Lords Sitting of 20 June 1991

Preamble
The House met at three of the clock: The LORD CHANCELLOR on the Woolsack.
Prayers—Read by the Lord Bishop of Wakefield.
Lord Redesdale Lord Redesdale— Sat first in Parliament after the death of his father.

Parking Bay Suspension: Costs
Baroness Gardner of Parkes Baroness Gardner of Parkes asked Her Majesty's Government:
Whether they will introduce regulations under Section 150 of the Local Government and Housing Act 1989 to clarify the existing right of local authorities to charge for suspension of parking places.
Earl Howe: My Lords, the Government have no immediate plans to do so.
Baroness Gardner of Parkes: My Lords, can I draw my noble friend's attention to the fact that this is a very grey area? It has not been clearly established whether the provision is legal or illegal. Does he agree that in view of the reply made at the Committee stage of the Road Traffic Bill, when the Government said that they had the powers to clarify this matter, that it would be desirable to do so?
Earl Howe: My Lords, it is correct to say that under existing legislation a charge made by a local authority for suspending a parking meter is neither prohibited nor expressly allowed for. However, the New Roads and Street Works Bill, which your Lordships considered for the last time this week, will allow highway authorities to recover from utilities all costs incurred by virtue of temporary traffic regulations. In principle that could include the administrative cost of suspending a metered parking bay.
Baroness Gardner of Parkes: My Lords, in view of the fact that it is so important not only to residents and other motorists who wish to use the facility, if it transpires that after the Bill comes into operation there still remains a lack of clarity, can the Minister say whether the Government will then consider the matter further?
Earl Howe: My Lords, the Government are not aware that the situation as it stands presents undue difficulty to local authorities. If it is a matter which is found to cause problems, the Government will naturally pay heed to any supported arguments that the local authorities choose to bring forward. However, we would prefer not to make further legislative changes at the moment.
Lord Clinton-Davis: My Lords, perhaps I may take this opportunity to congratulate the noble Earl on his first appearance at the Dispatch Box. Perhaps I may also advise him that I have no supplementary question to offer on this occasion.
Earl Howe: My Lords, I thank the noble Lord for his kind remarks. I am very relieved as to the content of his second statement.
Lord Tordoff: My Lords, perhaps I may join in the congratulations. However, I have one supplementary question arising from what the noble Baroness, Lady Gardner of Parkes, said. In his reply, the Minister referred to utilities suspending parking bays. Can the Minister say something about private ventures suspending parking bays? Has the noble Earl been into Great Peter Street recently and seen the chaos there?
Earl Howe: My Lords, it is open to a local authority to make a charge to a commercial undertaker by agreement with that undertaker. Some authorities do that and others do not. It is a matter for private negotiation between the two parties. The point raised by the noble Lord, Lord Tordoff, is an understandable worry. That is why the New Roads and Street Works Bill gives the Secretary of State reserve powers to bring forward a scheme of charges where the highway has been occupied for an unreasonable period. The first of any such regulations would be subject to the Affirmative Resolution procedure. The intention of such provisions would be to encourage work to be completed efficiently without penalising those who complete work within a reasonable period.
Lord Morris: My Lords, can my noble friend say whether Her Majesty's Government have any intention of bringing forward such proposals; and, if so, when?
Earl Howe: My Lords, the Secretary of State will no doubt be influenced to introduce a scheme of charges if he were persuaded over a period that there was sufficient annoyance caused by the problem which cannot be dealt with by other provisions in the Bill.
Baroness Gardner of Parkes: My Lords, I thank my noble friend for the Answer; and I add congratulations to him from this side of the House on his first appearance at the Dispatch Box.
Earl Howe: My Lords, I thank my noble friend very much.

Unemployment: Cost to the Exchequer
3.11 p.m.
Viscount Hanworth Viscount Hanworth asked Her Majesty's Government:
Whether the cost to the Exchequer of supporting unemployed people is at least 60 per cent. of the cost of employing them and, if so, whether they regard this as an efficient use of public funds.
The Lord Privy Seal (Lord Waddington): My Lords, the latest estimate of gross benefit payments to unemployed people in 1991–92 is £5,590 million. This cannot be compared with the costs of employment. These depend on the wage paid, and non-wage labour costs, such as national insurance contributions, which vary for each individual.

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The Government are firmly committed to helping unemployed people get back to work. My right honourable friend the Secretary of State for Employment announced yesterday an increase in the number of opportunities available. But the Government's principal task is to set the monetary and fiscal framework to defeat inflation, creating the conditions for a return to sustainable growth.
Viscount Hanworth: My Lords, I thank the Minister for that reply. Does he appreciate that, with unemployment rising, it is in the national interest if one can usefully give people further training? Does he agree that some of the money might be used for that purpose?
Lord Waddington: My Lords, certainly the needs of individuals differ. I do not disagree with the noble Viscount for one moment when he says that many of those who are out of work can benefit from training. In other cases undoubtedly people can benefit from advice and from work experience—the opportunity to continue working rather than receive training.
Baroness Turner of Camden: My Lords, is the Minister not aware that the political cost of attempting to use unemployment as a weapon against inflation can be very great? Is he not aware also that much of the current unemployment is among highly skilled and professional people? Can he say what incentive there is for such people to undertake training if there are no jobs for them and they are skilled and trained already?
Lord Waddington: My Lords, allowing inflation to rise would certainly be the unkindest act of all because in the long run far more jobs would be destroyed.
Lord Barnett: My Lords, the original Question asked whether the Government regard the cost involved as an efficient use of public funds. May we have an answer?
Lord Waddington: My Lords, I thought that I had answered. It is impossible to compare the cost of unemployment benefit with how much would be saved by a person being back at work. One cannot possibly know the level of wage that would be paid to the individuals concerned.
Baroness Phillips: My Lords, is the Minister aware that while teachers are being made redundant by various local authorities the Government are proposing to spend a vast sum of money with a certain well-known advertising agency to recruit them? Is that a very wise way to spend money?
Lord Waddington: My Lords, I cannot comment on policies adopted by individual local education authorities. I am not qualified to say what is the position within the boundaries of individual local education authorities.
Lord Rochester: My Lords, will the noble Lord accept that I welcome the Government's decision, so
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far as it goes and belated though it is, to provide emergency measures which include a temporary work scheme for the long-term unemployed?
Lord Waddington: My Lords, I am most grateful to the noble Lord. The new programme of employment action will provide work experience on local projects for a large number of people and is a very useful further step to help the unemployed.
Lord Stoddart of Swindon: My Lords, the Leader of the House referred to the resumption of stable growth. Can he say when we are to get this resumption of stable growth, bearing in mind that figures published today show that bank lending is down and the money supply also down? Does he not agree that the best way of dealing with unemployment is to reduce interest rates substantially and to do it now, so that real growth can be resumed?
Lord Waddington: My Lords, the point raised by the noble Lord goes far wide of the Question that is before the House. With the greatest respect, I do not think that the noble Lord is entitled to suggest that somehow the Government's achievements in the way of growth can be compared with the lack of achievement of the Opposition. There has been considerable growth since 1979, reflected in very much higher living standards.
Lord Hailsham of Saint Marylebone: My Lords, did I mis-hear my noble friend? Did he not say "sustainable" growth and not "stable" growth?
Lord Waddington: My Lords, I can assure my noble and learned friend that in my first Answer I referred to sustainable growth.
Lord Molloy: My Lords, can the Leader of the House confirm that a government spokesman has already said that a degree of unemployment—not for himself of course—is very worthwhile in order to bring down inflation? Is he not aware that unemployment creates very bitter problems for skilled artisans and general working people of exceptional knowledge whose abilities can serve this country? It is quite wrong for the Government deliberately to create a degree of unemployment to bring down inflation. When will that policy cease?
Lord Waddington: My Lords, unemployment is a terrible misfortune. No one would suggest otherwise. However, I am right in saying—I have said it already this afternoon—that if one were to take no steps at all to control inflation, in the longer run there would be far greater hardship because unemployment would be far higher.

Iraq: Sanctions
3.18 p.m.
Lord Molloy Lord Molloy asked Her Majesty's Government:
Whether they are aware of any moves at the United Nations or elsewhere to lift sanctions against Iraq; and whether they will oppose any such moves.
The Minister of State, Foreign and Commonwealth Office (The Earl of Caithness): My Lords, the first 60-day review of the sanctions regime on Iraq under Security Council Resolution 687 is taking place in New York. There is no agreement in the Security Council that its terms should be modified. We made it clear to the council on 11th June that we opposed any modification of the regime.
Lord Molloy: My Lords, is the noble Earl aware that that is a very welcome reply? In so far as the Russians have attempted to get some sanctions lifted, it is right that we should hold out against such proposals. Does the Minister agree that sanctions must be maintained until all goods stolen by Saddam Hussein from neighbouring peoples are returned, all prisoners of war released, and until atrocities committed by Saddam Hussein's troops have been thoroughly investigated and full reparation made to those who suffered? Unless those conditions are met, sanctions must be maintained.
The Earl of Caithness: My Lords, I agree with the list given by the noble Lord. I should add that we want full compliance with the terms of the cease-fire. We want the release by Iraq of the Kuwaiti detainees, the return of stolen property and notification of the complete elimination of weapons of mass destruction.
Lord Renton: My Lords, can my noble friend give us an assurance that in view of the anxiety and uncertainty about the resettlement of Kurds in Northern Iraq, sanctions will not be lifted until their future happiness and security there is beyond doubt?
The Earl of Caithness: My Lords, we firmly take the view that sanctions must remain. We do so for the very reasons that my noble friend has pointed out, as I confirmed to the House yesterday.
Lord Tordoff: My Lords, following the exchange in the House yesterday and the Minister's reply today, may I ask whether he is aware that what he said and what his right honourable friend the Foreign Secretary has said about the retention of forces in the safe havens is extremely welcome to those on these Benches, as I am sure it is to noble Lords on all sides of the House? In relation to sanctions, will the noble Earl add to the list to which he referred the safety and welfare of those Shi'ite Moslems in southern Iraq who are at present surrounded in the marshes by Saddam Hussein's forces?
The Earl of Caithness: My Lords, I shall go further and say that our concern is for all the civilians of Iraq and add to the list that Iraq must provide an explicit renunciation of terrorism.
Lord Mellish: My Lords, while many of us welcome what the noble Earl has just said, he will have to be careful and watch the Secretary General of the United Nations, whom the noble Lord, Lord Annan, described as a man without any spine at all—in other words, gutless. Therefore it is important that, whatever we do, we do it on our own and ignore the United Nations at least for once.
The Earl of Caithness: My Lords, I fear that I am not as good at the anatomy of the body as the noble Lord. Enormous credit is due to Sir David Hannay, our permanent representative in New York, who is doing a wonderful job.
Lord Cledwyn of Penrhos: My Lords, on this side of the House we welcome the noble Earl's replies. Can he say whether any guarantees given by Saddam Hussein would be acceptable to the Government?
The Earl of Caithness: My Lords, we would certainly wish to ensure that any guarantees given by Saddam Hussein were ones that were enforceable.
Lord Molloy: My Lords, bearing in mind the savage destruction of Kurdish and Kuwaiti property, does the noble Earl agree that at least 50 per cent. of Iraq's oil revenues should be taken to repair the damage that Saddam Hussein's forces inflicted on the Kurds and the Kuwaitis?
The Earl of Caithness: My Lords, the principle of compensation is well laid out in Security Council Resolution 692. That is being discussed at the moment. I am sure that everyone will take note of what the noble Lord has said today.

Nuclear Strikes: Defence
3.22 p.m.
Lord Kennet Lord Kennet asked Her Majesty's Government:
Whether the NATO Defence Ministers have discussed the US Administration's proposal for global protection against limited nuclear strikes, and if so what is Her Majesty's Government's opinion of it.
The Earl of Strathmore and Kinghorne: My Lords, the communiqué of the meeting of NATO's Defence Planning Committee and Nuclear Planning Group in Brussels on 28th and 29th May recorded that Ministers welcomed a briefing by the United States concerning its concept for global protection against limited ballistic missile strikes. The Government's approach to these issues remains as set out in my noble friend's Answer to the noble Lord on 20th May.
Lord Kennet: My Lords, will the noble Earl turn his mind to the part of the programme called the Arrow Continuation Experiments—ACEs for short—which takes place in Israel and is 80 per cent. funded by the United States? What is the Government's reaction to the news that Mr. David Martin, the director of the strategic defence initiative office in Washington, has virtually admitted that this work is being done in Israel in order to circumvent the ABM treaty? The noble Earl's opinion on that matter will be valuable. In the same context, can he yet again reaffirm the four points agreed by Mrs. Thatcher and President Reagan at Camp David in 1984?
The Earl of Strathmore and Kinghorne: My Lords, I must first reiterate what my noble friend Lord Caithness said in this House on 10th June. Her Majesty's Government are not a signatory to the

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anti-ballistic missile treaty. Its future and interpretation are essentially a matter for the United States and the Soviet Union. The answer to the noble Lord's second point is, yes.
Lord Jenkins of Putney: My Lords, even though the Government are not a party to the ABM treaty, they must surely have an opinion. Have they no opinion on whether this latest action seems to subvert the ABM treaty and to place the United States in the position of contravening undertakings that we have actually given? Are the Government unconcerned about this?
The Earl of Strathmore and Kinghorne: My Lords, the ABM treaty has been valuable so far but all questions about change to the treaty are at this stage hypothetical. As I have said, it is not yet clear what the final shape or scope of the GPALS system might be and how it might or might not affect the treaty.
Lord Mayhew: My Lords, does not the noble Earl recall that on many occasions the British Government have affirmed their strong belief in the anti-ballistic missile treaty? Therefore, whether or not it is amended is a matter of considerable concern to this country and a matter on which the Government should have a view.
The Earl of Strathmore and Kinghorne: My Lords, I can only repeat what I have already said. The Government's position is summarised in the so-called Camp David six points. These make clear that the Government fully back SDI research, while deployment would, in view of treaty obligations, have to be a matter for negotiation.
Lord Williams of Elvel: My Lords, have the Government discussed this development with NATO allies other than the United States; and, if so, what has been their reaction? Can he confirm that the United Kingdom has no intention whatever to contribute to this system?
The Earl of Strathmore and Kinghorne: My Lords, as I said in my original Answer, the NATO allies met in Brussels on 28th and 29th May. The noble Lord asked whether the United Kingdom contributes to GPALS. My noble friend Lord Arran has already replied to the noble Lord, Lord Kennet, in a Written Answer; the answer is, no, in financial terms, though we participate in SDI research.
Lord Kennet: My Lords, the noble Earl referred just now to six points. If I remember correctly, there were at the time only four points. Can he check that two more have not been added?
The Earl of Strathmore and Kinghorne: My Lords, there are indeed six points.

Commercial and Private Bank Bill [H.L.]
3.27 p.m.
Read a third time, and passed, and sent to the Commons.

Statute Law Revision (Isle of Man) Bill
The Lord Chancellor (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 recommitment be discharged.
Moved, That the order of recommitment be discharged.—(The Lord Chancellor.)
On Question, Motion agreed to.

Local Government Finance and Valuation Bill
3.28 p.m.
The Minister of State, Department of the Environment (Baroness Blatch): My Lords, I beg to move that the Bill be now read a second time.
This Bill prepares the way for the introduction of the council tax in 1993. It has two purposes. First, it strengthens our capping powers in the run-up to the introduction of the new tax. This will ensure that local authorities will not be able to indulge in the overspending which was such a marked feature of the transition to the community charge. Secondly, it will allow us to make a start on the banding of all domestic properties in Great Britain in preparation for the council tax. So, as noble Lords will appreciate, this is a significant measure.
I shall deal first with the extension of our capping powers. But, before doing so, I wish to address, head on, the arguments about the principle of capping. The experience of the previous two years is one which we are determined should not be repeated: local authority spending rose by a quarter as councils used the changeover to the new system to camouflage vastly increased spending. It is faced with these facts that we have now reluctantly concluded, as my right honourable friend said in another place, that strong capping powers are an essential element of any system of local government finance.
In introducing the community charge we had high hopes that the increased transparency of local authority spending decisions to chargepayers would allow local people to hold their authorities to account. Unfettered local accountability is the ideal. But we have learnt the bitter lessons of recent experience. The facts show clearly that the ideal is unachievable. Accountability in itself has not proved sufficient to restrain excessive spending by local authorities.
The contrast between our experience this year—when the Government announced their intentions for capping in advance —and the previous year is marked. In 1990–91 local authority expenditure rose by 13.5 per cent. and was nearly £3 billion above the amount

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we considered appropriate. In 1991–92 local authority budgeted expenditure is only ½ per cent. above the amount provided for in the settlement. The results speak for themselves. We have learnt the lessons of experience.
In such circumstances the Government cannot stand idly by. Not only would this be at odds with our responsibility for the overall management of the economy and the control of inflation, but it would also allow authorities to impose unnecessary burdens on their chargepayers. We are prepared to accept our duty, to manage the national economy and to protect chargepayers from the consequences of excessive spending. I am afraid that the same cannot be said for the apposition, who have made clear that they will have nothing to do with capping.
Notwithstanding the success of our capping strategy this year, there is a strong case for strengthening our capping powers. In England and Wales we have previously been able to take action only against those authorities setting budgets above £15 million. That exemption mirrored the similar provision under the rate capping regime. When rate capping was introduced we made clear that this exemption reflected the relatively low level of expenditure incurred by such authorities and hence their small effect on the total of local government spending. We also thought, perhaps naively, that the effect on the local tax of spending decisions by such districts would be small. I have to say that, yet again, time has moved on.
While a large number of districts setting budgets below £15 million have done so prudently and sensibly, there are others which have greatly burdened their charge payers. This year over 100 authorities set budgets above their SSA and in about 40 cases did so by £26 or more per head; that is, they added £26 or more to the charge. In some cases the overspending is very considerable indeed. But, under the existing powers, we were unable to take action to protect the charge payers of Derwentside, who were asked to pay an extra £95 to meet the costs of overspending by their authority, or Harlow—an extra £83—or Elmbridge —an extra £73. I could continue.
Moreover, the cynical way certain authorities sought to manipulate their budgets cannot be shown more graphically than in Thurrock or Maidstone. Both these councils contrived to set budgets of £14.99 million: or perhaps it was just a coincidence—a coincidence which put £50 on the bills of the people of Thurrock and £32 on the bills of local people of Maidstone.
The need for us to be able to act to protect such charge payers is clear. There is, likewise, compelling evidence for the need for stronger capping powers in Scotland. Under the present Scottish legislation my right honourable friend has taken action against only one authority—Lothian Region. That is notwithstanding the fact that Scottish authorities chose to increase their charges this year by an average of 30 per cent. That outrageous increase was despite a very fair grant settlement of 10.4 per cent. which should have enabled local authorities to keep charges at reasonable
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levels. There are also two new and connecting arguments which give strong support to the steps which we are now taking.
First, it is imperative that we are able to take action to prevent, on the introduction of the council tax, the kind of spending-up which accompanied the introduction of the community charge.
Secondly, as noble Lords will be aware, the Government have announced and implemented a permanent and fundamental shift in the burden of paying for local services from local to national taxation. As a consequence, we are providing very substantial additional resources to local authorities. We are determined that this additional money should be used to keep charges down and not to fuel higher spending.
I turn now to the provisions of the Bill. Clause 1 will remove the £15 million statutory exemption from capping for authorities in England and Wales. Clause 2 deals with Scotland and will bring the Scottish capping powers into line with those in England and Wales. The clause will amend the Scottish capping powers to enable my right honourable friend to take capping action where he is satisfied that an authority's planned expenditure is excessive or there is an excessive increase in planned expenditure over the previous year. For the first time my right honourable friend will be able to take action against excessive increases in budgets. He will also, for the first time, be able to set out the principles by reference to which he will take his capping decisions. The success of this strategy in England this year amply demonstrates the benefits of such a change.
My right honourable friend the Secretary of State has made clear that it is our intention to announce our provisional criteria for capping in advance of budget setting by authorities. That is why we are seeking rapid enactment of this measure. We hope that all authorities will follow the example of the vast majority of authorities in England this year and set sensible budgets. It is our aim, as this year, to achieve as much as possible by deterrence and as little as possible by actual capping. If an authority, whatever its size, budgets excessively, the Bill will allow the Government to take action to protect all charge payers from the consequences.
I turn now to valuation. Clauses 3 to 6 of the Bill deal with the task of allocating all properties in England, Wales and Scotland to bands. They are the first step towards our firm objective to introduce the council tax in April 1993. These clauses are paving clauses, enabling progress to be made on the banding task. We will bring a Bill before the House later in the year when we have fully considered all the responses that we have received to the consultation paper which we issued on 23rd April. That Bill will cover the details of the council tax. Today we are dealing with a paving measure to enable work to begin on the exercise of banding.
My right honourable friend has made clear in another place that there will be no need for precise valuations of every dwelling for the council tax. That is a significant difference from, and a great

