on the agreed formula from which a profit rate is set.
In 1990, for increased effectiveness and efficiency, risk pricing arrangements were introduced to cover greater reward for increased risks hitherto borne by MoD and are now accepted by Rolls-Royce and Associates. Rolls-Royce is involved in a nuclear submarine programme from concept stage to the in-service support stage. The responsibility for safe design and operation of the nuclear steam raising plant is vested in the MoD and the supply of safe plant is vested in Rolls-Royce. The safety and reliability directorate of AEA is retained by MoD as an independent assessor and adviser.
The point I am coming to is this: in weapons we can see the same pattern of management of the project developing. The contractor is responsible for design through to production and beyond; MoD is responsible for safety through the compliance office. The contractor works for government to start with but may, under the Phase 2 contract take on work at a later stage for other customers. I am sure, whoever he is, that he will insist on that in his negotiations and that that will be acceptable to the Government provided certain qualifications are met.
As we all know, the nuclear industry is shrinking. Options for Change has reduced the business of Rolls-Royce and Associates by 30 per cent., and it is looking for new links throughout Europe. I believe that the Comptroller and Auditor General's powers are sufficient and that the contractor at AWE will develop a special relationship with MoD in weapons as Rolls-Royce has done with main and auxiliary propulsion. That meets the requirement of integrated logistic design where the through-life support must be considered as an integral part of the design process. That can only be done where there is a designated 1580 authority with designated activities as proposed; an authority which covers design as well as manufacture. I hope therefore that the House will see the amendment as unnecessary and superfluous and will reject it.
§ Lord Mayhew
My Lords, the noble Lord paid a deserved tribute to Rolls-Royce to whom the British defence effort owes a great deal. He stirred a happy memory when he spoke of the navy handing over a reactor to Rolls-Royce at Dounreay in 1965. I handed it over myself and had a suitably lucullan meal with the Rolls-Royce directors. What we have here is a question as to whether any private company should produce weapons of mass destruction—nuclear, biological or chemical. At this stage of the Bill we need not go into that matter again but I think it is in the minds of my noble friends; I think particularly of the noble Lord, Lord Williams.
I think I detected the noble Lord saying that the Government would have access to the papers of the contractor. A very strong reason for supporting the limited appeal of the noble Lord, Lord Williams, that financial papers should be made publicly available is that the compliance officer, the Government, will have no access to the papers of the contracting company.
§ Lord Ironside
My Lords, perhaps I may interrupt the noble Lord for one moment. I was saying that the Comptroller and Auditor General would have access to all the documents. I thought that that was what I said.
§ Lord Mayhew
My Lords, with great respect to the noble Lord, I think he will find that when the Minister replies he will say, "No, we are not going to let the Comptroller and Auditor General anywhere near even the financial papers". I asked him whether the compliance officer will have access to the papers of the contracting company. I shall leave it at that and wait to hear what the Minister has to say.
§ The Earl of Arran
My Lords, the effect of this amendment would be to open the accounts of the contractor to the inspection of the Comptroller and Auditor General. Your Lordships will recall that an identical amendment was moved in Committee by the noble Lord, Lord Williams.
I explained in Committee that, in our view, the additional powers conferred by this amendment are not needed because the contractor's accounts must be published to meet the requirements of the Companies Act, and powers already exist for the Comptroller and Auditor General to consider MoD's relations with the contractor. It would be inappropriate to make the contractor subject to inspection by the Comptroller and Auditor General as that would put him in an entirely different position from any other defence contractor, including the dockyard contractors, who do not have that requirement imposed upon them.
I was not persuaded by the point made in Committee by the noble Lord, Lord Williams, that the AWE contractor is in a quite different position from any other defence contractor because he will have no other business apart from running the AWE. Although there are some very special aspects to this 1581 particular contractoristion—and specific safeguards are being provided covering, for example, safety aspects—the principle of a contractor undertaking work for the Government, which applies in this case, is by no means new; nor is it novel. We do not require other contractors to submit to a Comptroller and Auditor General inspection of their accounts and we see no reason to depart from that principle. To do so would be to widen the Comptroller and Auditor General's remit to inspect the accounts of private sector companies which we cannot accept as either necessary or desirable.
