Lords Sitting of 15 May 1991

Preamble
The House met at half-past two of the clock: The LORD CHANCELLOR on the Woolsack.
Prayers—Read by the Lord Bishop of Salisbury.
The Earl of Cromer—Sat first in Parliament after the death of his father.

NHS Waiting Lists
The Countess of Mar The Countess of Mar asked Her Majesty's Government:
Whether they have assessed the costs to industry and commerce, the Inland Revenue, the Department of Social Security and individuals of keeping patients on National Health Service hospital waiting lists for protracted periods.
The Parliamentary Under-Secretary of State, Department of Health (Baroness Hooper): My Lords, no such assessment has been made.
The Countess of Mar: My Lords, I thank the noble Baroness for her Answer to the Question. I totally expected that because it is clear that the Government tend to regard the National Health Service as a drain on the economy. Will she consider whether it would be worthwhile looking at the marvellous benefits of the National Health Service and realising that people who are treated, who are put on their feet again and able to return to work, are of benefit to society generally? Would ii not be a good idea to expedite the clearing of waiting lists so far as is possible—I realise that they can never be totally cleared—in order to benefit the economy generally?
Baroness Hooper: My Lords, the reason why we have not undertaken the kind of assessment suggested by the noble Countess is that it would be a mammoth task. There is no need to do so because our firm policy is to reduce long waits for treatment. I agree with the noble Countess that the problem is the waiting time involved. We firmly believe that excessive waiting times for treatment are wrong. The question of economic; benefits is another matter; but our firm policies are directed to shortening the waiting time.
Lord Ennals: My Lords, at a time when, historically, we have record lengths of waiting lists, is it not strange that this matter is not considered to be a priority? Is it not to be expected that, in this age of purchaser and provider and with all the new accountants and administrators who have been brought into the National Health Service, the costing of the waiting lists, with all the misery that they cause people, would have been an essential piece of finance?
Baroness Hooper: My Lords, this is a priority for us. In the 12 months to September 1990 the number of patients waiting over a year reduced by 7 per cent—that is important in the overall numbers—and fast-track figures show a further 12 per cent. fall in
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patients waiting over a year in the five months to February 1991—proof that our policies for improving the situation are working.
Lord Boyd-Carpenter: My Lords, is it not a fact that in shortening the waiting lists, the argument is humanitarian rather than economic?
Baroness Hooper: Yes, my Lords. In all the reforms of the National Health Service, we direct our efforts to improving the quality of patient care.

ECGD: Premium Rates
2.40 p.m.
Lord Taylor of Gryfe Lord Taylor of Gryfe asked Her Majesty's Government:
What plans they have for future premium rates for Export Credit Guarantee Department cover and availability of funds for the aid and trade provision.
Viscount Astor: My Lords, the level of Export Credit Guarantee Department premium rates for medium and long-term business will be kept under regular review to seek to ensure that they continue to achieve the balance which Ministers wish to strike between the national interest reasons for supporting such exports and the risk to the taxpayer that the ECGD's premium income will not be able to cover its underwriting losses.
The aid and trade provision budget for 1991–92 is£97 million. The budget for 1992–93 will be set following the outcome of the annual Public Expenditure Survey.
Lord Taylor of Gryfe: My Lords, is the Minister aware that I have in my hand a letter from the Chairman of the Overseas Project Board which represents the major contractors in Britain engaged in export? He points out that there is no new money available this year under the aid and trade provisions whereas other countries, like Germany and France, have resources in that area. Secondly, is the Minister aware that the increased premiums that are now charged on export credit business are on top of the highest rates of export credit insurance premiums in the world? How can British exporters continue to improve when their hands are tied behind their back in that way?
Viscount Astor: My Lords, that is true about the aid and trade provision budget, but it is because of the recent successes of British firms that the budget has been heavily overcommitted. It has been decided that we can take no further commitments involving ATP expenditure in 1991–92, but discussions are under way with a number of firms on the way in which projects should proceed in 1991–92 with ATP expenditure deferred until later years. One must accept that rates are high, but they are necessary for the type of business concerned and the Government are committed to providing a viable and stable framework for the ECGD support for project exports.
Lord Trefgarne: My Lords, is my noble friend aware that the increase in premiums which has recently been effected in respect of ECGD will be very damaging from the point of view of our exporters? Will he undertake to look at the matter again and see whether it is possible for our exporters to be put on an equal footing with their overseas competitors?
Viscount Astor: My Lords, as I said, it is important to strike the right balance. Rates are going up. French rates have already gone up. We are campaigning vigorously to press other export credit agencies to charge economic premium rates for medium and long-term export credit support. We are making good progress.
Lord Williams of Elvel: My Lords, is it enough for the Minister to say that the Government are pressing other export credit guarantee agencies to charge the same rates as ourselves when we are charging uncompetitive rates to industry and thus affecting British exports? Furthermore, can the Minister tell the House why the aid and trade provision was suddenly capped without any warning to anybody? Was that a Ministerial decision?
Viscount Astor: My Lords, I do not believe that it was capped; it is my understanding that it reached the full extent of its budget. With regard to short-term rates, my honourable friend the Minister for Trade made it clear in another place at Report stage of the Export and Investment Guarantees Bill that the Government, through the ECGD, will be providing 100 per cent. reinsurance to the privatised insurance services in respect of risks arising in respect of a handful of countries which are unlikely to be acceptable to the private reinsurance market. He gave an assurance that it was the Government's intention that, subject to satisfactory financial performance, the facility would continue for as long as the Government consider it essential to meet the reasonable needs of exporters.
Lord Williams of Elvel: My Lords, is the Minister aware that he is trying to widen the Question to the short-term insurance services group which the Government are trying to privatise? That was not the Question that my noble friend asked. It was about premium rates for insurance cover for long-term exports to the world. Are not the Government aware, and is not the noble Viscount aware, that we are now becoming seriously uncompetitive in our insurance premium cover and it is about time the Government did something about it?
Viscount Astor: My Lords, I have already said that although our rates are high, premium rate increases have been justified. However, they were tempered to take account of the rates charged in other countries. While premium rate increases are unpopular most exporters would prefer to have cover available on the market than none at all.
Lord Jay: My Lords, is the Minister aware that for many years the policy of previous governments was that the ECGD should match the facilities available to
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exporters in other countries? Is he further aware that the present Government policy is likely to deal a serious blow to British exporters?
Viscount Astor: My Lords, I have already said that our rates are high, but they are competitive. We are taking the lead in tackling the problem of subsidised premium rates. Other EC countries have problems and have shown great interest. We feel that they will want to take similar steps in the future.
Lord Elton: My Lords, will my noble friend draw the views expressed in your Lordships' House, particularly those of my noble friend Lord Trefgarne, to the notice of his right honourable friend?
Viscount Astor: My Lords, I shall certainly do that.
Lord Taylor of Gryfe: My Lords, is the Minister aware that we are running a substantial deficit in our balance of payments and there is increasing unemployment in heavy engineering industries? Will he try to understand how difficult it is for British exports, particularly in capital goods, to compete with those of the French, the Germans and others who are offered much more favourable credit terms than our exporters are offered? Can he not do something in the national interest to improve the situation?
Viscount Astor: My Lords, as I said earlier, we believe in providing strong support for our exporters. They are an extremely important part of our economy. We know that the rates are high and we are looking at them but we feel that they are justified in view of the increasing risks involved.

"Global Warming in an Unequal World"
2.47 p.m.
Lord Hatch of Lusby Lord Hatch of Lusby asked Her Majesty's Government:
Whether they are taking into consideration the report Global Warming in an Unequal World in their preparations for next year's international conference on the environment in Brazil.
Viscount Astor: My Lords, I have seen a copy of the report. While we do not share the approach it suggests, the report does highlight the important role of the developing countries in the international response to climate change. The Government are strongly committed to the negotiation of a convention on climate change to be signed during the United Nations Conference on Environment and Development in June 1992. To be effective in tackling this global problem, the convention must be supported by all the world's major greenhouse gas emitters, including leading developing countries.
Lord Hatch of Lusby: My Lords, I thank the noble Viscount for that Answer. Is he aware that the report is a counterblast to the propaganda that is mounting in Washington, based on the World Resources Institute, suggesting that the developing countries are as culpable as the developed countries in producing the major greenhouse gases? Is it not a fact that the United States and the Soviet Union alone account for

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about 30 per cent. of the total world emissions of those gases? Is that not a major issue which the Government will face, and one hopes are now preparing to face, at next year's conference in Rio?
Viscount Astor: My Lords, this is of course a major issue. The Government support the aim of preparing the climate change convention in time for its signature during i he conference. We are also playing an active part in negotiations for a convention on bio-diversity and an international agreement on forestry to be finalises in time for the conference. UNCED will look at a great range of environment and development issues. We hope that it will agree an action agenda on key issues and produce a declaration, or charter, of environmental rights and principles.
Baroness Nicol: The Minister states that we must include the underdeveloped countries on this attack on global warming. Can he say how seriously the report about which my noble friend asks is taken? For example, will it be studied by our own Interagency Committee on research into global environmental change? I refer to the committee into which all our research councils have an input. If the Minister takes the report seriously perhaps he will suggest that those councils consider it and take it into account when they next advise the Government.
Viscount Astor: My Lords, I have stated that we do not necessarily share the approach that the report suggests. It suggests a global formula which seeks to solve this complex issue of climate change in one bite. We believe that the negotiation of such a formula would invariably delay the world's response to this serious problem. We prefer to approach the current negotiations on a step-by-step basis. That was the approach successfully adopted in the international agreements on the protection of the ozone layer.
The authors of the report met officials from my department when they recently visited this country. They had a very interesting discussion on the issues raised in the report.
Lord John Mackie: My Lords, the noble Viscount referred to an international agreement on forestry. Will he consider his Government's record on planting trees in this country over the past two years?
Viscount Astor: My Lords, we are proud of our record of planting trees. However, that is a rather different question from the one on the Order Paper.
Lord Cledwyn of Penrhos: My Lords, does the noble Viscount agree that this problem is closely related to the external debt burden of the third world? Does he recall the proposal made by his right honourable friend the Prime Minister in the Commonwealth meeting held last year? Mr. Major then proposed that the external debt of the poorer countries should be cut by two-thirds? Will he tell the House what progress has been made on his right honourable friend's proposal?
Viscount Astor: My Lords, I am afraid that I cannot say what progress has been made. I can say what we are doing. We are co-operating with
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developing countries in many ways. Through the Overseas Development Administration we aim to strengthen the ability of developing countries to manage their environmental resources in a sustainable way. The ODA is examining ways of enhancing its work in the energy sector. The Government have announced a contribution of£40 million to the new global environment facility in the World Bank to provide funds for projects in developing countries with global environmental benefits. We have also increased our support for conservation of tropical forests by£100 million and now fund projects with a total value of£174 million.
Lord Hatch of Lusby: My Lords, I congratulate the noble Viscount on having read the report. I am glad that he has done so. He states that the Government do not accept all the approaches, but does he accept that there are two major issues for discussion at next year's Rio conference? First, how can the developed world cut down its present emissions of greenhouse gases? Secondly, but no less important, how can the developed world assist the developing world to secure the genuine, sustainable growth to which it is entitled without at the same time adding to the destruction of the planet's resources?
Viscount Astor: My Lords, as I said, it is an extremely important subject. Although developing countries currently contribute only one-quarter of global CO2, emissions, the proportion will rise sharply in the next decades as a result of economic growth and population increases. We believe that the contribution of those countries to global response should be through adopting policies which omit growth in their emissions without impeding their economic development. The developing countries can learn from our experience and our mistakes and ensure that they produce and use energy as efficiently as possible.
Lord Hatch of Lusby: My Lords, will the noble Viscount agree that they can do so only if they are assisted by those of us who have gained benefit while polluting the planet in the past 150 years?
Viscount Astor: My Lords, I have already said that we help the developing countries in those areas.

Further Education
2.55 p.m.
Baroness Lockwood Baroness Lockwood asked Her Majesty's Government:
What advice they have received from Her Majesty's Inspectorate of Schools about their proposals to remove further education and sixth form colleges from local education authority maintenance.
Lord Cavendish of Furness: My Lords, members of Her Majesty's Inspectorate were fully involved in discussions about the proposed new further education sector before the Secretary of State reached his decisions. Advice from HMI is given in confidence.
Baroness Lockwood: My Lords, I thank the noble Lord for that reply. Does he realise that in the absence of any publicly stated independent educational advice, one is bound to conclude that the Government's decision to transfer those colleges from LEAs is based on other than educational reasons? Can he advise me how he reconciles the Answer that he has given with previous reports from HMI? For example, the 1990 report on Aspects of Further Education states:
"Despite the demographic downturn during the past three years, FE enrolments have not declined and in some areas, they have increased … Colleges have addressed issues of efficiency and effectiveness and there has been an overall increase in their student:staff ratios".
Does that coincide with the advice that the Minister was given?
Lord Cavendish of Furness: My Lords, I believe that both of the noble Baroness's questions might be answered if I give the aims of the proposals. They are twofold. The first is to increase participation in education and training by young people. That will be achieved by giving colleges powerful financial incentives to recruit additional students. Secondly, the changes will increase colleges' freedom to manage by freeing them from local authority control. Colleges will be able to build on their strengths as they see them and become more responsive to student demand and the needs of the labour market.
Earl Grey: My Lords, as I understand it, the advice was given in confidence. Why was that so?
Lord Cavendish of Furness: My Lords, the tradition has been for such advice to be given in confidence at this stage. The noble Earl may accept that people giving advice will always feel freer when consultation is undertaken in confidence at that stage.
Lord Taylor of Blackburn: My Lords, while I accept that advice was given in confidence, it is usual after a period of time for HMIs to publish the advice given to Ministers, especially in respect of a subject which affects so many children and schools. Will the Minister give an assurance that in the course of time the information will be published?
Lord Cavendish of Furness: My Lords, I cannot give that assurance today. There will be a White Paper published soon. I shall have to write to the noble Lord to inform him whether the advice will be published afterwards. I am quite sure that it will not be published before such publication.
Lord Dormand of Easington: My Lords, is the Minister aware that his lack of desire (if I may so put it) to state what advice the HMIs gave justifies the suspicion which many of us have about the decision taken by the Government in this matter? Is he further aware that the work undertaken in further education and sixth form colleges is almost universally of a high standard and very widely admired by both parents and students? Why are the changes proposed; especially as the parallel—I am sure he will agree that it is a parallel—relating to the number of schools which have opted out is so low after this period of time? Will he state the cost of making the change and following it through?
Lord Cavendish of Furness: My Lords, noble Lords should not read anything sinister into the fact that I do not give details of HMI advice. I have given the reasons. It is a long-standing arrangement. The noble Lord asks for further details. He will have to wait for the White Paper.
Lord Glenamara: My Lords, will the noble Lord say when the White Paper will be published? Will there be ample time for representations to be made to the Government before legislation is introduced?
Lord Cavendish of Furness: My Lords, I can only say that the White Paper will be published soon. I am confident that there will be no recriminations about my definition of "soon". There will be plenty of time for representations.
Baroness Blackstone: My Lords, is the Minister aware that in published advice given by HMI to Ministers, local authorities and the FE sector were given a clean bill of health? Among other things it said that the way in which the Education Reform Act was being implemented with regard to FE was going well. It also said that most LEAs were working to develop quality assurance methods. Will the Minister say how 600 FE colleges dotted around the country will have their quality control monitored by a single agency at the centre?
Lord Cavendish of Furness: My Lords, the noble Baroness must wait for the publication of the White Paper to learn about the monitoring quality. As regards the overall picture, the great majority of college principals have welcomed my right honourable friend's statement.
Baroness Lockwood: My Lords, will the White Paper also contain the evidence on which the Minister based his statement that the transfer will bring about greater recruitment of young people to further education?
Lord Cavendish of Furness: My Lords, I am afraid that I cannot anticipate the White Paper.

Business
Viscount Davidson: My Lords, with the leave of the House I should like to say a few words about the two debates standing in the names of the noble Baroness, Lady Birk, and the noble Lord, Lord Ennals. As the mover is allowed 15 minutes and the Minister should rise to reply not less than 20 minutes before the scheduled end to the debate, in the case of both debates all other speeches should be limited to a maximum of seven minutes. If any noble Lord were to speak at greater length he would be doing so at the expense of subsequent speakers in that debate.
Greater Manchester (Light Rapid Transit System) (No. 4) Bill [H.L.]
Read a third time, and passed, and sent to the Commons.

The Arts: Public Support
3 p.m.
Baroness Birk Baroness Birk rose to call attention to the state of public support for the arts at national and local level and to the loss abroad of Britain's artistic assets; and to move for Papers.
The noble Baroness said: My Lords, this House discussed the performing arts in a debate on the arts in February. I hope that today the net will be spread to other areas. I intend to focus on the predicament of the visual arts. Recently their position was made more urgent by the increasing pressure put on local authorities to find money for their museums from overstretched and often capped budgets and by the financial battles to keep in this country the Badminton Cabinet, "The Lock" by Constable, Canova's "Three Graces" and the Middleham Jewel. A miracle must occur before Friday because that is when the decision will be made on granting an export licence for the Badminton Cabinet.
But whatever ails local museums is felt equally by the national institutions. While the Government have made a start in repairing the fabric at least by putting buckets under the skylights, little additional money has been found. That is in spite of the promise made by Richard Luce, a former Arts Minister, to put the buildings in order by the millennium. The Government have recently commissioned a study on building from Arup's. However, it appears that they will content themselves with basic repairs rather than install modern equipment and standards which are taken for granted internationally which will provide proper ccnditions for conservation and display.
The state of many of our national collections is a national disgrace. The vital and imaginative improvements that have been made have usually been due to the great generosity of a few patrons, among whom the noble Lord, Lord Sainsbury of Preston Candover, is a leading figure. The noble Lord is to speak in today's de bate. Welcome as that financial intervention is, it should not be taking over the state's fundamental role. Nor should business sponsors be expected to deal with capital investment in our museums. The Government's contribution to buildings and running costs remains painfully thin. In spite of all the figures that no doubt will be thrown at me by the noble Viscount, Lord Astor, those are the facts. One has only to look at our museums and galleries to see that it is true. The increase in grants has not matched inflation, let alone the rise in wage costs. The situation was worsened by the appalling way in which, in 1988, responsibility for capital costs was handed to the museums without a proper survey and without adequate provision.
One can compare that situation with the privatisation of water and electricity, in respect of
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which the Government wrote off capital debts. They also invested in new equipment before the industries were passed to private hands. I do not suggest that the museums should be privatised but there is an analogy between handing over to the museums the responsibility for running themselves and handing over to private hands some of our nationalised industries. The damage caused to this country's reputation for museum management and scholarship about equals the enduring threat to the objects in their care and the buildings which house them.
Care at local level is just as bad, as was shown in the recent report of the Museums and Galleries Commission. More than half the local museums are facing straight cuts or below inflation increases. All local authority responsibilities are statutory except those for the arts. Therefore, the temptation to look to the arts first in the hunt for savings is almost always irresistible.
After the abolition of the metropolitan county councils the effect on the arts in local areas has been devastating. The London Borough Grants Committee, which was set up after the abolition of the GLC, was supposed to be the saviour of the arts in London. Some saviour! Many noble Lords tried to give warnings during the passage of the Bill but they were not heeded. The committee is responsible for dozens of arts organisations summarily losing their grants. There is a great crisis in the arts in London, not only in museums and theatres but across the whole spectrum. The ruthless demands of the Government's capping policy and the squeeze of the poll tax has resulted in a crisis not only in London but throughout the country. Throughout the country that has led to breaches of trust between the local authorities and their dependent organisations—that is, museums, theatres, libraries and voluntary services. The muddle and complications caused by the Government's dithering attempt to find a formula for the new regional arts boards makes one gasp in wonder.
Furthermore, nothing has been done since 1985 to raise the purchase grants of the national museums. Incidentally, the figure is lower than it was in 1980–81. The grants to the National Gallery, Tate Gallery and the Victoria and Albert Museum are£2.75 million,£1.815 million and£1.145 million respectively. Ten years ago grants of that size enabled museums and galleries to act, albeit with difficulty. Today the price of old masters, 20th century art and even contemporary art renders planned action impossible. A single David Hockney was sold for more than£1 million in New York in 1990. A Francis Bacon can command more than£3 million.
While museums strive to maintain their collections, great works are leaving Britain with depressing ease. Although many are retained they are usually the less expensive works. If the Minister says that we have managed to keep more than 51 per cent. of the works he must translate that into their value. It is only one-tenth of the value of those that got away. The Minister's way of looking at the matter is not correct.
Many people in the art world and outside it are anxious about the Badminton Cabinet. Recently I went to see it at the Tate Gallery. Many people were