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improvement on, a rating system. Instead, we intend to allocate each property to one of seven broad bands. The Bill provides the necessary powers.
Our proposals also mean that those living in a property in the lowest band will pay two-thirds of the amount paid by those living in a property in the middle band in an area. People living in a property in the highest band will pay two-thirds more than those in the middle band. That means that a couple in a highest band property will pay two-and-a-half times as much as a couple in a lowest band property. In this way we will avoid the disproportionate bills for high price areas that were such an undesirable feature of the rates. Our proposals will also mean low bills for those living in low priced properties throughout the country.
With this basic fabric our council tax will be a sound and practical tax for local government. Woven into that fabric we also propose that there will be a personal discount of 25 per cent. for those living alone.
Moreover, where the first or second adult in a property is a student, or a student nurse, apprentice or youth training trainee, each will receive a full personal discount. If there were no other adults in a household of students, the household would receive two discounts amounting to 50 per cent. of the bill.
We also plan a rebate system. Those with incomes above the income support level will contribute on a sliding scale towards the council tax. Those on income support, or with incomes at equivalent levels, will pay nothing. Our proposals for rebates will meet up to 100 per cent. of liability to the council tax.
This package has already been widely welcomed. The provisions in the Bill that we are considering today will enable progress to be made when we have considered the comments and suggestions which we have received during the consultation period.
Clauses 3 to 6 of the Bill cover two vital aspects of the preparation that is necessary to introduce a sound and practical council tax in April 1993. First, they provide the power for the allocation of domestic properties to bands to be carried out. Secondly, they ensure that the right information is available to those engaged on the task for them to do a proper job.
I should like to concentrate my remarks this afternoon on two specific points which I know are of interest to the House: the number of bands to be used and the way in which the exercise of banding is to be carried out.
We have made clear that it is our intention to have seven bands. We shall, of course, listen carefully to all suggestions that are put to us. However, I have to say to the House now that we considered many possibilities before coming to that view. We believe that the problems of detailed valuation which plagued the rates can be overcome by adopting a banding system. But for banding to work there can only be a small number of bands. The more bands there are, the greater the administrative task involved and the greater the likelihood of disputes and appeals. We also believe that the difference of two-and-a-half times between the bill of a lowest band property and a highest band property is the right difference.
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Seven bands give the right balance between those considerations. It gives broad bands of values and a reasonable ratio between the bills of properties in each band.
Our proposals do not imply that an individual valuation will need to be made of each property. That is why we provisionally estimate that the banding task can be carried out for a sum of £250 million—£11 for each property. Even so, £250 million is a large sum of money. The exercise needs to be carried out cost effectively to keep within our budget. It also needs to be carried out to time, to deliver a council tax in April 1993. We can achieve that. We can do so by using the private sector where there is great expertise, which it must be right for us to use.
We intend that the allocation exercise should be carried out soundly and consistently across the country. The Bill provides for the Commissioners of Inland Revenue to mastermind the exercise. For Scotland, the Bill also provides that the valuation shall be carried out by the local assessors, in recognition of their experience and skills in these matters.
The allocation of 23 million properties to bands is not an exercise to be taken lightly and we are committed to undertaking the task in a sound and practical manner in order to deliver a sound and practical council tax in April 1993.
We have set out our firm intention of introducing a council tax in April 1993. We have been advised that to do so requires urgent action if the preparations are to be properly made. We have listened to that advice and have brought this Bill before your Lordships today. It paves the way for the introduction of the council tax in April 1993. By strengthening our capping powers we can be confident that expenditure will be restrained and that charges will be at acceptable levels.
By making an early start on the banding exercise we can be confident of an orderly introduction of our new tax. The Bill is a key measure to ensure we secure our firm objective of introducing a fair and practical council tax in April 1993. I beg to move.
Moved, That the Bill be now read a second time. —(Baroness Blatch.)
3.42 p.m.
Lord McIntosh of Haringey: My Lords, the House is grateful to the Minister for her exposition of the Bill's provisions although she went wider than the present Bill in an attempt to defend what is in it. It is a great pleasure to be able to welcome the noble Baroness, Lady Hamwee, to the House. I have had the honour of working with her on an inquiry into the need for affordable housing in central London. I am well aware of her distinguished work in London planning. I know that she will be a distinguished addition to the House. I am only sorry that she is in the wrong party. We very much look forward to hearing her maiden speech later this afternoon.
When the Bill came before another place, a Conservative Back-Bencher—I believe that it was Mr. Robert Adley—said that his heart sank when he saw another Bill with "Local Government" being the first two words in the title. I must confess that my heart

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sinks as well. I do not know which number Bill this is since 1979—I think we are up to 53 or 54—but it has reached the stage where I do not remember what the subsequent words are. The honest thing would be to call it the Local Government (No. 54) Bill, rather like a shelf company, instead of trying to ring the changes with different additions to the words "local government". This is a bad local government Bill. It is another example of hand-to-mouth legislation on local government and another example of a forlorn attempt by the Government to undo the damage they have done in their own recent legislation.
We have yet to come to the big climb down—the Local Government (No. 55) Bill—for which the Minister has given us a trailer and which will no doubt be before the House in the autumn. That is the Bill in which all the fine words about the poll tax, accountability, the wickedness of local government and the admirable restraint of central Government will come home to roost, because that is the Bill in which everything that has taken up many hours of your Lordships' time over the past few years will be undone. This Bill is a preparation for that.
The only thing for which one can be grateful in relation to this Bill, in contrast to the previous one, is that the Government, in this House at any rate, have stopped the Bill being treated with the contempt with which it was treated in the other place. I am grateful to the Lord Privy Seal, the Minister and all others involved in the decision that the Bill should have a proper consideration in the House, with proper intervals between stages, rather than being rushed through in one day like the previous Bill.
Above all, the Bill is a self-evident retreat from the principle of accountability which was claimed to be the benefit of the poll tax. It is a preparation for the acceptance of something we all said at the time the poll tax was introduced: that the only sensible way to finance local government, at least in part, is on the basis of property taxation. The sad thing is that having led the troops to the top of the hill and down again, we find that the bottom of the hill is not what it was; in other words, a rating system which, with all its defects, to some extent represented ability to pay is now to be replaced by a debased version of the rating system in which there will be, as we heard from the Minister, only seven bands and in which the difference between the lowest and the highest will be a factor of only 1:2.5. That is a blatant attempt to protect the rich and to ensure that those who, under any other system of taxation, will be paying for the services which they use to a substantially greater extent than the poor, will not be paying the proper amount. When that Bill comes before the House we shall oppose that part of the provision.
The history of local government finance in recent years has not been happy or consistent. If we go back only as far as 1989–90 we find that locally based funding of local government was at a level of 57 per cent. of the total, having been increased from about 45 per cent. when the Government came into office in 1979. By 1991–92 (the current year) the gross figure is not 57 per cent. but 22 per cent., and the figure after rebates is 14 per cent. That means that local resources
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under the control of local authorities are responsible for only one-seventh of local government finance. I shall deal with the SSAs in a moment, but that means that for every pound local authorities want or need to raise above that which is authorised by Marsham Street, £7 has to be raised from local poll tax payers. That is in direct conflict not just with what local politicians think but with everything that anyone who has paid any attention to local government over the years—I include the Minister, though not the Secretary of State, in that number—has said time after time.
I hesitate to go back as far as Layfield, but page 240 of the Layfield Report of 1976 states:
"If local authorities are to be accountable, they should be responsible to their electorates for both the expenditure they incur and the revenue they raise to finance it, particularly for increases in both".
In what they have been doing over the past few months—let alone over the past few years—the Government have, in effect, been attempting to reduce accountability and to go against all the principles they proclaimed to be their attitude towards local government finance.
In turning from the general issue of accountability to the particular case of capping, I can do no better than quote what the Secretary of State wrote in a famous article in The Times on 10th May 1990. It is especially relevant to consideration of the Bill. He wrote:
"One solution advocated is the introduction of a general 'cap'; no council allowed to increase its charge bill or its expenditure by more than a stated percentage. But does anyone think that so obvious an idea never occurred to any of us before? In the early 1980s we crawled over the capping option but finally rejected it.
"To cap or control, central government has to choose figures so far above the average that only a limited number of extreme cases are caught. And those below the cap have an implied licence to spend up to it. To extend the cap by lowering its incidence increases the risk of legal challenge. Furthermore, to design such a system effectively would negate accountability and be an act of centralized political power outside our experience. On these grounds alone it should be resisted".
Those are wise words, to which the House would do well to pay attention. If it does so, the House will treat the Bill with much less respect than it is receiving from the Government Front Bench and than it received on the votes in the House of Commons.
The change that has taken place in the Government's attitude is not just between a Secretary of State out of office and a Secretary of State in office. It is a change that has taken place in official statements from the Government's Front Benches here and in the Commons over a short period of time. At the end of 1987, Mr. Michael Howard said about capping:
"We are only taking such powers because of the appalling record of a dozen or so authorities".
The noble Earl, Lord Caithness, said much the same thing in this House on 14th June 1988. Now, the Secretary of State says and the Minister has today repeated it:
"strong capping powers are an essential aspect of any local government finance system". [—Official Report, Commons, 3/6/91; col. 55.]
Only one of those statements can be true they cannot both be true. The statement that,

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"strong capping powers are an essential aspect of any local government finance system",
negates every argument on which the poll tax was introduced only three years ago. It certainly negates any argument about accountability. It is a confession of failure by this Government.
The crux of capping is that it has to be based on some kind of concept of what the right level of local government finance expenditure will be. For the Government, there is only one right concept of what financial expenditure should be. It is the view taken by government, the view taken by the Department of the Environment in Marsham Street. That is what the standard spending assessment is and it is why the extension of capping is an extension to all local authorities of budgeting from Marsham Street rather than budgeting in local authority areas by those who best know their community and its needs.
It is no good saying that some local authorities go in for excessive spending. Excessive spending in this Government's definition is simply spending over their assessment. Of course there will be differences. It is, as Lord Leverhulme said about advertising: half his advertising expenditure was wasted, but he did not know which half. The conclusion to be drawn from this brings us back to the wise words of Denis Healey: "You don't get a chicken farm out of the red by starving all the chickens". That is exactly what the Government seek to do with local authority expenditure.
It is noticeable that, in a recent report, the Audit Commission confirmed that there is a lack of confidence in the standard spending assessment among local government politicians and professionals. That issue is firmly brought before your Lordships' House because of the extension of capping which the Bill proposes.
In Clause 2 there is additional provision for Scotland. I am not an expert on the subject, although I intend to be one, if I can, before the Bill reaches Committee stage. As I understand it, the 1966 Act for Scotland said that capping should apply if local authority expenditure was unreasonable and excessive. Again, as I understand it, "unreasonable" is a word which has a legal sense. The Bill now proposes to remove the word "unreasonable" and replace it by the word "excessive". That means that "excessive" is defined as being something the Government do not like, something above the standard spending assessment. Therefore, at Committee stage there will be opposition to some of the provisions in Clause 2 for Scotland.
I turn to the final part of the Bill, the issue of valuation; in other words, the preparation for the proposed introduction in 1993–94 of what is politely called the "council tax" since no more accurate name can be thought of by government.
The problem about all these provisions is that they are being made at a time when not only is consultation in process but the Government have not made up their mind about a large number of issues. The Minister has given us a foretaste of what the council tax Bill will say in the autumn, and we must be grateful for having that
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on the record. However, it still does not explain the basis on which these assertions—they are not conclusions, they are assertions—are made. First, in Clause 3(3), why is the decision as to whether the valuation should be on capital value or on some other basis left to regulation? This is a matter on which Ministers appear to be divided.
There is still no clarity as to whether the valuation is to be on the basis of individual properties. Clause 3(1), the money provision, allows it to be a valuation of all domestic properties in Great Britain. Clause 3(3) provides for a list of all domestic properties, but Ministers in another place appear to indicate that something less than that, a more rough and ready valuation, will be acceptable. I warn them that, if that is the case, there will be huge numbers of appeals on grounds of fairness between rough and ready bands which make substantial differences to people's incomes.
No, my Lords, I am sorry but this Bill is not good enough. It is not only a pathetic attempt to deal with damage done to local government by government policies over the years, but it is in effect further evidence of government misunderstanding about the proper relationship between central and local government. I can do no better than quote from The Times, whose first leader on Friday 14th June, stated:
"The bill is an offence against local democracy far more outrageous than anything M. Delors is proposing for monetary and political union. Michael Heseltine is, in effect, telling local councillors that their work is of tin-pot insignificance: they cannot be trusted with access to the public purse and should delegate their discretion upwards to a bountiful and ever-wise Treasury".
It is not as though there were no alternative. We have made it clear, and we have been supported by all the local authority associations, whatever their party, which have responsibility for collecting revenue, that we could now, as from 1st April 1991, go to 100 per cent. rebates instead of the 80 per cent. rebates. We have made it clear that we could go now or certainly from 1st April 1992 back to the rates on 1973 values in preparation for a more considered return to a fair rating system. This Bill is a paving Bill, but it paves the way slowly towards the wrong scheme when the right scheme is available and could be implemented quickly.
3.58 p.m.
Lord Ross of Newport: My Lords, I do not wish in any way to offend the Minister. She is excellent at her job and gave us another first-class exposition of the Bill this afternoon. However, there are many reasons why I wish to see this Government out of office, and soon. The one which I put top of my list is the quite desperate need to restore pride and confidence in local government. Incidentally, if one of the tenets of Majorism is to give more choice to the people, charge capping locally elected authorities is a funny way of going about it.
I had hoped that the Secretary of State, who went out of office and who gave the impression that he was aware of the sad state of the relationship between national and local government, would do something positive about it. But, alas, no, the message is still the

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same. Apparently councils just cannot be trusted to manage even the most minor of budgets. Every authority will now come under the capping regime.
As I listened to the Minister explain the Bill to us, the only point that came into my mind was that local democracy has broken down altogether. We have reached an absolute nadir in the history of central and local government relations. It is a quite appalling state of affairs where only 14 per cent. of local spending will be raised by the so-called council tax and the rest will be provided by the Government to be distributed as they think fit. That is a recipe for disaster. That policy stands on its head the former policy of this Administration, which was, quite rightly, moving in the opposite direction. Indeed councils were having to raise something like 50 per cent. of their own money. I feel that central funding of no more than 30 per cent. should be the target to aim for.
The Bill is of course a panic measure to try to rectify some of the harm brought about by the poll tax, but it most certainly is not in the best interests of the administration of local services in Britain. With the opting out of schools and hospitals, the cessation of council house building and universal budget capping, one might as well run everything from the centre. But the fact is that the man in Whitehall certainly does not know best. He will inevitably not only spend more in the long run but make a complete hash of the whole business. That has already happened in that at least £4 billion has been lost on the poll tax alone.
I have been rereading The Case for Local Government by Jones and Stewart published in 1983. I only wish that Ministers in the Department of the Environment would do the same. I believe that when the noble Lord, Lord Joseph, re-entered office in 1979 he sent lists to his officials of speeches and books that he wanted them to read. Perhaps we should try to do the same. The Case for Local Government states that the great strength of local government is that,
"it can provide democratic public control over bureaucracy in organisation far more effectively than can be achieved in large national bureaucracies headed by Ministers or appointed boards".
Local government operates on a scale that can be seen and comprehended and that makes it vulnerable to challenge. I can only repeat a comment I have made many times in this House. Annual elections and proportional representation would work wonders in our council chambers.
We are only too well aware of the bitterness that now pervades the council chamber in Liverpool, where brave people are trying to rectify a desperate situation. Those people surely deserve our moral support, whatever our party affiliations. I have much sympathy for Councillor Rimmer at this time and wish him well. Every morning I listen to Government Ministers on Radio 4 harp on at every opportunity about overspending authorities. Due to that constant repetition there is much ill-feeling both within and outside council chambers throughout the country.
When I left another place in 1987 I set up a commercial property division for a well-known firm of estate agents in the Isle of Wight with the prime objective of trying to attract badly needed new investment in both the commercial and industrial
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fields. To achieve that objective I needed the co-operation of local government. I obtained that co-operation from local government officers. However, I then approached the Conservative chairman of housing on the Medina Borough Council—I had previously regarded him as a friend as he and I, with others, had set up the Isle of Wight housing association—to ask for his help and advice. He told me it was more than his life was worth even to be seen publicly in the street with me. He added that I just did not know the feeling against me. I realised I had some enemies but I did not realise that the situation was quite as bad as that. That conversation convinced me that it was time for me to leave.
I have enormous admiration for the courage of city councils such as those of Glasgow, Birmingham and Sheffield that have gone ahead and transformed local facilities. Those councils have given their citizens something to be proud of, but will they be able to meet the payments on the debts they have incurred? The portents are none too good. The Midlands Electricity Board even cut off the electricity supply to a Birmingham school last week because the bill had not been paid. I hope that that was just an oversight.
Another area where some of our cities have done well is in the development of their airports. Manchester and Birmingham come immediately to mind. When I was a Member of the Transport Select Committee we asked operators what they thought of these local airports. They said that they liked using them. The people they were gunning for were those in the British Airports Authority. One has only to ask someone who uses those airports how they feel about them to get an idea of how highly they are rated. My wife flew from Birmingham airport the other day and she said it was a delight to do so. Customers much prefer our municipal airports, but this Government will privatise those airports if they remain in power. That will be yet another nail in the coffin of local government. No doubt privatisation of those airports will result in greater profits for BAA.
I wish to pay tribute to the London Borough of Richmond, which has been particularly successful in the field of waste reclamation. I look forward to hearing the noble Baroness, Lady Hamwee, speaking later in the debate in this connection. When has all this alleged overspending occurred? Perhaps it occurred when the poll tax came in. I do not know where the money has been spent because all I see around me are libraries that are closing, that are threatened with closure or that are open only for part of the week. I see art collections being sold off and swimming pools closing. I see schools where music lessons are being withdrawn. The situation in Warwickshire is desperate and that is a Conservative administration. Theatres are being closed everywhere. Houses are being shuttered up as there is no money to renovate them. The maintenance of school buildings has been further delayed. The current situation must be reversed, and soon. Let us give our democratically elected councillors a chance to cut Whitehall down to size. This Bill will do nothing except make a bad situation a great deal worse.

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I believe that there is much to be said for a property rate as well as a local income tax. We on these Benches have argued the case for a local income tax time and time again. I shall not go over the ground again today. But I wish to put it on record that I believe that a banding system can be made to work. After all, Layfield recommended both systems. I also have much sympathy with the views of the Audit Commission which in its recent response to the Government's discussion paper called for the return of the business rate to local authority control. The noble Lord, Lord McIntosh, referred to that. It is an utter disgrace that the Government have done absolutely nothing to lessen the burden of this ever-increasing charge on commerce and industry. It is increasing over a five-year period.
In the old days when one appealed against the business rate, one paid at the former rate until the assessment was confirmed or an agreement reached with the valuation officer. That is not the case today. I am told that some 60,000 appeals are still outstanding. I have a personal grudge in this connection. I consider that both assessments on commercial properties I own are far too high. One of them is certainly much too high. However, I have not heard a dickeybird from the valuation office since May of last year when my appeal was acknowledged. I am now told that I am not likely to obtain a meeting with the valuation officer before next Autumn. I must pay at the upper rate while all this is going on. I resent having to do so, as I am certain that the assessment is way over the top. Others must be suffering in a similar fashion. Surely some derating to help business and industry is now long overdue. The Chancellor could have made some provision in his budget in this regard.
What is certain is that house valuations will have to be put out to private sector qualified surveyors if targets are to be met. There are plenty of qualified surveyors about as their firms have sold out to companies such as the Prudential and they are hanging around with not much to do. I nearly volunteered to do the job myself.
If house valuations are to be carried out properly, most, if not all, houses will have to be inspected. In another place it has been said that a surveyor can stand at the end of a street and place a value on all the houses in it. I believe that that could be done only in a limited number of cases. I used to live in a terraced house. The house on my left-hand side was worth about half what my house was worth, while the house on the right was worth about double what my house was worth. A surveyor could not have stood at the end of the street and placed a value on every house. That would not have worked. The AMA has asked whether every property is to have an individual assessment. I have heard the secretary general of the RICS say that that would not be the case. I believe people will expect their houses to be properly inspected and assessed. Perhaps the Minister will confirm that that is the case.
If houses are to be individually assessed, the sum of £250 million referred to in the Bill is wildly optimistic. There will have to be a fair and rapid appeal system. Appeals cannot be delayed year after year. There will
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also have to be provision for fairly regular revaluations. They can be carried out quite easily if the property market stays reasonably quiet. However, we know that the property market goes up and down like a yo-yo. It usually goes up rather than down, and on occasions it goes up in leaps.
I have also calculated, on the basis of the Government's examples, in terms of the rates that I should be much better off owning a flat in central Westminster than my place of residence, with my country cottage as my second home. I cannot afford both but from the rating point of view that would be the way to do it. On the basis of Table A, I calculate that I shall face a rate on my house in south Shropshire of £471, whereas in Westminster the rate would be £136. With the 50 per cent. allowance for a second home, I should be £100 per annum better off and still the owner of two homes. As Norman Tebbit's secretary rightly pointed out, that is hardly equitable. It is not on.
The noble Lord, Lord McIntosh, made this point. Just as the old rate support grant formula was grossly flawed, so are today's SSAs. One year the rate support grant was so wrong that it allowed Bath not to set a rate at all and I think that two other towns were in the same position. It was patently obvious that it had been worked out incorrectly. I suggest that SSAs are also wrong in many cases. We need an independent outside body such as the Audit Commission to verify the accuracy of the redistribution of central funding as far as possible, although it can never be an exact science. That is why it is so wrong.
Under the current proposals, banding is likely to prove just as unacceptable as the poll tax. There will have to be changes and the Government should listen to some of the representations that have been made to them. I can only wish this Bill, which will no doubt become an Act shortly, an early demise.
4.12 p.m.
Lord Gisborough: My Lords, the principle of the new council tax is to be welcomed. It can be recognised as fair by the people who will have to pay it. Being broadly based it will be hard to evade and it will be easier to administer because there will be no need for a register.
However, the Government's proposed bands for the council tax are based on national average house prices, which hit residents in London and the South East hardest. If the tax is to be seen as fair by all there is a strong case for regional banding. It is widely recognised that the drawback of a tax system based on capital values is that it disproportionately hits people who live in areas with higher house prices. For example, under the Government's national bands only 1 per cent. of homes in London will fall into the lowest band whereas in the North 47 per cent. of households will be liable for the lowest rate of tax. In Barnet, no fewer than 47 per cent. of houses fall into the top band.
Under national banding 18 of the 33 London boroughs will be worse off under the council tax than under the community charge. A proposal for banding has been prepared by the LBA. It is based on average