Moreover, the argument that the contractor will have no other business apart from that awarded him by MoD is, in our view, based upon a false premise. In discussing this amendment during Committee the noble Lord, Lord Williams, assumed that a prime contractor would be, to use his words, "set up" as a result of the passage of this Bill. Although we acknowledge that it is likely a joint venture company will be established to undertake the contract, that will not inevitably happen. It is wrong to assume that Hunting-BRAE, or another joint venture company, will necessarily win the contract for full contractorisation: a full and fair competition will be run by the Ministry of Defence. It is possible that the company winning that competition will not wish to set up a separate company to act as prime contractor. In that event, the amendment would require Comptroller and Auditor General inspection of the parent company's accounts, which would be clearly inappropriate—the more so as they would cover other, non-MoD, business.
We fully accept, however, that the Comptroller and Auditor General and the Public Accounts Committee of another place have an important role in ensuring that the taxpayers' money is wisely spent; and they will no doubt wish to consider further the contractorisation of AWE. However, they do not need this amendment and an inspection of the contractor's accounts in order to do so. The Comptroller and Auditor General already has the right of access to papers held by the Ministry of Defence and the right to look at its relationship with the AWE contractor —just as he has the right to consider MoD's relationship with any defence contractor. The Comptroller and Auditor General has not reported any difficulty in obtaining any information that he has required concerning the Royal dockyards since contractorisation.
In summary, we believe the amendment to be unnecessary and based upon a false premise of the possible organisation of the company awarded the prime contract.
In answer to several points raised by the noble Lord, Lord Williams, the requirements of the Companies Act is the normal way of regulating public companies. It is the considered way that Parliament has determined to regulate private companies. I can tell the noble Lords, Lord Williams and Lord Mayhew, that the compliance office will have access to the contractorised AWE's papers relating to all matters of safety and security.
1582 I am grateful to my noble friend Lord Ironside for his intervention. He made the same point that the Comptroller and Auditor General's function is to audit government organisations. It would be a dubious precedent to give him fresh powers under the Bill to inspect a company. With those assurances, I hope that the noble Lord, Lord Williams, will not feel obliged to press the amendment.
§ 8 p.m.
§ Lord Williams of Elvel
My Lords, I find the noble Earl's response somewhat odd. First, perhaps I may respond to the noble Lord, Lord Ironside. The Atomic Weapons Establishment does not carry out forensic tests for the Home Office. That is not a function of AWE. The Home Office occupies property on the same site. Secondly, we are here discussing not a public company such as Rolls-Royce, but a private company—like Hunting-BRAE which has the Phase 1 contract. We are talking about a private company—probably a consortium company—which has interests but is nevertheless not a listed company on the Stock Exchange like Rolls-Royce, whose accounts are open and are immediately available to the shareholders.
The contractor at AWE will be using Ministry of Defence facilities. I emphasise this point. The only customer will be the Ministry of Defence, which will commission these weapons of mass destruction. The noble Lord, Lord Mayhew, has consistently made that point. It will effectively provide all the funds. The Ministry of Defence will be a monopoly buyer. If the Ministry of Defence is to be a monopoly buyer using public funds, that must be a reason for ensuring that the taxpayers' interests are safeguarded through an examination by the Comptroller and Auditor General.
Thirdly, the noble Lord, Lord Ironside, mentioned the possibility of other customers. The idea that this new consortium which is to be set up specifically for this purpose could take on other customers makes it even more important that the accounts should be examined by the Comptroller and Auditor General and that there should be no fudging and mudging about where the money comes from. We need to know.
Finally, the contractor is in a quite different position from contractors in the dockyards. I do not want to continue to refer to what the noble Lord, Lord Mayhew, said, but he is quite right. These are special anxieties. We are talking about weapons of mass destruction. We are not talking about dockyards; we are talking about nuclear bombs. I wish the Government would recognise that.
I thought that I had already dealt with the noble Earl's assertion that the normal way of regulating public companies is through the Companies Act 1985, as amended by the Companies Act 1989. We all know that, unless a company is listed on the market, its accounts are filed perhaps 18 months late and are open only to investigation of the most primary nature. There is no shareholders' meeting. What goes on is private. No one can ask questions about those accounts. No one can get into the detail of those accounts. They are simply filed. That is the procedure.