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milling around, looking at it. It is unique. It was made for the then Duke of Beaufort in the Medici workshops. It bears the Plantagenet coat of arms and is part of our heritage. The V&A could have bought it for£4 million but did not have the money and the Government were not prepared to help. Therefore, it is being sold to an American for£8.6 million. That makes no sense artistically, financially or economically. It is quite crazy.
I do not believe that the courageous appeal started by the National Art Collections Fund will achieve anything. How can it? People are dropping in odd coins and a few notes and are being as generous as possible, but how can that possibly add up to£8.6 million? That is ridiculous.
The real problem is that there is now insufficient money to back the system of export review, which worked well for years after it was started in 1952. The Export Review Committee has now become little more than a bureaucratic instrument of delay with no real power to demand retention. It is aware of that and finds the job very difficult and extremely frustrating, as the chairman has intimated. The Waverley standard is being waved aside and that is not the committee's fault.
In fact, there are a limited number of really important heritage items which appear each year. The availability of an additional£20 million would ensure that most of the items would remain here to be seen by ourselves and foreign visitors. Very often we set ourselves up as a cultural capital of the world but when we request the necessary resources to support that position they are not forthcoming. The resources are available in a country of this size. We may not be as well off as we were at one time, but compared with a great many countries we are still a wealthy nation. The availability of those resources would ensure the retention of items such as I have described in this country to be seen by ourselves and others.
It is not an argument to point to the increase in the funding for the National Heritage Memorial Fund from£3 million to£12 million because in the past the fund has been regularly and rightly topped up so that the average grant over the past 10 years has been£11 million. I hope that on this occasion the Minister does not trot out that canard.
Only items which have been here for 50 years or more are eligible for support from the National Heritage Memorial Fund. Therefore, it does not cover any classics by Henry Moore, Francis Bacon or Ben Nicholson. None of their works from the 1950s and 1960s would be eligible to be saved by the fund even if the money were available to do that. The National Campaign for the Arts points out that much more could be done fiscally to encourage people to give works to the nation rather than sell them. Last year only£1.25 million-worth of arts work was offered in lieu in the past financial year. That is nowhere near the£10 million contingency money which I understand is always available from the Treasury.
The recent Budget gave no help to the arts; in fact, it was almost a hindrance. VAT rose to 17.5 per cent. The National Art Collections Fund pointed out that
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nothing was done to increase the effectiveness of Gift Aid by changing the£600 limit to one that is more in line with what people are able to give. There was nothing in the Budget to bring nearer a beneficent lottery, which could do much if the proceeds were used strictly for capital investment but not as a substitute for government revenue funding.
I have dealt with only a few of the horrendous problems faced by the arts. I am sure that other aspects will be covered by other noble Lords, as there is a long list of speakers; and I particularly look forward to the maiden speech of the noble Baroness, Lady James of Holland Park. None of the issues, whatever they are, will be dealt with satisfactorily unless we show the will to give the arts the priority which they merit. Above all, that will must be shown by the Government. Their will must be backed by the necessary and essential resources. That can be done. It is quite ridiculous for the Government to argue that it is impossible.
Lord Renton: My Lords, before the noble Baroness sits down, does she realise that the lady who bought the Badminton Cabinet has done so subject to export and will not be obliged to pay for it unless and until it is exported? She is in no hurry to acquire it.
Baroness Birk: My Lords, I do not believe I should say any more. This is a timed debate and I do not wish to take time from other speakers. My Lords, I beg to move for Papers.
3.17 p.m.
Lord Crathorne: My Lords, I do not believe a time will ever come when the government of the day will be considered to be spending enough money on the arts. I am sure it is also true to say that every Minister for the Arts would have liked more money, and every Minister in turn has done his best to obtain more money for the arts. There is great rejoicing when that happens because a small amount of additional money for the arts goes a long way and is extremely good value for money. It makes a big difference, and any additional money has a considerable knock-on effect.
The noble Baroness has been rather harsh on the Government's record. It is worth mentioning one or two figures. Central government expenditure on the arts has increased 46 per cent. in real terms since 1979–80, with a budget of£600 million this year. The number of museums in the country has doubled in the past 20 years, and attendances are soaring. Expenditure on museums has risen by 40 per cent. in real terms since 1979. Support for the Arts Council has risen by 38 per cent. in real terms during that period. The National Heritage Memorial Fund has received£110 million in public funds since 1980. I do not wish to give further statistics, but listening to the noble Baroness one might believe that very little has been done. That is not the case.
There are two specific points which I should like to raise. The noble Baroness and I went to see the Badminton Cabinet together. Anyone who has seen it must have a very strong feeling that it should be retained in this country, and indeed in Europe because basically it is a European piece. The reviewing

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committee, using the Waverley criteria, has worked very well over the past few years. A large number of items have been retained in this country. All the starred items have thus far been retained. The problem now is the enormous sums required to buy the top objects. Because of that the system is in danger of breaking down. We have one or two great block-b asters every year such as the Badminton Cabinet. Something has to be worked out about how to deal with this matter. The National Heritage Memorial Fund has managed quite superbly, but it does not have the funds to cope with additional major items. As the noble Baroness said, we have to hope for a miracle at the eleventh hour or for assistance from a private: benefactor, if not the Government.
We do not have a restrictive export system in this country compared with other European countries. I favour that. I like the thought of a relatively free flow of pictures and works of art around the world. Many fine items have come back to this country. The flow is not just in one direction. The other specific item I wish to refer to is Canova's the Three Graces. This subject has raised a great deal of worry. As chairman of the Georgian Group, I make the point on behalf of various amenity societies which are worried about the matter. The Three Graces seemed to be an example of a fixture, As part of a listed building we felt that the Three Graces required listed building consent for its removal.
There were differing opinions at the Department of the Environment about that. The final decision was that the Three Graces was not a fixture and therefore could be sold. One of the disturbing aspects was that the Secretary of State seemed to be influenced in his decision by the fact that the owners of the Three Graces had moved it around to several different locations in recent years. The implications were obvious for that kind of object. If the article is moved around, it undermines the listed building consent legislation. We shall not pursue that point now; but it is a matter which the amenity societies wish to take up.
Perhaps I may end on a lighter note. I am sure that we are all very pleased that the Royal Shakespeare Company is now back at the Barbican. I took my two youngest children to "Much Ado About Nothing". I cannot believe that the play has ever been better performed or presented. My worries about taking a 10 and a 13 year-old turned out to be totally without foundation. We were sitting in the centre of the fourth row. My 10 year-old daughter laughed with such abandon at Benedick that he gave her a wonderfully surprised look as if to imply that it was she who was making if much ado about nothing.
By and large, I believe that the arts are flourishing in this country. However, there is no room whatever for complacency. There is always more that can be done and should be done.
3.23 p.m.
Lord Donaldson of Kingsbridge: My Lords, the noble Bareness has raised two separate points in her excellent opening speech, each of which deserves more than seven minutes. I shall confine myself to the first point, which is the central support of the arts, and
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grumble about the miserable performance of the Treasury. As regards the second point, the noble Baroness and the noble Lord, Lord Crathorne, dealt with it in a very interesting way. I believe that will be followed by many other speakers. When I left office 12 years ago the purchase grants were at about the same level as they are now. That would not be a bad place from which to start the debate.
I am looking forward very much to hearing the noble Baroness's maiden speech. I hope that in another debate we can talk with her about books and libraries which are an important part of this subject though I doubt whether they will be mentioned very much today. I look to the future for that.
I turn now to my five and a half minutes in criticism of the Treasury. At the end of the last war Maynard Keynes was responsible for the first Government support of the arts and for the founding of the Arts Council. Since then investment has increased year by year and a really extraordinary change has taken place in these islands. Who would believe that these days on any Saturday one will find two people in museums, galleries, theatres or concert halls against only one watching football. It is a very remarkable change that the same number would have been watching football many years ago and about one third of the people would be in the cultured world.
Whereas before the war one had to go abroad to train as an opera singer, today one cannot go into an opera house abroad without hearing a principal singer who is not only British but trained in this country. That is an extraordinary success story. The Treasury seems unable to understand that nothing succeeds like success. When one hits success in life only a mug does not follow it up for all its worth. The problem is that the Treasury cannot distinguish between subsidy and investment. The arts earn the Treasury and the country a great deal of money. The overseas takings of the cultural sector—that is broadcasting, records, tapes, films, the art market and touring—earn the country as much as the oil industry. The figure has been estimated at about£6 billion.
If it were not for the investment that the Government make in orchestras, theatres, galleries and the rest, little of that would accrue. If the investment falls too low the arts will fall. The American entertainer, Bertice Redding, was quoted in The Times as saying that the theatre is the greatest export England has.
She has a point. The cultural sector is certainly the only one to increase its income by 50 per cent. in the past four years. Even if no money were earned abroad the Treasury would be doing very nicely out of the arts. VAT on tickets for the performing arts alone is now approaching£100 million a year. Around 250,000 people are employed in the arts. The income tax on their earnings means that the Government can count on receiving back every penny they spend with a more than acceptable industrial rate of return.
As we all know—except perhaps the Treasury—to earn more one has to invest more. As the Government's own researches have shown, the arts produce jobs with less investment than any other form of Government programme. I suggest that the

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Minister speaks with his colleagues in the Department of the Employment about ways to help each other. Our central and local museums and galleries contain perhaps the finest collection of objects and pictures to be found anywhere in the world and perhaps the least fostered by Government, but certainly with the most visitors and the most children. The same is true of the theatre and music. The noble Lord, Lord Crathorne, has just told us about the theatre and its effect on his child. If one can have first-class performances of the standard plays, operas and music so that the theatres and concert halls are as full as they are today from Glasgow to Brighton, then nothing can stop the scholars and enthusiasts from breaking new ground —we shall find the whole wide world of the arts, commercial as well as highbrow, beginning to flourish. However, if one falters in support, standards will fall, the public will become listless and the money already put into the arts will be wasted.
A vigorous artistic society encourages innovation and experiment without which there is no creativity. The creative artists go abroad as our best architects do today, but if the whole land from Glasgow to London is buzzing with enterprise, people will come from all over the world and make it buzz more. Whenever there is a question of the arts making less than the greatest contribution to our lives that they are capable of, it should not be a question of the Minister going to the Treasury; it should be the Treasury coming urgently to the Minister and saying "What is wrong? We cannot for a moment afford to let the arts slip now that they are making such a major contribution to the country's welfare. There is too much at stake. Explain to us what should be done and we will see that you get the necessary resources". Long may that day come.
Of course the arts will never believe that they have enough; it is in the nature of artists to always want to do better. However, they must always be kept at boiling point. The Treasury insists on regarding the large sum invested in the arts since the war as subsidy; it is not. It is an extremely profitable investment, as I have shown. Backing success in the arts will produce at least as much money as it costs. It will make our country one of which we can be more proud than ever and I cannot understand why we do not do it.
3.30 p.m.
Baroness James of Holland Park: My Lords, I am sure that no new Member of this House rises to address your Lordships without trepidation and I crave the indulgence of the House for this, my maiden speech. I have fortified myself by consulting standing orders from which I learn that all personal, sharp or taxing speeches are forborne. I can promise not to be sharp or taxing. I wish that I could be equally confident that my words will be worthy of the subject. I hope that they will not be too irrelevant to the main thrust of the debate.
Without the excitement, the beauty and the inspiration of art in its various forms modern life would be a desert, and it is the measure of a country's civilisation how far this universal need of the human spirit is recognised and met. I am grateful to the noble
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Baroness, Lady Birk, for initiating this debate, not only because of its importance to all of us engaged in the arts, but because of the opportunity it gives us to bring before the House the claims of the art-form in which this country is internationally acknowledged to be pre-eminent—our literature.
We have in our language and literature, both classical and modern, an incomparable treasure. It is through language and literature that we celebrate our culture, our history, our aspirations, and no efforts of diplomacy can achieve the mutual understanding that nations enjoy through access to each other's literature. That will, of course, become increasingly important as Europe becomes united. English for a variety of reasons has become a world language and that has disadvantages as well as advantages. Because it is spoken and written in so many forms and for a variety of purposes it is most important that standard English should be valued and preserved in the United Kingdom.
Preservation does not, of course, mean that it should remain unchanged. A living language responds to the aspirations and needs of each generation. But the changes should enrich, not impoverish, and we debase our language if, while inventing new words to meet new techniques—new needs—we lose that nice precision of definition in vocabulary and construction which makes English an exact as well as a versatile language. If we debase, abuse, neglect our language, if our children cannot write or speak it simply, elegantly, persuasively, if we increasingly substitute jargon for clarity, we shall no longer produce books worth reading or a literature worth preserving.
Surely the National Curriculum Council is right to insist on the importance of children learning standard English. Some teachers have been reluctant to teach standard English from a fear of alienating parents and children or from a belief that dialect fosters a sense of cultural identity and self-respect. I speak of course of dialect, not regional accents. But standard English is not elitist, it is democratic; it is not exclusive, it is inclusive; it does not destroy identity or self-confidence, it fosters them. It opens the door not only to advancement and personal fulfilment but to a unique literature and a world of knowledge. We can never have a society of equal opportunity while children proclaim their disadvantage the moment they open their mouths or attempt to put down words on paper.
If literature and reading are so vital to the happiness and fulfilment of human beings and to the enrichment of society, it is important that books do not become too expensive for the average wage-earner. That is why in recent years there has been such a strong public resistance to the suggestion that value added tax should be imposed on books. The arguments against applying VAT to literature and knowledge have been frequently rehearsed and are still valid. In a parliamentary debate on 8th May, 1860 on the paper duty, W. E. Gladstone said:
"My right hon. Friend has said that this duty is a tax on literature and education, and, as such it has long stood in evil odour in this House".
Long may that evil odour remain offensive in the nostrils of governments of all persuasions.

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It would be irrational to debate the importance of language and the support of the arts without a mention of the public library system which in this country is certainly among the best in the world. It is important to keep it so. Learning how to use a library effectively is a vital part of education and it is, of course, equally important that there should be attractive and well-stocked libraries in schools. Present anxieties about the under-funding of school libraries were voiced during a recent debate in your Lordships' House and I will not repeat the arguments then put forward except to deplore the increase in the practice of providing school-children, not with their own books or the use of a well-stocked library, but with duplicated copies of the relevant pages or chapters—an easy compendium of pre-digested knowledge. It is rather like feeding a child perpetual tins of mashed, stewed fruit instead of the crisp juiciness of the apple and the variety of the orchard.
I know that books are expensive and have to compete with the demand for computers and the new electronic wonders necessary to equip our children for the modern world. But the fascination of a key-board cannot equal the excitement of handling books, learning to use an index, judging the importance of differing authorities and making other new and exciting discoveries which can illumine not only the subject studied but the whole of life.
A civilised society funds its arts generously because it believes that art and literature should be accessible to all, not an optional extra available to and valued only by a privileged section of society. The love of art and, above all, the creation of art is not only a matter of government subsidy, private patronage or local government support, vital as all of those are. A child first responds to literature when her mother reads to her the first story-book. The love of literature and art should begin in our homes, be fostered in our schools, be supported in our communities and remain to solace, inspire, entertain and delight us all our lives. Sir Arthur Quiller-Couch, lecturing to his Cambridge students after the First World War, said:
"Gentlemen, let us keep our language noble for we have heroes to commemorate".
We should keep our language noble for we have a civilisation to commemorate and a heritage of incomparable richness to bequeath to our children. It is these children who will produce, from our living language, the literature of the future.
3.37 p.m.
Lord Jenkins of Putney: My Lords, we listened to a maiden speech which is an example to us all. It is customary on these occasions to praise, but no one this afternoon will feel that that is perfunctory. We have heard a speech of great distinction and look forward to hearing much more when the noble Baroness has the time, which the content of her speech made us wish she had, to develop her ideas.
My noble friend Lord Ardwick said to me earlier, "I think we should get rid of these seven-minute speeches". He suggested that a straw poll taken among your Lordships would provide a majority for that point of view. He may well be right and possibly the
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Whips will note his remarks. We hope to hear a great deal more from the noble Baroness on an occasion when she has time to deploy her remarks more fully.
At Question time in the other place yesterday Mr. Bowis, a Conservative Member of Parliament, asked the Minister for the Arts whether he would bring forward a plan to remove the arts in London from funding by the London Boroughs Grant Scheme. Mr. Renton replied,
"The problems surrounding the settlement of the LBGS budget this year have demonstrated that the joint local authority arrangements for funding the arts organisations in London are not working effectively".—[Official Report, Commons, 13/5/91; col. 15.]
Well surprise, surprise! As my noble friend Lady Birk pointed out in her opening remarks the Minister was told—it was said in this House—that what was being established was a scheme which would not work. But at that time, as altogether too often happens, the Government's ears were not functioning. Only their mouths were operating, and they were telling us, rather than listening to the objections which we raised. This was an impractical scheme from the beginning. How can anyone get 32 boroughs of different political persuasions together and persuade them to come to a joint agreement? It has proved impractical and impossible. The Arts Council has had to step in at the last moment to try to save the situation. In the meantime total disaster has descended upon London. While waiting for funding, two or three organisations have gone under and several more probably cannot be saved in time. This disaster was brought about simply because the Government would not listen. At that time they were driven by the ideology of abolishing the Greater London Council and they failed entirely to put a practical substitute in its place.
The arts are not sufficiently well funded in this country to sustain that kind of thing. Their finances run on a shoestring. If action is taken which means that funding is held back, they go under. It is rather like the egg which is dropped from the wall, it cannot easily be put back together again. If an arts organisation collapses or a theatre goes under one cannot easily put it back together again. The consequence is that, sometimes, a very good organisation will disappear from the scene.
Mr. Bowis—a Conservative Member of Parliament—went on to say:
"Is my right hon. Friend aware that today Tom Stoppard, Tom Conti and others launched a campaign to save the King's Head theatre, which is one of the best in the capital and in the country, from the disastrous cut in grant by the London boroughs grants scheme? Is it not a fact that that scheme not only knows precious little about the arts, but puts them in the bottom category of its priorities? Is not it time that London's arts were rescued from its clutches?"—[Official Report, Commons, 13/5/91; col. 15.]
Mr. Bowis is not a Labour or a Liberal Democrat Member of Parliament. He is a Conservative Member of Parliament who is exposing the horror of the scheme which his own Government have forced upon the arts. Hardly a person in either House at the moment has a good word to say for it. Indeed, the Government themselves have abandoned it.
The Parliamentary Under-Secretary of State, Department of the Environment (Baroness Blatch): My Lords, it is a rule of the House that we must not quote Members of Parliament. We may quote Ministers, but not Members of Parliament in another place.
Lord Jenkins of Putney: My Lords, there are some circumstances in which it is permissible. It seems to me that this is such an occasion. If, however, I was wrong, I shall withdraw. It seems to me that, having quoted the Minister, it would be senseless not to give some idea of what the complaint was. However, if I was wrong, I withdraw.
Criticism is more likely to convince if it is accompanied by praise. Therefore I want to say a good word for the Government. They have supported and are continuing to support the Theatres Trust. This organisation concerns itself with the bricks and mortar, as actors used to call it. The theatres of this country are in a pretty parlous state. The Arts Council has been quite ineffective in this area and no one has taken any account of the buildings—the factories, as it were, in which the operatives do their stuff and where the profits to which the noble Lord, Lord Donaldson, referred, or some substantial part thereof, are generated. If the buildings are not kept going and are allowed to decline, then the whole operation will decline. We are at the moment in a crisis.
I congratulate the Government on providing a little money for the Theatres Trust to conduct a survey. When that survey reveals—as I fear it must—a pretty disastrous situation requiring very substantial sums of money to put it right, I hope that the Government, if they are in power—I doubt whether they will be—or any government, Labour or Conservative, will answer that cry and recognise that this is capital investment which must be made; otherwise, the whole standing of our theatre will gradually decline because there will not be practical places where the job can be carried out.
I have already taken six minutes and I have hardly started on what I was going to say. The problem is that I am not going to be able to say much more. How am I going to finish? I think in this way: in the 1960s two brilliant economists Baumol and Bowen—I shall tell the House about Baumol and Bowen another time.
3.47 p.m.
Lord Sainsbury of Preston Candover: My Lords, I congratulate the noble Baroness, Lady James, on a most impressive, moving and persuasive maiden speech. My noble friend Lord Crathorne referred earlier to the increase in grant with which the Government have provided the Arts Council. The growth in real terms has been 48 per cent., and the growth of the Arts Council grant over the previous 10 years was somewhat similar. It may therefore be surprising to your Lordships that the four national performing companies are so badly off despite the fact that the Arts Council grant has gone up so much over the years. It is to this that I should like to draw the attention of the House. Over the past five years, when the Arts Council grant rose by 26 per cent., the grant to the national performing companies in London
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actually went down. The proportion of the Arts Council grant that was devoted to the national companies went down from 30 per cent. of the Arts Council funds to 23 per cent.
In a sense that is entirely understandable because of the huge explosion in artistic needs and demand in the regions and the very understandable desire of the Arts Council to put more money into the regions. However, the real failing was not to create an atmosphere in which more funds came to them. Therefore all the extra funding to the regions was at the expense of the national companies. The grant to the Royal Shakespeare Company has fallen in real terms by 1.5 per cent. in the five years since 1985, and the Royal Opera House grant fell by 5 per cent. in real terms. The Government had asked for an efficiency study, known as the Priestley Report, to be carried out by the Cabinet Office. The Priestley Report recommended that the needs of both the RSC and the Royal Opera House—I should declare an interest as a chairman of the Royal Opera House until the end of this season—should be met. In the case of the Royal Opera House, the Arts Council has failed to meet that recommendation by 15 per cent.— £9 million over that period. This year the figure is£2.9 million light of the Priestley Report recommendation.
Despite this generous grant to the Arts Council, the national performing arts, which set the standard and which should be enjoyed by the nation in many different ways—educationally, on the media and so forth—have been starved of funds. I believe that the Arts Council has failed in a number of important respects. I am sorry that the noble Lord, Lord Palumbo, is not present this afternoon. It has failed to make to the Minister of the day the case for better funding for the arts. It has been quick to praise every extra grant it has given, but never to relate it back to the real needs and the RPI growth since the grant was made. It has failed to persuade the nation that we were underfunding the arts. It has also become increasingly bureaucratic. I welcome the announcement made recently by the Minister, Mr. Renton, that the Arts Council should cut its costs of administration by£1 million. That is entirely right and I congratulate him on it. It is a pity that it was not said a long time ago. The council has become increasingly
In addition, it no longer understands the meaning of the term arm's length. In the old days the Arts Council appraised, criticised and analysed the performance of its clients, and rightly so. But it always said to them, "You have the responsibility to run this. You should listen to our criticism and take account of it; but it is your decision". However, today the council does not work in that way. It insists on business plans which in certain cases include its own suggestions which are not supported by the directors of the boards of their clients.
Moreover, it puts forward the threat or the incentive—whichever word you like to use—of, "If you don't do this, you won't get that". It puts the boards in impossible situations. For example, the council says, "It is necessary for you to tour the regions". That of course is quite right. However, it does not provide the necessary funds. Therefore, the