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regional house prices so that people living in similar properties will pay the same for a standard level of service wherever they live.
The fact that somebody lives in an area where house prices are high does not necessarily mean that they have a higher disposable income. Indeed, in times of high interest rates those with large mortgages are likely to be worse off. The size and type of house which a person occupies can be seen as related to their income. The capital value cannot because of the wide disparities in house prices between the regions.
The amount of Government grant which local authorities will receive under the new finance system introduced with the council tax will depend on the amount authorities will be able to raise locally. Thus, in areas such as London where house prices are high more money will be raised through the new tax and boroughs will receive less in grant. In effect, therefore, the London taxpayers will be subsidising the services enjoyed by their counterparts further north.
Another problem with the national banding proposals is that frequent revaluations will be required. It was precisely such revaluations which discredited the rating system. The problem is that there are huge regional variations in the rate of increase in house prices. For example, between 1987 and 1991 house prices in London have increased by just 6 per cent. compared with 34 per cent. in the UK as a whole and 84 per cent. in the North West region. Fluctuations on that scale mean that there will have to be revaluations as houses move into higher bands. With regional banding, however, that will not occur because the regional band will be able to shift in line with the market conditions prevailing in a region. If prices increase across a region that region's average house price will increase and the bands will merely shift upwards. Revaluations will need to take place only if the prices of certain houses increase relative to other houses in the region.
Regional banding would retain the fundamental principle of government proposals. That is recognised in Scotland and Wales and it would be only equitable to extend it to England. Failure to do so would result in the same difficulties and opposition which were generated by the community charge.
4.15 p.m.
Baroness Hamwee: My Lords, I thank noble Lords for the welcome I have received from all sides of the House. I thank the noble Lord, Lord McIntosh, for his very kind comments. I wondered whether he would go or: to talk about 57 varieties of local government Bill; perhaps we shall reach that point.
I am aware of the convention that maiden speeches in this House should not be controversial. I shall, of course, endeavour not to be controversial, and I am sure that your Lordships will understand that any strength of feeling which may come through is borne not of a wish to be controversial but of 13 years' experience as a local councillor.
Everyone involved in the saga of local government finance which has unfolded over recent years must feel
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like the man in the joke: where does one start when constructing a system of local government finance? Certainly not from here.
We should all be asking ourselves the three fundamental questions: Will the new tax be fair? Will it be efficient? Will it be accountable? I can spend no time on the questions of fairness and efficiency because in my first speech in this House it would not be right for me to speak for too long, but fairness is fundamental. Every tax must be linked to the ability of taxpayers to pay.
I should like to mention the value of good local government, both for its services and for its accessibility to those whom it serves. I know that that will strike a chord with this House, which has a fine and deserved reputation for its responsiveness to public opinion. If we are to deal with the reform of tax before the structure of local government —and many people, not just politicians, have said to me in the past few weeks that surely structure comes before tax— then we must ensure that the tax does not jeopardise the future of good local government.
The effect, and I believe the underlying objective, of so many local government changes which have taken place over recent years has been the centralisation of powers and services. The extension of capping to all districts proposed by this Bill will mean that there will be almost no room at all for local decisions. The Minister referred to budget levels in a number of authorities over the past couple of years. I would say in response to that point that authorities will find it almost irresistible—and they should not resist—to try to anticipate what government regulations will be and to work within those regulations, but up to the limit in order to do their best for their communities. In the current climate of constraints on government spending local authorities will almost be bound to set the highest budget within those limits.
One of the most recent comments on local decision making has come from the Audit Commission in a report which has already been referred to. The paper deals primarily with the mechanisms for implementing the new tax but the Audit Commission felt it necessary to address the broader implications. It said that it,
"believes that local links between taxing and spending are important, and that local authorities, despite their many imperfections, are better placed to deliver local services sensitive to local needs than are central government agencies or non-elected local bodies".
That is a sentiment with which I entirely concur.
The Audit Commission's recommendations included scope for additional revenue-raising schemes and some fiscal powers for local authorities and increasing the proportion of expenditure raised from the council tax itself.
I have been speaking about tax but the debate should really be about services. Tax is necessary as a facilitator of services and it is the local authorities which are sensitive to the needs and aspirations of their own communities. I have never understood the accusation, which is made rather more by members of political parties than it ever is by the public, that expenditure on any particular item is somehow for the benefit of councillors. I appreciate that power has its dangers, but I believe that most councillors of all

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political complexions take the decisions that they do in order to do the best by their own communities, not for their own self-aggrandisement. Many of us have spent a great deal of effort in ensuring value for money for our own communities in order to spend what we have in the best way.
Reference has been made to the small proportion of local government funding that is now raised and will be raised at a local level. Not only that, but high gearing figures of one to six, seven and even eight have been talked of; in other words, that 1 per cent. on or off spending means, say, 8 per cent., on or off the council tax. Those aspects of the proposal must also make the new tax less accountable.
We need accountability of local government and stability. More party political controversy undermines respect for government. One of the unfortunate side-effects of which I have been aware over the past 10 years or so is that good candidates have been deterred from standing for the local authorities. Why should people make the personal and family sacrifices that are undoubtedly required in order to run a system devised by other people with so little flexibility? Local councillors understand that power and responsibility are linked and they would like to exercise responsibility, but for that they need scope.
What is not a party political point is the stablility that proportional representation would give by ensuring representative government. I say that even coming from the London Borough of Richmond-upon-Thames where, in 1986, 52 per cent. of the votes gave my party 94 per cent. of the seats and, last year, 48 per cent. of the votes gave us 92 per cent. of the seats. That is in some ways comfortable, but frankly it is unfair both to Conservative and Labour voters.
I say that this is not a party political point. The MORI state of the nation survey for Rowntree which was published recently showed more than twice as many people in favour of proportional representation as against it. There were more in favour across all the political parties and, perhaps what is most significant, among those who professed to have no interest in politics at all.
Finally, perhaps I may return to my concern for the scope of local decision-making. My concern is not for the politicians. Like mine, every good authority consults both on its services and on the consequent level of tax. There is a danger that nothing will be left on which to consult and the voice not just of our local councillors but of our communities will be stifled.
4.24 p.m.
Baroness Flather: My Lords, it is my great privilege to congratulate the noble Baroness, Lady Hamwee, on her maiden speech. It was thoughtful and I was impressed by the picture that she drew of what councils and councillors should aspire to do. She struck a chord with me across the political divide because my background, like hers, is in local government. I offer her many congratulations. I am glad that we have yet another voice to speak in your Lordships' House on local government.
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I have strong feelings about the Bill; I make no apology for that. I was a member of the Royal Borough of Windsor and Maidenhead Council until last month when I did not seek re-election. That was just as well because I probably would not have been re-elected anyway. Windsor and Maidenhead was a Tory council for two decades. It is now a hung council, not because there are tons of rubbish on the streets, or because it does not believe in value for money, or because it has any union trouble. It is hung because the voters have given their verdict on the community charge.
The council has always accepted the rules made by central government and, I can assure my noble friend the Minister, will continue to do so. In 1978, when the Labour Government asked local government to cut expenditure, we complied. Some neighbouring authorities did not. What a heavy price we paid! That year, 1978, became the year on which GREA—grant related expenditure assessment—was based until phased out by the community charge. As we had been as economical as possible, our needs were considered to be less than the needs of those who continued on their merry way. In spite of that, during the 16 years that the rating system operated, the royal borough rate started at 13 pence in 1974 and ended at 14 pence in 1989–90, with very small fluctuations in between. Not only did domestic ratepayers benefit; so did business ratepayers.
That position was not achieved by imprudent mortgaging of the future. It was the result of sound, long-term financial management policies which not only provided stability for local ratepayers but enabled the council to improve facilities and services for the people of the borough. It probably needs to be said that the people of the royal borough expect, and I believe are entitled to expect, good and improving services. They are not satisfied with anything less.
Against that background, once again we faithfully and conscientiously implemented the community charge legislation in 1990. The difficulties implicit in that task are now well known and widely accepted. They were multiplied for us by the totally inadequate method of distributing central government grant. That is based on the formula that the Government use to assess what each authority needs to spend on the basis of providing average services with average efficiency.
The best demonstration of how arbitrary that formula can be is a comparison between the royal borough of Windsor and Maidenhead and the neighbouring borough of Slough. The formula indicates that Slough needs to spend over twice as much per adult as the royal borough does—£204 as against £101. That is just on district services. It does not include county services. Slough has a few problems that we do not have arising out of the more urban nature of its environment. We have problems that it does not have, such as the cost of coping with 4 million tourists. In practice, the average level of spending per head in the two authorities is quite similar and all the local evidence suggests that their need to spend is also quite similar. But the government formula says otherwise. It means that, other things

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being equal, Slough's poll tax will be £103 less than the royal borough's, just in respect of district services. Let me hasten to add that no criticism of Slough is intended. After all, it has no more control over its far more generous SSA than does Windsor and Maidenhead. The problem is that the SSA says that Slough needs to spend twice as much, not just in relation to Windsor and Maidenhead, but twice as much as it spends itself.
The Government's response so far has been that they have consulted widely and that the matter has been well researched. That is cold comfort to those who have lost control over their finances and who have been punished by the electorate for it.
One may well say that this is all about the bad old days. But, sadly, that is not so. The new grant arrangements under the proposed council tax will be the same as the old SSA. The consultation paper states that,
"the SSA system is based on extensive research and provides about as fair a way of assessing needs as can be devised".
The tables and the consultation paper indicate that under the new system Slough is likely to spend £7.8 million. However, the total grant support to that authority will be in the region of £13 million. It follows that not only will Slough not need to levy any district tax at all but it can spend another £5 million before having to do so. Perhaps it will give a handout to the royal borough. Can that really be the best formula capable of being devised?
The Government's stated aim is to bring all authorities within the capping regime. It will therefore he vitally important that the measures used for setting capping limits are seen to be fair. The main criterion to be used would be the council's proposed expenditure against this very same formula for council spending. If the standard spending assessment formula has little or no credibility with many district councils, capping will be a very bitter pill indeed to swallow.
Along with my noble friend Lord Gisborough, I must express deep concern about the way in which valuations of properties for banding will take place. The property bands will not be based on local valuations but will be placed around a national average value. As my noble friend said—I repeat the point to make sure that it is carefully taken on board— this will mean that a family in Windsor and Maidenhead will pay more council tax than a similar family in a similar house in Manchester because the house is placed in a different area.
It may be argued that disposable incomes in the South East are higher and that therefore it is only right and proper that the council tax should be higher. But all indications are that the differential in property values is much greater than the differential in incomes. Certainly, the most equitable way to overcome the difficulty would be to have regional banding, particularly as the Government have given a clear indication of their intention to stay with the seven bands. Huge numbers of properties in my area will necessarily come within the higher upper limit. There
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is a very good argument for stretching the bands to a higher upper limit, thus achieving greater fairness in the tax burden.
The consultation paper does not rule out the concept of regional banding, and I urge my noble friend to take a careful look at the possibility of introducing it in England. I believe that Scotland and Wales in any case will have their own separate bands, based on average values there. Local government has gone through far too many changes. This time we must come up with a solution which will endure and which, most importantly, will be demonstrably fair to all.
4.32 p.m.
Lord Cockfield: My Lords, with your Lordships' indulgence, I occupy the blank space which appears on the list of speakers for the benefit of those of your Lordships who feel that attendance at this debate is more important than attendance at the Gold Cup at Ascot. First, I join my noble friend Lady Flather in congratulating the noble Baroness, Lady Hamwee, on a most interesting maiden speech. It was also a very impartial speech and lived up to the best traditions of this House in that respect. I am quite sure that that impartiality will not survive as far as the Committee stage of the Bill, nor do I believe that any of us would wish it to.
I have no quarrel with either the principles or the policy underlying the Bill. Indeed, in many respects, it represents an ingenious solution to an intractable problem. I doubt, however, whether it will prove a permanent solution—any more than the alternative policies promoted by the parties opposite will provide a permanent solution. The tragedy is that a small number—possibly a very small number—of irresponsible local authorities have created a problem which in the end has had to be dealt with by quite disproportionate measures. Over the years we have seen the use of an increasingly large sledgehammer to crack an increasingly obdurate nut.
I believe that we shall find a solution not by restricting the powers of local authorities but by increasing the sense of responsibility of the people who vote in local authority elections. That may well require—I wish to go no further—a measure of proportional representation. One may indeed need to go further than that and have a system of compulsory voting, so that every single resident knows that he or she bears personal responsibility for the policies and expenditure of the authority in whose area he or she lives.
Having made those general remarks, there are two specific points that I should like to make. First, I should like to draw attention once again, as my noble friend Lord Boyd-Carpenter has done on more than one occasion, to the problems created by the system of precepting, which means that a profligate local authority—I do not say that they are all profligate—can compel another local authority to collect its revenue for it. I do not say it in a partisan spirit but that is one of the factors that led to the downfall of

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ILEA and the old GLC. In so far as one can have them, single tier authorities get over that problem; elsewhere, the problem remains.
The other point that I wish to raise is one touched upon by the noble Lord, Lord Ross of Newport. It is widely believed, and there is evidence to support the view, that the Inland Revenue is unable to cope with the work arising from the unified business rate. Admittedly, bringing in the private sector will be of considerable help and support. But I cannot believe that it will entirely take the burden off the shoulders of the Inland Revenue. We must ask how the Government propose to address the problem.
There is another difficulty; namely, the risk of conflict of interest. Those of us who, in the past, and indeed today, have unfortunately been involved in conflict with the authorities over matters of this kind inevitably have turned to professional advisers, either surveyors or estate agents, to act on our behalf. What will happen if our advisers are now found on the other, and possibly the wrong, side of the fence? It would be a serious error to believe that there will not be a great deal of quite contentious work arising from this exercise.
Perhaps I may also say that the problem of valuation of apartments is very much greater than the problem to which the noble Lord, Lord Ross of Newport, referred. The value of an apartment will depend not only on its size and facilities, which will differ from one apartment to another in the same block, but also on the floor on which it is found, its aspect (whether it is looking north or south) and many other factors. Indeed, where I live, but for banding, which I do not want to pursue at this stage, it would be impossible to value any of the apartments without looking at every one of them individually.
I do not say that these are not problems that can be overcome but they are difficult problems. It is important that the Government should address their mind well in advance to these practical issues. It is not good enough just to get the policy right—as I said, I have no quarrel at all with the policy—but one also has to ensure that the implementation of that policy is efficient and effective.
4.40 p.m.
Baroness Blatch: My Lords, I join all other noble Lords who have given a generous welcome to the noble Baroness, Lady Hamwee. She made an interesting and most thoughtful speech. Her enormous experience of local government is already being brought to bear. The noble Baroness comes here with a good reputation not only for being competent in local government but for a wide range of other interests. We look forward to hearing more from her, even though I suspect that I shall be the butt of much of her criticism as we progress with this Bill. However, I look forward very much to her contributions in the House.
A number of points were raised during the debate. I must come back to a point with which the noble Lord, Lord McIntosh, opened. He was lamenting the number of local government Bills that have passed
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through this House. I believe that he is on record as saying that almost the first Bill that will pass through this House if, heaven forbid, the Labour Party ever came to power will be a local government Bill to take us back to what I believe to be the bad old days of the rates. It would be accompanied by a measure to abolish any limit on local government spending. That would be followed by another local government measure which would introduce something similar to this Bill; that is, a valuation Bill for laying the groundwork for a complicated range of measures to be brought in to replace the council tax. I therefore make no apologies for this Bill. It is the way forward for local government.
Criticism was also made of the smaller proportion of local government revenue raised at local government level. We are on record as saying that the level is about right. I noted with interest that the Liberal Democrats do not agree; they would increase the proportion. That needs to be noted by the great British public, who have told us with a loud and consistent voice that one of the problems is the volume of money raised locally. That needs to be considered.
Regarding unlimited local spending, one needs to look back only a year to see just what the level would be now and how much greater it would be this year had unlimited and unfettered spending been permitted at local level. One needs to look only at Liverpool at this moment to see enormous agonising over balancing the books. Had it not been for the measures in place there would have been no agonising; spending would have been let rip and be out of control in that city.
On the point raised by the noble Lord, Lord McIntosh, and the noble Baroness, Lady Hamwee, about gearing, spending above SSA and raising £7 from the charge payers, that is not the case. Nationally for spending at SSA central government broadly provide £7 for each £1 raised from the charge payers. For each £1 above SSA, the same amount must be raised from the charge payers—not £7 for each £1. In short, it is pound for pound on accountability—each extra £1 spent will mean £1 extra local taxation.
The noble Lords, Lord McIntosh and Lord Ross, suggested that we had not made clear the basis on which a valuation would take place or whether there would be a valuation for each individual property. A value will be attached to each individual property, but my right honourable friend made it clear that banding will be on the basis of capital values. There is no question about that. It is also clear that properties will be banded individually. They will not need to be given a precise value to the nearest pound. Putting properties into broad bands will be much easier than detailed valuation.
In response to the interesting criticism from my noble friend Lord Cockfield—perhaps not criticism but ensuring that the Government realise that there is a challenge in the practical application of the banding system—I point out that the fact that the banding is broad will reduce the number of problems. There is no difference between my right honourable friend in another place and his colleagues. The main basis will be capital values. However, we have proposed that

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factors such as adaptation for the disabled should be taken into account and disregarded where that would lead to a lower charge. I believe that that would be welcomed in this House.
The noble Lord, Lord McIntosh, referred to the rich receiving more from local authorities and said that therefore they should pay more. It is wrong to believe that people with high incomes do not pay their fair share. They pay their fair share in income tax, much of which is used to pay grants to local authorities. The top 10 per cent. of households by income pay 15 times more towards local government than the bottom 10 per cent. In any event, one of the features which discredited the rates was the myth that all those living in expensive properties could afford to make a limitless extra contribution to local government. For people without large incomes that means hardship, and often that hardship is experienced by the elderly.
My noble friends Lord Gisborough and Lady Flather were concerned about regional banding. If the council tax is to be a readily understood tax, and if it is to be a tax which varies according to property values, a system of national bands is the right approach. All other methods have been properly considered in the course of arriving at this decision. This way a house worth £80,000 faces the same bill everywhere. Of course those living in properties with higher values pay more. Under the old rates a property with a value twice as high as another faced a rates bill twice as high. In Barnet, where the average value is four times as high as that in, for example, Middlesbrough, rates bills would be four times higher. We have specifically designed our proposals to avoid disproportionate contributions from higher priced areas. Our approach to banding means that the largest bill is only two-and-a-half times the lowest for spending at the standard level. Regional banding would distort the careful balance that we have struck to gibe a fair, simple and readily understood basis for local taxation.
A number of other points were raised, but during the detailed discussion at Committee and Report stage of the Bill we shall have ample opportunity to examine them. It remains for me to say that we are determined to protect all charge payers from high bills in the run-up to the introduction of the council tax. We are not prepared to see the very substantial extra money we are providing to local authorities being used to support higher spending rather than to keep charges at reasonable levels. These new powers we are seeking do not represent, as noble Lords opposite have claimed, an attack on local democracy.
I do not recognise the local government described by some this afternoon. Authorities which budget wisely have nothing to fear. But experience has shown that sharpened accountability is not itself sufficient to ensure expenditure restraint. These are the facts. The stronger capping powers we are seeking are, I believe, the right response to those facts, and one from which I fear those opposite would shrink.
The powers we are seeking on the allocation of properties to bands will mean that essential preparatory work can begin as soon as possible. Our
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aim is simple. It is the orderly introduction of the council tax in April 1993. This Bill is the first legislative step towards that goal and I commend it to the House.
On Question, Bill read a second time, and committed to a Committee of the Whole House.