1583 If the noble Earl thinks that that is right for this major contractor on this important operation, then I am bound to say that we have a very serious difference of opinion.
Furthermore, unless the Comptroller and Auditor General is allowed access to the contractor's accounts, he will not be able, we will not be able, Parliament will not be able and the taxpayer will not be able, to see what underlies those accounts. As the noble Earl knows perfectly well, the accounts filed in Companies House are statutory accounts. They do not deal with the management accounts. They do not deal with how much was spent on this and how much was spent on that. They do not deal with the costings on this and the costings on that. There is no way of getting at that information through the published accounts. That is the kind of information we need to know about the contractor. It is quite extraordinary that the Government are not prepared to make this extension —I agree that it is an extension—of the Comptroller and Auditor General's powers in this vitally important case.
I see that there is silence from the Government Front Bench. If the noble Earl wishes, with the leave of the House, to respond to what I have said, perhaps he will be good enough to do so.
§ The Earl of Arran
My Lords, I am grateful to the noble Lord, Lord Williams, for allowing the Government to respond. With the leave of the House, I shall do exactly that. The problem here is that we have a difference of opinion on a point of principle. In addition to what I have already said to the noble Lord, I can say that the Comptroller and Auditor General will have ready access to papers in the Ministry of Defence, including those originating from the contractor. The dockyard contractors also use Ministry of Defence owned facilities. The Comptroller and Auditor General does not have access to those contractors' internal financial papers, but he has full access to all Ministry of Defence papers on expenditure with those contractors. That arrangement has been found perfectly satisfactory.
§ Lord Williams of Elvel
My Lords, I am grateful to the noble Earl. I think that he is right. We have a difference of opinion on a matter of principle. I do not have to remind the noble Earl that we believe the whole concept of contractorisation to be rubbish. However, we went through that at Second Reading and in Committee. What I am trying to do is to prevent any possible abuse of taxpayers' funds. I accept that the Comptroller and Auditor General has access to MoD papers. But to pretend that this new contractor can be monitored by the Government, by the taxpayer or by anyone else simply on the basis of accounts produced under the Companies Act 1905 as amended by the Companies Act 1989 is a travesty. Nevertheless, at this time, I do not wish to divide the House. I beg leave to withdraw the amendment.
§ Amendment, by leave, withdrawn.
§ Clause 3 [Privileges and immunities: application of certain enactments]:1584
§ Lord Williams of Elvel moved Amendment No. 5:
Page 3, line 10, at end insert:
("(4) Schedule (Compliance Office) to this Act shall have effect for the purpose of providing means of monitoring and supervising the designated and other activities of any contractor appointed under section 1 above, and providing advice to the Secretary of State on the incurring of expenses under section 5 above.").
§ The noble Lord said: My Lords, this amendment stands in my name and that of the noble Lord, Lord Mayhew. It may be for the convenience of the House if I speak also to Amendments Nos. 6 and 7.
§ In Committee we discussed the role of the compliance office. The noble Earl will recognise that the amendments before the House today are identical to the amendments we discussed in Committee. I should like to make two points. First, I was unhappy about our discussion in Committee of the compliance office. I did not believe that the Government had really understood the importance to Parliament of the compliance office. When we discussed the matter in Committee I did not believe that there was any serious definition inside government as to what the compliance office would consist of, how it would operate, what its terms of reference would be and what it should do.
§ The Government's position appears to be that they agree that the compliance office will be important but they refuse to give it statutory backing. That must be contrasted with the regulatory authorities which were set up under different privatisation Acts that your Lordships have considered over time. For example, we have had Oftel, Ofgas and many others. But in this case we do not have a proper compliance office which will govern the operations of the contractor.
§ I accept that AWE is not in exactly the same position as British Telecom, British Gas, National Power, PowerGen or the electricity authority. But, to my mind, that does not reduce the requirement for a proper regulatory and controlling authority. Further, it must be arguable that in this case the requirements for safety and security are much greater than in those other companies which the Government have privatised.
§ In Committee the noble Earl quite correctly said that the purpose of such amendments would be to write the functions and powers of the compliance office on to the statute book. I am not ashamed about that; I believe that it is the right thing to do. The present position is that the Government have refused to give us any information about the compliance office; for example, how it will be staffed, details about its relationship with the Minister of Defence or with the contractor or details about the powers which it will have. The Government's position that the powers of the compliance office will flow directly from the statutory authority of the Secretary of State is simply not good enough. It is not a satisfactory position.