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conflict is there all the time. The arts organisations are failing to get enough money from the Arts Council, which is becoming more bureaucratic and intervening, and interfering with the responsibilities of those who have the ultimate responsibility for the running of such organisations.
In the brief time that I have available to speak I should like to identify three policy issues to which I hope the Government will address their mind. In the post-election era, whoever the Government of the day may be, I hope that the problem will be addressed as a long term one. It is no good thinking that the problem can never be solved and that the arts will always want more. We never look ahead as regards such needs.
The first policy issue is the division of the responsibility between the Arts Council and the Minister of the day. It is ridiculous that an underfunded organisation of national significance and importance should go to the Minister for assistance and he says, "It is nothing to do with me. Go to the chairman of the Arts Council" and then he says, "Don't blame me. I can't do any more. The Minister wants this and that, and I haven't got any more money anyway". It is a classic recipe for bad management: divide responsibility, and blame the other. Successive governments have run the arts with a divided responsibility. There should be one responsibility as regards national institutions for the Minister of the day, and the Arts Council should look after the remainder.
Secondly, I suggest that the Minister of the day does not have sufficient authoritative, or independent non-political and well-informed advice. He does not receive it from the Arts Council for the national institutions, only for the regions, and he certainly does not get it from the Civil Service because it is not trained or qualified to do the job. There needs to be a body or a group which can give him independent advice as to the long-term investment, which is so much the right word to use, in the arts institutions and their revenue needs.
Thirdly, let us end this awful pull between the regions and the centre. They both need more support. It is unreasonable to expect the Arts Council to achieve the impossible balance between the needs of the regions and those of the centre. It should be a ministerial responsibility, well advised, as I said, by independent advice. I had hoped to be able to say something about the museums and galleries. Their position is similar to that of the performing arts. However, I am sorry that time prevents me from so doing.
3.53 p.m.
Lord Birkett: My Lords, I am very happy to join in the chorus of praise for the maiden speech of the noble Baroness, Lady James of Holland Park. Not only did I passionately agree with every word she said, but it was nice to find that literature and language were playing their proper parts in the debate. They do not often get as good a showing as that. I hope that we shall hear from the noble Baroness on many occasions.
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The noble Baroness, Lady James, started with two problems of capital funding: capital funding for the arts and of course, by definition, capital funding which is necessary to protect our heritage. She mentioned the old problem of the export of works of art. She was also good enough to say that she thought that a national lottery might be a solution to the problem. I am afraid that I shall have to disappoint her by not expounding at length on the subject. However, your Lordships will be much relieved that I shall not yet again ride a hobby-horse—not because I do not believe in it, but simply because I have ridden it too often. However, I shall at least say that there is a solution to the problem of funds. Every arts debate or sports debate which takes place deals with enormous sums of money. A kind of despair sets in. We talk round and round the subject. Were a national lottery to be permitted it does not have to be a state lottery—it would cure many of those problems. It is time that the idea is given a whirl.
Very large sums of money are used in the world of opera as the noble Lord, Lord Sainsbury, knows only too well. I suspect that, during most of his life at the Royal Opera House, he has been dogged by a general assumption in the mind of the public that such large sums of money—they are always the largest in the arts subsidy world—are in some way profligate and slightly scandalous.
I believe that it is time that the world in general, and the Government in particular, recognised—that is, if they have not done so already—that opera is by its nature the most expensive of all the arts. Indeed, it has to be because of the combination of arts it puts together. But when it is working well, I believe that it is the greatest of them. Nevertheless, it requires huge sums of money: and if your are going to do something you might as well do it well. The comparisons with Munich, Paris and half of Italy have been stated too often for me to reiterate. But they recognise that fact and do it properly. We do not yet do so. It does indeed need huge sums of money and much talent.
The Royal Opera House will miss the noble Lord, Lord Sainsbury. I shall be sorry to see him go. The English National Opera will miss Mr. Peter Jonas, Mr. David Poutney and Mr. Mark Elder very much when they leave their posts which they have indicated they propose to do. However, I am sure that the noble Earl, Lord Harewood, will see that they are replaced with people of equal talent, if that is possible. They will certainly be missed.
I believe that the world of opera needs a huge amount of support. I do not know whether the following idea would help the problem, but I believe that it would certainly help to take the curse off these very large sums of money. I refer to a thought that I do not think has been pursued enough. A certain amount of Government money—by which I mean Arts Council money—would be very well invested in promoting the televising of a great deal that the Arts Council subsidises.
Of course, it must be obvious to all of us that the minute we televise something we increase the audience from potential thousands to millions. In terms of value for money, the televising and recording of what

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the Arts Council subsidises could be enormously valuable, without a huge outlay of money. I believe that there was a time last year when the Arts Council was considering putting aside£1.5 million for that purpose. However, that money was swallowed up in the need for bailing out companies which would have died without assistance. Thank goodness that happened. But, nevertheless, that is not a very large sum of money for the pump-priming operation that I believe would be of enormous benefit to the country. I do not know what the noble Viscount's right honourable friend the Minister for the Arts thinks about that idea because I have not asked him. But I commend it as a thought as to how to make very good use of what is, perhaps, not enough money.
Of course, funding is at the back of all of these debates. I am not surprised that the London Boroughs Grant Scheme has been mentioned. It is rather scandalous that for weeks and months those concerned have been trying to make a budget varying between£28 million and£30 million. The fact that they have spent months and months not being able to agree on the matter is absolutely astonishing. I suppose that we should be grateful that they are actually in the same room disagreeing with each other. That does not always happen. It is a sad situation. Moreover, with the situation of GLA —now disbanded and its replacement not fully in action—London is in a very dicey situation. I know that it is not necessarily the Government's business to sort out the matter. But, even if they are not responsible for it, I hope that they can kick a few bottoms.
I should like to conclude by saying that, wherever the huge sums of money about which I have been talking come from, very small sums of money are needed and should be put towards the most important element of all. I refer to the youth of our arts organisations. It is so difficult for young people to start. If we do not encourage youth, where will the arts of the future be? For example, how does a young conductor start? As it happens, I am administering a scheme which is due to the generosity of Donatella Flick. There is a conducting competition which has as its prize the chance to study in Italy. That is probably even more valuable than money. It will be wonderful. However, if, when the winner comes back from Italy, there are no jobs or support around the nation, what will he do? It is most important for the young to be supported.
There is an organisation called Arts Threshold. It has much enthusiasm and many patrons. I am one of the patrons and the noble Lord, Lord Hatch of Lusby, is another. However, quite eclipsing both of us, Sir Alec Guinness is a third patron. The organisation could have a home, but it cannot afford the key money to get into it. It has 100 young actors fresh out of acting school and designers fresh out of design school dying to work, dying to show the world what they can do. It is a bright, talented organisation. It has appealed to no fewer than 60 firms and all the funding organisations for small seed money to get itself under way. It is the brightest thing for miles around. It has
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obtained not a penny. Unless we cure the underfunding of the very seed of our artistic future, we shall not have one.
4 p.m.
Baroness Hollis of Heigham: My Lords, like other noble Lords, I congratulate the noble Baroness, Lady James, on her maiden speech. It was truly splendid. The trouble with seven-minute speeches is that none of us says as much in congratulation as we otherwise would. When talking about the arts, people sometimes refer to the provinces. That is very much a London perception. I shall refer to the regions and the artistic life outside London; one which recognises that arts are local because they are the means by which individual communities define, express and profile their sense of place. I hope that I am in no way detracting from the role of the Arts Councils, national and regional, when I say that the regional arts are underpinned by local authorities.
To take the national figures, last year the Arts Council distributed£174 million, plus, of course, the OAL money; business provided£30 million; and local government spent£350 million on arts, galleries, museums and their buildings. To take a regional snapshot of my area (the Eastern area), the Arts Council provided£1.65 million direct to clients. The regional arts provided£2.8 million, business provided£1.5 million and local authorities£17 million. That is a ratio of something like 10:1. Not only is arts funding London-dominated—the ratio at the time of Glory of the Garden was about 5:1 in favour of London, and after Glory of the Garden and Wilding it is about 6:1 —outside London it is sustained by local authorities. Why? As other speakers have said, it is partly because the arts are a significant economic sector in terms of jobs, tourism and inward investment. Firms coming into an area now want to know as much about the cultural infrastructure of the area as its physical infrastructure. Arts have a significant social impact in terms of preparing the long-term unemployed for work; in helping youngsters from deprived inner city communities; and working in hospitals and in schools.
As leader of a local authority I talked to local businessmen about what they would like youngsters of 16 who were not ready for apprenticeships to be taught. I thought that they might say mathematics, but they said drama, and I was much struck by that. They wanted those youngsters to acquire communication skills: the sums would then follow.
If the arts are significant for their economic and social impact, they have an equally important effect on the quality of life of local people. In a myriad of ways, local authorities make that quality of life possible. They make national touring affordable through concessionary pricing. Local authorities support arts centres which help blur the line between the amateur and the professional so that those who live for the arts do not need to live by them. They provide for animateurs and facilitators who draw out talent from local council estates.
In less obvious ways local authorities support a lively night life which make our cities safe at night as well as vital. They enhance the built heritage. In my

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city of Norwich the local authority helps sustain monastic medieval halls, 30 medieval churches and merchant houses and a Norman castle. All those buildings are in use, primarily because of the arts. Elsewhere we see docks, old breweries, factories, mills and even a former fire station at Oxford revitalised and brought back into use. Local authorities are adopting a percentage for art policy for sculpture, mosaics and fountains so that, as Ruskin reminded us, we help to make the City Beautiful.
Yet what do we see happening to that local government work? In the unholy mess which followed Wilding the role of local authorities on regional arts boards has been snubbed. Their contribution and commitment has been reduced to only one-third, although their funding in their patch may be 10 times that of the regional arts boards. If I were a regional arts board chairman I should want networking and leverage for a regional arts organisation. I should be pulling in those local authorities, not seeking to minimise their role and contribution. Beyond that, we experience the financial constraints on local government. There is compulsory competitive tendering which cuts corners on maintenance of art centres; capital controls which means that my city cannot properly maintain and repair its priceless medieval monastic buildings; the poll tax, which even after a flat rate subsidy has been added to a flat rate tax, remains regressive; and charge-capping by which the very towns and cities most vulnerable to capping are those regional centres which provide the arts for their surrounding areas. Yet because, as other noble Lords have said, arts expenditure is discretionary, it is not bedded into the standard spending assessment upon which grant and capping depend.
As a result, in East Anglia three of the most progressive arts uthorities—Norwich, Ipswich and Basildon—have all been capped, and Cambridge is perilously close to it. Because arts funding is discretionary it becomes a soft target. Theatres are closed it. Basildon. Theatres in Norwich are not rebuilt. Ipswich has lost an arts education officer and Norwich has lost a marketing officer. Dark room facilities have closed in Cambridge. The arts organisations are not just losing direct local authority grants under pressure from capping, they are also losing their ability to contribute towards the incentive and challenge funding of which the Government have rightly made so much. Norwich's regional puppet theatre needs an artistic director, but it was necessary for the local authority's contribution to match that offered by Gulbenkian. It could not, and so the Gulbenkian money is lost.
The best work is done in a partnership in which we lock one mother in to maximise leverage and funding. The cuts occurring as a result of the constraints on local government finance mean that that partnership is going. I hope that the Minister will today accept that local people vote their money for the arts because they know that they represent value for money and add value to the quality of their lives and the life of their communities. I hope that he will recognise that and help us to ring fence the funding in the future.
4.7 p.m.
Lord Rees: My Lords, the debate draws us on to a well-tilled field, but it is a field that is still capable of yielding worthwhile crops. I am sure that we are all grateful to the noble Baroness who introduced the debate. It also provided an opportunity for a notably elegant maiden speech. I hope that we shall hear many more in the same vein from the noble Baroness, Lady James. The noble Baroness, Lady Birk, confined herself largely to public funding for the arts; a rather limited view of the problems. I hope to have time to return to that point later.
The noble Baroness rightly referred to the loss abroad of the country's artistic assets. I believe that the present control of exports offers a well-conceived balance between the interest of the owner and the national interest and attempts to preserve an open international market. The anomaly is that the licence system is operated by the Department of Trade and Industry, a department for which I have a warm regard because I once served briefly in it. I believe that it would be better operated by the Office of Arts and Libraries, although of course trade policy impinges on that question. We shall have to consider the implications of a full internal market in the European Community at some time. As I said, the scheme would be more sensitively and expeditiously handled by the Office of Arts and Libraries.
When the future of the "Three Graces" was under review, a recent Secretary of State for Trade and Industry was inclined to allow individuals to compete against the prospective foreign purchaser. There are manifest difficulties in that approach, and it needs to be reviewed and gone into a good deal more thoroughly. I am not sure that such an approach is fair to the foreign purchaser and that the national interest will be safeguarded in that way. If that ruling is to continue, I suggest that the United Kingdom purchaser, if successful, should be under an enforceable obligation to give or sell the item in his lifetime, or by his executors at his death, to a national institution.
The weakness of the existing system, as other noble Lords have pointed out, is that few national institutions have the resources at the moment to compete in an international market where prices have gone beyond recognition, way beyond anything we could have imagined 10 or 15 years ago. These national institutions must therefore depend very often on public subscription and, in particular, on the National Heritage Memorial fund. Although sensitively administered —and I am the first to pay tribute to it and it is more generously funded than it was—the fund is not in a position to compete in international terms. It is a matter of huge regret to me that an earlier financial secretary—a man of acute intellect who is happily still with us—submitted to the accepted canons of public accounting. He deprived the National Heritage Memorial Fund of its assets and merely accorded it a notional fund in the public accounts. I believe that that was a great mistake and that as a result the country has suffered.
I know of the many claims on the Government's purse and do not wish to join the ranks of

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irresponsible claimants attempting to commit the Government to expenditure way beyond their means. However, I believe it would give the National Heritage Memorial Fund a healthy degree of independence and protect the government of the day from the clamour for ever more funds in this field if the fund were to be given independently managed assets.
The noble Baroness who introduced the debate turned to various other priorities: the increase in purchase grants to national institutions and the preservation of the fabric of our great and small museums. She will be well aware that the present Minister for the Arts has already committed himself to making the second of these one of his major priorities.
I am a little anxious to learn from the noble Baroness, or perhaps from the noble Lord, Lord Morris of Castle Morris, when he speaks, exactly how her aspirations are to be comprised in the already formidable list of commitments to which the party which they both adorn has committed itself:£21 billion over 10 years. Perhaps we shall be enlightened in this field in the latter stages of the debate.
The noble Baroness also said little about the role of private support for the arts, except for a graceful tribute to my noble friend Lord Sainsbury in which I am sure we all concur. However, the noble Baroness, and the whole House, should recognise that the Government have, by their fiscal policies, by reducing confiscatory rates of direct taxation and by their relief for charitable giving, done much to stimulate private generosity in this field.
I wish to know, again from the noble Baroness or her noble friend, exactly what the Labour Party's position would be in this sensitive field. Both of them will recognise that the politics of envy do not sit well with private patronage of the arts, both visual and performing. I have to say to them, and to the whole House, that a top rate of 50 per cent. for income tax, 9 per cent. national insurance contribution and an investment income surcharge of 10 per cent., amounting to a total of 69 per cent., smack to me a little of the politics of envy. I believe that the healthy development of the arts, both visual and performing, cannot be sustained by public subvention alone.
4.13 p.m.
Lord Donoughue: My Lords, first I congratulate the noble Baroness, Lady James, on her powerful and eloquent maiden speech, exhibiting the virtues of the English language in which she is skilled and of which she is an advocate. As a fan of her books, perhaps I may say that no doubt she will find the procedures of this House innocently simple compared with the dark complexities of her plots.
I also thank my noble friend Lady Birk for introducing this debate on the arts. We ran around the course, or parts of it, three months ago, led by the noble Lord, Lord Annan. Nevertheless, the subject is of such importance in our society that it justifies further examination. Some artistic institutions have run into further financial difficulty over this period. I start with finance because finance, or the lack of it, is at the heart of the problem. It has often been stated in
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the House, but must be repeated until something is done, that public expenditure on the arts in the United Kingdom is shamefully low. I say to the noble Lord, Lord Crathorne, that that is not a party point, it applies to governments of all parties.
At about 0.3 per cent. of all public expenditure, central and local, the expenditure is one of the lowest in the advanced world. It is roughly half the EC average and about one-third that of comparable countries such as France and Germany. This miserable public contribution means that United Kingdom artistic institutions are forced to find a higher percentage of revenues from the box office, with inevitable consequences for seat prices. Socially, that shuts out the less prosperous parts of our population—which is bad—even though they contribute to the arts through income tax.
Perhaps the most depressing recent aspect of the arts situation is at the local level, of which my noble friend Lady Hollis spoke with such knowledge. Although local authority support is central to our national artistic life, as she said, historically our local authorities, with rare and honourable exceptions such as the old LCC, have not properly met their full responsibilities to the local arts.
In the post-war decades, when money was easier, local authorities spent too little. In more recent years the squeeze on local authority expenditure meant that they had neither the resources nor the will to meet their obligations. Consequently, we have seen the refurbished Grand Opera House in York forced to close. In Basildon, the Townsgate Theatre is under threat of closure; in Liverpool the Playhouse has been rescued from the brink of bankruptcy. Noble Lords will each know of casualties in their own neighbourhoods.
Perhaps I may say a little more about London of which the noble Lord, Lord Birkett, spoke so impressively. In London, the uncertainties about arts expenditure, especially under the London Boroughs Grant Committee scheme, have created absolute chaos for a wide range of artistic activities. For some it is proving fatal. Basically, apart from the problem of leaving announcement of the grants until damagingly late, the financial provision for arts in London has been seriously reduced. The LBGC has apparently cut the percentage of its budget for the arts—which I believe is already reduced—from 10 per cent. last year to 8 per cent. this year. The Arts Council grant to Greater London arts has been raised by only 2i per cent. in nominal terms, which represents a serious real cut.
These reductions are already biting hard. The final financial arrangements and their artistic consequences are not yet absolutely clear. However, it seems that over 20 institutions are seriously threatened by the cuts. The Kings Head and the Almeida Theatres in Islington face imminent closure. The Albany Empire Theatre in Greenwich, the Oval House in Lambeth, Tara Arts in Wandsworth and the Royal Court have been hit by the cuts. The Museum of London has been forced to disband its entire archaeology department.
These are not lunatic fringe groups of the kind which inhabit the fantasies of the Right-wing press.