Welfare of Pigs Regulations 1991
4.48 p.m.
The Minister of State, Ministry of Agriculture, Fisheries and Food (Baroness Trumpington)The Minister of State, Ministry of Agriculture, Fisheries and Food (Baroness Trumpington) rose to move that the draft regulations laid before the House on 21st May be approved [22nd Report—from the Joint Committee].
The noble Baroness said: My Lords, the subject of pig husbandry has been much debated since Sir Richard Body decided to use his Private Members' Bill to phase out the use of stall and tether systems in pig keeping. That Bill did not reach your Lordships' House for consideration and we have not yet had an opportunity to express our views on the subject.
Before speaking about the welfare needs of the pig, I should briefly explain why we now have before us proposed regulations and not the Pig Husbandry Bill. Sir Richard Body successfully steered his Bill through its First and Second Readings in the other place, and in Committee on 6th March the Government tabled amendments to the Bill, all of which were accepted. However, at Report and Third Reading, Sir Richard moved that his Bill should be withdrawn. During the debate that followed, my honourable friend the Member for Penrith and the Border, gave the commitment that he would introduce regulations under the Agriculture (Miscellaneous Provisions) Act 1968 as soon as possible which would mirror the Bill. He has honoured that commitment, and the regulations before us have exactly the same effect as the amended Bill.
Perhaps I may now turn to the matter in hand; that is, whether pigs should be kept in close confinement systems. Continuous confinement was rejected by the Brambell Committee in its report to the Minister of Agriculture, Fisheries and Food and the Secretary of State for Scotland in 1965. During the 1980–81 Session of Parliament the Select Committee on Agriculture reported on Animal Welfare in Poultry, Pig and Veal Calf Production and called for alternatives to be developed and, when this was done, for the close confinement systems to be phased out over a reasonable period.
The Government's Welfare Code for Pigs strongly advises against their use and, in 1988, the Farm Animal Welfare Council called for their phasing out. The Government accepted that advice but sought to achieve the phase out on a Community basis. Of course there are Community proposals on pig welfare, but because they have been delayed for so long the Government consider that we can wait no longer before taking action in this country.
I should add at this point that the regulations do not extend to Northern Ireland. However, I can assure your Lordships that separate legislation under the

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Welfare of Animals (Northern Ireland) Act 1972 will be introduced to have the same effect as these regulations.
The reason why we have not been able to act long before now to eliminate these systems is simply because the alternatives have not been sufficiently advanced to enable the industry to adopt them on a large scale. Not only have there been doubts about their economic viability, and this was recognised by the Farm Animal Welfare Council, but there has also been concern that they imposed equally serious, if different, welfare problems for the pigs.
It is the view of the Government and many people that the alternatives can now be economically viable and can provide better welfare conditions. Indeed, something in the order of 45 per cent. of the 800,000 sows in the UK are now kept in stall free systems. I must, however, sound a word of warning here. The alternatives will work provided that the management practices and level of stockmanship are of a high enough order. We must not underestimate the task that falls to the industry to achieve this nor can we expect it to be achieved quickly. I see scope here for the agricultural colleges and the Agricultural Training Board to help with the training for stockmen. They can do a great job in assisting the industry to achieve its goal.
It would also be quite wrong for the Government to assume that the alternative systems as they currently exist are developed as far as possible. They can be refined further. The Government have a long-standing commitment to research into alternative systems and that research will not end with the current moves to phase out stalls and tethers.
There are two further points that I wish to make at this stage. First, the Government amended the original Bill in the other place so that the phase-out period was extended from five years to eight. These regulations also require all close confinement systems to be phased out by the end of 1998. There are two reasons why the Government consider this period to be necessary. First, the costs to the industry with a five-year phase out would have been such that some producers would have gone out of business and there would have been a knock-on effect for the ancillary trades. Consumers would of course still want pigmeat and the shortfall would have come from abroad—from the very systems that we would have banned here. Even with the eight-year period there will be costs to bear but they will be reduced to a level with which the Government consider the industry is able to cope.
Secondly, as I have already mentioned, the industry needs time to prepare itself for the full move away from stall and tether systems. There is no point in moving pigs from one system to another if the level of stockmanship is not up to operating the alternative systems without one set of welfare problems being replaced by another.
Finally, your Lordships will note that the regulations allow for certain exemptions from the ban on close confinement. We believe that they are all for acceptable reasons and they have not been challenged.
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However, the pig industry has made strong representation for the exemptions to be extended to allow close confinement of sows during the period after weaning. This time would include the oestrus period when the sow is coming into heat and also a period for about 35 days after service.
After consideration of the request and examination of the evidence the Government have decided that close confinement in a two foot wide stall after weaning is neither necessary nor acceptable and the regulations do not allow for it.
I believe that many pig producers will be pleased to have removed the uncertainty over the future of production systems which has existed of late. In due course the regulations will give the industry the opportunity to say that UK-produced pigmeat comes from animals which are not kept continuously close confined in stalls or tethers. Compared with our competitors in Europe we have the great marketing advantage of welfare. The farming and retail industries have long enough to ensure that all the pigmeat that reaches the shelves in our shops comes from farms operating the best welfare orientated systems available. I am sure that these regulations provide the right way forward for pig welfare and for the industry and I commend them to your Lordships' House.
Moved, That the draft regulations laid before the House on 21st May be approved [22nd Report from the Joint Committee].—(Baroness Trumpington.)
Lord Gallacher: My Lords, I thank the noble Baroness for her clear and precise explanation of the regulations and the history of the decision leading to them. We on this side of the House support the prohibitions on tethering and the keeping of any pig in a stall or pen unless they meet specified requirements. We also support the concessions.
The regulations are made under powers conferred by Section 2 of the Agriculture (Miscellaneous Provisions) Act 1968. The noble Baroness confirmed that the provisions mirror the proposals originally contained in a Private Member's Bill introduced in another place where it was successfully carried forward to Report stage. Blocking tactics were then alleged on the Government's side: I make no further comment. The Bill was withdrawn at Third Reading when the Minister promised the regulations now before us.
We are pleased that the purpose of the Bill is now enshrined in the regulations. However, we are sad that an opportunity to use a Private Member's Bill for other good agricultural purposes was apparently lost. I have noted the comments made in the 22nd Report of the Joint Standing Committee on Statutory Instruments as well as the replies to those comments made by the Ministry of Agriculture, Fisheries and Food on 17th June. I have no wish to pursue the difference of opinion, if it can be so described, between the comments of the committee and the reply by the Ministry.
Many people may consider that the lead times contained in the regulations are long. However, we accept that they are necessary. They allow the capital costs of disqualified stalls to be written out over a

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reasonable period of time without prejudice to existing producers. The effect of the changes contained in the regulations and the economics of pig production are difficult to estimate, given the information available to us. However, I know from many years' personal experience that the bacon market in the United Kingdom is extremely competitive. Denmark and the Netherlands in particular have a large share of British trade despite the endeavours made in recent years by the Food from Britain organisation to promote the home product by means of its charter scheme.
That raises an important question of when European Community legislation will be brought into line with that which the regulations now propose for Britain. The noble Baroness said that something is on the stocks but that it is likely to be a long time before it passes into Community law. Can the noble Baroness be more positive and give a possible date when we may expect Europe to follow the lead now being given by Britain?
Letters in support of the regulations have reached me from organisations concerned with animal welfare. I have been glad to respond to their overtures by saying that we fully support the regulations. However, I noticed that certain of those bodies have European Community contacts. I hope that they will use their best endeavours to speed up European Community legislation so that all European Community pigs are reared under similar conditions. That will ensure fairness in the market places of the Community as far as is possible.
Having said that and having thanked the noble Baroness for her introductory speech, I reaffirm our support for the regulations.
5 p.m.
Lord Mackie of Benshie: My Lords, we too welcome the moves made towards more humane treatment of the pig population. A totally unqualified welcome is given to those efforts. However, there are many snags which the Minister was good enough to mention. I loathe the pig stall. The pigs chew the iron bars and look terribly unhappy. Funnily enough, I am not nearly as unhappy about tethering. I saw some of the original tethers and the fact that the pigs could lie back to back and touch each other made them much happier than they were in the stalls. That may seem curious but it was so. They looked infinitely more contented.
I have run an outside pig system which appears to be ideal from humanitarian points of view. However, there were times during the winter when the pigs looked as though they would have liked to be inside, whether in a stall or tethered. Therefore, it is not an easy matter. For years in Aberdeenshire and elsewhere in the north of Scotland, cattle have been tethered by the neck throughout the winter with every appearance of contentment. Therefore, as the Minister mentioned, the use of the stall ensures that each pig receives equal treatment as regards food. There is not a great deal of bullying and without doubt there is far more even production if each pig receives its proper share of food.
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I know that throughout the animal kingdom there are examples of those who get too much and those who get too little—perhaps I am one. Will the Minister comment on whether the stalls could be used for feeding animals? They would not be combined, but the animals could be fed in such a way that each received an equal share of food and each received a proper ration. That is a very strong economic point.
Perhaps the Minister will be good enough to say what systems are being tried and what experiments are being carried out to ensure that the high efficiency of the pig industry is maintained. The noble Lord, Lord Gallacher, mentioned that from his experience he knows that it is a very competitive industry. I believe that the public will buy bacon from abroad if it is cheaper in preference to that produced under a more humane system.
The timing is important. It will take a long time to change the system in an efficient manner. I reiterate the question asked by the noble Lord, Lord Gallacher. What measures are we taking to ensure that this humane and proper lead is being followed by the rest of Europe?
Lord Elliott of Morpeth: My Lords, in moving these regulations, which I welcome, my noble friend mentioned the Select Committee in another place which sat for a considerable period of time and reported in 1981. I had the privilege of chairing that Select Committee. It went into its task in response to public disquiet about intensive methods of food production—so-called factory farms. That was not a pleasant task. The visits which we made as a committee—and we made quite a number—to various places in the country and on the Continent where intensive methods of food production were undertaken were extremely distressing in many cases.
In thinking back to those days, there is no doubt in my mind that one of the cruelest animal husbandry systems was the tethering and restrictive penning of pregnant sows. That was deplorable. The noble Lord, Lord Mackie, spoke of pigs gnawing bars. We saw that many times. We saw the great distress in their eyes and their frustration. They could not turn round. If they were tethered, they were tethered either by their neck or their middle and were held by a heavy chain. It was a deplorable sight.
Therefore, when the report was produced and the recommendations were made, one principle recommendation was that that system of keeping pigs should be phased out as quickly as possible. That was 10 years ago. Therefore, I welcome the regulations today; but I emphasise that our recommendations were made 10 years ago.
I take into full account what my noble friend said about the husbandry and stockmanship required for alternative systems. However, 10 years ago, when we were undertaking our inquiries, a great deal of experimentation was taking place. Again, the noble Lord, Lord Mackie, asked whether the restrictive pen could be used for feeding purposes. I saw an experiment which used that method. Other methods were being tested which showed great promise.

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However, 10 years have now elapsed before the introduction of these proposed regulations and, sad to say, they will not be fully implemented until 1999.
I warmly welcome the fact that no further construction of restrictive pens and of systems which will entail tethering can be constructed after the end of this year. However, it seems sad that it will be 1999 before that cruel system is phased out altogether. I believe that the economic argument for its retention is not strong.
However, I take heart because although it has taken a long time, our recommendation will be implemented. A distinguished Member of the Select Committee in another place was Sir Richard Body. I welcomed his introduction of a Private Member's Bill on this all important subject. After much consultation by a number of us, who feel very strongly about this subject, Sir Richard felt obliged to introduce his Private Member's Bill. It was introduced because no action had been taken by Her Majesty's Government. As my noble friend said, that Bill has been withdrawn; but it is pleasing to know that the regulations which we are approving today follow almost precisely the lines of Sir Richard's Bill. I commend them warmly.
I ask my noble friend, as I have done in this House on a number of occasions, to take due note not only of the particular recommendation which has led to the debate taking place today on these regulations, but to take note also of other recommendations made by that Select Committee 10 years ago. I hope that Her Majesty's Government may see fit and see good reason to implement more of our recommendations.
Baroness Phillips: My Lords, I should like to follow what the noble Lord, Lord Elliott, said. When we listen to a description of a regulation like this and we hear phrases like "continuous confinement", it is not easy to envisage the horror which we inflict on those animals.
Like a great number of noble Lords, I kept pigs during the war. The economic argument has always intrigued me that we may be producing too much now and that we waste food. In some strange way, while pigs were cared for humanely and sensibly, just as the hens were, we seemed to produce enough food for the population of the time. So far as I know the population of these islands has not increased that much. We do not care enough about the animals that we eat. When we discuss dogs, badgers or foxes we have a great attendance in the House and we are all very worried. However, when we talk about hens or pigs for some strange reason there is just a handful of noble Lords present who have some interest in the matter.
Like every noble Lord who has spoken, I welcome the order. One could not fail to do that. The length of time involved before final implementation is very disappointing. As regards the 45 per cent. of the 800,000 sows kept in stall free systems, what happens to the other 55 per cent. of those poor creatures? They will not live until 1998. It is sad that we cannot carry out this measure more quickly. I am very much against European products and make a point of not buying them. I cannot think why we do not buy British. I have
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not eaten bacon or any kind of pork or used any eggs, for about five or six years. That is the customer's protest against husbandry of that kind. If we pursue that line more it will chasten everyone whether it is the farmer, the markets or those people on the other side of the water. I am delighted that the Government have taken note of the very imaginative Bill that was presented in the other place. Let us have a little more action, and let us have it faster.
Lord John Mackie: My Lords, I did not intend to speak in this short debate. I want to emphasise what my noble kinsman said about tethering. One of the best pig outfits that I ever saw was in Denmark where the pigs were tethered. They were tethered by the neck, not with a chain but with a rope, and they had plenty of room. As my noble kinsman said, they could touch each other. It is the same for the sow and the cow. To get the best out of sows and cows they have to have individual attention. There are still tens of thousands of cows in cowsheds in this country which are tethered by the neck and which are getting individual attention. For the best part of my farming career and for long before that, all the beef cattle in Scotland were tied by the neck individually. If they were bedded with straw, they were comfortable. I could not agree more about the sow stalls. However, we should think a little more about tethering than we are doing.
Lord Soulsby of Swaffham Prior: My Lords, I very much welcome these draft regulations because they address one of the key issues laid down in the Farm Animal Welfare Council on one of the key freedoms of animals in animal production; namely, the freedom of movement. Tethering and the restriction of animals in stalls is contrary to that freedom. When we consider tethering and restriction in stalls, we should ask why that has been done in the first place. In large measure it is done because of the major problem of aggression in sows when they have free range. Quite remarkable damage and appalling injuries can result when that occurs. Tethering is a combination of trying to control that and also to allow freedom.
Fortunately, as the noble Baroness said, research has progressed somewhat since the Brambell Committee. Now there is considerable indication that there are other techniques of raising and keeping sows during the pregnancy period that are beginning to be accepted as satisfactory. Unfortunately, they are not as perfect as we would wish them to be. Electronic devices are proving to be very helpful in preventing the marked aggression that occurs when sows are mixed together and the hierarchical system comes into play.
Another consideration which has been touched on is the economic side where farmers have made a very large capital input into animal housing. To change it over in a reasonable period to non-tether, non-stall housed animals is going to take some time. I believe that eight years is an entirely adequate period for that to occur. It should still place the British pig farmer in a competitive situation with individuals elsewhere in the continent of Europe.
5.15 p m.
Lord Houghton of Sowerby: My Lords, a debate of this kind brings home to us the length of time that it takes to get favourable changes made in the keeping of animals almost everywhere. The noble Lord, Lord Elliott of Morpeth, was chairman of the Select Committee in the other place. It arrived at conclusions which were quite startling at the time. Those conclusions were obtained by general consensus from members of all parties. The next step was that the conclusions went to the Farm Animal Welfare Council. It took a great deal of evidence. That body is composed of people with representative interests throughout; namely, the farm industry, the meat industry, the animal welfare people, and the rest. It was a very representative committee of all the interests. It came to unanimous conclusions about these matters and made recommendations to the Government.
Here we are considering the outcome of 10 years' work. Even now our pork will not be fit to eat for another eight years because it will bear the scars of cruelty, neglect and indifference of people who become running scared if a dog bites a child. The whole nation gathers round the Government to order the execution of 10,000 dogs and to do it within a matter of weeks. The disproportionate reaction of the human species to cruelty and indifference to others is an astonishing study in human psychology. We pride ourselves on being noble members of the living world, but we cannot come to terms with the animal kingdom.
We have veterinary surgeons, farmers, clergymen and all kinds of people who are willing to rally round and beseech people to be more discriminating in what they eat and how it gets to the table. I have said more than once that for any big social change to take place in this country it is necessary to go into politics, the pulpit and prison. Noble Lords should mark my words and look at our social history for any alternative to that process which takes years to complete. I will embarrass the noble Lord, Lord Soulsby, by fixing my faith on him. His is the first voice of the veterinary profession in your Lordships' House and he bears a very heavy responsibility in being here. I apologise for having referred to him in a previous speech as president of the British Veterinary Association. He is even higher than that—high though that is—as he is president of the Royal College of Veterinary Surgeons.
What we are discussing at the moment shows how long it will take to get a change and how important it is that someone should recognise, when first seen, the potentialities for commercial exploitation and the amount of investment which will have to be made for years afterwards to get a better system installed.
Why can we deal with dangerous dogs in a couple of weeks but with cruelty to pigs in not less than eight years? That is what baffles me. It makes me so impatient—the pretensions that human beings have of nobility, of lofty ideals, and a belief in God when they are little better than the animals they keep.
Why do we have to wait? Is it because of the commercial interests that are at stake here? We are
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told that it will cost the industry £30 million, but we are going to spend that on a fruitless chase after the so-called justice of war criminals. Moreover, we are starting on that level of expenditure now not by the consent of this House, thank goodness, but on the independent judgment of the other place which took a step not taken for 40 years by ignoring your Lordships' verdict and going straight to the Crown to force its own way. Where is the sense of proportion? How can one bear this? My difficulty is that I cannot contain myself when I address these problems. Human beings are so bloody stupid, yet we have to live with it.
It is shameful that our Refreshment Department has pork on the menu. Pork ought to be banned from your Lordships' House as a mark of disapproval at the conditions under which pigs are kept to produce it. I said on a previous occasion how much I reproach myself for not being stronger in the Labour government of 1964 when the Brambell Report came up for review. However, there is a history to that and I will not bore the House with it. We should have been stronger and recognised that there lay this kind of problem. And it is not the only one—battery hens, turkeys, ducks, and calves are all in this now. Oh dear!
I beseech the veterinary profession to recognise the seeds of interminable cruelty in what they see in the commercial development of animals. I fear that the human race will exterminate the living species it regards as of no commercial value and exploit those upon which it feeds or clothes itself, or can turn to commercial profit. That is coming. The animal kingdom, for its own sake, has no recognition. To cure their souls human beings and the Churches are having to go to God to bless them; yet we behave to the animal kingdom—another part of the living world —as if it scarcely deserves the justice of existence. That is appalling.
Let us heed the warnings early enough to nip this problem in the bud. We do have such a warning in regard to the slaughter of deer, which we have not yet resolved. These are the beginnings of commercial enterprises which are modest when they start but gradually grow and dig deep into the economic life of a large part of our industry. We should watch that, catch it early and stop it. As it is, we may now have to turn our attention more to Europe for remedies than to our own Government because more and more of these matters have a European dimension. It is to Europe we may have to go, but we shall have to work for it. It will take a long time to come.
In the meantime, we ought to address ourselves to the problem of informing the public of what we are considering this afternoon and on other similar occasions. The public are given a view of the surgical wards of our hospitals and the advances of surgery in human affairs; they are shown pictures of dastardly things done to human beings-not all of them, but we get a glimpse of what in our experience is deeply disturbing. One thing the public is rarely shown is what goes on inside slaughterhouses and with intensive animal production.
We consume over 15 million pigs a year. Practically all of them are kept in intensive conditions. There are