§ I am sure that we all agree that the final decisions should be taken by the Secretary of State, who is answerable to Parliament. There is no division between ourselves and the Government on that. But that makes it even more important that there should 1585 be a compliance office and a compliance director whose tasks and responsibilities are set out in the legislation.
§ I do not believe that the Government have thought through what the compliance office should be. If the noble Earl can reassure me in any form at all that that is not the case, I shall be reasonably happy. On the other hand, if he cannot reassure me, I assure him that this is an issue—and I believe that I speak for the noble Lord, Lord Mayhew, too—which has now become the fundamental issue of the Bill. I beg to move.
§ 8.15 p.m.
§ Lord Mayhew
My Lords, I have no hesitation in rising to support the noble Lord on this point. In Committee we expressed our profound distrust of the Government's attitude towards the compliance office because of their failure to spell out its duties and to give us any assurances about its status and its numbers. The replies we received were far from satisfactory.
However, I believe that I can encourage the noble Lord, Lord Williams, who may not have seen the report of the House of Commons Defence Committee on The Progress of the Trident Programme which was published this morning. It bears out all we said and confirms our suspicions. For example, at paragraph 70 the committee says:In fact the total strength of the Compliance Directorate is seven staff: given that this presumably includes some administrative support staff, the number hardly suggests a vigorous and wide-ranging organisation".Then in the following paragraph it refers to,new pay scales being awarded".That is an issue on which I should like the Minister to reply. Under the contract, when contractorisation starts it looks as if higher pay will be awarded to those employed by the contracting company. But what about the staff of the compliance directorate? Presumably they are employed by the Minister and given Civil Service pay. As time goes on their conditions and their pay will, therefore, depreciate compared with those of their colleagues who are working for the contracting company. May we also have an assurance from the Minister that that will not happen and that appropriate pay increases will be made to the staff of the directorate at least to keep them in line with their other colleagues?
Our amendments would give a proper status to the compliance directorate. Incidentally, I take the point made by the noble Earl that it will have access to those papers of the contracting company which deal with security and safety. But what about the rest of the business of the compliance directorate, whatever it is —and it is has not been very well defined? Is it not also concerned with monitoring the performance of the contracting company? Will it be denied access to papers which refer to the performance record or to environmental or health questions? It seems to me that by denying the papers of the contracting company to the compliance officers in these fields the Government are further underrating the importance 1586 which should be attached to the compliance directorate. I profoundly hope that the noble Earl can reassure us on those points.
§ Lord Ironside
My Lords, originally in Committee I believe that the noble Lord, Lord Williams, was more concerned about the privatisation of the compliance office than the safety aspect. However, as I understand it, he is now concentrating on safety. My noble friend on the Front Bench has made it quite clear to me that the safety organisation is an integral part of the establishment and will remain so after transfer to full contractual operation.
As I understand it, the contract will make it quite clear to the contractor that safety is his business. Responsibility for design and production safety is vested in the MoD and the contractor's responsibility is to deliver it. Apparently the compliance office consists of seven people at present. The future needs for Phase 2 are currently being addressed and I suppose that considerably more people will be needed. I do not know how many more will be required. But, as I suggested—and my noble friend confirms this fact—Dr. Glue, the compliance director, can contract out if he is short of staff and does not have the right specialties. Nevertheless, it appears that it will be some time before the manpower problems are resolved at AWE as regards getting the right mix of skills, as natural wastage is now running at something like 600 per year.
As I understand it, the interim contract covers the safety aspect and lays down strict requirements to ensure that the contractor complies with all the appropriate safeguards and that the establishment continues to operate to the existing high standards of health and safety. Of course the compliance office is closely interfaced with the AWE staff. It appears unnecessary to give the compliance director any statutory powers.
§ The Earl of Arran
My Lords, the effect of the amendments would be to write the functions and powers of the compliance office on to the statute book and to bind the Secretary of State to comply with recommendations made by the compliance director. Your Lordships may recall that I spoke against a similar set of amendments which were moved in Committee on 2nd July and subsequently withdrawn. I must resist the amendments we are now discussing for the same reasons as I resisted the earlier ones; namely, that statutory provision is not necessary in order to establish the compliance office and define its functions; nor is it an appropriate means of doing so.