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They are respected institutions, contributing greatly to the cultural life of London. There is clearly a major crisis in the funding of the arts in London. I ask the Minister what the Government will do about it before a number of valued artistic institutions disappear.
There are many other important issues on which I have little time to touch. Other speakers have put forward impressive arguments, especially for the need to provide capital for the structural renewal of our arts buildings. It is pointless arguing about a small percentage in the current grant if the museum or theatre is falling down. Despite the magnificent contributions of the Sainsbury family and the Clore Foundation to the National Gallery and the Tate respectively, sponsorship can never provide support on a national scale, especially during a recession of this kind. Sponsorship should be seen as a valuable and welcome increment to, but not a substitute for, public funding.
As regards the export of works of art, we obviously must think again about the adequacy of Britain's laws to retain important works of art. We must provide the financial resources to retain them. The acquisition budgets of our institutions are completely inadequate. I believe they have risen by only some 13 per cent. in the past six years. They need more money to enter the marketplace as they currently cannot compete for major works of art. Art which was bequeathed to us by the creative genius of the 16th, 17th or 18th centuries cannot be replaced today. We have an obligation both to treasure the genius of our ancestors and also to pass it on to the generations to come.
We are not discussing some elite sector of minority interest. The arts in the wide variety of forms which should be encouraged to flourish in Britain provide pleasure for millions as spectators and participants. At the material level, as the noble Lord, Lord Donaldson, correctly stated, the arts sector is estimated to contribute£6 billion to the country's overseas earnings through tourism and revenues from live and recorded performances. That is on a par with the oil industry. At the highest cultural level, the arts provide a dimension which lifts the whole quality of our society. We should give the arts the support they deserve
4.21 p.m.
Lord Ritchie of Dundee: My Lords, I wish to add my congratulations to the noble Baroness, Lady James, on her articulate and confident maiden speech. It was a delight to hear and an example to us all. I wish I could speak for longer about the maiden speech but I am afraid I cannot spare the noble Baroness any more time out of my seven minutes. I am pinched to say what I want to say.
I wish to talk about two theatres in particular. The Townsgate Theatre in Basildon has already been mentioned by the noble Lord, Lord Donoughue. I shall refer also to the Almeida Theatre. The Townsgate Theatre is an efficiently run theatre. I have just spoken to the director who certainly knows what he is doing. The theatre is a receiving house offering a high standard of entertainment of all kinds. Recently it has offered the English Shakespeare Company, the
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Supremes, Opera 80, Ajido—an African dance company and a production of "Fireman Sam" for children. If that does not represent variety, I should like to know what does.
The theatre is run by an independent company at arms length from Basildon council. The theatre also receives some support from Essex County Council and from Eastern Arts. The theatre has been active in self-help measures. Last year, through the box office, conferences, sales and catering, the theatre raised£1.3 million. Eleven days before the end of the financial year, the theatre was informed by Basildon council that the council's grant of£350,000 was to be cut entirely. One realises that such grants are discretionary, but an agreement had been reached with the council that for a period of three years the theatre should receive a grant of£450,000. Last year it was reduced to£350,000; now it has been reduced to nothing.
The theatre decided to mount an enormous rescue operation. In two weeks it collected 8,000 signatures. Over 1,000 letters were dispatched to the leader of the council. The theatre has now been given funding until the end of June while the council appeals against poll tax capping. That is all the theatre knows. What kind of a business like enterprise can one run in those circumstances? How can a theatre budget when it suddenly has a promised£350,000 removed?
The Almeida Theatre in Islington, which was formerly a receiving house featuring a music festival, was taken over at the beginning of last year by two actors, Jonathan Kent and Ian McDiarmid. They converted the theatre into a producing house and seem to be enjoying enormous success. They concentrate on international contemporary theatre and little performed classics. At the moment they are offering Dryden's version of the Antony and Cleopatra story, "All for Love". They are also offering a new translation of Wedekind's "LuLu" and Harold Pinter's "Betrayal". I am assured that such productions appeal not just to the well heeled. The theatre offers a cheap night on Monday and concessionary rates for students, the unemployed and old-age pensioners. On certain nights those groups may see the best productions in the best seats for£5.50 or£6.50.
Besides corporate sponsorship and box office takings, the theatre receives public funding from Greater London Arts of£226,000. It receives£54,000 from the London boroughs grants scheme—I hardly dare mention its name—and a smaller amount from Islington council. On 27th March—four days before the end of the month—the theatre was told, with four days' notice, that its grant of£54,000 from the London boroughs grants scheme had been cut entirely. The theatre is appealing against that decision and launching a major appeal. If it should have to close, 35 full-time staff would lose their jobs and certain restaurants in the neighbourhood of the theatre would close down as it would not be worth their while opening in the evenings when there is no theatre.
Your Lordships will know that this is happening everywhere. A number of theatres where this situation has occurred, or where it is threatened, have already

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been mentioned and there is no point in repeating them. The Lyric, Hammersmith, is one such theatre. The London boroughs grants scheme has already been torn to shreds in your Lordships' House this afternoon. I need not add to that except to say that that body is the guilty party in the case I am referring to. Some 80 arts groups funded by the scheme will receive nothing until the budget is finally set. Meanwhile the various political interests in that group squabble among themselves. Some eight companies face immediate closure as a result of cuts already announced, including the King's Head Theatre.
Over the past few years, arts organisations—I am talking about the theatre in particular—great and small, have made enormous strides in self-help. They have made enormous advances in obtaining business sponsorship, in letting their premises, in providing catering facilities and in many entrepreneurial adventures. I believe that most of those organisations must have personnel who are responsible for marketing. I have met one or two of those people and I was very impressed.
Arts organisations are no longer the airy-fairy, irresponsible, profligate bodies they were once depicted as being, coming with their begging bowls to the Arts Council. That has all changed. There have to be some good hard business heads in most of these organisations. I give the example of the Almeida Theatre. I rang the theatre and by the first post this morning I received an admirable glossy publication inviting me to the performance of "All for Love". Perhaps I should declare an interest in the theatre in that case.
But what can theatres do in these circumstances? How can they budget or run a business faced with such sudden and arbitrary swingeing cuts ordained by local authorities and by the appalling London boroughs grants scheme? No other kind of business could possibly be expected to run on that basis. Something must be done. The theatres are doing all they can. It is for the Government to step in and clear up a situation which at the moment is producing chaos.
4.29 p.m.
Lord Ardwick: My Lords, in congratulating the noble Baroness, Lady James, I wish to promise her that I shall line up behind her in any campaign she may wage on behalf of the spoken or written word. During our previous debate on this subject I was reminded of an old theatre manager in Manchester who used to divide his audience into three categories. He mentioned the cognoscenti and illuminati. Both those categories were represented in that debate. We had the cognoscenti who knew all about the administration of the arts and we had the illuminati who were pressing for special noble causes such as an opera or an orchestra. But nobody spoke on behalf of the third group, those who pay to go in; the ordinary customer. I want to speak for them today.
There is available to me outside the treasure house of the West End, around my south-western suburb, more high art than I have time, taste or money for and a lot of it is sustained, I suspect, by public subsidy. By
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how much I do not know, because theatres do not advertise, "Thanks to the local council you are getting two seats for the price of one and the council pays the rest." Political parties are very coy about talking of their generosity towards the arts for fear of incurring an adverse philistine vote.
But I am most grateful for what I am offered. This week the advertisements in my local newspaper invite me to Ibsen's "Enemy of the People"; the English Shakespeare Company in extracts from "The Wars of the Roses"; Sheridan's "The Rivals" and Brecht's parable on the rise of Hitler. There are also two or three new plays, including a Russian one at our brand new theatre in Richmond.
The music includes Mozart's Requiem and his Don Giovanni; an orchestra playing Grieg, Bach and Copland; and a group of singers performing Haydn, Poulenc and Mozart. All this is only a sample. The visual arts are rather less rich.
What now I fear is that our suburban riches are being eroded. I began to worry when the Greater London Council was wantonly destroyed by Mrs. Thatcher's government, and I regarded the Government's assurances that the arts would not suffer as mere blandishments. I admit that perhaps I was too suspicious. I could not believe that the residuary body, the London Boroughs Grants Committee, would be an enlightened and generous patron, or that the London Regional Arts Association could provide full compensation. But they have not done quite so badly yet as the current riches of suburban arts would indicate. The problem is to keep it up and it is an immediate problem, as we have heard this afternoon that there are very grave things in prospect in London arts.
For several months the borough grants committee has been wrestling to agree a budget and has only just done so. The decision requires a two-thirds majority and I am told that the outer boroughs were reluctant to find money which would be disproportionately spent on the inner boroughs. The Greater London Council had two funds. One was for the arts and the other was to fund the voluntary bodies who provide specialist welfare. The grants scheme has only one fund. In hard times like the present, it has to choose between life enriching art and desperately needed life sustaining welfare and advice. So the amount allocated to the arts seems to have fallen from£3 million to£2 million with the dire results about which the noble Lord has just told us.
The problem of local authority contributions to the arts is not purely a London problem. If you include live entertainment with the arts, you find that the total spent by local authorities is equal to that spent by the Arts Council. We are all familiar with the turmoil, uncertainty and confusion of local authority finance as the Government clumsily play with their revenue raising capabilities. It does not seem to me to be at all possible that they will go on operating 260 theatres, 100 concert halls and 50 arts centres, nor to go on giving a subsidy to running costs to the extent of about£3 a seat. The local authorities are under no duty to support the arts and so no part of this expenditure attracts government support.

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The Audit Commission has investigated local authority expenditure on the arts and has come up with a Set of wise maxims. It is, of course, right that local authorities should have clear objectives and should monitor what they achieve:
"Such needs"—
said the commission—
"have been accentuated by the introduction of the community charge".
It can say that again. What the commission recognises is that every artistic venture requires a certain amount of faith. All certainty disappears before the box office.
I wonder whether the Minister can tell us whether he or the regional arts associations are monitoring what is happening to local authority projects. If so, are they satisfied that institutions valuable to the community are not at great risk? If they are at risk, what do the Government intend to do about it?
I should welcome it if this debate could be broadered, if somebody could write dispassionately about the situation in words and with a minimum of figures; if someone could produce something better than the arid cultural trends and the report of the Office of Arts and Libraries. All I can say about the latter is that it is beautifully printed and abominably written. I hope that the noble Viscount will tell his Minister about that.
4.35 p.m.
The Earl of Perth: My Lords, first I should like to congratulate the noble Baroness, Lady Birk, on having the luck of the draw which enables us to hear a very good speech not only from her but from many others in your Lordships' House. But, above all, there was the maiden speech of the noble Baroness, Lady James. She used a sentence which might well be sent to the Minister for the Arts and others for them always to remember. She said that without the arts and literature, life would be a desert. Many of your Lordships have spoken on that theme. I cannot say how right I think it is.
I shall not talk on the performing arts or on literature. I shall talk on works of art as such. The noble Lord, Lord Crathorne, said he thought that all the "stars" of the works of art have been saved for the nation over past years. I wish that that were the case. I shall not quote a list of things which were lost, but I beg h m to read the report of the Reviewing Committee for the Export of Works of Art, which comes out annually and tells the tragic story of what is escaping us. Whether we are talking about works of art, whether we are talking about literature, whether we are talking about the performing arts, money is at the heart of it all. There will never be enough money.
I want to say a word of praise of the Government in relation to their help in getting the structures, the buildings which house the various museums, into a better form. For far too long they have been neglected, but considerable work is now being done and we ought to recognise that. Perhaps as a sequel the money available for the purchase of works of art or anything like that will be that much less.
The question then arises: are we sure that we are making the most effective use of the money? About three weeks ago there was a conference at Ditchley. Its
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title was: Museums and Galleries; Collecting, Funding and Protecting the Heritage. That was a very remarkable gathering. Forty of the great and good from the museums of seven different countries were there, and I suggest that if any of your Lordships are interested it would be very easy to get a synopsis of what was said at that meeting, which was very ably presided over by Sir Richard Luce.
I want to touch generally on the subject of whether works of art should stay in this country or should go out of it, and how they are to be protected. The year 1992 looms, and in theory works of art or anything else in Europe will then be able to move from one country to another without restriction. But it will not happen. We know already that some countries have an embargo. The result is that people who buy, smuggle out works of art. Some, like the French—and I think the Italians—have a system of pre-emption. They announce it beforehand and that is not fair to the individual.
So what are we to do? As I said earlier, we should make sure that our system is effective. How can we do that? What has been called for frequently over the past year is essential; namely, that we should set up a working party which has political clout. By that, I mean not just an in-house job, but one again presided over by an eminent judge like Lord Waverley. Everyone recognises that the Waverley criteria work well, but there are many other features which do not work and which creak. The noble Lord, Lord Rees, indicated several of them. I could go into detail about them; but it is not the time to do so.
As systems develop through which we receive money for the arts from government, that money comes more and more in a centralised way and less goes to the museums themselves. I am not sure that that is the right policy. I am not criticising the work of the National Heritage Memorial Fund because we all know what a splendid job it does. However, it is pretty discouraging if the allowances to the museums remain the same year in, year out and works of art go up five or 10 times. A working party should take a look at that matter, particularly the question of whether we should have more for the museums to spend. When they make an appeal, if they can put up only a tenth or a twentieth of the money, you do not feel that they are serious; but, if there is a good deal of money and they have pledged a large amount, they are much more likely to get the right things.
The Ditchley meeting touched on other interesting and important subjects. It referred to the question of more lending between museums. There is a problem there for the Government regarding insurance. It referred to stolen and smuggled goods and to the totally different system in Europe. Those are important points which should be considered by any working party.
I have only one minute more and then I must stop. I beg the Government to consider setting up a serious body with real clout, consisting of members from all parties, to consider the matter before 1992. Such a body has often been called for, but nothing has happened. Should it be the responsibility of the

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ministry for the arts or of the Department of Trade? Those questions must be answered. I hope that my plea will not go unheeded.
4.43 p.m.
Baroness Lockwood: My Lords, I want to speak from a regional perspective. The 1989–90 annual report of the Yorkshire Arts Association—the final report before the regional association is succeeded by the Yorkshire and Humberside Arts Board—indicates tremendous vitality and creativity embracing both the traditional and the new ethnic cultures of the region, despite the continual struggle to maintain resources. However, just as there seems to be an inevitable conflict between the allocation of funds for national prestige projects and regional projects, so too there is a dichotomy between support for the highly visible or popular which attracts publicity and generates funding and the small, struggling companies and community arts.
Yorkshire has its flagships. It has Opera North, the Yorkshire Sculpture Park, the National Film and Photographic Library and now the Yorkshire Dance Centre, as one of the national dance agencies, to mention only a few. It also has a multiplicity of professional, amateur and community groups which are the basis of the continual growth and development of the arts in the country.
It is a fallacy to suggest that the arts are the preserve of a privileged minority, as the noble Baroness, Lady James of Holland Park, said in her exceptional maiden speech. The arts are the heritage of us all. I am glad to say that there is evidence in my region of an ever-increasing proportion of the population both participating in and enjoying the arts.
I should like to give three illustrations of that participation. Yorkshire has around 80 professional theatre companies, some 60 of which are struggling on the breadline and some of which—for example, the York Grand Opera Company—have gone under. Some of the smaller companies often subsidise much of the new and more experimental work which we all agree is important to do. Those companies do it by paying themselves well below the accepted rates because of their commitment to the work and to art. They also take the theatre into the community. Mind the Gap, a company based in Bradford, works with the physically and mentally disabled. Its objective is not just to entertain, but to go into day and residential centres and involve the disabled people themselves in providing theatre.
Then there is community art and the environment. An example here is Silkstone Village in the Barnsley metropolitan district which realised that it no longer had parish boundary markers. A steering group was therefore set up and, together with a local sculptor, a plan was established to create 16 unique sculptures as markers, each representing an aspect of Silkstone life, past and present, fact and fiction. That project is now well under way.
Thirdly, there are several groups which take both
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theatre and the arts into schools. This latter category has a particular problem which is referred to in the annual report of Yorkshire Arts. The report states:
"Local Management of Schools … has fundamentally altered our relationship with schools. It means we can no longer rely on the single relationship developed with a local education authority, and now have to find a new way of working which can encompass the region's 2,500 schools. And, worryingly, as schools are now beginning to manage their own finances, there is growing evidence to suggest that their spending on the arts—on residencies, visiting artists, trips to the theatre and so on—may come under threat, because of a severe shortage of cash in the education world".
The noble Lord, Lord Birkett, would deplore that.
There should not need to be that dichotomy as to where funding should go. The arts represent an enormous industry for both the domestic and the international market. Consequently, as the noble Lord, Lord Donaldson, said, investment in the arts is both an investment in the economy —and, incidentally, an investment in the largest job market of the economy—and an enrichment of life for individuals and the community. It is an expanding market which requires an expanding investment. Instead, we have in effect a contracting investment because recent funding levels from central government have only kept arts organisations up with prevailing levels of inflation and unfortunately do not represent any significant increase in real terms. Moreover, throughout the 1980s arts organisations have worked hard to develop business plans and marketing strategies at the Government's behest.
The noble Lord, Lord Sainsbury, complained that the Arts Council was not keeping itself at arm's length. I suggest that the Government are not keeping themselves at arm's length either. They are forcing the arts associations to adopt strategies which are not appropriate to the arts. I should like to develop that aspect but time does not permit.
I end by saying that it may not be fashionable for the Government to think in terms of increased funding and investment in a public enterprise, but government funding and investment in the arts is very necessary.
4.50 p.m.
Lord Auckland: My Lords, debates on the arts in your Lordships' House are not exactly conspicuous by their absence, but we need not apologise for that. The noble Baroness, Lady Birk, has the House in her debt for having initiated the debate, which has been richly enhanced by the outstanding maiden speech of the noble Baroness, Lady James of Holland Park, whose literary efforts are well known in many parts of the world.
Ironically, this debate is to be followed by a debate on the National Health Service, with which I have a rather closer connection than with the arts. We are crying out for funds for the National Health Service too. We are crying out for funds for overseas aid and other things. The agonising problem which all governments have to face is to decide where the arts fall within those priorities. In one of the debates in which I have spoken, in over 30 years' experience in your Lordships' House, I coined a rather philistine

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phrase—"penicillin before Puccini". As one who is a Puccini addict and has also benefited from penicillin I believe that that is relevant.
The noble Baroness, Lady Hollis, reminded us of the regional arts and the fact that the arts exist north of Watford and south of Wimbledon. I am very much involved with the Thorndyke Theatre in Leatherhead. I was a trustee when the theatre was first built and opened by that marvellous actress, Dame Sybil Thorndyke, who took part in the first play in the new theatre. There was a time when local authorities were mandated to pay a 6d rate to their local theatres. I wonder whether my noble friend the Minister can give any information on that.
I should also like to say a word about Scotland, where I was brought up. It has two very fine theatres —the Perth Repertory Theatre, which is very near to my home part of the world, and the Pitlochry Festival Theatre. I also speak as a member of the all-party parliamentary committee on tourism. Pitlochry relies very much on tourism. It presents some splendid plays, concerts and recitals. We must get out of our heads the very philistine point of view that it is only in London that there are splendid examples of the arts.
I have been once to the Maltings at Snape in East Anglia since it was rebuilt after being burned down to see a wonderful performance of the Bach Christmas oratorio. I do not know whether that theatre receives any central or regional funding. We have to bear that point very much in mind.
As my noble friend the Minister reminded me, this debate does not deal with opera. However, I should like to Point out that one of the problems with the arts in this country concerns the buildings. One has only to go, as I did some years ago, behind the scenes at the Royal Opera House at Covent Garden—which I believe is to close for a while—to see the appalling conditions, even for leading singers. The English National Opera company, which I think is one of the finest opera companies and which is still very reasonable, is in a similar position.
I end with one, not intentionally facetious, suggestion for Her Majesty's Government. When overseas parliamentarians come here as guests of the Inter-Parliamentary Union or the Commonwealth Parliamentary Association—and I declare an interest as a member of both organisations—there are many places where they can be taken. I remember that some years ago my wife and I hosted a visit to the English National Opera to hear David Hughes—now since passed on—singing Pinkerton in "Madame Butterfly". It was a marvellous evening. The English National Opera company could be helped by government hospitality, and if that is giving it a puff, so be it. Guests could be taken to opera, sung in English, and performed by British stars—and I say British deliberately. They could enjoy a marvellous evening. Even in times when funding for the arts creates problems—and all governments recognise that —that would provide some help for the arts of this country. which have so much to offer.
4.55 p.m.
Lord Morris of Castle Morris: My Lords, we have had a most interesting and informative debate—so far. Its highlight for me has been the maiden speech of the noble Baroness, Lady James of Holland Park. Long may she follow the devices and desires of her own heart when they lead her to speak with such authority.
The words "museums" and "art galleries" have surfaced fitfully from time to time. Perhaps I may for a few moments invite the concern and sympathy of noble Lords for the Cinderellas of the museum world, the "provincials"—the local authority museums and the independents, some 3,000 of them, from Truro to Wick—and particularly for the area museum councils, the AMCs, which guide, help, advise and fund them with a few pennies where they can.
There are nine area museum councils covering the whole of Great Britain, plus an embryo one, pecking at the shell, in Northern Ireland. They were set up in the late fifties and sixties. They are funded by government through the Museums and Galleries Commission, of which until last December I had the great honour to be chairman.
Throughout the eighties, in one annual report after another, the commission implored the Government to double the extremely modest grant to the area museum councils. In 1984 the commission produced a special area council review under Sir Arthur Drew, which reiterated the request. The Government did not do so, have not done so and show no sign whatever of doing so now. Why not? They will argue, of course, that they have done their best and that they have enabled the commission to increase the AMC grant this year by no less than 15 per cent. on average. However, that cannot make up in any way for a decade of neglect, benign complacency and inflation.
The area museum councils are staffed by first-rate museum professionals. There is an absolute minimum of bureaucracy. Several consist virtually of a genius, a secretary, a telephone and a motorbike. In terms of value for money, it would be almost impossible to match the service which they provide nationwide. They are, and for decades have been, a shining example to the rest of Europe, which has nothing like them and looks at them with great jealousy.
The area museum councils themselves are in the business of helping museums to help themselves. Their grants are all 50 per cent. or less. Their services and their grants are all massively oversubscribed, in some cases by a factor of 10. If their money were doubled in any one year they could use it to magnificent advantage.
There can be no doubt, because the commission has investigated them carefully, that the AMCs are lean and efficient organisations and that they could use every penny of an increased government grant to help museums improve their public services and their care of collections. For example, the AMCs are developing help with museums' education, in particular with smaller museums which do not have specialist museum education staff. The area museum service for