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very few pigs produced nowadays that lead a normal life and have room for exercise and the enjoyment of existence. The breeding sow must surely be the most miserable animal of the lot. It is shocking and appalling what they undergo. Even the process of artificial insemination can leave them shrieking. But somebody has to become indifferent to all that—and they do. They call it animal production. To me this is a moral issue. Where are the Churches in all this? What do they preach? Or have they not yet discarded the doctrine that animals are here for the benefit of human beings and that we should be free to use them as we think fit? That is how it began and how it was for centuries. That is why that doctrine has to be demolished in order to get animals a stake in human affairs.
We welcome these proposals. I am very sorry for the Minister. Every time she brings an improvement before your Lordships' House—something that she and the Government have fought for or tried to do—she is met with a cool reception. There are no victors in this field. When these provisions are met they will be inadequate, out of date and much too late. People's thoughts are going further than what is proposed this afternoon. I can only hope that these occasions will be used as I fear I am using this occasion—for the wider issue to be developed with feeling and emotion and with a sense of purpose.
It is regrettable that it has taken so long and will take another eight years—another four or five generations of breeding sows—before we can get new equipment installed. The longer we go on, the more elaborate and expensive this kind of equipment will become and the longer it will take to get rid of it. Although the Jewish persuasion has agreed to a change in the casting pen, that cannot come about for a time because there is equipment to be replaced. That costs money. A great many people do not see, either from a religious or commercial point of view, that they should install a lot of expensive equipment merely to satisfy the attitudes of other people about their use of animals. That is why it is so important to search for conditions that may lead to cruelty and cause extreme hardship to animals for years to come before we can get them put right. There ought be an immediate ban on sweat boxes; there ought to be this and there ought to be that, but they are not in these regulations.
That is how I feel. I welcome what the Minister has introduced. I thank her for her work. I apologise for the fact that the noble Baroness, and your Lordships too, have had to listen to this diatribe.
5.30 p.m.
Baroness Trumpington: My Lords, the noble Lord, Lord Houghton, should not apologise. We all share his feelings. I loathe and abhor any cruelty to any animal. Both he and the noble Baroness were quite right to put their strongly held feelings into words. I just wanted to say that before I answered the various questions raised during the discussion of the regulations.
The noble Lord, Lord Gallacher, referred to Sir Richard Body's Bill. The noble Lord is very naughty.
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There was no blocking of the Bill. Since the Committee debate in another place on 26th April the Bill has obtained its Report stage. As for its future, that question will have to be addressed to Sir Richard Body. There was certainly no blocking from the Government's point of view. There has been good feeling on the issue. The regulations cover—
Lord Gallacher: My Lords, I thank the noble Baroness for giving way. The blocking to which I referred was at Report stage, when allegations were made that certain Back Benchers on the Government side of the House were making speeches of inordinate length—one speech lasted two-and-a-half hours—in the hope that the Report stage would not be completed that day. If that does not constitute blocking, the noble Baroness must agree that it comes very close to it.
Baroness Trumpington: My Lords, I cannot be responsible for the length of speeches in either House. However, on that occasion my honourable friend the Member for Penrith and the Border said that he would bring forward regulations. Those regulations are now before us.
I was asked why the regulations cover all pigs. The evidence that has led to the phasing out of tethers and close confinement systems is based on their effect on sows, as my noble friend Lord Soulsby said. However, it must be accepted that any pig kept in such conditions will suffer. There is no reason why pigs should be so kept. Only rarely have members of the State Veterinary Service come across other types of pig kept in such systems. However, it is sensible to make it an offence in these cases as well.
The noble Lord, Lord John-Mackie, referred to the tethering of cows and sows. For cattle, tethering is seasonal for winter housing, but the majority are in loose house systems. Cows are not continuously tethered. All advice that we have received is against the continuous tethering of sows. The practice was condemned by the Select Committee, FAWC, and so on. The noble Lord, Lord Mackie of Benshie, mentioned outdoor tethering. Any form of tethering of pigs has the potential to cause injury if the tethers are not regularly inspected and adjusted. There is no reason why a paddock cannot be fenced. The proposed regulations give those producers who wish to keep pigs outdoors sufficient time to replace tethers with fences.
The noble Lord, Lord Gallacher, asked when the EC will follow our lead. Our lead is very important in this issue. We very much hope that the EC will follow. After a recent intervention in the Agriculture Council recently by my right honourable friend the Minister the council agreed to resume discussions shortly. The incoming Dutch presidency of the council has made this a priority in its work programme.
Noble Lords referred to the feeding of pigs. I agree that a bossy sow which is preventing others from eating can be a difficult problem. Pigs can be fed in stalls. Regulations allow that. But pigs must not be kept in small stalls all the time. Stalls must be of a minimum size.

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My noble friend Lord Elliott of Morpeth and many other noble Lords asked why the period for implementation is so long. I had hoped that in my original remarks I had made it quite clear that there can be problems with all husbandry systems. Only recently has it become clear that alternatives could be successfully operated both in terms of welfare and of economics. This is not simply a matter of economics but of getting the welfare right. That is what we all want. The ministry's R&D has now shown that group housing systems can be operated successfully.
I have answered most of the questions. If I find that I have not answered some noble Lords I shall of course write to them. I hope your Lordships are happy that the order has come forward. In my view it is an important welfare measure and one with which we lead Europe.
On Question, Motion agreed to.

Home-Grown Cereals Authority Levy (Variation) Scheme (Approval) Order 1991
5.36 p.m.
Baroness Trumpington Baroness Trumpington rose to move that the order laid before the House on 13th May be approved [20th Report from the Joint Committee].
The noble Baroness said: My Lords, the order before us today amends the 1987 Home-Grown Cereals Authority levy scheme which empowers the Home-Grown Cereals Authority to raise levies from cereal producers, dealers and processors in order to fund its activities. These activities include the provision of market information, UK cereals export development, support for Food from Britain and research and development.
The principal change being made by the order is to introduce two different rates of processor levy for funding the authority's research and development work from 1st July 1991 in place of the present single rate of processor levy. A reduced rate would be payable by animal feed processors while other cereal processors, such as millers and maltsters, would pay the standard rate of processor levy. This new funding arrangement follows extensive consultations with all concerned and has been agreed by UK cereal trade interests. The actual rates of levy to apply from 1st July are being set in a separate rate of levy order which was laid before the House on 10th June.
The opportunity is also being taken to make a couple of small technical changes to the 1987 levy scheme so as to fulfil an undertaking given to the Joint Committee on Statutory Instruments when it considered a previous variation of the scheme and the introduction of the HGCA oilseeds levy scheme last year. One of the amendments deletes the reference to the recovery of unpaid levy summarily in magistrates courts, leaving such debts to be recovered through the usual procedures of the civil courts. The other amendment provides that information which the HGCA may require from levy payers should be limited to that which is necessary for determining their
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liability to a levy, bringing the scheme into line with the requirement in the parent legislation. I commend the order to the House.
Moved, That the order laid before the House on 13th May be approved [20th Report from the Joint Committee].—(Baroness Trumpington.)
Lord Gallacher: My Lords, I thank the noble Baroness for explaining the order. We do not oppose the order as such and yet I wonder whether the Home-Grown Cereals Authority levy systems are not becoming too complicated for all but the expert to understand. The order imposes two rates of processor levy; a reduced rate for cereals processed for animal feed, and a standard rate levy in respect of all other processed cereals. If we add to those the European Community levies for cereals with abatements thereof in respect of two set-aside schemes announced by the noble Baroness in the Official Report of 18th June (at col. WA10) plus levies introduced to enable the Home-Grown Cereals Authority to contribute to the funds of Food for Britain, one gets a situation where at least one noble Lord will soon need a plain man's guide to the Home-Grown Cereals Authority levy system; and that after assiduous reading of the Home Grown Cereals Authority's annual report. The keeping of records for levies paid is onerous for small concerns. Moreover, the inspection of records must add to the costs involved. As I said, the system continues to grow. I hope that the consultation process indulged in by the HGCA—an organisation which I much admire—includes a broad spectrum of interest so that small growers are fully consulted and their representations taken fully into account. Having said that, I should just like to say that we support the order.
Baroness Trumpington: My Lords, I thank the noble Lord, Lord Gallacher, for his welcome. I note what he said. I should perhaps remind him that we have in fact consulted on the matter. I commend the order to the House.
On Question, Motion agreed to.

Food Protection (Emergency Prohibitions) (Paralytic Shellfish Poisoning) Order 1991
Food Protection (Emergency Prohibitions)
(Paralytic Shellfish Poisoning) (No. 2)
Order 1991
5.40 p.m.
The Earl of Strathmore and Kinghorne The Earl of Strathmore and Kinghorne rose to move that the two orders laid before the House on 23rd May and 4th June be approved [22nd Report from the Joint Committee].
The noble Earl said: My Lords, these orders ban fishing for certain species of shellfish in certain areas off the north-east coast of England and the west coast of Scotland. They are required because of the build-up

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of a naturally occurring toxin, paralytic shellfish poisoning, or PSP for short, in the flesh of these species which could be dangerous to anyone who ate the fish. The orders will remain in force for as long as necessary and no longer than necessary. They will be revoked as soon as the results of continued weekly monitoring indicate that the toxin has subsided to a safe level.
PSP results from a build-up of toxin in certain species of shellfish. The species most affected are bivalve molluses such as mussels and scallops. Traces can be found in other types of shellfish such as crabs and lobsters, but normally at very much lower levels. The build-up arises from the ingestion of algae containing the PSP toxin. These are common to many north-west European countries and further afield. Problems generally arise when there is exceptionally high production or blooms of these algae.
They are normally associated with calm, sunny weather and hence tend to occur in late spring and summer. The blooms are therefore naturally occurring. They are not associated with pollution. On the east coast of Great Britain traces of the PSP toxin have been recorded in every year since 1968. Last year and this year PSP was also detected at significant levels on parts of the west coast of Scotland.
In the system of measurement used for this toxin, a reading of 400 units is internationally accepted as the level at which action needs to be taken to protect human health. Last year there was a major surge of PSP, with levels well in excess of 400 units. Public health warnings were issued covering a large part of the east coast of Britain and specific parts of the west coast of Scotland. These were effective in that no human cases of poisoning were reported, but the resulting scare stories in the media caused serious disruption of the shellfish market. In the light of last year's experience the departments involved—the Ministry of Agriculture, Fisheries and Food, the Department of Health and the Scottish Office—reviewed their monitoring and action arrangements with a view to ensuring effective protection of the public with minimum disruption of the shellfish market.
There is now a comprehensive programme of monitoring in the area known to be at risk—the coast of Scotland and the north-east coast of England—with samples of shellfish being taken at frequent intervals at selected sites. This programme enables us to base action on a type of shellfish on results from that type. Where action levels are reached, we take one of two types of action according to circumstances. Where no commercial fisheries are involved it is sufficient to post signs along the beach warning against collection and consumption of the specified species of shellfish. That has been established practice for many years. Where commercial fisheries are involved, however, we now have a policy of closing the affected fishery by statutory order under the Food and Environment Protection Act 1985.
In some circumstances voluntary closure of fisheries may be adequate because only a small number of shellfish farmers or fishermen are involved.
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In most cases, however, such action alone cannot be sufficient to guarantee that no affected shellfish will reach the market. The industry was consulted over the new arrangements and is generally content with the revised monitoring and action procedures.
Against that general background your Lordships will want to know the specific circumstances which led to the making of the orders before us today. They are as follows. In England a result of 904 units was obtained on 22nd May from the scallop beds off Berwick-upon-Tweed. The Ministry of Agriculture, Fisheries and Food acted immediately to close the affected fishery by statutory order. That is the first Food Protection (Emergency Prohibitions) PSP order before the House today. The order prohibits the taking of scallops (including queen scallops) in UK territorial waters from the Scottish Border to Newcastle. The landing and use in production of food of scallops is also prohibited. The area to which the order applies includes the affected scallop beds, together with a safety margin to the north and the south.
In Scotland, high levels of toxin were detected in queen scallops at Loch Dunvegan, Skye and Badicaul, Kyle of Lochalsh. The readings were 772 and 1,177 units respectively. Immediate action was taken to have warning notices posted on the shores of the affected areas, and the Scottish Office contacted shellfish farmers in those areas and advised them not to harvest or sell. However, as there are also fishing boats which operate in the area, an order was made on 29th May, the (No. 2) order before us today, banning fishing for all bivalve molluscs.
The orders will be revoked when we are satisfied on scientific and medical advice that it is safe to do so. In the case of the English order that point has in fact been reached: it is being revoked this afternoon and will cease to have effect at midnight tonight. The Scottish order, if last year's pattern is repeated, is likely to have to remain in force for some time yet. I beg to move.
Moved, That the two orders laid before the House on 23rd May and 4th June be approved [22nd Report from the Joint Committee].—(The Earl of Strathmore and Kinghorne.)
Lord Carmichael of Kelvingrove: My Lords, we are grateful to the Minister for his detailed explanation of the orders. The powers embodied in them are most important because of the serious nature of the contamination. The very fact that they are designated as emergency orders ensures that, far from trying to oppose them, we are anxious to see that they are implemented. The Minister will be aware of some of the anxieties expressed by the Joint Committee on Statutory Instruments about the possibility of the orders being ultra vires. But I am sure that they will have been drafted in such a way that the committee will be satisfied that those who drew them up will have made allowances in regard to the advice it submitted.
However, a few questions remain to be answered. The Minister went into some detail about how the public are informed of the dangers of consuming shellfish from a particular area. I am not as familiar with the area on the English side, but I roughly know the area around Applecross. It is a large area. If the

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Minister were to look again at the schedule to the Scottish order (the No. 2 order) where "Area One" is designated, he would see that there are no fewer than 12 refererences to "latitude" and "longitude" which the casual stroller along the coast would be hard pressed to identify. Can the Minister tell us whether there are maps available to people entering these areas? I am sure that there must be proper designations on Ordnance Survey maps, but are there rough marks on maps to indicate to people where these dangerous areas are situated?
I am pleased to note that notices are placed along the beaches, but some of these areas are very remote. I know the Kyle of Lochalsh to some extent and the Applecross area, but there are areas which people visit only occasionally. There may be a tendency to say, "This area is not used much, we hardly need to post bills in it". Then a family comes along with children and they fill several black plastic sacks with shellfish. It could cause considerable harm.
I assume that the control over the commercial gatherers and commercial farms is firm enough for the problem not to present a serious danger. One assumes that anyone with a commercial interest in the area will be anxious to remain on good terms with the health authorities and fishing authorities when there is such contamination. Therefore, these areas may be more easily policed than areas where there are casual, innocent people on the seashore. I should be interested if the Minister can tell me whether casual gatherers can be protected.
On the inner Clyde coast, despite a number of newspaper warnings, there are frequently no notices. I have seen people gathering whelks knowing they were dangerous. Children probably took them home, boiled them up and tried to eat them. Whether or not sickness resulted, I do not know, but there is that possibility. The Minister spoke about mussels which are becoming extremely popular. I am not concerned so much about the commercial side but about the casual gatherer. I hope that the Minister can satisfy the House on the matter.
The Earl of Strathmore and Kinghorne: My Lords, I am grateful to the noble Lord, Lord Carmichael of Kelvingrove, for his comments. He asked a number of questions to which I shall attempt to reply. First, he referred to the policing of the areas. Commercial fisheries are known to the sea fisheries inspectorate of the Scottish Office which is well placed to police that aspect.
The second point which the noble Lord raised concerned casual gatherers. To deter members of the public from casual gathering of shellfish, as I stated in my opening speech, warning notices are posted on beaches by environmental health officers who would also be in touch with local traders and hoteliers. The environmental health officers are authorised officers under the Act to enforce the orders. It should also be borne in mind that the trade has its own reputation to protect. Shellfish farmers in particular have been most co-operative.
The final point raised by the noble Lord concerned maps. Maps are not produced but local authorities
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make sure that all people in the locality know of the orders. I hope that that answers the various queries of the noble Lord. I commend the orders.
On Question, Motions agreed to.

Children and Young Persons (Protection from Tobacco) Bill
5.53 p.m.
Read a third time.
Clause 3 [Sale of unpackaged cigarettes]:
Lord Stoddart of Swindon Lord Stoddart of Swindon moved Amendment No. 1:
Page 2, line 24, at end insert:
("Provided that, where an offence under subsection (1) is charged together with an offence under section 7 of the Children and Young Persons Act 1933, the person charged shall not, if he is summarily convicted, be liable to a separate penalty for each offence.").
The noble Lord said: My Lords, some noble Lords will recall that at Committee stage I sought to delete Clause 3 from the Bill. However, I did not press my amendment to a Division at that stage. Since then, I have made a further study of the clause and find that my original view which I was later misled into modifying was correct. It was that a tobacco retailer could be fined up to £3,500 for selling a single cigarette to a child or young person.
During the debate at Committee stage on my amendment, my noble friend Lord Carter said that the clause was merely declaratory. In my view, since Clause 3 can impose an extra £1,000 fine on a retailer, it is rather more than declaratory. That is why I bring this amendment forward today. It is absurd that under Clause 3, if a retailer is prosecuted on both counts, he can be fined £3,500. It brings about a situation where a retailer can be fined £3,500 for selling a single cigarette to children and young persons, but only £2,500 if he sells 20, 200 or even 2,000 cigarettes to a minor, provided they are sold in the original package.
The arguments of the promoters and sponsors of the Bill are in some respects far-fetched. When they dislike official statistics which do not fit their pet theories, they produce their own spurious surveys which seek to contradict official and accepted statistics, the statistics which were accepted at Committee stage by the Minister himself. That is what they have done in relation to the statistics produced by the Office of Population Censuses and Surveys which state that only 2 per cent. of children under 16 buy single cigarettes. On the other hand, 38 per cent. buy them in packets of 10 and 54 per cent. buy them in packets of 20. Thus we are talking about a small minority.
It is undoubtedly true that the incidence of the sale of single cigarettes to under 16 year-olds is small. The practice is most prevalent among children themselves or between them and their older brethren who can buy as many packets of cigarettes as they wish because they are over 16. Many of them use the opportunity as a little bit of private enterprise. They buy a packet of 20 cigarettes and then sell them singly. They cannot be prosecuted; they can do exactly as they wish. It seems

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to me that virtually all the youngsters who smoke, of whom I have knowledge, obtain the odd cigarette in this way, not from a retailer; the cigarette comes from their young peers or older brethren.
There is also the argument used by the anti-smoking lobby that a single cigarette sold to children or adults under Clause 3 is sold with a health warning. I find this rather strange. It is said that if packets of cigarettes are sold to young children or those under the age of 16, the children are given the health warning. I accept that. On the other hand, when people object to tobacco advertising and want it banned, they seem to forget that the advertisements themselves show the health warning. In tobacco advertising, as on the single cigarette packet, the main prominent and unequivocal message is, "Smoking damages your health".
People are now saying that if cigarettes are not sold in their original packs, the health warning will not be conveyed. They cannot have it both ways. Clause 3, as drafted, is absurd as well as illiberal. My amendment would at least remove the absurdity of the imposition of a heavier penalty for selling fewer cigarettes to children and a lighter penalty for selling children more cigarettes.
I hope that noble Lords will recognise the force of that argument. Far too much legislation that is foolish and is not properly considered goes through this House. If we allow Clause 3 to pass into the Bill unamended, we shall pass a piece of legislation which will be completely absurd in its operation. I beg to move.
6 p.m.
Lord Airedale: My Lords, surely what the noble Lord, Lord Stoddart, is asking for in this proposed proviso in Clause 3 is entirely unexceptionable, fair, reasonable and just. The only question concerns whether it is necessary to spell out the provision in the Bill. I have heard the noble and learned Lord, Lord Wilberforce, say that Acts of Parliament should concern themselves with general principles and should not seek to deal with every conceivable eventuality that may possibly arise. On that principle I should not have thought it was necessary to spell out these words in the Bill.
Lord Monson: My Lords, I support the amendment without reservation. Unless it is agreed to, the total maximum penalties that can be imposed will be quite disproportionate to the offence. It is quite illogical that the penalty for selling a single cigarette should be 40 per cent. higher than the penalty for selling 100 or 1,000 cigarettes. The noble Lord, Lord Stoddart, has pointed out that fact. We are grateful to the noble Lord, Lord Airedale, for his qualified support; but I believe he is wrong in interpreting the dictum of my noble and learned friend Lord Wilberforce in the way that he has. I believe my noble and learned friend was referring to matters other than the imposition of penalties. It is important to be precise. If we are not precise, there is a danger of gross unfairness.
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The stock answer to the case put by the noble Lord, Lord Stoddart, is that maximum penalties may never and need never be imposed in practice. But the trouble is maximum penalties inevitably act as a guideline when magistrates come to decide what penalty to impose in any particular case. There is another factor which I believe has not been mentioned so far. Any young person with the slightest gumption enjoys the idea of experimenting with whatever is forbidden. Therefore the more draconian the penalties for providing the forbidden fruit, as it were, to youngsters, the more panic stricken adults will appear to be in the eyes of those youngsters, and the more exotic, tempting and glamorous something like tobacco will appear to those who have never tried it. The draconian maximum penalties such as we have at present are not only wrong in themselves but may also be counter-productive from the point of view of those who support the Bill.
Lord Ennals: My Lords, I hope noble Lords will not accept the amendment that has been proposed. At the previous stage of the Bill my noble friend Lord Stoddart sought to ensure that Clause 3 was deleted. I was glad to see that he did not receive any support for that proposal. Not surprisingly he seeks therefore to weaken the effect of Clause 3. I do not think we should take any action which would weaken that clause. Clause 3 was carefully considered. I fear that if the amendment of my noble friend were accepted, Clause 3 would become ineffective. There would be no point in ever bringing prosecutions under Clause 3 if this amendment were passed as the maximum fine under Clause 3 is £1,000, while under Section 7 of the 1933 Act, as amended by the Bill, the maximum would be the higher amount of £2,500. The effect would be to make it seem that Parliament believes that the sale of single cigarettes to a child under 16 is a lesser offence than the sale of a packet of cigarettes. I do not think that should be the case. The sale of cigarettes, whether singly or in quantities of 10 or 20, to children under 16 is an offence in every case.
I doubt whether the impression my noble friend Lord Stoddart has that there is only a small incidence of the sale of single cigarettes is correct. There is a good deal of evidence that young children, particularly those who are starting to smoke, and want to try smoking will buy single cigarettes. The OPCS survey showed that young children were more likely to buy single cigarettes. Surveys also show that children in the lower social groups are more likely to buy single cigarettes.
The rationale behind Clause 3 is that the sale of single cigarettes puts children at even greater risk than does the sale of packets of cigarettes. Children buy single cigarettes because they cannot afford to buy packets of 10 or 20 cigarettes. As I have said, it is the poorer children who are more likely to buy single cigarettes. They buy single cigarettes until they can afford packets. Nicotine is a highly addictive drug as we all know. By the time a child is old enough to buy whole packets of cigarettes, he may already be hooked on the drug.
I believe that Clause 3 in its present form will protect children by making it more difficult for them