I must begin by restating once again the Government's commitment to ensuring that the compliance office has the powers and the resources effectively to regulate the contractor, and in particular to enforce environmental, health and safety standards and compliance with the terms of the contract. During the debate on 2nd July the noble Lord, Lord Williams, asked for more detail about the compliance office. I believe, therefore, that it will be helpful if I say some words on this subject before explaining our objections to the amendment.
1587 In its report on the Trident programme which was published yesterday the House of Commons Defence Select Committee stressed the need for the compliance office to have access to any relevant documentation, and to have devoted to it human and financial resources commensurate to the scale of its task. The Government agree entirely with those views, as I hope will become clear to your Lordships from what I am about to say.
There is, of course, already a compliance office at AWE, headed by a compliance director. It was established on the first day of the interim, or Phase 1, management contract—1st October 1990. Its present duties are: to ensure that Hunting-BRAE complies with the Phase 1 contract; to assist MoD HQ in setting up and implementing the arrangements for full contractorisation; and to determine the structure and resources needed for the larger compliance office which will monitor the Phase 2 contract, which will begin late next year.
The compliance director's staff is small at present —some half a dozen individuals. But that is because full contractorisation is still some way off. Part of the director's task, as I have said, is to determine the structure and resources that will be needed for the larger compliance office which will monitor and audit the contractor after full contractorisation. It would be wrong to pre-empt that process by attempting to forecast at this stage the precise structure and size of the compliance office under Phase 2. What I can say, however, is that it will be considerably larger and more complex than at present. It will be subdivided into separate offices dealing with particular areas of responsibility such as safety, security and site engineering. Each office will include staff with the expertise appropriate to its function: thus the security office will contain staff with MoD security experience, and the safety office will contain professional safety staff, including health physicists and radiological experts.
The compliance office will monitor the contractor's performance on a day-to-day basis, and will provide regular reports to MoD covering a wide range of areas. In order to fulfil that role the compliance director's staff will have access to all relevant documentation, and, in addition, will be able to call for special reports or studies on particular issues. They will also have unrestricted access to all AWE facilities. It is intended that compliance staff will be permanently located in certain important AWE facilities, and will visit all the others to review, monitor and evaluate all processes and procedures. Particular attention will be focused on those facilities which deal with fissile, radioactive or toxic materials.
I should make it clear that we do not intend the compliance office to take over the role of the existing safety organisation at AWE. It is important that the contractor should not feel that safety is someone else's responsibility. The contractor will inherit AWE's existing safety personnel, and will be expected to maintain the safety culture which has been the main factor in AWE's excellent safety record over recent years. The compliance office will be there to make sure 1588 that he does so, and specific performance indicators and criteria will be established to that end. Specific safety criteria will be defined in the contract and will be based not only on statutory requirements, but on the ALARP principle that radiation exposures should be kept as low as reasonably practicable.
As well as day-to-day monitoring of the contractor's activities, the compliance office will carry out audits in particular areas where appropriate—for example, to validate the documentation provided by the contractor or to assess security procedures.
If the compliance director believes that the contractor's performance needs to improve in a particular area, he will ask for the necessary changes to be made. The intention, of course, is to nip any potential problem in the bud before it can become serious. There are, however, a variety of sanctions available to reinforce the compliance director's authority if necessary. First, there are two levels of financial sanction. The compliance director will be responsible for authorising the regular payments to the contractor. He will approve such payments only when he is satisfied that the required progress has been made, and that it has been made within the prescribed safety and security environment. In addition, there will be discretionary award payments tied to areas such as safety and security. In the unlikely event that despite all the financial sanctions the contractor's safety performance was still unsatisfactory, the compliance director would be able to close down any facility which was not being operated to a satisfactory safety standard. In the last resort he could recommend the cancellation of the contract.
Perhaps I have digressed enough and should return to the subject of the amendments. My main objection to them is that they cut across the constitutional responsibilities of the Secretary of State. The Secretary of State for Defence is responsible for all that happens within the sphere of his department's function, which of course includes the activities of AWE. I must stress once again that we are not privatising AWE. The Secretary of State for Defence will continue to own all the establishment's assets; all he is doing is bringing in a contractor to operate them for a fixed period of time and under strict contractual control. That does not alter the fact that he will still be ultimately responsible for the establishment, and he will remain accountable for it to Parliament.