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South-East England is developing a London museums education unit to help London's 300 non-national museums.
Secondly, the AMCs can help with better public displays. The councils are anxious to deploy their expertise to encourage and help member museums to brighten up their public displays and take them out of dusty cases, as the Audit Commission report has recently called for. I give as an example Devizes Museum in that lovely little place in Wiltshire. It has an internationally important prehistoric collection. It deserves more visitors but simply cannot deploy its collection in the way that it should. The same could be said for Leeds City Museum, Exeter's Royal Albert Memorial Gallery or the Somerset County Museum at Taunton.
Thirdly, the area museum councils wish to do far more to help member museums to widen their audience through special schemes to attract groups within the community who do not traditionally visit museums and to provide special services and facilities for people with disabilities. The area museum service for South-East England recently published a non-visitor survey which asked such questions as, "Who are the people who do not go to museums? Why do they not go?" People described museums they had visited as "dingy places with different kinds of bits". That indicates that there is a long way to go to interest some sections of the community in the museums and art galleries of our country.
Fourthly, on research and cataloguing, the AMCs have made huge efforts to encourage the documentation of museums' collections. The University Museums Group is meeting in Newcastle today. The AMCs have been undertaking a nationwide survey of university collections.
Finally, on training, the area museum councils' training officers have developed a lively and imaginative pattern of training activities for museum staff of all grades and for volunteers. Much more could be done to meet the booming demand, especially with regard to the volunteer-run museum where training has to be informal and on site.
The vital importance of area museum councils is stressed again in the most recent MGC report issued last month, entitled Local Authorities and Museums. The chairman of the working party which produced the report, Professor John Last, a most knowledgeable man on all matters concerned with local authorities and a member of the Museums and Galleries Commission, reiterates once again Recommendation 37 of the report which states:
"We recommend that AMCs should have their current level of funding doubled by 1995".
I hope that the Minister will tell me that that will be so.
Professor Last said that central government needs to be more aware of the far-reaching effects of its policy changes and that local authorities should have properly considered, written-down policies towards the museums in their care. He calls for a more realistic level of challenge funding to enable museums to be more effective in fending for themselves.
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I am not optimistic that the Government will hear his call. However, there will be a general election before too long. Therefore, to the AMCs, the museums and galleries, the theatres and the orchestras, I can only say in the words of that under-rated poet Philip Paul Bliss:
"Hold the fort: for [we are] coming".
5.3 p.m.
Viscount Astor: My Lords, the noble Baroness, Lady Birk, has initiated the debate today on a most important subject. I am happy to reply on behalf of the Government. However, first I should like to congratulate the noble Baroness, Lady James, on her elegant and excellent maiden speech. I hope that my words will be as good as hers or I fear that I may soon be a victim in her next book. I hope not. In any event, we look forward very much to hearing her speak often in the House in the future.
The Government are proud of their record in supporting the arts. In the current financial year total central government support for the living arts, the museums and galleries and libraries will total£561 million. That means a cash increase of 13 per cent. on 1990–91, itself a record year. With inflation now falling rapidly, the 1991–92 uplift means a real terms increase in support of over 5 per cent. If we compare current provision with what it was in 1979–80, we have seen over that period an increase in support of 55 per cent. in real terms. In other words, once inflation has been taken into account, the money which the Government put into support of the arts is now worth half as much again as it was in 1979.
The debate has raised a great many issues. In replying, I have only time to touch on some of the main areas. I should like to start by saying something about the arts in general. This is a matter of keen interest to your Lordships. We had a lively and well informed debate in February. The arts are one of our most precious national assets and in range and quality they are the equal of any in the world. But we must never be complacent about the health of the arts in this country. Nonetheless, the justifiable concerns that we all share should not be allowed to crowd out the good news—a point made by my noble friend Lord Crathorne.
There has been much good news in the few weeks since we last debated the arts. The City of Birmingham has opened its new Symphony Hall. It has turned out fully to meet all the high expectations we had of it. The Royal Shakespeare Company is now back again at the Barbican with a very substantial uplift of 30 per cent. in its funding from the Arts Council and a most generous contribution from the City of London worth£4 million over the next three years. The Royal Opera House has been able to announce a tremendously successful season and that has made major inroads into its deficit. The Welsh National Opera is now on a secure financial footing which will enable it to expand its repertoire and continue to give much pleasure from its touring. Equally, as a result of the enhancement fund introduced by the Arts Council this year, Opera North has had its grant increased by 40 per cent. and it too faces a much more secure financial

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future. Close by, the West Yorkshire Playhouse, after a very successful first season, is now benefiting from a grant increase of £160,000 which has been very generously matched by the local authorities. Those are just a few examples. I could mention others: the successful resolution of the financial difficulties of the Liverpool Playhouse, the commitment to build an Opera House in Edinburgh, and so on.
I mentioned earlier the overall increases in the Government's support for the arts, the museums and galleries and libraries. If we look in a little more detail at increases in funding for the arts alone, the figures are perhaps even more impressive. In just over two years the Arts Council grant has gone up by 25 per cent. Over the past 20 years arts spending has almost doubled in real terms. It has to be said that keeping pace with the growth in arts organisations is not easy, even within a budget for arts support that has grown so substantially. From small beginnings, the Arts Council's budget of £194 million now supports 70 major revenue clients as well as many more who receive annual grants or project funding.
The Government remain committed to strong continuing support for the arts. We believe that the stability which this offers has played a major role in helping to sustain the growth and present health of the arts in this country. The figures I have given convincingly make that case.
I should like to make a number of further, fundamental, points. First, across the whole range of government expenditure programmes there will invariably and inevitably be claims of underfunding. That is not new. The public purse—filled from taxpayers' pockets—is far from bottomless, and successive governments have had to review priorities, make hard choices and take difficult decisions. Secondly, over the past decade or so the sustained growth across all of the art forms has generated an enormous increase in interest, demand and expectations. In response, the Government have played their own role to great effect by increasing the real level of support. But that is only one, albeit a most important, element. We firmly share the widely held view that in our own society, with its liberal culture, it would neither be right nor possible for central government to be the monopoly funder. The challenge must also be met by the community as a whole: by local authorities, the public, businesses and private patrons—of whom the Sainsbury Foundation is one of the most generous benefactors.
We have therefore been concerned to encourage greater diversity in the sources of support for the arts. In particular, this Government have given a strong lead in encouraging sponsorship of the arts. Since the Business Sponsorship Incentive Scheme was launched in 1984 it has brought nearly £40 million into support of the arts, including a government contribution of £13 million. One thousand eight hundred first time sponsors have received an award under this scheme. A high percentage of those have continued to sponsor the arts.
The Government have, however, noted with concern that not all support for the arts has remained as stable as their own. As has been pointed out, the
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local authorities are also very important funding agents of the arts. In all they contribute about £200 million a year, broadly equivalent to the Arts Council's own contribution. A number of noble Lords have already referred to the pressures on local authority expenditure. We are all well aware of these but there is a continuing need for local authority spending to be carefully controlled. In some cases that has required the Government to introduce charge capping.
Arts spending is not mandatory and at the end of the day it is for individual local authorities to determine the levels of support that they provide. But it does not automatically follow that local authorities have been obliged to reduce their spending on the arts. When local authorities are tightly run and have their priorities right there is no reason for the arts to be singled out for cuts. Overall, the pattern is by no means uniform. Indeed, some authorities have increased their expenditure. Others have assumed that cuts in spending on the arts are the easy way out. I do not believe that that is so. Local authority support for the arts not only helps to improve the quality of life by making the arts more accessible to everyone but it can also help to attract visitors, business and inward investment.
We have at the moment some outstanding examples of local authorities which have made it clear that they see substantial support for the arts as an essential part of their civic responsibility and as a generator of economic well-being. I have already mentioned Birmingham which contributed so much to the realisation of the new Symphony Hall. It has also generously helped to establish the Sadler's Wells Royal Ballet in its splendid new home there and has provided a base for the D'Oyly Carte. But, equally, Glasgow has now put itself firmly on the map through its ambitious and wide-ranging programme of arts activities. Last year it was the EC City of Culture and it has continued to support the arts and the magnificent museum and galleries in the city. It, too, has opened a new concert hall in the past year. I have also mentioned Leeds and the West Yorkshire authorities which have done so much recently to make the city a lively centre for some of the best arts organisations in the country. But not all local authorities have taken the same enlightened view.
Your Lordships are already aware of the serious threat to the future of the Bristol Old Vic as a result of inadequate local support. Short-sighted decisions by Derbyshire Council not only to cut support for the arts but to sell off precious assets have also hit the headlines. Close to home we have seen the long drawn-out unhappy tale of the London boroughs grants scheme arts-funding decisions this year. I shall return to that matter in a moment. The Government regret this instability in certain areas of local authority funding. At the same time we cannot accept that wherever a local authority reduces its provision the Arts Council must make good the shortfall. Its budget is already tightly committed. Wherever possible it uses its own funds to generate additional support from others.

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The noble Baroness and other noble Lords already referred to the London boroughs grants scheme. The Government have been most anxious about what has happened this year. Recent events have confirmed that the present arrangements are not working as they were intended and are unnecessarily putting at risk important arts activities. A budget has now been set, but the Government regret the delay in reaching decisions on levels of grant which were so eagerly awaited by the scheme's clients. Beyond that we are concerned about the apparent lack of co-ordination with funding decisions taken by other bodies such as the Greater London Arts Association and the Arts Council itself. Regretfully, we have had to conclude that the scheme is not working well. My right honourable friend the Secretary of State for the Environment has as a result decided to include the future operations of the London boroughs grants scheme in his review of local government. My right honourable friend the Minister for the Arts is in close touch with the Secretary of State for the Environment about future arrangements which will help to ensure a more stable and better co-ordinated environment for the funding of arts organisations in the capital.
Before turning to the important points that have been made about the heritage I should like to say a few words about government support for the museums and galleries. They too have benefited from increases in real terms in government support. In the current financial year £181 million will be devoted to maintaining our museums and galleries. That is an increase of 40 per cent. in real terms since 1979–80. We have an important stock of national museums and galleries in this country. Many of the buildings in which our great collections are housed are magnificent in themselves. However, they are old and extremely costly to maintain. The Government have set as one of their major objectives that the buildings of the national museums and galleries should be completely renovated by the end of the decade. As a result extra resources are going to that ambitious programme. During the next three years the allocation for it will be in excess of £188 million.
Consistent with their other policies the Government have also been active in encouraging wider private sponsorship of both national local museums and galleries. Through the Museums and Galleries Improvement Fund the Government are matching the generous contribution made by the Wolfson Foundation. All in all this will mean an extra £12 million in the three years from 1991–92 for major refurbishment projects in exhibition and display galleries throughout the country. The British Museum, the National Gallery, Sir John Soane's Museum together with facilities in Newcastle, Oxford, Huddersfield, Truro, Worcester, Cambridge, Bournemouth and Scunthorpe—I sound like a British Rail announcer—are already benefiting.
The programme for the museums and galleries is going ahead at a time when we are also involved in a major construction project; that is the building of the new British Library at St. Pancras. We are on target to complete the first stage of the work by 1993 at a total
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cost of £300 million. A completion phase for the project has also been agreed at a further cash cost of £150 million. Partial occupation of the building will begin in July this year and the entire facility is due to be completed and fully operational by 1996. The new British Library will be the largest publicly-funded cultural building to be completed in this country this century. Once ready and open it will be a major national asset of which we can all be justifiably proud.
As your Lordships will be aware, my right honourable friend the Chancellor of the Exchequer was able to announce in his Budget statement that discussions were taking place designed to lead to the setting up of a new foundation for the arts and sport. This is to be funded jointly by contributions from the pools promoters and from the proceeds of a reduction in the pools betting levy. Current estimates are that in total that could provide the new foundation with some £60 million annually. Discussions with the pools companies are continuing and detailed arrangements for the operation of the foundation have still to be worked out. I am sure noble Lords will agree with me that once established the foundation will help to augment the range of funding already available in this country for the arts.
I now turn to the heritage. Your Lordships have expressed deep anxiety that our controls on the export of our national cultural heritage appear to be breaking down with the increasing loss overseas of pre-eminent works of art and other national treasures. What lies at the heart of this current concern? In four words it is lack of unlimited money. As I have already said, in relation to the performing arts all areas of public expenditure will always claim to be under-funded. Charges of allowing market forces and high auction prices to prevail, without any significant extra commitment of resources to allow our public institutions a chance to compete in this particular market place, have been laid at the Government's door. Perhaps I may quote an extract from representations made by the Reviewing Committee on the Export Works of Art from 1957–58. It stated:
"We make no apology for repeating the argument on these matters set out in our last three Reports … that a level of purchase grants consonant with current price levels is a fundamental requirement".
Your Lordships will understand that money has always been a problem and it still is.
I suggest that we each of us would wish to keep in this country a variety of important heritage objects and we have the reviewing committee to thank for its professional and meticulous identification of the very best. I pay tribute to the successive chairmen who have given their time and talents to this task, not least the noble Earl, Lord Perth, who always can be relied on to remind this House of the important contribution the committee makes to saving the heritage.
Each year decisions on funding, often hard decisions, must be taken. These must have regard to general economic pressures, and to particular crises, such as war, or social and health funding. No choice between competing claims is ever easy.
I must draw to your Lordships' attention, and underline, the record of this Government as regards funding the heritage. We have not been backward in

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making extra resources available. Since its creation in 1980, the National Heritage Memorial Fund has received £111.6 million enabling it to spend, by April 1991, some £132.4 million. This presents tremendous value for money. The range of things saved, from bats and butterflies to major houses and their contents, as well as individual works of art, represents a great deal more than that £132.4 million.
As a signal of our commitment, the Government have this year quadrupled the annual grant to the fund to £12 million. We have also increased the grants to the various heritage bodies funded by my right honourable friend the Secretary of State for the Environment, to £174 million—an increase of nearly 16 per cent.
However, this is not the whole story, by any means. In addition to these grants, given primarily to assist with the purchase or restoration of items threatened with export or destruction, there exist a number of tax concessions created by the Government to support the heritage. Perhaps I may cite some examples.
Heritage items, buildings and land may be offered in lieu of inheritance tax. The acceptance in lieu scheme has been greatly expanded by this Government. Developments we have introduced include the waiving of interest charges on tax liabilities while an AIL offer is being processed; the acceptance of works in situ where there is an historical association with a r articular property; and the increase of funding for the scheme in 1985, with an annual average of £12 million now available to finance the fluctuations inherent in a scheme in which the incidence of death is usually the determining factor. Since 1985 over £42 million worth of tax has been satisfied by items offered in lieu.
The Government also offer a significant tax concession to individuals owning items on which inheritance tax is due if those items are sold to an approved institution. Since 1985 items valued in excess of £55 million have been acquired by UK national museums and galleries through the mechanism of the private treaty sale at a cost to those institutions of only £25 million.
The noble Baroness, Lady Birk, berated the Government when this House discussed the Badminton Cabinet on 29th April, for the lack of tax allowances available during a person's lifetime. I must apologise to the noble Baroness for incorrectly saying that "gifts" could be made in lieu of tax in a person's lifetime. What I should, of course, have said was that sales in lieu of inheritance tax could be made during a lifetime. My right honourable friend the Minister for the Arts is aware that there would be substantial benefit to the heritage if further concessions relating to lifetime gifts of museum quality objects were created which gave relief on income and corporation taxes. He is ever open to suggestions for such concessions and seeks to encourage their introduction. Schemes offering such a concession operate very successfully in a number of countries, most notably in the USA and Australia. While the introduction of such a scheme in the UK is for the future, I would remind the House that an important tax concession already operates during one's lifetime. I refer to the maintenance trust
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for heritage property. The creation of maintenance trusts to manage property of heritage significance can lower tax liabilities significantly when expenditure is undertaken to protect property.
I now turn to the various points raised in the debate. Noble Lords have spoken again with eloquence in support of this cabinet. I pay unreserved tribute to the appeal conducted by the National Art Collections Fund on behalf of the Fitzwilliam Museum. Of course, £8.7 million is a very considerable sum to have to match, and is far and away a record for a piece of furniture. But regrettably those Herculean efforts have not yet raised the total sum. The Government continue to consider requests for additional funds, but I remind noble Lords that the Government have made available £1.5 million through the National Heritage Memorial Fund and £30,000 from the Local Purchase Grant Fund for the regions. It is also open for a private offer to be made.
The deferral period expires two days from now. Noble Lords would not expect me to anticipate the decision of my right honourable friend the Secretary of State for Trade and Industry, nor the likely recommendation of my right honourable friend the Minister for the Arts.
However, the system works. I am sure that noble Lords will recall the circumstances of the retention in this country of the "Three Graces"—a subject raised by noble Lords this evening—thanks to the exceptionally generous offer of David and Frederick Barclay. My right honourable friend kept the export controls under review and the introduction of private offers has been a major development in the protection of heritage.
I should point out to the noble Baroness, Lady Birk, that our three-year funding provides, for the first time, a planning framework for arts companies. That is a flexible arrangement, as has been demonstrated in the past two years. Substantial additional funding has been made available.
The noble Lord, Lord Jenkins, mentioned the Theatres Trust. I am glad that he acknowledged that extra funding has been made available to conduct a survey of the fabric of the theatre. The Minister looks forward to the outcome and will consider the conclusion.
The noble Lord, Lord Ardwick, asked whether the Government are monitoring the impact of changes to local authority finance arrangements. I can confirm that the Arts Council and the regional arts associations are monitoring the situation very closely.
Anxiety was expressed by the noble Earl, Lord Perth, about the possible effect of the single market on the protection of our national heritage. I assure your Lordships that the Government are aware of the need to consider the operation of export controls on works of art and are discussing the possibilities with HM Customs and Excise. We are participating in discussions to strengthen co-operation between ourselves and other members of the EC some of whom foresee rather more difficulties with the single market due to current restrictive export regimes. Evasion of those may be even more tempting after 1992. Our export system is one of the least restrictive in Europe

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and as such contributes to London's position as a world leader in the art market with minimal abuse of export controls.
This has been a wide-ranging debate and I must apologise if time has not allowed me to deal with all the points that have been raised. However, I make no apology for focusing on heritage issues, given that we were able to concentrate in rather greater depth on the performing arts during our debate in February. The Government's commitment to the protection and preservation of our cultural heritage is real and I rest our case on the many successes in this area.
Lord Rees: My Lords, before my noble friend sits down, will he say explicitly whether he sees any merit in the suggestion that the overseeing of the control of exports of important works of art should be transferred from the Secretary of State for Trade and Industry to the Minister for Arts and Libraries?
Viscount Astor: My Lords, I shall draw the remarks of my noble friend to the attention of both the Minister for the Arts and also the Secretary of State.
5.29 p.m.
Baroness Birk: My Lords, at one point I thought there may be time to take on the noble Viscount and point out the error of his ways as regards some of his remarks and the figures which he gave. There is now no time for that.
I am glad that after seven or eight years the Government have decided that the London boroughs grants scheme is not working. We could have told them that a long time ago. I am very grateful to noble Lords who have spoken in this debate which has been of a very high level—apart from the introduction—and extremely interesting. I should like to say also how much I enjoyed the contribution made by the noble Baroness, Lady James.
We must plug on and hope that the Government accept that more funds are needed for the arts. That is not the same as saying that everything should be agreed to, but it means that the will I spoke about may be backed up by something more concrete and stable than just good wishes and the reiteration of how much money has been given. When one examines the figures, one is seldom comparing like with like. They are apt to go astray. I beg leave to withdraw the Motion.
Motion, by leave, withdrawn.