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to buy their first cigarettes which may hook them for life. The clause will prevent them from suffering in the future from ill-health or premature death. That is the view of the Department of Health. I do not always agree with that department but I enormously welcome the support the department has expressed for Clause 3. The clause is also supported by the Labour Party. The Chief Medical Officer has also indicated his support for Clause 3. The clause was accepted in another place with all-party support. I hope that nothing will be done in this House to weaken the effect of Clause 3.
Viscount Astor: My Lords, the noble Lord, Lord Stoddart, has from the outset voiced his opposition to Clause 3 and is doggedly pursuing what I hope will be a lost cause with this particular amendment which he has tabled. In Committee the noble Lord ploughed a lone furrow in speaking against this clause and I had thought from his concluding remarks on that occasion that he had, albeit reluctantly, accepted the views expressed by the majority of noble Lords who were present on that occasion. However, I admire his determination to fight on nearly single-handedly; but I hope I can convince him not to press his amendment.
One of the noble Lord's main anxieties about this clause has been whether a retailer could be fined up to £3,500 for offences of selling cigarettes to a child under 16. It would be possible for a retailer who sells a single cigarette to a young child to be charged under both Section 7 of the Children and Young Persons Act 1933 and Clause 3 of this Bill. Such a situation would be by no means unique. For example, a person charged with theft or handling of a stolen drug can also be charged with possession of the drug.
The maximum penalties for the general offence of selling tobacco to children and for selling unpackaged cigarettes will be £2,500 and £1,000 respectively when the Criminal Justice Bill, which increases fines, becomes law. However —and I want to emphasise this point—it is a well-established principle that courts should adjust the sentence passed to reflect the totality of the behaviour involved. The maximum penalties for the offences to which I have just referred are upper ceilings appropriate for the worst examples of those offences. Within that range the courts are entirely free, and are encouraged by the Court of Appeal and the Criminal Justice Bill, to adjust the sentence to reflect the seriousness of the offences.
Where both offences of selling tobacco to children under 16 were charged, the court would no doubt be sensible about the totality of the sentences imposed. It is highly unlikely that a retailer would be fined the maximum on each charge unless he had been guilty of a most flagrant breach of the law.
There are at present no legislative restrictions prohibiting courts from imposing separate penalties where a person is charged with more than one offence. To introduce such a restriction here, which is the effect of the noble Lord's amendment, would not only break new ground by interfering with judicial discretion; it would also be unnecessary and unhelpful given what I have said about how the courts deal with such cases at present.
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Clause 3 creates an offence of selling unpackaged cigarettes. The purpose of the clause is to protect children. It seems to be nonsense to create an offence for which in some circumstances there would be no penalty. That is another effect of the amendment. The amendment virtually renders that useful clause ineffective because, if it were to be accepted, there would be nothing to deter a retailer from breaking open a pack of cigarettes and selling them individually to vulnerable young children. He or she might decide to take that risk safe in the knowledge that he or she would be liable only to one fine and not two as the Bill stands at present. The clause is included in the Bill to reinforce the point that selling cigarettes to children in ones or twos is not only pernicious but is just as unlawful as selling packs of 20. That important message is lost if the offence of selling loose cigarettes to children in effect carries no penalty.
Finally, on a drafting point, perhaps I should point out that the amendment is deficient in that it would leave the law in Scotland unchanged. That is because Section 7 of the Children and Young Persons Act 1933, to which this amendment refers, applies only to England and Wales.
I listened to the speeches made by other noble Lords. I thought that there was something rather illogical in the argument of the noble Lord, Lord Monson. We are not talking about children or parents; we are talking about shopkeepers who sell cigarettes. The Bill does not make smoking look more attractive or more dangerous.
I invite the House to oppose the amendment. I hope that the noble Lord, Lord Stoddart, will not choose to divide the House as the Bill has widespread support on both sides of this House.
Lord Rea: My Lords, every noble Lord who has spoken, bar two, has produced very good reasons for my noble friend to withdraw his amendment, the most important being that it would make the clause ineffective, and the clause is one of the most interesting and useful in putting teeth into the Bill.
The sale of single cigarettes puts children particularly at risk, more so than the sale of packets of cigarettes, because children do not have very much money. That is particularly true of children from the social classes which earn less money who are more likely to buy cigarettes. As I pointed out at Committee stage, smoking is a far greater problem among the socio-economic group which is most deprived. The sale of single cigarettes will perpetuate that disadvantage. My noble friend is a life-long member of the Labour Party and I am sure that he has always espoused the cause of the underdog. In this case he seems to be changing his point of view.
The noble Viscount reminded us that an interesting situation would arise if the amendment were passed. We might well see lots of children hitching across the Border to Scotland to buy single cigarettes. At Third Reading it is now too late to amend that aspect of the Bill.
It has also been mentioned that only 2 per cent. of cigarettes are bought singly by children. It may be the case that in volume only 2 per cent. are bought singly. However, some of the children interviewed in the

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Bristol survey who had already acquired the habit of smoking and smoked at least six cigarettes a week were asked whether they had ever bought single cigarettes. In some schools in Bristol up to 80 per cent. of those children who were already on the way to becoming smokers had at some point bought single cigarettes. That is just the sort of experience which will lead them to become more serious smokers later in life.
Lord Monson: My Lords, I thank the noble Lord for giving way. Can he say whether the 80 per cent. of children who had bought single cigarettes had bought them from shopkeepers or from older children?
Lord Rea: My Lords, from reading the study it is my understanding that they bought them from shopkeepers.
The Bill is concerned with what shopkeepers sell to children and cannot concern itself with what children sell to each other. I hope that the noble Lord will understand that. It would be extremely difficult to legislate to control that.
Having heard all noble Lords put their point of view, I hope that my noble friend will accept that he does not have enough support to press his amendment and feel able to withdraw it.
6.15 p.m.
Lord Stoddart of Swindon: My Lords, I should like to thank all noble Lords who have taken part in the discussion on my amendment. I am most obliged to the noble Lord, Lord Airedale, who thought that the amendment was entirely reasonable. That is certainly progress from the Committee stage and I am most obliged to him. He said that the amendment is not necessary, but I hope that everything that he has heard since from those noble Lords who have argued against the amendment makes it clear that the amendment is necessary if retailers are not to be fined twice for the same offence of selling cigarettes to people under the age of 16.
The noble Lord, Lord Monson—and I am most obliged to him for his support—said that youngsters like to experiment. Of course they like to experiment. They have always experimented. I know from my own school-days, which in spite of my great age I can still remember, that my school fellows did not buy single cigarettes from retailers; they sent someone out to buy a packet of 20, or 10, or even five Woodbines as they could then, and then distributed them for a little profit among themselves. It was not retailers who were selling cigarettes; it was the lads themselves.
Lord Ennals: My Lords, my noble friend has pointed out that the days of his youth were a very long time ago, about as long ago as my own youth—
Lord Stoddart of Swindon: Not quite so long ago.
Lord Ennals: My noble friend is suggesting that all children do not get their single cigarettes from tobacconists, but surely he cannot be suggesting that none of them buys cigarettes from tobacconists. If so I am sure that he is wrong.
Lord Stoddart of Swindon: My Lords, I have been prepared to accept the statistics of the Office of Population Censuses and Surveys, as has the Minister. It is Parents Against Tobacco which does not accept the evidence provided by the official body and my noble friend Lord Rea; so I am prepared to accept that evidence.
The noble Lord, Lord Monson, pointed out that the more that older people and parents criticise children for doing something, the more the children want to do it. That point must certainly be kept in mind. Make no mistake about it, I support the Bill. I am not against the Bill. I do not think that retailers should act against the law and sell cigarettes to children. It is no good my noble friend laughing. That is my position. However, what I do not like about legislation of this kind is the fact that it is illogical and absurd. I do not like the House of Lords or the House of Commons passing such legislation. My noble friend appeared to give the impression that I forced a vote in Committee.
Lord Ennals: No, that is not so.
Lord Stoddart of Swindon: I am glad to hear that because I did not force a vote in Committee. However, I must point out that a statement was made from the Labour Front Bench in Committee to the effect that Clause 3 was merely declaratory. I must point out to my Front Bench that it is rather more than declaratory when it can impose a fine of up to £1,000 on an offending retailer if he is found guilty of the offence. I have already dealt with the question of figures which, as I said, I am prepared to accept.
The noble Viscount, Lord Astor, said that I was ploughing a lonely furrow. I think that he understands this afternoon that I am not ploughing a lonely furrow. Indeed, I have an obvious convert on my right and a spokesman in my support on my left. It is a bit much when the Minister accuses me of ploughing a lonely furrow when his colleague in Committee in another place said that Clause 3 was not necessary. I took my lead from his colleague. I am now being denounced for taking that lead.
It is the Government who have changed their mind. They have not changed their view. They have changed their mind simply and solely because they were able or willing to do a deal with the sponsors and promoters on another part of the Bill. That does not mean to say that they have changed their mind about Clause 3. My guess is that they still believe that Clause 3 should not be part of the Bill, so I am sure that we shall not hear any more from the noble Viscount, Lord Astor, on the matter. He must understand that the Government's original position is my position which I am now putting forward.
Viscount Astor: My Lords, perhaps I may intervene briefly. I do not believe that the Government have significantly changed their mind. Even if they had, it would simply show that they have a responsible attitude and listen to the arguments put to them.
Lord Stoddart of Swindon: My Lords, the words used in Committee were pretty forthright. My guess is that the Government, far from being more concerned

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and ready to change their mind, embarked upon a shady deal. That is really what happened. It is not a question of changing their mind. They still believe what they originally said and I was quite entitled, as were other Members, to believe the Government when they made their first statement in Committee.
The noble Viscount said that the courts would make their decisions and would not necessarily apply the maximum fine. I understood him to say that they would take all the circumstances into account and that the fine would be much lower. But the promoters of the Bill are using the fact that there will be a fine of £3,500 to support their point of view. They say, "Look here, it's the £3,500 that will be the deterrent against selling tobacco or a single cigarette to young people." So the Minister says one thing and the promoters of the Bill say another.
I still do not believe that it is more pernicious to sell one cigarette to a young person than it is to sell him or her 20 cigarettes. I simply cannot take that point on board. If a retailer sells 20 cigarettes to a youngster, those 20 cigarettes will help the youngster to become addicted to the weed to a greater extent than if he smoked only one cigarette. I therefore do not accept the argument that it is more pernicious to sell one cigarette to a youngster than it is to sell 20.
Lord Rea: My Lords, does my noble friend not realise that some children in this country have only 10 pence. 20 pence or 30 pence in their pockets and might still like to buy a cigarette from a tobacconist; or does he think that all children have at least £1 in their pocket with which to buy a packet of cigarettes?
Lord Stoddart of Swindon: No, my Lords. According to the statistics that I and my Front Bench have accepted, that incidence is very small. I reiterate that most children obtain their single cigarettes from other children or from friends who are older than 16. I went to an ordinary council grammar school. I know what goes on. I know what went on then, and I know that it still goes on. I cannot accept my noble friend's argument that the sale of a single cigarette is more reprehensible than the sale of 20 cigarettes. We shall have to agree to disagree.
With regard to my membership of the Labour Party, I must tell my noble friend that it does not merely derive from being in favour of the underdog but from being the underdog. I hope that he will remember that point. I was brought up in the Rhondda Valley, so I know all about underdogs. My father was unemployed for a while, so I know what it is to be an underdog. I know the awful kind of lives that people in such places as the Rhondda Valley lived, so I hope that he realises that I understand exactly how working people live and what their needs are. Their needs are often quite different from those of the middle class and the upper middle class. Sometimes they lead such flaming awful lives that some of them perhaps need a cigarette and a drink to allow them to forget the circumstances in which they find if themselves.
Finally, I strongly reiterate that I am in favour of the Bill as it stands with regard to Clauses 1 and 2. Retailers should obey the law, but Clause 3 is
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unnecessary. It is illiberal and imposes in a stupid kind of way a higher fine on retailers for selling more cigarettes rather than less. In those circumstances, the House should amend the Bill. There are too many silly clauses in various Bills and this will be another silly one. I hope that, if the Bill is enacted unamended, the courts will knock the silliness out of it.
The Deputy Speaker (The Earl of Listowel): My Lords, does the noble Lord wish to press his amendment or to withdraw it?
Lord Stoddart of Swindon: My Lords, I shall not press the amendment bearing in mind the fact that I appear to have made some kind of mistake and that my amendment would apply only to people in England. It would be wrong if we allowed the Scots one kind of penalty and the English another. In those circumstances, I have no alternative but to withdraw the amendment.
Amendment, by leave, withdrawn.
6.30 p.m.
Clause 5 [Enforcement action by local authorities in England and Wales]:
[Amendment No. 2 not moved]
Lord Cocks of Hartcliffe Lord Cocks of Hartcliffe moved Amendment No. 3:
Page 4, line 12, at end insert ("excluding the use by trading standards officers or others of children under the age of 16 to incite tradesmen to commit offences").
The noble Lord said: My Lords, I beg to move Amendment No. 3. When I spoke on this matter at Second Reading I said that for 17 years I had represented a constituency in Bristol in which there had been very substantial tobacco manufacturing, both cigarette and cigar. There were thousands of workers employed in that industry, and also thousands of pensioners. I have not been Member for that area since the last general election, and I want to make it absolutely clear that I have not been contacted by any of the industry spokesmen or representatives concerned, nor have I been lobbied in any way. All I have received is a letter from the Tobacco Advisory Council to say they are quite happy with the legislation. My objection to the Bill is my own and concerns the use of children to obtain evidence that offences are being committed.
I hope that in the course of the discussion we will not debate how long various people have been members of the Labour Party, because with the new computerised national membership scheme at Walworth Road some of us would be in difficulty in showing our party cards!
I entirely support the Bill and have no intention of trying to wreck it. On the other hand, Parliament has a duty to examine legislation passing through it and to make sure that it is satisfactory.
I have obtained figures for England and Wales relating to proceedings in Magistrates' courts in 1989. In that year proceedings were taken against 47 males and 15 females. In the end, only 39 males and 15 females were fined for the offence of selling tobacco to juveniles. Clearly, those figures are derisory. I can understand the frustration of those people who wish to tighten up the law against the practice of selling

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cigarettes to under-age children. However, I believe we are reaching an advanced stage of the legislation without having seriously considered how the situation is to be remedied.
On Second Reading of the Bill on 18th January in another place the Minister, on behalf of the Government, expressed surprise that enforcement would not be done simply by inspectors visiting premises but that the real intention was to use children to go round and try to buy cigarettes and thus establish the dishonesty of shopkeepers. The Member for Warley, East, who promoted the Bill in the other place, said that that point should be fully considered in Committee and he was sure they would come to terms with it. In reply, the Minister said he was grateful to hear that, because he did not think the majority of Members in another place would want to insist that children should be used in order to catch law-breakers.
I have carefully read through the Committee proceedings in the other place. Apart from a cursory mention, there is no serious discussion about the use of children to obtain evidence. On Third Reading of the Bill in the other place, the honourable Member for Bedfordshire, North, raised the question of children being used, and the Member promoting the Bill said that everybody knew in their heart of hearts that the only way evidence could be obtained was by the use of children under the age of 16.
That is a highly unsatisfactory situation. If that is going to go on, what will be the scale of it? I believe that until now the evidence presented has been collected by some local council inspectors and enthusiastic amateurs anxious to promote the case for the Bill. Let us look at the problem of enforcement. The latest information I have about the number of outlets in this country where tobacco is obtainable indicates that there are some 90,000 to 100,000, including vending machines. The highest estimate of the number of vending machines mentioned throughout the proceedings—not necessarily the best estimate —is 30,000. That leaves 60,000 to 70,000 other outlets which include a few specialist tobacconists, confectioners, tobacconists, newsagents, convenience stores, grocers, cash and carry, garage forecourts, kiosks and off licences. An enormous burden is placed upon local authorities to make sure that the legislation is enforced.
If children are to be used we are not talking about penny numbers. A large number of children will be required if it is to be effective because the duty is laid on every local authority to make sure the legislation is observed. We have to ask some questions about it. First, what kind of parents would allow their children to take part in this exercise on a regular basis, and why? We are not talking about a one-off job or a couple of visits but visits carried out on a regular basis.
Will the children who do it be paid? If so, are we satisfied that they should be used in this way as agents provocateurs? Where will these children come from? Are they going to be local children who know the locality and are known in the locality? Let us suppose a child takes part in a case and "shops" the local
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newsagent. After the case is decided he goes to school where possibly the son of the newsagent is in the same form. What kinds of frictions and tensions will be set up there? Local children could be in danger of being ostracised, bullied, despised and caused great difficulties. If we are not going to use local children will young people be bussed about from one part of a town or city to another to spy on people in that other area?
We tend to think that the darker side of human nature does not emerge until we get older, but we know that that is not always the case. Surely there must be a danger that children will decide to blackmail shop keepers over this matter. It is possible for groups of young children to set up protection rackets, threatening shop-keepers that if they do not look after them in one way or another they will report them for selling "fags" to them. Your Lordships may think that is fanciful but I do not believe that is any more fanciful than the suggestion made recently by my right honourable friend on the Front Bench that cigarette smokers were more likely to beat their wives. In fact, I think that what I suggest is a great deal more probable. Frankly, what is there to stop children going into a shop having concealed about their person packets of cigarettes and coming out alleging they have been sold to them? Is it seriously suggested that the inspectors who take round such groups of children to do the snooping will frisk them every time that they go into a shop?
There is another point. It is well known that some children in their teens look much older than others of the same age. Indeed, we all know that in cases brought on a charge of serving alcohol under age or taking part in sex under age sometimes the proceedings are dismissed because of the appearance of the young person concerned. So we come to the question of the selection of these children and their appearance. It is possible that the incorrect selection of someone, possibly even motivated by malice, may cause difficulties and not give what in the popular phrase these days is called a level playing field. Therefore, serious problems can arise.
I appreciate that there is a valid point about how one obtains the evidence to make sure that that practice is not taking place. Indeed, that is the buffer which I have come up against when discussing this point with a number of people who are very keen on this legislation. They usually finish up by saying, "How on earth do you enforce the measure if you cannot do this". I understand that point, but it does not excuse this House from examining the matter and considering it very closely.
In the other place only yesterday the honourable Member for Basildon had leave to introduce a Ten-Minute Rule Bill to amend the Pet Animals Act 1951. He explained to that House that one of the purposes of the Bill was to ensure that no animal would be sold to a person under the age of 16 unless a parent is present and has given permission. Noble Lords can imagine how long it will be before the animal rights lobby, and others such as my noble friend who spoke earlier on the agricultural orders, will press to toughen up the legislation against people