The Secretary of State does not need a statutory provision to enable him to establish a compliance office, and indeed, as I have said, the compliance office is already in existence. The amendments would therefore compel the Secretary of State to do what he has already done.
There is another aspect to the amendments, however, which is even more objectionable. Paragraph 4(1) of the proposed schedule states:The Director may make recommendations to the Secretary of State concerning stage or incentive payments to a contractor, and no such payment may be made by the Secretary of State in contravention of such a recommendation.In other words, the amendment would compel a Minister by statute to do what one of his own officials tells him to do. I ask your Lordships to consider the 1589 constitutional implications of that. It is Ministers and not civil servants who are answerable to Parliament for the activities of departments but how could the Secretary of State continue to be responsible to Parliament for the regulation of AWE if the final decision had been taken out of his hands, as it would be if the amendment were adopted?
We should find it hard to conceive of a situation in which the Secretary of State would not accept the recommendation of the compliance director. My point is that it would be wrong to bind him by statute to do so. We also have our doubts about paragraph 2(1) of the Proposed schedule, which seems to wrest responsibility for the enforcement of health and safety legislation away from the Health and Safety Executive. In fact, the HSE is already responsible for enforcing the Health and Safety at Work etc. Act and associated enactments at AWE, and will continue to be so after vesting day.
In conclusion, from one point of view the amendments are superfluous, because they seek to compel the Secretary of State to do what he has already done; that is, to establish a compliance office. Furthermore, when one looks at the detail of the amendments, they are also objectionable, since they interfere with the constitutional responsibility of the Secretary of State.
I hope that in the past few minutes I have been able to reassure the noble Lord, Lord Williams, and other noble Lords about how the compliance office will work in future.
§ Lord Williams of Elvel
My Lords, I am grateful to the Minister for giving that lengthy dissertation on how he believes the compliance office will work. I shall make only two responses. The first is that the important amendment is Amendment No. 6, since that insists that the compliance directorate should be wholly effective and in place before contractorisation. We of course take on trust what the Minister has said, but as the contract will not be available until the end of 1992, we should like to have the compliance directorate's functions on the record clearly and in some identifiable manner before that contract is laid.
Secondly, the Minister waxed eloquent over the constitutional arrangements involved in the amendments. I do not have to remind him that the Secretary of State in another capacity is bound on many 1590 occasions by outside bodies. Under the Fair Trading Act 1973 the Secretary of State is bound by decisions of the Monopolies and Mergers Commission. He cannot go against them. There is nothing unconstitutional in anything we suggest.
Finally, I am grateful to the noble Lord, Lord Mayhew, for drawing my attention to the report of the Select Committee in the House of Commons on The Progress of the Trident Programme. I shall quote from paragraph 73:It is therefore essential that MoD continue to keep developments at AWE under close review, and that general oversight be in no way diminished as a result of the introduction of management contractorisation".For us, that is the fundamental point. The House of Commons Select Committee put its finger on the point. Unless we have the position of the compliance office or the compliance directorate in the statute before contractorisation, we will not be satisfied.
I do not wish to continue the debate at this late stage unless the carrier pigeon has arrived with further information for the noble Earl. He may wish, with the leave of the House, to respond to some of the points that I made or he may not.
§ The Earl of Arran
My Lords, with the leave of the House, again there is a fundamental difference of opinion here. However, it may help the noble Lord if we take up the points that he has mentioned. I shall correspond with him in order to enlarge upon the points that I have made and I shall endeavour to show him why we do not accept them. I shall send a copy of the correspondence to the noble Lord, Lord Mayhew, and put a copy in your Lordships' Library.
§ Lord Williams of Elvel
My Lords, I am grateful to the noble Earl for that little bit of comfort at the end of the debate. I am not satisfied with the Government's response to the amendment. Nevertheless, at this time of the evening I do not intend to divide the House. I beg leave to withdraw the amendment.
§ Amendment, by leave, withdrawn.
§ [Amendments Nos. 6 and 7 not moved.]