The National Health Service
5.30 p.m.
Lord Ennals Lord Ennals rose to call attention to the state of the National Health Service and especially to the newly established NHS trusts; and to move for Papers.
The noble Lord said: My Lords, perhaps I may first say how delighted I am that so many noble Lords and Baronesses agreed to speak in the debate, many with much experience in the health service. I am especially looking forward to the maiden speech of the noble
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Lord, Lord Harmsworth. His record of social service commends him to us all and we look forward to what he has to say.
In the debate I shall not only call attention to the problems of the National Health Service, so widely shared in this country, but also will call upon the Government not to approve any more opted-out trusts until the public have spoken in a general election. So far as I am concerned, the sooner the better. There is no reason for delay. It will not be legislation that will hold us up. It will simply mean that the Government are frightened.
It is almost a quarter of a century since I first became a health Minister. In my view, the NHS is now in very grave danger. The people of Britain, who, because of an ageing population, increasingly rely on the National Health Service, should wake up to the fact that only their decision to bring about a change in the direction of our nation's affairs can rescue the service from terminal decline. Clearly, it is not safe in the hands of the party opposite. It is just four years since an under funding crisis led Mrs. Thatcher to set up her review and come up with a market-orientated solution which will eventually spell death to an already ailing service. NHS reforms conceived by her Right-wing advisers are a time bomb which will explode at some stage and damage both those who plotted her demise and the rest of the "yes men" also.
I shall examine the evidence. With a steadily ageing population making huge extra demands on the service, it is being squeezed of resources. Of course there have been additional funds provided by the taxpayer. Every year in every government that has been so because of the increasing demand. But the funds have been eaten up by the growth in demand, the cost of new technology and the rate of inflation. This year health authorities were given 6 per cent. extra to pay for costs which rose by 9 per cent. We see the results all around us in terms of bed closures. Even the day before yesterday in King's College Hospital 14 people lay on trolleys which were nine inches apart because no beds were available. That is a hospital which had substantial bed closures earlier in the year.
On several occasions in the past I have drawn attention to the 3,500 beds temporarily closed, supposedly to wipe away debts so as to allow the new systems to start with a clean slate. Inevitably waiting lists rose sharply as wards, operating theatres and consultants were put out of service. Waiting lists have reached almost 1 million, if Government statistics are to be believed. Britain is still way behind the United States and the rest of Europe in her share of GNP spent on health. Growth rate at the moment has dropped to virtually nothing but our percentage of GDP spent on the health service is not rising; it is falling. It is now down to 5.8 per cent., and that at a time when the National Association of Health Authorities and Trusts—not a pressure group but the health authorities themselves—recently estimated that there is an underfunding of the NHS of £4.5 billion.
However, the Government insist that underfunding is not the real problem. They claim that they have found the solution by introducing market forces into the NHS. We have all become purchasers and

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providers. They decided to bring in a new brand of business manager; to remove doctors and nurses from positions of power; to eliminate elected councillors. The Government said, "Let the entrepreneurs get their hands on the provision of patient care; break up the old relationships; let the hospitals opt out, they will find their feet as Sainsbury's and Marks & Spencer's have done for decades. The hospitals will survive if they will only move into the field of making profits. Let the: GPs become small businessmen able to buy better services for their patients".
When that was presented to the House of Lords —and another place—many of us said, "Watch out! Take it easy! Try out some of these notions. See how they work. Do not just impose it upon an uncertain nation. Trial and error is the best way". If we now look at the situation, we see that they plunged into untried schemes. We were not saying, "No change". We were prepared to see many sorts of change. We said that it would be irresponsible to open the floodgates without fully understanding what we were doing.
That was the message, not only from the people in this House and in another place, but from all the Royal medical colleges, from the British Medical Association, the Royal College of Nursing and from all the colleges in professions allied to medicine. Peers on all sides of the House said it; the all-party select committee in another place said it; and the public said it. But the Government took not a scrap of notice. They forced their Bill through both Houses with virtually no concessions to common sense. We are now beginning to see the results of their pigheadedness as the first 56 opted-out trusts face the real world, and as the GP budget holders use their new-found power to create a two-tier health service.
We are only six weeks into the scheme and what do we find? Ministers admit quite frankly that they do not know what is going on within the NHS trusts. Of course not. The Government say, "The NHS trusts are free to go their own way. The trusts and the budget holders are independent. It is not for us to breathe over their shoulders. Give the local people the opportunity of making decisions for themselves. The Government cannot give explanations; it is for local people to decide. We cannot intervene".
They cannot have it both ways. They cannot say that NHS trusts are still part of the health service and disagree with us that they have opted out of the NHS, and yet say that they accept no responsibility for what the trusts do with the funds provided for them. It was Ministers, including the Prime Minister, who launched this unseaworthy craft. They cannot now evade the responsibility of the results.
In succession the newly opted-out hospitals are cutting jobs and services-600 at Guy's and Lewisham, 10 per cent. of their overall budget; 300 in Bradford; announcements still to be made for Leeds General Infirmary, the Royal London Hospital and others. Ministers pretend that all that is to increase efficiency and that the patients will not suffer. That is simply not true. A recent document from Guy's Hospital spoke of
"inevitable reductions in direct patient care services".
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Professor David Levison warned that the proposed budget cuts of £320,000 in his department would require the immediate axeing of up to 20 technicians who match blood for operations. That will result in a 10 per cent. cut in the hospital's blood transfusion service which is already in a precarious situation. It cannot be said that no damage is going to be done to the services.
If Guy's can make such cuts without affecting patient services, one is bound to ask about the running of the hospital over recent years if there is so much slack that can now be taken up. How is it at this stage that it is necessary for Guy's to make these kinds of cuts in jobs and services? No doubt the noble Lord, Lord McColl, will tell us about that. We can only take a responsible attitude to the trusts and their programmes, and towards others whose plans are still to be announced, if we can see the business plans submitted to the Secretary of State before the decision to grant trust status was made.
Why should these documents be secret? Why should not every one of them be published either by the hospitals or services seeking to opt out or by the Secretary of State who received them and on whose submissions he no doubt reached his conclusions? I ask the Minister to say whether there is some reason for the current secrecy. It is time that we knew what is going on so we can face the facts.
Professor Stewart Cameron, Professor of Renal Medicine at Guy's, said that there had been,
"a massive loss of confidence in the trust executives among consultants".
He warned that medicine, surgery, psychiatric, obstetric and geriatric services will all be particularly hard hit. And what about the other 55 trusts? We have been informed that Coopers & Lybrand, a firm with great responsibility, carried out, at the taxpayers' expense, a study of the financial basis of all the applicants. It is said that only 12 were financially viable. I ask the Minister whether that is true. If so, why were decisions taken by the Secretary of State to proceed when the finances were in such a rocky state? The accountants' report should also be published. Why the secrecy? The report was paid for by the taxpayer in the interests of the taxpayer. Why should not the report be revealed to the taxpayer at this time?
The Government are constantly complaining that documents are leaked. In a democracy this kind of information should be made available to the public. We are entitled to demand that. I hope that the Government will give some explanation as to why there is such secrecy. Will the Minister please convey this anxiety to the Secretary of State? Before leaving the question of service trusts, I remind the House that cuts are not only being implemented in the new opt-out hospitals. A few days ago it was announced that 435 jobs, said to be across the board, were to go in the Charing Cross and Westminster Hospitals. They are hospitals which have served the welfare of Members of this House over many years. Those hospitals are part of a very disturbing and growing pattern in the reduction of facilities. I notice that three out of four health authorities have cut the number of long-stay beds for elderly people in the past three

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years. That is a section of the population which needs more help than any other. As waiting lists have lengthened, more and more beds lie empty and unused.
My noble friend Lord Mulley has drawn to my attention a letter dated 30th April received from Sir Robert Reid, the chairman of the West Lambeth Health Authority. In that letter he states:
"Three in-patient theatres and 184 additional beds could be brought into use if sufficient financial resources were made available. We calculate that capital expenditure of £300,000 and annual revenue expenditure of £5.9 million would be required for this".
From the time that the Government's plans were published, I have expressed my deep anxiety that the Government were driving the National Health Service into a two-tier service. It was always said that that was not the case. Yet we now begin to see more and more examples of that happening. The Watford General Hospital has promised the patients of fund-holding GP practices a shorter wait for both in-patient and out-patient appointments than for other patients. Doctors are rightly up in arms. The BMA has said that it would be unethical for consultants to see some patients quicker than others.
The Prime Minister's attitude to doctors is no better than that of his predecessor. At first he refused to meet them; then he said he would but that they would have to wait, and now they are accused of a party alliance with the Labour Party. The Prime Minister and Mr. Waldegrave fail to realise the degree of worry that there is in the country.
I was in Monmouth over the weekend. I can confirm that there is real fear that if the Nevill Hall Hospital and the Royal Gwent Hospital opt out, the quality of care will fall. They are already suffering from cancelled operations and lengthening waiting lists. Those hospitals have great pride in their health service. These anxieties are found across the country. It will be highly irresponsible and wrong as we approach a general election and it is known that the Government are under such criticism to proceed to take more decisions before we have had the opportunity of assessing and studying the results of the first 56 trusts. I plead with the Government to listen to what is said in this debate and in the country. I beg to move for Papers.
5.47 p.m.
Lord Harmsworth: My Lords, I am aware that talking on this subject in a maiden speech, particularly after a former Secretary of State, is the equivalent of placing one's head in the lion's mouth. But I have an enduring interest in the subject, so appropriately introduced by the noble Lord, Lord Ennals, having once spent some valuable years in the Department of Health. I take heart from the fact that in a recent debate on the medical injuries' no fault system, almost the last speaker before the Minister said that he must be one of the few to speak who was neither a doctor nor a lawyer. I hope that your Lordships will not spurn another generalist's view.
I am very much a fan of the National Health Service. My family and I have used it almost
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exclusively all our lives. If anyone is in any doubt about its efficiency and the hard work put into it, he or she need only go to an out-patient's clinic at a London hospital and note how fast and accurately treatment is delivered in any particular specialty. I hesitate to use the words "conveyor belt" but it is with unerring precision and speed that a very large number of patients are cared for by the consultant's team.
But time moves on. The National Health Service must not become locked into a method of working which results in productivity increases based so heavily on manpower factors. Technology, particularly information technology, must be the keynote of the future. The key to treating successfully more and more patients in what must surely be a bottomless, or virtually bottomless, pit of demand, is mobility. I refer to the mobility of patients; mobility of medical records; mobility of information about queues; mobility of information itself; mobility of doctors, mobility of equipment if necessary, and mobility of money.
The National Health Service and Community Care Act 1990 does much to set up the right framework. For instance, I should like to see an NHS with a minimal number of kidney stone shattering machines strategically located, sufficient for the whole nation. Patients would travel to them. I should like to see patients travelling from a two-year queue for a hip replacement, even 300 miles, to a five-month queue elsewhere, despite any loss of therapeutic effect through the patient's family not being near. I should like to see regular and short trips by patients across RHA boundaries for treatment which is sooner provided next door. I should like to see some of the ancient concepts relating to confidentiality of medical records questioned if the effect will be to speed up mobility. I should like to see use made of information technology to hasten the passage of medical records from one region to another and to hasten information on areas of locally slack demand for certain otherwise heavily demanded treatment; and, possibly, in due course, see even trans-EC patient movement and movement of all other resources that are so necessary to the efficient handling of sometimes unpredictable requirements in health care.
In a maiden speech it is customary not to be controversial. I am conscious that I am in danger of overstepping the bounds. I have a deep respect for your Lordships' House. At two minutes past three on 1st November 1956 a young lad was ushered into a gallery above. It was the first time he had witnessed a debate in your Lordships' House—indeed, any debate in the Palace of Westminster. Almost exactly 48 hours beforehand, in another place, the Prime Minister had risen to make a Statement to the effect that British and French forces would intervene if within 12 hours Egyptian and Israeli forces had not withdrawn 10 miles each from the Suez Canal. The United Nations Security Council was informed. When on 1st November that year, just after midday, Lord Henderson rose to call attention to the Government's Statement, he did not know whether any fighting had taken place. Your Lordships had to debate the issue with scant knowledge even of the facts. Your

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Lordships left your visitor with a lasting impression of constructiveness in debate, manners, helpfulness, balance, expertise and an uncompromising intention to get things right.
The late Archbishop of Canterbury, Archbishop Fisher, had just risen to express the Church's position on the operation when your visitor arrived. He produced a masterly exposition in the circumstances. He did what your Lordships' House is renowned for. He produced an authoritative and definitive statement for the very interest he was there to represent, as did the Lord Chancellor—a very difficult job surely—and many ethers. Your visitor stands here today still as much impressed. He will transgress, he will err, he will fail to master his brief, but he will endeavour to contribute to the valuable work of your Lordships' House. I request nevertheless that you accord him the indulgences and help for which your Lordships are justly so very well known.
5.53 p.m.
Lord Hunter of Newington: My Lords, it is my great pleasure to be first to congratulate on behalf of the House the noble Lord, Lord Harmsworth, on his marvellous, balanced maiden speech. I have a personal reason, too. For seven years he and I worked for the same mistress—the Department of Health and Social Security—so I can guarantee that he understands government in great detail. I can also guarantee, from finding out about him, that he has a wide experience of affairs outside. In thinking of his maiden speech, I believe that the House will be impatient to hear his next speech. His key note was, "Let's get a move on". I hope—and I am sure the House hopes—that he will speak again very soon on this and other topics.
How many debates have there been on the National Health Service in the past three years? By cross-party agreement, every aspect has been looked at and views have been expressed; views in the main concerned with the future of the service rather than the more limited aspect of party objectives. I hope that this debate maintains that tradition.
With the approval of Parliament, as has been said, the great experiment began in April of this year. Mr. Kenneth Clarke, when he was Secretary of State, met the Select Committee on Science and Technology and said that: everything would be carefully monitored and made public. One must ask whether his successor has the same view and intention. There is vital information that must be shared, examined and understood. There is a strong case for saying that no further NHS trusts should be established until the reports are analysed and the full significance of the management board's paper of February 1991 examined.
Naturally one is particularly anxious about the proposals for trusts and the financing of general practice. However, one must say that the Government have met university teaching and research requests, including the decision to make some funds available to contribute to research overheads in non-teaching hospitals. In addition—and very importantly—teaching hospital trusts are required to protect the teaching
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function in their establishment order. The Secretary of State has reserve powers to protect the teaching function of the trusts.
However, a problem which has existed since the beginning of the National Health Service is the payment of overheads for medical research activities. As the University Grants Committee—now the Universities Funding Council—and the research councils—belong to the same department of government, an arrangement was made that the overheads of the Medical Research Council activities would be met from UGC funds. What has changed is the reduction in research council funding and the enormous increase in charitable funding. The charities have been concerned greatly in having to meet the overheads for research activities. I understand that the same problem is being faced in the United States.
The suggestion of a service increment for research was originally made by the Imperial Cancer Research Fund. I quote:
"medical charities expect the NHS to cover the service support of the research they carry out. In the opinion of all the major charities this expectation is seldom, if ever, fulfilled".
The Government must address this urgent problem.
It seems that the public must be made aware of the fact that when they give money to charities for specific objectives, basic overheads and VAT are being met from their funds. There is a continuing anxiety with all the major charities that if the public understood this they would be reluctant to give funds as generously for research purposes. The Christie Hospital, Manchester, is likely to have to find £1.3 million to pay the VAT on the extension of its new research accommodation in the Patterson building. That is something one must think about.
I have said that we must wait to see the results of the new experiments in hospital and general practice funding which have begun. Perhaps June or July would be about the time to look at those results. One hopes that the vital information will be made available by the Government. However, there are other problems that can be usefully discussed. One of these is the relationship between the district health authorities and the family health service authorities. Should there not be one sub-regional authority to look after every aspect of the district, including nursing, pharmacy and other services? This would simplify the machinery between local government and the health service. There is another reason. I quote from the management board's paper of February 1991:
"Collaboration between the NHS agencies has been a long-standing aim. But integration goes wider than this and involves the active pursuit of high quality, seamless care at every level across the primary and secondary arms of the service. Until recently effective means of pursuing these goals had been lacking".
During our debates it has become evident that in many situations it is cheaper to provide services outside hospital. For example, eye testing in a qualified optician's premises costs half what it would cost in a hospital. Moreover, the services of specialists in the eye clinic are increasingly focused on new therapies, transplants and laser treatments. If this is generally true then there should be a shift of diagnostic and treatment services from hospitals to secondary care centres and large group practices. The

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tradition of referring patients to hospital in many circumstances must change. Movement of staff of different categories must be made much easier and this would be so if there was a single authority. Anyone who has read the report of the Audit Commission on day surgery would realise that there are many surgical operations which could well be done outside hospitals in secondary care centres or practices where there are a few beds for overnight stay.
How do these proposals, if implemented, fit in with the service to patients proposed for hospital trusts and fund-holding practices? It seems that they would fit well with the second, but what of hospital trusts? It would seem more important to strengthen the supply side of the service. I originally welcomed the suggestion that hospital trusts should be created, but I now have some doubts. A more important thing to focus on in the first instance would be specialised aspects of the supply side. For example, the provision of special equipment and X-ray machines. Also I wonder whether it would be a natural reaction for the managers of a trust to try to preserve their hospitals' income and resources and therefore be reluctant to transfer specialist investigations or treatment to secondary care centres and practices. Having expressed my doubts, I seek the Minister's reassurance that my fears are unfounded.
6.1 p.m.
Baroness Fisher of Rednal: My Lords, I apologise to the House for arriving late in the debate. In fact, I have only just finished working in a committee upstairs. I should like to stress the secrecy which appertains throughout the National Health Service. As a result of the last reorganisation, we now have no local authority nominees on any of the boards. Therefore, we have businessmen elected to those boards. I always feel that the Government are very keen to talk about the businessmen, but they never even mention the businesswomen. Indeed, if one looks at the people who are appointed, I suppose that it will be seen that the majority of them are businessmen. However, we never know who these faceless people are. It is most difficult to find out. I enlisted the support of the Library which sent me a letter on the matter. It says:
"I am advised by the Department of Health, Regional Liaison division, that the best course for a member of the public wishing to ascertain the names of local health authority members would be to write directly to the authority concerned".
Therefore, the fact that people are taking up public positions with no public accountability seems to me to suggest that there is no input from what we call the consumer or the patient. In other words, there is no way that we can get what we call a "direct consumer input" in the way that we used to when people were appointed who were not what we call "businessmen". These people are spending public money which is taxpayers' money, without any accountability; and, that type of accountability means that they are inaccessible to the general public.
The secrecy goes even further. I refer to the change in status for opting out. In a television programme last
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week, the Minister said, "I think that we are right this time". Of course, they thought that they were right about the community charge and about the testing of children at the age of seven. Let us hope that they are not right this time. However, we are getting restrictions in speech, so we are in fact getting more secrecy. For example, a consultant employed by the West Midlands health authority was asked to speak at a public meeting. She spoke about opting out. She now finds herself being faced with a disciplinary charge and will most likely lose her job. There was also a tutor nurse who was working in the northern part of the country who had to go to an industrial tribunal. He lost his job because he spoke out about what he thought were bad conditions in the hospital in which he worked. The situation is getting to the stage where secrecy is part of the Government's programme to ensure that opting out takes place. We all know what opting out means: it is the first step to privatisation.
I remember quite clearly when we were discussing water. The first thing we discussed was the businessmen who would be serving on the water authority. That was before any form of privatisation took place. However, we know full well that those men were put there so that they were ready for the privatisation five years later. I feel sure that that is the Government's main aim at present. These people, whom I call "the secret people" are there, plotting their way for the final privatisation.
Perhaps I may now deal with the West Midlands. There is great secrecy taking place in that area on what they call the "QE site"—that is, the Queen Elizabeth site. It has already been planned that the maternity hospital, the accident hospital and the women's hospital should go on to the site, together with the psychiatric hospitals. There is also now the leaked document—which has not been contradicted—which states that a step forward to opting out will be taken in the near future. If that happens, it will be the largest medical complex in Europe. It will mean that people in one part of the city of Birmingham will be travelling anything up to 15 miles to reach the site. It must be realised that travelling 15 miles with a sick child will not be great fun. Despite all the promises from the chairman of the region that such things would not happen, we now find—notwithstanding public protest and the newspapers taking up the challenge—that the whole matter is becoming very secret and we do not know what is happening. That is not what one would call serving the consumer. Moreover, it is not what one would call having direct consultations with the public, which the Government are so fond of telling us always happen.
In the time that I have left, I should like to stress something which we all fail to consider when we are discussing efficiencies in hospitals. I believe that we fail —and my noble friend on the Front Bench is constantly drawing our attention to this fact—to recognise the strains and stresses which nurses who carry out such a valuable job inside our hospitals are under. They are under such strains and stresses because of modern medicine, and because people stay in hospital for a much shorter time. People who are very seriously ill now go into hospitals which do not