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who sell pets to children under the age of 16 and will suggest that inspectors go round with young children to see whether they can get some unsuspecting shopkeeper to sell them a small hamster or a white mouse. We are going down a very difficult road.
It is a grave offence to have sexual intercourse with a child under the age of 16. No one suggests that young girls are sent round importuning to see whether that law is being broken. We ought to think very seriously about this provision. Let us suppose that prima facie an offence is thought to have been committed. At the court proceedings it is possible for the child's evidence to be given by means of a written statement. If the defence challenges it, the child will have to appear in court. Video evidence is restricted to cases of child abuse and violence. Therefore, there must be a personal appearance in court by the child, though the child's identity is protected under Section 37. When the child goes to court to give evidence he or she will be away from school. Classmates at school are always very interested in why people are away and I do not think that it will do that child any good in school or with his classmates if repeated appearances in court brand him or her as an informer against neighbours, or possibly people in other parts of the town should a bussing system operate.
When are the children to do this work? Unless they are to be dragged out of school they must do it either during the lunch hour or after the school breaks up in the afternoon towards tea time. The lunch hour and towards tea time are the busiest times for the people who run newsagents and the kind of outlets about which we are speaking. So the person running the outlet will be put under the closest scrutiny just when he is busiest and has the least time to try to satisfy himself that he is selling cigarettes only to those aged 16 or over.
What about the enforcers, the inspectors who have the thankless task of taking round the children to try to establish whether or not the law is being broken? They will have to work during the lunch hour and later in the day. Believe it or not, they also have other duties to perform and, if they do not do them, the same people who are pressing for this legislation will create a great disturbance because other laws are not being enforced. So one must ask inspectors to undertake these duties during the lunch hour and late in the day when they are thinking of getting home.
It seems to me that in this issue enthusiasm has clouded judgment. If this measure is to be effective one will have to set in train a whole series of events which have riot even been discussed. Unless an amendment to this Bill is carried today—and I doubt very much whether it will be since I have no intention of pressing it and there are no further amendments on the Marshalled List—this will be the last opportunity that Parliament has to discuss this legislation. The Bill has gone through both Houses without any mention so far as to what it is intended to do with our young children under the age of 16 in order to try to enforce this legislation. I believe that that is a disgrace which should have been sorted out very much earlier.
I am glad to have had the opportunity to make this case to your Lordships. I believe that if a serious
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attempt is made to use young children in this way the problems that will arise in years to come will be manifold. I do not want anybody who has pressed for this legislation for so long and in such a zealous way to be able to say, "Of course, this matter was never raised when the legislation was before Parliament". I have raised it in your Lordships' House. I am grateful for the opportunity to have done so. I beg to move.
6.45 p.m.
Lord Airedale: My Lords, I am a little concerned about the use in the amendment of the word "incite". The noble Lord mentioned the agent provocateur. Surely an agent provocateur is someone who sets a trap and gives the suspect an opportunity to walk into it. I find difficulty in believing that if a child goes into a shop and says, "Ten cigarettes please" and the shopkeeper says, "Certainly not", then the child has incited the shopkeeper to sell him cigarettes. If the child goes on to say, "Oh, but please Mr. Smith just this once; just one tiny little cigarette. Won't you please let me have one?", I still do not think that the court would come to the conclusion that that child was acting as an agent provocateur.
Lord Monson: My Lords, after the powerful and comprehensive introduction to this amendment by the noble Lord, Lord Cocks, there is no need to go at any length into why it is so important. Once again I must disagree with the noble Lord, Lord Airedale, in his interpretation of semantics. The word "incite" is absolutely right. I do not believe that any problem would arise with it. The use of juvenile agents provocateurs would be deplorable and utterly contemptible. I find it hard to believe that Her Majesty's Government would tolerate such behaviour. However, one never knows nowadays and this amendment would ensure that neither they nor any of their successors would be so tempted.
Perhaps some will argue that the end justifies the means. That is a very dangerous doctrine. I fully support the amendment.
Lord Ennals: My Lords, I hope that the House will not go down the road suggested by my noble friend. I want to say that I am very pleased that these amendments have been moved. I was delighted to hear from both my noble friends Lord Stoddart (who spoke on an earlier amendment) and Lord Cocks, in moving this amendment, that they support the Bill. Having read again the speech made by my noble friend Lord Cocks at Second Reading, one would not have thought that he supported the Bill. It is therefore encouraging and I take great strength from the fact that he is convinced.
I must admit that I am a campaigner against smoking and especially against the opportunities for children to start on what I believe to be a damaging route for their health. I know that my noble friend does not believe that we should campaign for anything. I believe that we should campaign for all kinds of things, and this is one of them. Sometimes a campaign produces a Bill and sometimes a Bill

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becomes an Act, and it may remove some of the opportunities for children to begin smoking, which is what I hope this Bill will achieve.
I want to clear up the point about smokers beating their wives. In col. 1168 of Hansard on 8th May when my noble friend Lord Stoddart said that men did not batter their wives because they had had a cigarette, I was reported as saying, presumably from a seated position, "Smokers beat their wives". I meant to say that smokers beat their wives as much as non-smokers beat their wives. If my noble friend was claiming that smokers did not beat their wives just because they had had a cigarette, I would argue that they were just as likely to beat their wives as anybody else. So let us lay that to rest and come to the issues raised in the amendment.
First, we should recognise that, sadly, it is not an offence for a child to buy a cigarette either from a shop or from anyone else. The offence is not committed by the child but by the shopkeeper or tobacconist who sells cigarettes. Test purchases, which is what we are discussing, are carried out for two purposes: first, to ascertain the extent of the problem in a specific area and, secondly, to identify retailers who persist in breaking the law. If we were encouraging children to break the law, most of the criticisms made by my noble friend would be justified. But let us look at the circumstances in which those test purchases take place.
Beforehand retailers are sent reminders by the local authority drawing attention to the law on sales of cigarettes. I am glad that my noble friend did not move Amendment No. 2. If it had been carried it would have meant that local authorities probably would not have taken such action in notifying local tobacconists. It is only after that warning that local authorities examine the behaviour of tobacconists more closely with the help of children.
We should further recognise that the consent of the child's parents is always obtained. The children are committing no offence; it is not illegal for them to buy cigarettes. They are also told to be honest about their age if the retailer should ask. As I understand it, the reaction of children who have taken part in such exercises has been positive. They appreciate the risks of smoking and feel that they are helping to protect other children. It is good for children to feel that they are helping to ensure that the law is carried out. One of the lessons I am sure we all want to teach our children is that it is important to see that the law is respected.
Controlled purchases or surveys are an effective last resort. If the amendment is carried it will prevent local authorities from dealing properly with the problems of illegal sales. To be realistic, children who smoke do not come forward to give information about where they buy their cigarettes except under considerable pressure. Therefore test purchases made by under-16 volunteers are likely to be necessary if the Bill is to be effective.
There are all sorts of times of day when the tests can be carried out. They can be done during school holidays, on Saturdays and on Sundays for those
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tobacconists who are open on Sundays. The worry that children will miss schooling is unnecessary. The fact that parents will always have to give their approval indicates that my noble friend is perhaps overly concerned. I hope that I have given him some assurance. I hope too that the Minister will give some assurance so that my noble friend will not feel as worried as he is at present.
Viscount Astor: My Lords, the noble Lord, Lord Cocks, offered us an intriguing scenario of a child leaving a shop with perhaps a single cigarette tucked behind one ear, a packet in one pocket, a hamster in the other and possibly even swigging a bottle of gin. But I understand the anxieties that the noble Lord feels.
The amendment to exclude the use of children to incite offences is in any event redundant as it is already an offence at common law to incite any offence. Under Section 45 of the Magistrates' Courts Act 1980 any offence of inciting a summary offence is subject to the same penalty as that offence. In addition, anyone who incites another to incite the commission of an offence or who aids, abets, counsels or procures an offence of incitement is himself guilty of an offence. Trading standards officers are as subject to the law as anybody else.
The Government have already agreed to issue a circular to local authorities setting out their powers and responsibilities under the present law and this Bill. In that circular we shall include guidance on the use of children by trading standards officers during surveys or exercises to determine the extent of over-the-counter cigarette sales to children under 16 in a specific area. The guidance will remind trading standards officers that it is illegal to incite another person to commit an offence.
Nevertheless, I am satisfied that the use by trading standards officers of children under the age of 16 may in reality be the only practical way of ensuring that the law in this area is being complied with. It is important that such operations are carefully supervised, both in the interests of the children and the traders. All relevant parties will be consulted about the circular and I hope that the noble Lord, Lord Cocks, will be assured by that undertaking.
The most important point that needs to be made is that honest and responsible retailers will have nothing to fear from the clause as it stands or the Bill in general. It is aimed solely at those who have persisted in fighting the present law.
Lord Stoddart of Swindon: My Lords, I should like to support my noble friend Lord Cocks in his amendment. I felt that the figures he gave at the outset for the derisory number of prosecutions under the existing law were probably the best case I have heard for the Bill. He has done a service by bringing forward those figures. They show, as we all agree, that there is a need to strengthen the law. We should all be obliged to him for his research and for bringing that information forward.
However, we must have some anxiety about what he says. People in this country do not like agents provocateurs; they do not like narks. It is a quirk in

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this country. They do not like people who appear to be sneaky. There are a number of considerations to be taken into account.
I was encouraged to some degree by the Minister saying that there will be safeguards and a circular will be sent out. Nevertheless, he confirmed that it would be possible to use children under the age of 16 to procure an offence. That is what it is all about. It is almost a conspiracy to procure an offence. We must be careful. For example, how young will the children be? Will they be eight, 10 or 12? We need to know that. Surely we do not intend to teach children of that age to go into a shop and buy cigarettes. That would invalidate what we are trying to achieve in the Bill. Does not telling a young child that provided his parents and the trading standards officer say that it is all right for him to buy a packet of cigarettes there is nothing wrong in doing so encourage the same child and perhaps his sisters and friends to do the same? We must be careful because we are not dealing with adults. We are dealing with children and we must be careful how we treat their young minds. My noble friend Lord Cocks is right in bringing these issues before your Lordships.
Perhaps I may turn to the other end of the age scale. Will tie trading standards officers send someone aged 15 years, 11 months and 27 days to procure an offence? That would be unfair to the retailers because at that age the child may look 16 years old. We must strike a balance. We must ensure that our English traditions are not undermined by overzealousness in one direction or another.
I do not wish to delay the House further in speaking at the next stage of the Bill. I wish merely to say now that it does not matter whether the Labour or Conservative Parties, all the parties in the world, the House of Commons, the House of Lords and any organisations including ASH and Parents against Tobacco, believe that everything in the Bill is right. It is the duty of all noble Lords as individuals to put forward their point of view even if it differs from all others. If we honestly believe that there is a point to be made it is our duty to put it forward. That is exactly what I have tried to do during the passage of this Bill. I hope that people understand that and will not criticise Members of this House in seeking to put forward their views.
Like my noble friend Lord Cocks, the views that I have put forward are my own. I have had no representations from the tobacco industry. Indeed, my guess is that the tobacco industry would not want noble Lords to interfere with the arrangements that it has made with the producers of the Bill. I wish to assure the House that the views that I have expressed are my own and that they are honestly held. The amendments that I have proposed were designed not to undermine the Bill but to improve it. I wish to ensure that the Bill is decent and is not illiberal and that it is possible for it to work in its entirety.
7 p.m.
The Earl of Harrowby: My Lords, surely we are not going to be asked to teach our children to become agents provocateurs. That is equally dangerous. The
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Minister began his reply by explaining that such action would be illegal. He should remember that there will be a child in the middle who, as middleman, may be immune from any legal action. It could be held that the incitement to the child was not breaking the law because there is an immunity in the middle. However, I ask my noble friend to recognise that real problems exist.
I understand that the noble Lord, Lord Cocks, will not press his amendment but surely that cannot be the end of the story. There is a great danger because in the first half of his reply the Minister said that the action would be illegal but at the end he almost reversed that statement when saying that nevertheless such activities must be considered in order to obtain prosecutions. We are in real danger of creating one error in order to cure another as so often happens in government circles.
Lord Monson: My Lords, with the leave of the House and following the comments of the noble Earl, perhaps I may ask this question. Will the Minister clarify a point arising from his reply? Is it the case that children who are below the age of criminal responsibility will be exempt from the restrictions imposed by the Act which is cited and which on the face of it prevents them from being used as agents provocateurs? If they are below the age of criminal responsibility, presumably they could be so used.
Lord Rea: My Lords, I believe that noble Lords are allowed only one bite at the cherry—
Lord Monson: My Lords, I said, "With the leave of the House".
Lord Rea: My Lords, perhaps I may ask what is the opinion of the House?
Viscount Astor: My Lords, it is an offence to incite another person to commit an offence. Trading standards officers are subject to that law as is anyone else. If they incite the commission of an offence they are as guilty as if they actually committed the offence.
A trading standards officer will use a child under the age of 16 not to incite an offence but to ascertain whether a retailer is selling cigarettes over the counter to children. That is clear and two separate issues are involved. Children under the age of criminal responsibility—that is the age of 10—cannot be convicted of an offence of incitement. However, it is inconceivable that children so young will be used for the purpose. There are two parts to the issue that we have been discussing.
Lord Rea: My Lords, the most important point was made by the noble Lord, Lord Airedale. Incitement may be an offence; but in inciting, a person pressurises or cajoles another person into committing an offence. That is not what trading standards officers are doing to children nor what children are doing when they purchase cigarettes. Trading standards officers do not have the intention of bringing about a criminal offence. Indeed, they would much rather no one committed an offence and that no newsagent-tobacconist sold cigarettes to children under the age of 16.

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My noble friend Lord Stoddart underestimates the grasp, intelligence and stability of children between the ages of 12 and 16. Those who co-operate in controlled or test purchases in such circumstances are fully aware of what they are doing. They understand the way in which tobacco harms health and that it is a public health menace. They wish to help their fellow children not to acquire the habit. They completely understand what they are doing. They have their parents' permission for what they are doing. Often they enjoy what they are doing and understand why they are doing it.
We have had a good airing of this point this evening. I do not believe that the action taken to observe whether or not this law is being broken constitutes incitement. I do not believe that the amendment applies to the activities which children may undertake in co-operation with trading standards officers to ensure enforcement of this legislation. My noble friend said that he will not press the amendment. We have a good discussion on the point to which we can refer in Hansard in years to come. We should now move on to the next stage.
Lord Cocks of Hartcliffe: My Lords, I am grateful to noble Lords who have taken part in the debate on my amendment. I gave your Lordships a substantial list of possibilities about the use of children and I do not recall any real answer to the various points which I raised.
I am grateful to the Minister for his contribution. He made it clear that the successful implementation of this legislation involves the use of children in order to collect evidence. I stress the point which I made earlier; namely, that this legislation is dependent upon the use of children under the age of 16 to implement it and yet this Bill has gone through both Houses and there has been only one real discussion on the matter, and that has taken place this evening.
I fear that had there been reference to animals in the legislation there would have been a great deal more discussion. There does not seem to be as much anxiety as regards children. I hope that in time to come my speech will be seen as an anachronism, a monadnock and a lot of scaremongering. I fear that it will not be. However, for the present, I beg leave to withdraw the amendment.
Amendment, by leave, withdrawn.
Lord Rea: My Lords, I beg to move that this Bill do now pass.
Moved, That the Bill do now pass.—(Lord Rea.)
On Question, Bill passed.

Auction Houses: Buyer's Premium
7.12 p.m.
Lord Cocks of Hartcliffe Lord Cocks of Hartcliffe rose to ask Her Majesty's Government whether they intend to take any action on the buyer's premium charged by auction houses.
The noble Lord said: My Lords, the buyer's premium imposed by many auction houses is a concept with which very few people are familiar.
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Therefore, perhaps I may say a few words about it. I spoke in a debate in February of this year initiated by my noble friend Lord Donoughue on horse racing. I said that I thought that those who were speaking represented all sorts of interests in horse racing apart from those of the ordinary punter—the person who places a bet from time to time. In a sense, I am in the same position this evening. Very few people are fortunate enough to be able to bring to your Lordships' attention a matter concerning auction houses.
The view that the punter should be represented was raised in a Home Affairs Committee report which recommended that the next government appointment to the Horserace Betting Levy Board should be a person seen by the punters as a voice for them. This evening I should like to feel that I am speaking for those who attend auctions and who bid to buy items and not for those who organise auctions.
The buyer's premium is comparatively recent. It has come to my knowledge through my interest in philately. From time to time I have bought at stamp auctions and I regularly receive a number of catalogues from different auction houses. However, I do not purchase from any auction house which imposes a buyer's premium because I believe the system to be extremely unfair. It was introduced in 1975 by Sotheby's and Christie's. The idea is that quite apart from a seller handing in his goods to the auction house to dispose of and paying commission, when those goods are auctioned, the final price at which they are knocked down—referred to as the hammer price—is added to by the auction house which charges the person who has bought the lot an additional sum, commonly 10 per cent., although it can vary. The 10 per cent. impost, which the customer must pay, also attracts VAT at the current rate.
That flies in the face of what I believe are the duties of auction houses. There seems to be a fundamental discrepancy between the auction house acting as an agent for the seller and the imposition of a commission.
I have the conditions of business under which Christie's conducts its business. Referring to the buyer, and under the heading "Christie's as agent", it states:
"Save as otherwise appears, Christie's acts only as agent for the Seller".
I should have thought that that is self-evident. I have always understood that the duties of an agent were to obtain the highest possible price for the goods being sold. However, the words are "Save as otherwise appears". Paragraph 4, under the heading "Premium", states:
"The Buyer shall pay to Christie's a premium of 10 per cent. of the Hammer Price together with VAT at the standard rate thereon and the Buyer acknowledges that Christie's may also receive commission from the Seller in accordance with Condition B4".
Condition B4, which concerns the seller, states under the heading "Commission and Expenses":
"The Seller authorises Christie's to deduct commission at the Published Rates and Expenses from the Hammer Price and, notwithstanding that Christie's is his agent, acknowledges that Christie's may retain the premium payable by the Buyer in accordance with Condition A4".
When I was a boy, that would have been described as having one's cake and eating it. In Bristol we have a more homely phrase. We call it having the penny and the bun. Either way it seems that there is a clear dichotomy between the auction house acting as agent for the seller and being charged with obtaining the best possible price and, in addition, exacting a payment from the purchaser.
It seems to me that the duties of the auction house as an agent are very well summed up in a quotation from Sotheby's latest publication which states on page 11 under the heading "Selling at Sotheby's":
"Operating on a commission basis, our reputation and success rests on securing the highest possible price for your property".
To me that is the proper aim of the auction house acting as an agent. If one imposes a buyer's premium on the person purchasing, that is diluted. The best possible price is not then obtained because those thinking of bidding will set themselves a limit above which they will not go. Sometimes they are overtaken by zeal and go above that limit. However, most people do set themselves a limit when attending an auction to buy particular lots. Perhaps they discuss the matter with their spouse beforehand. The buyer must take into account, when considering that limit, that he cannot pay as much as he would like because he would be faced with the buyer's premium of a certain percentage plus VAT on top. Therefore, that must be taken into the reckoning. By imposing the buyer's premium the auction house is lowering the price which it can get for the vendor. That is not good; in fact, it is double dealing.
When I read my Stamps magazine, to which I contribute regularly, I sometimes see articles about buying at auction. The articles give advice to people who are perhaps a little nervous about putting a toe into the water. They invariably say "Bear in mind, when preparing your estimate as to how far you are going, to go in bidding for particular lots, that you may have to pay a buyer's premium on top of that and you should adjust for that". Because that factor is taken into account by the potential purchaser, the seller suffers.
Perhaps I may give an example. I must not weary your Lordships, but ignorance on the subject is profound and unless one comes into contact with it. Some body buying a lot for £100 will actually pay £110 if there is a 10 per cent. premium, plus VAT. Yet there is still the commission to be deducted from the seller. To me, that is patently misleading because of the need to accommodate how the bid is adjusted. The public suffer from that. One wonders how far it has gone. There is a very wide range of auction houses with different conditions attached to the premium.
I thought that we had really reached a pretty pass when, in my latest edition of Stamps for the month of July, there appeared a full-page advertisement from Stanley Gibbons under the heading "The New Season". The advertisement for Stanley Gibbons Auctions states:
"News from 'SGA' Buyer's Premium Down to 10%".
On inquiry I found that the buyer's premium was 15 per cent. plus VAT. In its puff Stanley Gibbons goes on to say:
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"As from the beginning of the new season … This means that for all sales from September 1991, the buyer's premium will be only 10% plus VAT which, we hope, will help to ease the burden in these difficult economic times".
That is probably Stanley Gibbons's way of saying that they are losing so much business by imposing a 15 per cent. premium that they have to lower it, though it is better to dress it up in that way. The public suffer from that. Certainly the national museums and galleries lose out when trying to buy works of national importance to add to their stock. I hope that my noble friend on the Front Bench, who knows far more about the subject than I, will be able to embroider on the matter.
To their credit, some auction houses have not imposed a buyer's premium when a public body has been purchasing, notably Phillips. However, when we consider that the total purchasing grant for all museums and galleries was just over £9 million and we compare that quite starkly with the profits of Christie's and Sotheby's for 1989 of 100 million and 188 million dollars respectively, we can put the matter into perspective. Frankly, I believe that the whole rotten system is merely a device for increasing income. It is a shoddy deception.
The sellers are victimised because they are getting less for their goods than they would otherwise. They are losing money. The auction house is getting paid at both ends. The premium is just a device to increase commission without the vendor realising it. The buyer gets absolutely nothing for the money he pays. I am very glad to have this opportunity to air this grievance. Many people who go to auction houses are aware of the abuse, but so far as I know there is no way in which this kind of grievance can be expressed except through one or other of the Houses of Parliament.
I hope that there will be greater public awareness of the subject. Tonight, I do not expect the Minister to offer any quick fix. However, I hope that the Government will consider whether the matter should be ventilated. They may wish to study the possibility of more publicity or whether there should be moves to have the matter looked at by the Office of Fair Trading which has already done a fair amount of work on the problem. I am not asking the Minister for a definitive answer now. I am very glad of this opportunity to raise the matter. I look forward to contributions from other Members of the House.
7.25 p.m.
Lord Strabolgi: My Lords, I am sure that we are all grateful to my noble friend for putting down this Unstarred Question on what is really a very important subject. As he said, for some years now the leading auction houses have been charging what I may call "double commission"; that is, commission from the vendor for whom they act, as my noble friend said, and the commission which is called a "premium" from the buyer, which is 10 per cent. of the hammer price. The buyer's premium of 10 per cent. could be a substantial sum on the higher priced items.
My noble friend mentioned stamps and items of about £100. If one thinks of the large auctions which take place in London, mainly of paintings, on