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cater for what we call the "convalescent period" whereby someone stays in the ward where he is better able to look after himself and can very often look after a fellow patient. Operations are now much more severe. That means that patients need constant nursing and quite obviously, more often than not, that means greater care, attention and, of course, greater stress because on so many of the wards the people who are there will perhaps not be alive within a few weeks. We fail to take notice of that fact. Wards should be better staffed than they were in the past because of the present situation.
In conclusion, I believe that we are forgetting that the real business of hospitals is caring for patients. We know that people do not go into hospital just because they want to enjoy themselves; they go there because they are in pain and because they are suffering from a complaint. Therefore, they need that care. I am not suggesting that we should waste money on that care. Indeed, we must spend it wisely and according to the needs of the various localities. Of course, that will not be the same pattern in every health authority throughout Great Britain.
6.9 p.m.
Lord McColl of Dulwich: My Lords, I too congratulate the noble Lord, Lord Harmsworth, on his splendid speech. We hope that there are many more to come.
I always enjoy attending debates on the NHS because; I sometimes feel that I am hearing about life on another planet. I have just completed nine hours operating at Guy's Hospital, and after the debate I shall operate for another three or four hours. Perhaps I can assure your Lordships that Guy's Hospital is alive and doing extremely well and that the patients are happy, despite all the unscrupulous propaganda we hear.
A debate has been going on for over 100 years about the closure of beds and hospitals in London. In the 1970s, two important principles were introduced into the NHS with the agreement of all the political parties. The first was the introduction of cash limits into the. hospital service for the first time; and the second was the report of the Resource Allocation Working Party (RAWP) whereby resources would be more fairly distributed throughout the country, which inevitably meant less money for London hospitals. That was a fair and just policy because the population of central London had declined and had increased in the rest of the country. Understandably, it was an unpopular policy with London hospitals. They did not call it RAWP; they called it something else.
In addition to the problems caused by imposing cash limits and moving resources out of London, several other pressures were at work: the reasonable and legitimate drive to reduce the number of hours worked by the junior hospital staff and to have them working rotas which were no more arduous than one in three. There was the need to concentrate high technology in one or two appropriate hospitals in each district, and not to have it on every street corner. In
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some district health authorities there are as many as 11 hospitals. Clearly, all 11 cannot have high technology. It is needed in one only.
Given the fact that there was that remarkable political agreement on all those objectives, how can we achieve them, bearing in mind that 70 per cent. of the hospital budget is used on salaries? I am afraid that there is only one solution. There is one way only to achieve those objectives, and that is by reducing the number of staff and closing some London hospitals. The inevitable closure of beds and hospitals in London has always been distressing, but it has been made much worse and much more distressing by some unscrupulous politicians who have tried to make a cheap, short-term political gain out of other people's distress.
Guy's and Lewisham Hospitals' deficit this year is due partly to the fact that we worked too hard last year. The crazy way NHS finances are run means that if we work harder, we are penalised. We are not surprised that everyone is in favour of the Government reform which will allow money to follow patients so that the disincentive to work hard is removed. A further part of the deficit is due to the new system of nurse training which will be introduced nationally at the end of the century. The worst part of the increasing deficit was caused by self-inflicted wounds. The previous Administration employed more and more people instead of using the money wisely to treat patients and repair the fabric of the buildings. We now need to make up for that lack of maintenance.
We have heard a great deal about needing an army of accountants to put the reforms into effect. If one returns to 1974, Guy's Hospital finance department employed 30 people. In four years, that number had increased to 90. To be fair to the staff, none had any financial qualifications or was paid adequately. Many of them were bored to tears and felt demeaned because they had enough insight to know that they did not have a proper job. A few years after that, the number increased to 205—none of whom had any financial qualifications.
The good news now is that Guy's has a revolutionary form of management. It started six weeks ago. The revolutionary aspect of the management is that it makes decisions quickly and implements them without further ado. In planning to reduce the number of staff at Guy's, it is doing what we suggested 11 years ago. In the past, there were no mysteries in the NHS, only mysterious people.
We have heard a great deal of criticism of the trusts. It is said wrongly that the trusts are concerned only with profitable services and not with the needs of the local population and disadvantaged groups such as the elderly and handicapped. That is untrue. The Guy's and Lewisham trusts are reviewing every service and asking fundamental questions such as: is this service of a high quality? Is it relevant to the needs of our local population? How cost-effective is it? Are there some people who could do the job better? How relevant is the work to the needs of teaching and research? Not only are we asking those questions of ourselves, we are actively seeking the views of the local population, local general practitioners, the local

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community health councils and other community interests. After all that activity, we shall set out what the trusts' future should be. We shall be driven by the vision of producing for our local community the most relevant hospital and community services to match the needs and expectations for the next 10 or 20 years, and at a cost that is affordable by the taxpayer.
In the past, too much reliance has been placed on giving hospital staff jobs for life. That has been an excuse for not paying them properly. No one worth his salt needs a job for life. The labourers are worthy of their hire.
In conclusion, I should like to quote the chief executive of the West Lambeth Health Authority, a former nurse and general manager, and incidentally a member of the Labour Party. He said:
"For Labour to suggest that the old style district health authorities provided a sound basis for the management of the NHS is spurious to say the least. Decisions prior to the reforms were arrived at by a process of those who screamed the loudest"—
I wonder to whom he is referring—
"and we have all witnessed various displays of shroud-waving. This was not a rational way of making difficult decisions and perhaps the key benefit from the NHS reforms will be the evolution of a system that will lead to rational and informed debate about how and why we use precious resources in our NHS".
6.18 p.m.
Lord Kirkhill: My Lords, in the hope that your Lordships may not be too disconcerted and even, in truth, if some are, I intend to direct attention to at least part of the position as it obtains in Scotland and more specifically as it obtains in Grampian region and especially the city of Aberdeen, which is my home town and where I live. I shall refer to Foresterhill Hospital, Aberdeen. In Scotland we are about one year behind England in relation to possible trust status. There are two proposals at the moment, one at Ayr and the other at Foresterhill.
The present situation was briefly touched on by my noble friend Lord Ennals and the noble Lord, Lord Hunter of Newington. On 1st April throughout the health service the concept of an internal market was introduced—without, I consider, adequate consultation. Health boards are now district managed units, each consisting of a group of hospitals and services, usually geographically or specialty determined. The restructuring is based mainly on the work of Professor Enthoven, a distinguished American professor of health economics, which I do not dispute. In my view, it is an untried and untested experiment. I believe that it is likely to fail, basically because I hold to the position that hospitals are not supermarkets.
The health service has developed somewhat differently in Scotland, partly because of geography, but far more for historical, social and political reasons. I think it is generally accepted in the medical profession that the service is better. This is particularly true of the Grampian region which heads most tables for efficiency, economy and so on.
The consequences are that opting out at Foresterhill will be easier financially than, say, for Guy's because the financial basis at Foresterhill is
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rather more sound. I believe that the main, immediate result of opting out will therefore be that the carefully integrated service built up over the past 40 years will be disastrously fragmented. This untested, experimental form of management will have enormous power over patients, GPs and hospital staff. Instead of doctors co-operating, different units will be expected to compete. Since the trust must remain solvent, economy instead of quality will be the decisive factor. That is why in Aberdeen the senior doctors, junior doctors, nursing staff and all ancillary staff have made public their opposition to opting out.
Many members of the medical staff at Aberdeen genuinely fear the possible development of a two-tier system. They cite as an example of their reservations the proposal that a division of acute services should take place; that is, trust status at Foresterhill for the acute services but non-trust status for acute services, including psychiatry, geriatrics and so on, at Woodend hospital in Aberdeen. That is the beginning. Despite what people may say—other areas may be different—there is the beginning, at least in Aberdeen, of the possibility of a two-tier system coming into operation.
One of the declared intentions of trust status is to increase patient choice. But if health boards as purchasers have to make contracts with trusts for services, then GPs will be denied the freedom to refer patients outside those contracts. Professor Enthoven has stated that one of the defects of his scheme is the decrease in patient choice. That has already been admitted by one or two of the English hospitals which have opted out. There are also great fears that in a constricted financial climate, teaching and research will suffer. That is the experience of American hospitals which run on similar lines. Every other consideration is ignored when financial viability is made paramount.
One other fact not usually given sufficient consideration but significant for the future running of the service is the attitude of the staff. It is not merely that the medical staff, especially the consultants, can disrupt any imposed system simply by being less than enthusiastic in the execution of the detailed administration necessary. It is no accident that Grampian is considered to have the most efficient and cheapest service in Scotland. Some would say that it is a model of how the National Health Service should work. Over the past 40 years all grades of staff have worked in true co-operation. Why should this be so? I believe that in a trust status management would have to consider the possibilities of financial implications that had not been truly costed. Morale might begin to crumble. I merely pose that as a proposition. If it were to happen, it would be called lowering morale. But it would be tragic if the working spirit of a largely whole time service were lost. It may never be replaced.
A number of senior doctors working in Aberdeen today are from England. That is because there is little private practice in the Aberdeen area. The National Health Service works as it should whereas, in certain parts of England, it provides such a poor service that private practice is almost a necessity. I concede that

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point. A trust situation could bring about its most tragic effect of all in the Grampian health region as well as many other parts of Great Britain.
6.21 p.m.
Lord Nugent of Guildford: My Lords, at a time when the noble Lord, Lord Ennals, is attacking Her Majesty's Government for sabotaging the National Health Service, I thought it would be apposite to recall the origin of the health service organised after the White Paper incorporating the Beveridge Report in November 1942, Social Insurance and Allied Services. On page 11 of the report, which I have in my hand, it is laid down in paragraph XI that:
"Medical treatment covering all requirements will be provided for all citizens by a National Health Service organised under the Health Departments and post-medical rehabilitation treatment will be provided for all persons capable of profiting by it".
The White Paper was adopted by the National Government of the day, led by Winston Churchill. A major part of the Government was, of course, Conservative. In 1948, when the Labour Government enacted in legislative form the health service, the Conservative Opposition did not, as is generally thought, oppose it. They moved a Reasoned Amendment. That may have been foolish because it has always been misunderstood.
However, we can declare today that our part in the parentage of the National Health Service continues to be as firm as ever. The current reforms are designed solely to improve the service for patients within the national resources available. The present expenditure on the health service, at 50 per cent. in real terms above the 1979 level, indicates that the Government are giving the National Health Service top priority and will continue to do so.
The National Health Service trust hospitals are under fire for creating a two-tier health system. I believe that that is totally unfounded. A hospital becoming a self-governing National Health Service trust will start by introducing resource management initiatives to the hospital which will so strengthen the management that the hospital can produce a reliable budget covering its whole operation. The important point was made by my noble friend Lord Harmsworth about information technology playing a large part in it. This will then be the basis for the hospital's finance for the coming year instead of the present theoretical formula which is now used.
At present, most active enterprising hospitals run out of money every year and are obliged to cut down activity and close beds in the latter part of the year, as my noble friend Lord McColl mentioned. However, the slow-coach hospitals end the year with an unspent financial surplus. This wasteful anomaly will disappear and the more patients a hospital treats, the more finance it will receive. That will be one of the major benefits of the NHS trust hospitals. What could be a greater improvement than that? I hope that when my noble friend replies to the debate, she will say how the programme is progressing.
The accusation has been made that a two-tier health service is being created by the introduction of fund holding practices. Again I believe that accusation
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does not rest upon a reality. The critical attack rests on the assumption that within the National Health Service there is somewhere a mastermind which directs the needs of each patient to the right doctor at the right time to receive the right treatment. Nothing could be further from reality. In reality we know that there is a huge workforce of a million men and women. They work away doing the best they can for the continuous stream of patients coming in. They treat the next patient who comes to hand on a very haphazard basis. The total output of their labours is enormous. In-patients are up 25 per cent. on the total of 1979. The number of day patients has nearly doubled. Last year 7.5 million patients were treated. That is a wonderful total.
One of the sad aspects of the political struggle is that the wonderful achievements of the health service are so often forgotten. However, the figures I have referred to are a credit to the dedicated workforce. It is inevitable that some patients will receive treatment without delay while others may wait for months. The new concept of GP budget holding practices, when it becomes universal, will go a long way to correct this hit and miss system. I can give an indication of how the budget holding practices will work from an experience I had three years ago. The verger of my village church, an elderly lady, was in acute pain from her hip. The date of her operation was 12 months hence. I felt that I should help her and I asked some of my friends to join me in putting up the money for her to have immediate treatment in a private hospital. The lady's GP agreed to her seeing another consultant surgeon and to her entering a private hospital where I had booked a bed for her.
On examination the surgeon found that her condition was so far advanced as to amount to an emergency. She also suffered from a heart condition. The surgeon arranged to operate on her immediately under the NHS. Within a few days she entered hospital and the operation was successfully carried out. That is a simple example of what a GP budget holder, with cash in his pocket, will be able to do when catering for an urgent case. He may shop around with other consultants and he may shop around for a bed with other hospitals outside the district. Finally he may try a private hospital which is usually prepared, if it is undergoing a slack period and has empty beds, to cut its rates for the NHS.
Naturally, the first tranche of the 300 practices which opted for fund holding status are conferring a benefit on their patients. However, that situation is only temporary. It will disappear as G.P. fund holding practices spread across the whole country and all will be able to share in the benefits of making supply equal more closely demand. That is what it is all about. The accusation that the budget holding practices are creating a two-tier health service is sheer moonshine.
6.33 p.m.
Lord Walton of Detchant: My Lords, I join with other speakers in congratulating the noble Lord, Lord Harmsworth, on his most erudite and enjoyable maiden speech. As I made clear in the debates on the health service Bill, I, unlike the noble Lord, Lord

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Ennals, and unlike the BMA, am not opposed in principle to the provision and establishment of hospital trusts nor to GP fund holding practices provided certain safeguards in their operation can be assured. I always enjoy listening to the sparkling and amusing erudition of the noble Lord, Lord McColl. However, I confess that there were occasions when listening to his speech—his description of that nirvana on the other side of the Thames—when I wondered whether I was living on a different planet from the one the noble Lord occupies.
The problem is that the safeguards we all seek are not in place and are not as yet fully operative. Hospital referrals by GPs are in danger of ossifying. Patients who in the past have been referred as of custom and of right to certain hospitals distant from their homes are now being told by certain general practitioners that they cannot go to those hospitals either because of managerial edict or because the fund holding practice cannot afford to send them there.
There is evidence of a 300 per cent. variation in costing for simple procedures as between different hospitals of comparable size and strength. Guy's may be shedding administrators but many other hospitals are having to recruit large numbers of additional accountants to work out the costing systems they have not been able to employ in the past. At the moment the administrative costs in the National Health Service are on average less than 6 per cent. of costs and in some of our hospitals they are as low as 4 per cent. That compares with 15 per cent. in the United States. My concern is that teaching hospitals are seen in many instances throughout the country to be losing out. Inevitably because of their teaching function for our future doctors and because of the research infrastructure that they are required to provide under the crumbling dual support system, they are more expensive to run than many local or regional hospitals.
Throughout the length and breadth of the country, and not just in trust hospitals, we hear of beds being closed, admissions being restricted and surgeons being restricted to one operating session a week. Recently the medical sub-committee of the Committee of Vice-Chancellors and Principals expressed grave concern about the effects upon the teaching of our medical students because in many teaching hospitals, and especially in London, there was a serious risk that because of reduced clinical facilities, standards would fall below the minimum standards required by the General Medical Council. Students can, of course, use regional hospitals more, and they will have to do so. Nevertheless, that concern is real and genuine. I am told that in one region no money was allocated in the regional budget for the post-graduate and vocational training of doctors. That is a clear responsibility of the region under the NHS legislation.
The Government agree with the profession that we need a consultant-led service and that many more consultants are needed. Report after report from the Royal colleges has shown that by a factor of two or three we have fewer consultants in virtually all specialties per unit of population than in any other
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developed country in the world. The director of R&D has recently issued his first press statement and the Secretary of State has agreed that we should move towards spending 1.5 per cent. of the NHS budget on research. That is excellent, but where will the additional money come from? We all agree that it is essential to cut the hours of work of our overstressed and overworked junior doctors, but again that will cost money.
I know that I shall be accused of producing tired old cliches and of producing the kind of argument that has been expanded recently—the noble Lord, Lord Ennals, mentioned this—by the National Association of Health Authorities and by the BMA. However, the fact remains that there is a money problem and this extent of underfunding is not an illusion. Many of the reforms are invaluable, but despite those reforms there is evidence that the Government's major increases in funding, from a very inadequate base, have never kept pace with inflation and have never fully supplemented salary increases which are much needed by NHS staff. My own secretary has worked with me for 32 years. She rose through the grades of shorthand typist and personal secretary and is now at the top of the general administration grade in the NHS. However, she is paid less than £11,000 per annum. Is it right that we should have exploited—as I believe we have—many dedicated members of staff by having such low salaries in the NHS? The nurses have been helped and I commend that as a major and important contribution to the NHS.
Health is a problem in which we are all concerned. The people who are drawing attention to the present state of the National Health Service and to the need for additional funds, however they are raised, whether by an index-linked income related health tax or some other mechanism, are not Left-wing demagogues. They are extremely responsible anxious people. There is a tide of mounting anxiety and concern about the present situation of our much cherished National Health Service among doctors, and among other health care professionals the length and breadth of this country, shared not just by the BMA but by the royal colleges and by the health authorities themselves.
I simply ask and implore the Government to take note of this concern and to pause, to assess the effects of their reforms, to work out the way in which they are being applied, to examine the mechanisms that are being used throughout the country, and then to act on the evidence that is presented to them.
Lord Cavendish of Furness: My Lords, before my noble friend rises, may I remind the House that we have spent four-and-a-half minutes too long on this debate. Perhaps noble Lords will keep within the seven minutes for the rest of the debate.
6.41 p.m.
Lord Skelmersdale: My Lords, with what a very fluent and very negative speech the noble Lord, Lord Ennals, opened this debate! All he was asking for was no more National Health Service trusts until after a general election. I heard no solutions to the