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£500,000 the 10 per cent. premium is £50,000; on £1 million, which is not unusual for a painting to fetch nowadays—in fact, some fetch even more—the 10 per cent. premium is £100,000. By a strange coincidence the decision to charge the buyer was brought in by the two leading auction houses, Sotheby's and Christie's, at the same time and the smaller auction houses soon followed suit.
My noble friend was very critical about the premium. I can understand the reason why it was introduced. The reason is that it gives more flexibility over the seller's commission when a prospective sale is being negotiated. If you are trying, against your rivals, to get a really important collection to auction, perhaps from the United States and amounting to, say, many millions of pounds, it is a great advantage to say to the prospective vendor, "We shall be happy to sell these Impressionists or Old Masters for you without commission so that you will get the full hammer price". All the auctioneer's costs and expenses, and the company's eventual profit, can be absorbed by the buyer's premium.
In this country we have never had any auction taxes; that is, a tax paid by the buyer on the hammer price. When such taxes have been proposed at times by the Treasury there has always been very strong resistance. The old argument against such taxes used to be that Britain alone had no taxes and that this was a great advantage to our auction houses in securing important collections from overseas—particularly from the United States—against our Continental rivals. That argument was somewhat undermined when our auction houses introduced their own tax on the buyer which they called, with the national love of euphemism, "a buyer's premium". There is also VAT which is only levied, fortunately, on the seller's commission and premium and not on the hammer price.
There is no buyer's premium in France although there are auction taxes. These taxes, which are levied on the buyer, vary from nearly 13 per cent. for smaller items up to the equivalent of £1,500 (say, 15,000 French francs) and descend by stages to under 5 per cent. for objects costing above the equivalent of £30,000. It will be seen, therefore, that a French tax on the more expensive items of only 4.965 per cent., plus VAT, is far less than the buyer's premium over here which remains unchanged whatever the price of the object at 10 per cent. throughout. I should like to ask the Government whether they have any evidence that the buyer's premium has depressed prices because, as my noble friend said, the dealer, in particular, and the collector have to take it into account when calculating how far they can bid.
There is a slump at the moment, as we all know. Only the very finest and rarest works of art and antiques seem to be holding their prices. It is likely, therefore, that the buyer's premium has come to stay, at least for the time being. However, I put in a plea for more flexibility and perhaps a sliding scale, rather than the rigorous 10 per cent. throughout.
I should further like to ask the Minister whether he will detail the division of responsibility for auction
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sales in this country. The Department of Trade and Industry has overall responsibility, as I understand it, although the local authorities have some responsibility as well. Perhaps he will say what responsibility the Westminster City Council has, for example, for the four leading auction houses situated in the capital: Sotheby's, Christie's, Bonham's and Phillips. Who is responsible for supervising the conduct of auction sales to make sure that the law against pre-sale, non-bidding agreements, partnership cartels, dealers' rings and so-called "bids off the chandelier" is observed? In France auction sales are conducted by official commissaires-priseurs who are accredited to the French Government. Also in France the genuineness of items being auctioned is guaranteed. Here the auction houses give no warranty and accept no liability. That, of course, is included in the small print.
It is surely only a matter of time before the European Commission begins to examine the question of equalisation between our own and the continental practice concerning auctions. I wonder whether the Government have had any thoughts about that and what their attitude is likely to be, because they are two quite different systems. I happen to believe that the continental system is better and produces better catalogues. However, when it comes—as come it must —it will be an interesting question to determine. I look forward to hearing the views of my noble friend on the Front Bench and to the Government's reply.
7.32 p.m.
Lord Crickhowell: My Lords, until I came into the Chamber this evening I had not appreciated that this item was on the Order Paper. I have been out of London today and I had not noticed it. I intend to intervene only briefly to say how much I agree with almost everything that was said by the noble Lord, Lord Cocks of Hartcliffe, when introducing this subject. We owe him a debt of gratitude. I have to declare an interest. I am a director of several West End fine art dealers.
Clearly there has been some conflict in recent years between the policies of the great auction houses and the position of the dealers. It seems to me that it was a deplorable step taken by the auction houses, using their dominant monopoly position. It is unquestionably true that the highest possible price cannot be obtained because any buyer will take into account the cost of the premium. It is also true, as the noble Lord, Lord Strabolgi, pointed out, that effectively we have seen the introduction of a tax, because not only do we have the buyer's premium but that draws down upon it a liability to VAT.
However, I do not think I shall follow the noble Lord in giving much encouragement to the idea that we should follow the French example. The French have been notorious for a very tightly-controlled system which ensures that only French auction houses, carefully listed on carefully controlled registers, can operate. It is impossible for competitors from this country or elsewhere to enter the market. I was glad to see in the newspapers within the past few

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days that the EC has tackled this particular abuse and is about to open up the French market. That is a thoroughly welcome development.
I fear, however, that what we saw during this period of great vigour and activity in the art trade was a very concerted and successful effort by the great British auction houses to establish a dominant position in the market in a variety of ways. That has done some good for the nation in terms of considerable foreign earnings and the ability of those auction houses to take a very strong position in the United States of America.
However, one of the prices that has been paid undoubtedly has been considerable damage to the fine art dealer market in London. That price will not just be paid by the dealers but by many who have bought pictures during the period when the art market was hyped-up—and hyped-up, it must be said, by the auction houses. It was hyped-up on the basis of practices that involve not only offering to sell pictures for very little charge, or for nothing—as has been pointed out—but on the back of loans and financial support; often not disclosed and quite improper, in my view. That practice really ought to be condemned.
We have seen the art market hyped-up and we have seen the extraordinary expansion of the premises of the great auction houses spreading themselves in a grandiose way down Bond Street, behind Bond Street and in King Street in St. James'. All that has had to be paid for by someone, not least by those who have been paying the buyer's premium. However, we now enter a very different era; the worst slump in the art market that anyone I have met can recall. It is certainly the worst recession in the art market since the war. It is a slump that is putting many dealers out of business and which has completely broken the back of the very overheated market in impressionist pictures and in the more fashionable pictures. I am glad to say that I saw, in an auction I attended only yesterday, good quality English pictures now being bought for good prices by English buyers. There is some sign of recovery.
However, one of the features of the dealer business is that dealers do tend to offer guarantees and they frequently buy back from discontented customers. They offer reassurance to long-term customers that they will seek to look after them in later years. Many who buy in the auction houses, I fear at high prices, find rather painfully when the going gets rough that there are no such guarantees; that they are left with the high prices that they paid and are told that they must lump it. Therefore, I believe that the time has come for another look at this question. Certainly the auction houses ought to be asking themselves some questions. They ought to recognise, for example, that if there is to be a healthy art market it is a market that must have a healthy dealer market as well. The underlying basis of the art trade in this country has always depended on there being a healthy dealer market. The recent tendency of the great auction houses to seek to dominate and effectively to become dealers themselves seems to me a wholly deplorable development.
A very considerable service has been rendered by the House this evening by drawing attention to some
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of these factors and by enabling us to comment on them. I hope that in this very different market in which we are now operating some thought will be given as to whether there should not be a re-examination of some of these changes that were introduced at a time when almost anything seemed to be possible in the art market. There was a feeling that somewhere in the world —in America and, most recently, in Japan—there were always those who would pay ever-increasing prices. We have seen scandal in the Japanese market break the confidence of many buyers. We are in for a different era; an era in which there will be a re-examination of the practices in the trade by all of us in the trade—I count myself as one. I hope that among those who re-examine their practices and ask whether they are really justified will be the auction houses in their operation of the buyer's premium.
7.40 p.m.
Lord Morris of Castle Morris: My Lords, the Opposition Front Bench is by convention neutral on this question. I speak purely in a personal capacity. Although I cannot say of the buyer's premium, as the psalmist said of his tears, that it has been my meat day and night, I can claim a fairly close acquaintance with it during the 15 years I spent on the Museums and Galleries Commission, the last five of them as its chairman. It was throughout that period a matter of continual concern to us, as it was to all the museums and galleries of the United Kingdom, not merely in London but in Edinburgh, Glasgow, Cardiff, Birmingham, Manchester, Hull, Halifax and the many other places where museum matters matter.
Perhaps I may set a context. The buyer's premium was introduced more than 15 years ago, to a chorus of protest by museums, galleries, collectors and dealers alike, by two great auction houses within two days of one another. Originally, one charged 8 per cent., the other 10 per cent., but they very rapidly came together and standardised it at 10 per cent. The reason for its imposition was that, at that time, the art market was going into a slight recession, and auctioneers were naturally anxious to maintain their profits. The result was that they made very great profits indeed, and have continued to do so ever since, irrespective of the fluctuations in the market or the continued protests of Britain's museums, galleries, owners, collectors and dealers. I can find little record of any protest, or indeed of any comment, or indeed of any interest, by Her Majesty's Government during recent years.
Like many another thing we could well do without, the practice of charging the buyer's premium came to us from the Continent, where some auction houses had seen it as a means of making a quick franc, mark or lira. When it was introduced into this country it did very great damage because of the very high level of profits made by the auction houses which introduced it. It is commonly alleged, in the public prints and elsewhere, that those auction houses subsequently employed greatly enhanced publicity machines to push up values, and to tempt owners to sell their inheritance through the very high profile auction houses, and to the very great profit of those houses.

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The result of these elevated prices for works of art—the word "hyped" is one I have commonly heard used, and heard again tonight, and not always by the vulgar—is that all our national museums and galleries have been unable to compete, because not only have prices rocketed skyward, but, at the very same time, the museums' purchase grants on which they rely to bid have been frozen by the deliberate, conscious policy decision of this Government for every one of the past six years. Time and again, one of our great galleries has simply turned away from the auction of an important piece of British heritage because it knew perfectly well that it did not have the money to compete with foreign buyers at these astronomical prices.
The museums must pay the 10 per cent. buyer's premium and the greatest auction houses look most unkindly on any auctioneer who does not charge this premium to the national museums and galleries or threatens not to do so. And so, one after another, these works have gone overseas, and the haemorrhage of the heritage has quietly seeped on. The most recent example, but only one among many, is the Badminton Cabinet, sold for £8.7 million to the United States. The Fitzwilliam Museum and the National Art Collections Fund put up a valiant fight to match that enormous price, but I disclose no secrets when I say that most of us believed from the beginning that they did not stand a snowflake's chance in hell of meeting it. And so it proved.
That is all very sad. We have all said so. We bemoan it; we wish it had not happened. But the Government will argue that it is perfectly fair and unquestionably legal; that it is the free play of market forces, the bracing breeze of competition; and that the auction houses are under a statutory obligation to maximise their profits in the interests of their shareholders. "This is a matter of free trade", they will add, "and we are all in favour of free trade, are we not?" But this is not free trade—it has been well described as more like a three card trick. The buyer's premium is nothing more or less than a surcharge imposed at 10 per cent. on the hammer price. So let us consider what takes place.
If you bid £1,000, and you are successful, you will pay £1,100 plus VAT on the buyer's premium. But the owner, the seller, will not get the full benefit of that £1,100. He may well lose more than 20 per cent. of it if he pays both the seller's and buyer's premium, and, in the end, trouser no more than £900. But, of course, a powerful or knowledgeable owner, a well advised or well informed owner, will already have negotiated a "no seller's premium" deal. So the only commission to the auction house is this buyer's premium, fixed at 10 per cent. And we all know, and the auctioneers have quite openly said, that this is not negotiable. In any other commercial transaction, of course, it would be. But the major auction houses have agreed between them not to vary it. This is surely creating monopoly; it is certainly not free trade.
The Government know this, and the Government have done nothing about it. We may ask why. The answer is that the Government wish to keep London
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as the centre of the art trade, because it brings in vast revenues in invisible earnings. And so they are more or less content, unless they are roused by troublesome people like your Lordships, to turn a Nelsonian eye on the activities of the major auction houses, lest by any chance they should ruffle the feathers of these geese that lay such golden eggs. But like so much else in government policy, this is extremely shortsighted. Just like North Sea oil, the treasures of the British heritage are drying up. This cow has been milked and milked until it is almost dry. There may perhaps be a tiny blip in the immediate future when the unfortunate names at Lloyd's are forced into distress selling, and a few more of the family treasures hit the market, but that will be a very temporary amelioration of the trend, and before long there will be virtually nothing of outstanding value or importance left.
The buyer's premium has forced sale values up, to the benefit of no one except the auction houses themselves. Prices are now untouchable by our major collectors and museums. Perhaps I may give one recent example. A pair of Japanese porcelain Kakiemon vases sold this week for a record price of £550,000, against an estimate of £400,000. That immediately ruled out of contention two British museums with fine collections which desperately wanted to buy. If those vases had been sold to one of those museums under the private treaty sale rules, there can be no question but that the owner would have been better off, the museum would have had time and opportunity to raise the price and the objects would have been certain to remain in this country. The only party not to have benefited to the full would have been the auction house. I know not whether it be true, but it is certainly widely believed that auction houses have, on many occasions, actively discouraged owners from attempting private treaty sales to British museums. If it is so, it is hardly possible to see such activity as being in the national interest.
Free trade must be supported, but the stark tyranny of market forces must not be allowed to rule, unallayed, in so sensitive a matter as the disposal of our national heritage by no more noble criterion than the sordid motive of private profit. The Question before us asks what action the Government intend to take. I will tell them what action they ought to take. The buyer's premium is not in itself a matter calling for heavy primary legislation. It is essentially the latest symptom of a deep-seated malaise. What is needed is a Select Committee of your Lordships' House or of another place, or a joint committee of both Houses, to look into the totality of auctioneering practices in this country. It should investigate the desirability or undesirability of the buyer's premium; it should consider all available evidence on the matter of valuations by auction houses; and it should explore the practices governing the placing of reserves on objects for sale, to say nothing of the widely rumoured practice of taking bids off the walls, the chandeliers, the carpet or anywhere else.
There are well-known rules and regulations which apply to all other forms of business in this country. There are regulatory bodies in the City which enforce them; and woe betide now the company or the

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businessman who wilfully contravenes them and is found out. However, the auctioneering business has no such regulatory body with teeth and power; no such investigatory body to search out irregularities; and no policing mechanism to deter the potential wrong doer. It may interest your Lordships to know that in the United States at this very moment there are moves afoot to set up exactly this kind of investigation, because it seemed to be necessary for the proper regulation of the trade in that country. A fortiori, it is necessary in this country, where London is the heart and centre of the art market of the world—and long may it remain so. A Select Committee, making recommendations, would create confidence, set standards and assure that constant vigilance which is our only prophylactic against abuse.
In the end, we must remember that this trade is unique. If we make a motor car and sell it, we can make another one. If we manufacture washing machines and sell them, there are plenty more where they came from. But the auction houses deal in far more precious ware: you cannot manufacture another Gainsborough once you have sold one; you cannot make a new Rembrandt to sell. This trade must be properly regulated.
7.53 p.m.
The Parliamentary Under-Secretary of State, Department of Trade and Industry (Lord Reay): My Lords, this has been an interesting debate. I have listened carefully to the points made. The noble Lord, Lord Cocks, was in very indignant form this evening. The noble Lord, Lord Strabolgi, and my noble friend Lord Crickhowell both evidently have great knowledge of the matter from their personal experience. Finally, we heard from the noble Lord, Lord Morris, who broadened the debate somewhat to encompass points which were to some extent outside the Question before the House. He ventured into certain areas and I say at once that I do not intend to follow him.
The Question to Her Majesty's Government is whether they intend to take any auction on the buyer's premium charged by auction houses. There are three strands to the issue. First, there is the question of whether the introduction of the buyer's premium by Christie's and Sotheby's in 1975 involved a collusive agreement falling within the terms of the restrictive trade practices legislation; secondly, whether Christie's and Sotheby's might have created a monopoly situation in their market and, if so, whether they were abusing that situation; and thirdly, whether the Government should act directly to ban the imposition of buyers' premiums by law. I shall take each in turn.
The buyer's premium was first introduced by Christie's and Sotheby's in 1975. The other auction houses followed suit shortly afterwards. Allegations were made that the two main auction houses had colluded in setting the premium and that an agreement existed between them which would fall under the terms of the Restrictive Trade Practices Act 1976. The Director General of Fair Trading, who is responsible for administering the restrictive trade practices legislation, investigated the matter in some depth.
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Indeed, he did so on no fewer than three occasions: in 1976, 1979 and 1982. The two companies strongly denied the allegation of collusion and the director general, after consulting leading counsel, concluded that there was no further action which should be taken. The director general has not, I understand, received any recent complaints on the subject.
I turn now to whether Christie's and Sotheby's have or had established a monopoly by virtue of a dominant position in the market. This too was looked at by the Director General of Fair Trading when he was investigating the buyer's premium under the Restrictive Trade Practices Act. The director general concluded that no competition issues—for example, the existence of excessive profits arising from a monopoly situation or action to prevent new entrants to the market—were raised by the premium. He found no evidence to warrant formal investigation at that time under either the Fair Trading Act 1973, which covers monopolies, or the Competition Act 1980, which deals with anti-competitive practices more generally.
In recent years the Office of Fair Trading has had only one complaint about possible abuse of the dominant position in fine art auctioneering enjoyed by Sotheby's and Christie's. Among matters complained of were generally excessive prices, made higher by the publicity given to significant purchases; the practice of allowing anonymous bidding and anonymous telephone bids; bidding by auction houses on behalf of clients, or house bidding as it is sometimes called; and misrepresentation of the number of bidders for particular items by auctioneers. However, the OFT concluded in June 1990, after fully examining this representation, that nothing significantly anticompetitive was going on to justify action under competition legislation.
Finally, it has been suggested that the Government should legislate to ban the buyer's premium. However, this is not a matter in which the Government have the powers to intervene, and nor would they wish to assume them by further legislation. It is, and we believe it should remain, for the auction houses to decide how best to conduct their business. Traditionally the auction houses, and indeed organisers of auctions of all kinds and not simply the fine art houses, have recovered their costs by charging a commission to the seller, whose agent they are.
These costs will, however, vary considerably. For the organiser of an auction of second-hand cars they are likely to be small. For a dealer specialising in rare and valuable antiques, by contrast, they are likely to be considerable. Any auction house dealing in this field will need to maintain expertise in the different branches of the trade in which it deals, and such expertise is expensive. Insurance, handling, storage and security costs are all likely to be high. It is not for me either to endorse or to criticise the actions of the auction houses, but I see no objection in principle to their costs being met by the buyer as well as the seller.
The noble Lord, Lord Cocks, argued that it is wrong for the auction houses to make a charge to the buyer since they act as agents for the seller. But I do not find that argument convincing. The customer of

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an auction house is in much the same position as the customer of a shop: he is making use of a facility and can, therefore, reasonably be expected to pay for the facility. It does not seem to me to make much difference whether he does so directly through the buyer's premium or indirectly through an element of what he buys being retained by the auction house by way of a larger commission on the sale. In any event, we see no justification for the Government to intervene in the working of the market in that area.
Auction houses are in competition with one another and with other consumer outlets for business. If they do not offer sufficiently attractive terms sellers will go elsewhere. If an auction house makes an unreasonable profit then it is likely to be undercut by its rivals. Auction houses, like any other business, charge what the market will bear. How they structure their charges is a matter for them. If auction houses were forbidden by government to impose one type of charge, they would either cover their costs by raising other types of charge or they would go out of business. It is not evident that either of those results would benefit either buyers or sellers at auctions.
The noble Lord, Lord Strabolgi, asked some questions of which he was kind enough to give me notice. He asked whether the Government had any evidence that the buyer's premium depressed prices. We have no such evidence. I should make it clear that my department does not monitor the working of the fine arts auction market. In so far as a general consumer interest in involved, that is primarily a matter for the Director General of Fair Trading, who has a duty under the Fair Trading Act to keep under review commercial activities in the United Kingdom, in particular as they may have an adverse effect on the consumer interest.
The noble Lord also asked how the responsibility for auctions was divided between the DTI and local authorities. The DTI has no formal responsibility in the field of auctions except in so far as it is ultimately responsible for the legislation affecting them. Most of that legislation is part of the general sale of goods legislation and creates civil remedies in the event, for example, of goods not conforming to their description. The enforcement of certain legislation affecting
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auctions which creates criminal offences—for example, mock auctions and the operation of so-called rings or cartels among bidders—is the responsibility of local authority trading standards officers and the police.
The noble Lord asked finally about proposals emanating from the European Commission. There are currently no proposals to harmonise the law governing auctions in different member states and so at the moment that is a hypothetical question.
To sum up, it is the Government's view that, in the absence of evidence that the activities of auction houses fall within the scope of competition law, it must be for the market, not for the Government, to decide how they should recover the costs of providing their services.
Lord Morris of Castle Morris: My Lords, before the Minister sits down, did I understand him to say that his department does not monitor sales in the major auction houses? If I have understood him correctly, does any department monitor such sales? If not, why not?
Lord Reay: My Lords, I said that that is principally a matter for the Director General of Fair Trading, whose duty under the Fair Trading Act is to keep under review those matters in so far as they may have an adverse effect upon the consumer.

Birmingham City Council Bill
Brought from the Commons, read a first time and referred to the Examiners.

Heathrow Express Railway (No. 2) Bill
London Underground (Victoria) Bill
Returned from the Commons with the amendments agreed to.

Planning and Compensation Bill [H.L.]
Returned from the Commons with amendments and with a privilege amendment; it was ordered that the amendments be printed.
House adjourned at four minutes past eight o'clock.