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undoubted problems of the health service which the noble Lord, Lord Walton, for example, and many others of your Lordships have mentioned. What a contrast then was the speech of my noble friend Lord Nugent; full of the solutions that this Government have up and running and the successes of the health service.
In emergency, we have the best health service that it is possible to devise, free at the point of use, speedy, medically superb. I believe that there is no criticism anywhere in the House of its emergency actions. What this debate is surely about is the vast mass of the operations of the health service, elective surgery and the activities of general practitioners; and, of course, how we fund that great behemoth which in Europe is second only in the number of its employees to the Russian Army.
Small wonder that this has become a matter of great debate politically, not only in tomorrow's by-election—is that, incidentally, why we are having this debate squeezed in today?—but in the general election which is to follow, because nothing better epitomises the great divide in British politics than the "nanny knows best" brigade of the opposition and the "let my people free" position of the Conservative party.
I was privileged to be a junior Minister in the department in 1987, very close to the beginning of the health service reforms. With the illness of my right honourable friend the then Secretary of State I was catapulted into rather more involvement with policy in this area than I expected. The Government had recognised some time earlier that all was not well with the National Health Service. The bethemoth had not changed with the times and, despite the management reforms proposed by my noble friend Lord Griffiths which were in place, it simply was not delivering the health care that it was capable of in an even way across the country.
Recognising a problem is one thing, producing an answer is quite another. In many quarters of the medical profession we were told that if we produced more money all would be well. But we had been, and did, and in 1987 found rather more than £1 billion extra over and above inflation for the National Health Service. The behemoth took a gulp, swallowed this vast dollop of cash, the inequalities continued and the great giant came up for more. Yes, I agree with all those who have been calling for more money for the health service—it is always needed for the health service and always will be—but this Government have done a remarkable job in producing what noble Lords who understand about racing would no doubt call a "treble".
Since 1979 the health service has received just over half as much again, after allowing for inflation, as it did then. The public sector debt has been almost cut in half, saving over £2½ billion a year in interest charges alone—money which could well be, and for all I know is, being put into the health service. Moreover, income tax has been cut from 33 per cent. to 25 per cent. Those are undeniable facts. All we have from the Labour Party is a promise—if I have it right and, of course, should it be elected—to give an unspecified
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extra sum if, and only if, over the lifetime of the next Parliament the economy grows. But I am getting side-tracked.
My noble friends gave, and will give, plenty of details about what is misunderstood about the reforms. My point is that these reforms came from thinking people within the health service itself, all of whom when given the opportunity came to my colleagues and myself with their remedies based on their experience. The House would do well to ponder long and hard over the excellent maiden speech of my noble friend Lord Harmsworth. One of these experts—my late and much lamented noble friend Lord Trafford—was, as we remember, for a short period a health Minister. I have no doubt that another of my experienced and noble friends will do likewise very soon.
The noble Lord, Lord Ennals, likes to sneer at self-governing hospitals: opted out, he calls them. I challenge him by asking what he thinks the great hospitals which became the special health authorities—the Maudsley, the Hammersmith, the Brompton and so on—were under his tenure of office but a form of self-governing hospital. Did they ever opt out of the NHS? Of course they did not. But it is true to say that they were bound by all sorts of petty restrictions and even had a special department in the Department of Health to look after them. There was a lot of freedom but not nearly as much as they needed.
Self-governing hospitals have evolved from that experience. They are being properly and locally managed for the first time in the history of the National Health Service. Some of them are finding that they have too many employees. What is new in that? Between 1986 and 1991 Barts has increased the number of patients being treated while at the same time cutting 1,000 jobs. It certainly was not a self-governing hospital during that time.
Next I turn to what I call self-governing GPs; those doctors' practices who have successfully applied to hold their own budgets and to use them as they see fit for the benefit of their patients. It is said that that, more than anything else, will lead to a two-tier health service. For emergency work that cannot happen. GP contracts with hospitals apply only to non-emergency work so no patient will be worse off.
However, having consulted the patient a doctor can, and I hope will, refuse to enter into a contract with a hospital which cannot deliver in elective surgery terms what is required. If the patient is prepared to have her varicose veins or whatever treated rather further away from home instead of waiting another six months in pain and possibly fear, why not? That is her choice. She should be allowed to exercise it and by doing so we shall see a levelling up, as my noble friend Lord McColl said. Hospital A will be concerned to see that it performs as well as hospital B; otherwise it simply will not get the contracts. That is what has been lacking in the National Health Service to date. If that is what the noble Lord, Lord Ennals, calls facing the real world, I am all for it.
In conclusion, I leave the House with this thought. If the health service reforms are so bad, why did I,

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intrinsically involved as I have been over the past four years, come home last weekend, open my post and discover an invitation to open a doctor's surgery?
6.48 p.m.
Lord Pitt of Hampstead: My Lords, I was looking at the television a few days ago and saw Mrs. Thatcher who was boasting about these health service reforms and comparing them to the community charge and the Government's policy on housing. I thought that was very interesting, because we all know about the community charge; and I certainly know, from my days as chairman of Shelter, that as a result of the Government's housing policy we have had the largest amount of homelessness that this country has ever known.
I just wondered about that in relation to the National Health Service, because in 1986 there were 876,000 patients on waiting lists; in 1990 there were 959,000; and yet in 1990 3,250 NHS beds were permanently closed and 4,400 were temporarily closed for financial reasons. Yet we are told, and the Prime Minister certainly insists on it, that the problems of the NHS are not those of insufficient resources, but are those of organisation. We have heard that already again tonight.
The Government, having come to that conclusion, have introduced their NHS reforms which will make the situation worse. I find it difficult to understand. I hear from commentators on both sides of the Atlantic that the effect of the NHS reforms will be to make British medicine more like that practised in America. I find that difficult to take. I find it difficult to understand why we should wish to emulate a system in which, although one in five Americans receives little or no medical care, the United States pays three times as much on health care as the United Kingdom. I cannot understand why intelligent people want to emulate that system. Moreover, an American doctor is reported to have said:
"In the USA, doctors are paid to do more. In England they are paid to do less. I feel safer in England".
American doctors who know both systems agree that the NHS has strengths which most informed Americans admire. The system is fairer, everyone gets a doctor free of charge and nearly everyone stands in the same queue.
The NHS now spends little on administration. The noble Lord, Lord Walton, referred to the increase in administrative costs that will follow the internal market. The Government continue to claim, as did the noble Lord, Lord Skelmersdale, that we shall not have a two-tier service; but if some GPs have budgets and others have to rely on contracts made with the district health authority, it is a two-tier service. The doctor's duty is to do the best for his patient. If he is a budget holder, he seeks the best value for the money that he spends. That value is not necessarily the best if it is the cheapest. On occasion he may be prepared to pay a great deal more in order to have the patient treated more quickly. The GP who does not have that budget does not have that lever.
There is therefore no point in saying that it is not a
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two-tier service. It is a two-tier service. There are two different methods. As your Lordships may remember, I once said in this Chamber that, if the reforms come into play, it is the GPs' duty to become budget holders. They will then have the best means of helping their patients. I was pleased to hear that the noble Lord, Lord Nugent, recognises that point and accepts that it is so at the moment, but it will not be so when all GPs are budget holders. The same holds good for the hospital service. It will only be a one-tier service when either all hospitals opt out or none of them does. One needs to face the issue squarely.
The noble Lord, Lord Skelmersdale, mentioned the question of under-funding. That is still the main issue. We spend a smaller percentage of our GDP on health than any comparable country. One per cent. of our GDP would be £5.4 billion at current market prices. The BMA has asked the Government to put £6 billion more into the National Health Service which would mean increasing our GDP by 1.1 per cent. That still keeps us very much below France and Germany and, as I said earlier, far below the United States. I hope that the BMA will meet the Prime Minister soon. I hope that he will then agree that the service is under-funded and that he will increase funding and agree to delay the developments regarding the NHS trusts until there is a proper review of those hospitals that have opted out.
6.54 p.m.
Baroness Cumberlege: My Lords, I should like to thank the noble Lord, Lord Ennals, for initiating another debate, and we have had the opportunity tonight to hear the excellent maiden speech of the noble Lord, Lord Harmsworth. It also gives me an opportunity to report on the first returns from the reforms in my region.
In South-West Thames region we have 13 district health authorities acting as commissioning agents; seven trusts that have been established since 1st April; and 22 GP fund-holding practices. I agree with my noble friend Lord Nugent that it is the GPs who are the shakers and the movers, setting a spanking pace in the new reforms. I find that very encouraging because I remember that just a year ago many of those GPs were threatening to resign from the National Health Service, but it is now the GP fund-holding practices which are spearheading the reforms. With surgical precision they are slicing through the red tape, challenging out-dated clinical practices and, I am sorry to say, the arrogance that is still around in NHS hospitals.
It is no good for hospitals, however great their pasts, to rest on their laurels. It is not their history or claims of excellence which will determine their futures, but delivery. That delivery must be based not only on up-dated clinical skills but on an awareness of changing social trends and people's expectations. One of the most beautiful liners that was ever built was the Queen Mary; but she became obsolete in the face of jumbo jets and Concorde. I fear that, if the great, proud flagship hospitals do not respond to changing needs, they too will sink without trace. I do not want that to happen.

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In one of those hospitals a GP referral letter marked "Urgent" takes 17 days to process before the patient receives a date for his appointment. Fund-holding GPs in Wandsworth have rejected that poor service and have negotiated with a neighbouring trust hospital for every patient in an urgent case to be given an appointment in five days. That is not queue- barging; it is a tightening up of administration. Throughout the region, GP fund-holders are rejecting draughty, dingy, depressing out-patient departments in inaccessible hospitals. Instead, they are successfully negotiating with top-rate consultants to hold out-patient sessions in their own surgeries and health centres where we know patients feel much more comfortable and at ease in familiar surroundings. In Wandsworth, when patients request to have day case treatment and it is medically right, GPs stipulate that treatment must be on a day case basis. That is right. Who knows the person, the family, the home support, the living conditions—or the budgie!—better? Is it the family doctor or a hospital consultant? It is surprising that it is now not specialists but GPs who are driving forward day case surgery.
Before 1st April, Dr. Howard Freeman had to wait six months before a patient in need of psychotherapy received treatment. For people in a state of mental anguish or depression, six months is a long time. Today that patient can receive treatment tomorrow because the fund-holding practice has used its savings to employ a full-time psychotherapist and is about to employ a second with money saved from the practice. The GPs are setting local priorities locally so that they match the needs of the local people. Dr. Hughes, a GP in Merstham, has cut the waiting time for physiotherapy by a third. He has negotiated an agreement whereby East Surrey Hospital provides two sessions per week in his premises at no extra cost to the hospital Other practices are carrying out their own ECGs, so people with heart problems, anxious and in discomfort, learn the results immediately. I read recently that a fund-holding practice in Essex has negotiated with the Royal London Hospital Trust for a consultant cardiologist to see patients in his Harley Street rooms. That is fascinating. We hear a great deal about a two-tier service and such fears have been expressed tonight. However, that example represents a most remarkable erosion of the two-tier service, with NHS patients experiencing the comfort and luxury of Harley Street consulting rooms.
I have tried to give some examples tonight. If that constitutes a two-tier service, then I want that for everyone—I want every GP practice to become a fund holder.
I turn now to the trusts. Much has been said about loss of jobs. In Epsom the trust appointed a third additional ENT surgeon last week. Today it is advertising for a fourth, to work as and when needed. That is very interesting. It is also advertising for a second urology consultant. The St. Helier trust is taking on another 30 medical, paramedical and nursing staff to expand neonatal intensive care. Kingston Hospital Trust is developing a new
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initiative, a patient hotel. Its advertisement has attracted between 50 and 60 applicants keen to work in an NHS trust.
Noble Lords may think that car parking has little to do with health care, but in nearly every patient satisfaction survey it comes top of people's worries. Epsom trust has just built an additional 100 spaces, at 10 per cent. of the cost. Why? Because the chairman has mobilized local firms to co-operate and give generously.
The community trusts in my region tell a similar story. They rejoice in their new-found freedom. They are able to make minor building improvements, released from the beck and call of the district capital budget's annual squeeze. They can negotiate with confidence with other agencies, social services and the like, in the knowledge that what the board agrees is final. There is no buck-passing up the line, no delay and frustration as a perfectly good decision is questioned yet again. The Homewood trust in Chertsey has already introduced patient menu choice for the first time in a long-stay hospital. It has turned patients' eating areas from canteens to dining rooms and refurbished a bathroom and toilet area. It is about to introduce a ballet company to work with occupational therapists. I could go on and on, but I cannot because the time is running out.
I want to finish by saying that I know that I have given a surfeit of war stories. I have tried to be specific, but what I cannot convey is the spirit in those trusts. It has to be experienced to be believed—the excitement, the innovation, the energy, and above all the teamwork. I shall make an offer to the noble Lord, Lord Ennals an offer that he cannot refuse. That is, come with me, out on manoeuvres, to experience the new NHS, witness what is happening, meet the people and above all, talk to the patients. I promise him that it will be more exciting and more rewarding than a trip to the Bahamas. I hope that he will come with me.
7.2 p.m.
Lord Rea: My Lords, my speech will have to be decimated because of the lack of time, and it will need to be further decimated because I need to say a few words in answer to the noble Baroness who has just spoken. I speak as a GP who is not a fund holder. I am able to say that in our practice we already have a great many of the advantages which she attaches to fund-holding practices. We can carry out electrocardiographs on the premises. We have a psychotherapy service. It is not possible to provide those services only if one is a GP fund holder.
I had intended to say a little about the GP contract, which is claimed as a success by the Government because a high percentage of targets have been achieved. However, the Government do not realise that many GPs in inner city areas are finding it quite impossible to hit those targets because of the high mobility of the population.
In a recent speech to the Royal College of General Practitioners the Secretary of State did not wax lyrical about the success of the contract. Instead he said that in July he might be able to make some changes in response to discussions that he had held. I hope that

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he will, and that the changes are beneficial. That would prove that he is a listening Minister. It is a pity that his predecessor did not listen in the first place.
This Government have said that they are very concerned about health promotion. I should like to ask the noble Baroness what is happening to the health promotion units. I do not mean health promotion via the Family Health Service Authorities in general practice, but the health promotion units which used to be part of district health authorities. They are now in limbo. They do not know whether they belong to the purchasing arm or the providing arm of health authorities. I have heard that many of them are very worried about their future. Can the noble Baroness say that that matter is receiving early departmental consideration?
The matter is of some urgency because budgets have to be fixed now and many of the units are not sure whether the local health authorities will buy their services. I believe that they should be linked into the purchaser side of health authorities because of their traditional and vital link with the practice of public health.
It could be said that the difficulties in the early stages of the operation of the National Health Service and Community Care Act are teething troubles. However, as a GP with a great deal of experience of paediatrics I have learnt that so-called teething problems in babies are seldom due to erupting teeth. In nearly every case the explanation is an infection, major or minor, which is affecting the child's whole body and making it uncomfortable. Luckily babies have immune systems which in 95 per cent. of cases put the matter to rights quite rapidly. I am not so sure —are other noble Lords?—that we can say the same of the National Health Service and its problems. The new NHS Act has suppressed the immune system of the NHS by removing its democratic accountability at all levels and replacing most non-executive members with appointees who may know a lot about business and accountancy but less about health matters.
Other damage has been done to the body of that hardworking beast of burden, the NHS. I do not need to go into details because other noble Lords have brought them forward. I shall make only one point about GP fund holders. It must surely be unjust that a patient can obtain an earlier appointment or admission simply because he is registered with a GP who has become a budget holder. It is difficult for a patient to transfer to a doctor with a budget. For one thing his practice may have a monopoly in an area or the patient may live in a different area. Believe me, that is true.
To conclude—and I shall end a little before my time is up in order to make life easier for everybody—perhaps I may make a plea. While we are so uncertain of the effects of general practice fund holding and hospital trusts, can there not be a moratorium, as my noble friend has asked, before new ones are created? Last year in this House we failed to persuade the Government to agree to a full scientific evaluation of the proposed changes to the National Health Service. The Government were much too keen to press ahead
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countrywide. Now we have a second opportunity to evaluate those trusts and GP fund holders in the first wave. It may be that they will be shown to work on one tier, or on two. Maybe they will not work. I urge a slogan, which I borrow from the American Revolution: "No Proliferation without Evaluation". Let us try to assess the effect of the major operation already carried out on the body of the National Health Service before we subject it to further surgery.
7.8 p.m.
Baroness Seccombe: My Lords, I, too, thank the noble Lord, Lord Ennals, for initiating this debate and giving us the opportunity to consider the state of the National Health Service, a service which we all care for so much.
This Government have an excellent record on the health service. Overall spending is up from £8 billion in 1978–79 to £32 billion this current year—an increase of over 50 per cent. in real terms. The average family of four now spends £44 a week on the NHS compared with £11 in 1978. During those 12 years we have seen the largest building programme in the history of the NHS. Five hundred hospital schemes, each costing over £1 million, have been completed and another 400 are at various stages of completion. All that has meant significant increases in patient care. Over 30,000 more patients are treated every week in the health service hospitals than in 1978. I hope that noble Lords will forgive me if I repeat that figure because I believe it is truly incredible—an extra 30,000 more patients are treated each week.
Over the 12 years as both resources and medical knowledge have increased, there have been considerable improvements in the range of treatments to patients. Transplant surgery is now much more common. We have more patients with a successful kidney transport in this country than in any other European country.
There have been some important developments affecting our children. The infant mortality rates have almost halved since 1978. Damaged heart valves can now be repaired or even replaced. That means that many babies born with heart defects, whose chances of survival only 10 or 20 years ago were very slim, are now able to receive life saving treatment.
In many areas we lead the field. For example, we are the first country in the European Community to have a nationwide call and recall scheme for both breast and cervical cancer screening. All eligible women between 50 and 64 will have been invited for screening by the end of next year.
Such measures help to make the NHS a health service rather than a sickness service and so fulfil the vision of its founders. So too does all the preventive medicine provided for our children. An increasing number of them are now protected against diphtheria, tetanus, polio and whooping cough. Four out of five GPs have reached their immunisation and vaccination targets.
The NHS is in a good state—a very good state. As medical research pushes forward the frontiers of knowledge and makes yesterday's miracle operation today's routine operation, naturally the NHS requires

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more resources. Patients, quite rightly, expect the best possible service from it. But they want the NHS to be tailored to their needs, and not to have to adapt themselves to what it offers. The Government are spending, and will continue to spend, a lot on the health service. However, resources are not infinite. The very real demands and needs mean that the best possible use must be made of every pound put into it so that the maximum amount of money is targeted into its real objective— patient care— and the minimum amount possible sidetracked into administration and bureaucracy.
Those are the objectives behind the new NHS trusts. Prime among the criteria which must be fulfilled before a trust can be set up, is increased benefits and improved quality of service for patients. The trusts will be opting out of the bureaucracy and opting into a closer relationship with the local community and a greater awareness of its needs.
A host of benefits is already appearing from the 57 hospitals and units which have been established as trusts. Those benefits include specific commitments to reduce waiting times; expanded clinical services and new specialty units; opening hours which reflect the needs of working people; and closer co-operation with GPs. Those factors all reflect more concern for the patients.
The nature of the health service reforms means that for the first time hospitals can look ahead knowing what services are required and the budget that is available to meet them. That may mean some tough decisions— about jobs, for example— but they will be taken in the context of long-term management and not as panic measures. The whole perspective of the health service will be changing to concentrate on the needs of the patients.
As I aid earlier, the National Health Service is in good shape. The newly formed trusts and other reforms will make it even better. It is a service which we cherish and one whose benefits we must all work to maintain and enhance.
7.15 p.m.
The Countess of Mar: My Lords, like many others, I am saddened that the National Health Service has once again become a party political football. What must the current furore have done to the morale of patients and NHS staff? Patients must feel particularly let down. After all, the White Paper which led to all the recent changes was subtitled, Working for Patients. Those who are fortunate enough to have a fund-holding GP may feel secure in the knowledge that their GP will be able to purchase a superior service for them. After all, was not the introduction of trusts and fund holding intended to streamline the provision of health care? Those who remain with non-fund-holding GPs may not feel quite so secure.
Many of us may be reluctant to admit it, but we all know that money talks. In all walks of life an individual who has, as they say, "the cash up front" can purchase for himself or herself a better quality of goods and services. Until recently that was not the case with the NHS. All patients were treated according to the priority of their clinical condition and
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not because they had more money or were more important than another patient. Now, true to the philosophy of the present Administration, it is money which counts and not necessarily the patient. Those patients who cannot afford to purchase private medical treatment will, if they have any sense, wish to join the practice of a fund-holding GP so that they can obtain priority over other NHS patients. They are not necessarily greedy or selfish. Anyone who is sick or in pain will naturally wish to take the quickest route to recovery.
No matter what opinion we may have of our own importance, I do not believe that when it comes to a question of physical or mental health anyone has the right to decree that one individual is more important or of greater value to society than another. There is but one question: is the condition of the patient such that he must be attended to immediately; or can he or she wait to be seen by a consultant and possibly for admission to hospital? Hitherto it has been well understood, both within and outside the service, that that is the basis upon which patients are dealt with.
Sadly, the introduction of trust hospitals and fund-holding GPs seems to be changing that practice. Every day there are fresh reports of incentives being given by hospitals to GPs, and by GPs to hospitals, to expedite the treatment of some patients, though I suspect that it is in a minority of cases only that money comes before the needs of the patient. I shall be grateful if the Minister will confirm that all NHS patients will be treated according to the urgency of their clinical need; and that the benefits which are expected to accrue to patients of fund-holding GPs who are treated in trust hospitals will apply to all other NHS patients.
I fully understand the desire for efficiency and the need for economy. When I worked for the NHS in the 1960s I was often appalled by the extravagance within the small hospital in which I worked. I was equally appalled by the enormous increase in administrative staff which occurred after the 1974 reorganisation, so graphically described by the noble Lord, Lord McColl of Dulwich. Administrators and clerks seemed to breed like rabbits. Much of the extravagance in the clinical area has been eliminated over the past 15 years. Indeed, some would say that the pendulum has swung too far in the direction of parsimony. There is no indication that such economy is applied generally to the administration of the NHS. Unless the current army of clerks and administrators is grossly under-employed at present, the new arrangements will surely set the rabbits off in another orgy of breeding. It will be a long time before all hospitals are in a position to do what is to be done at Guy's Hospital; and it can only mean that less money will be available for direct patient care.
I cannot resist quoting a letter published in the BMJ of 11th May 1991. It is from a Mr. Alan G. Cox. It states:
"South Western Regional Health Authority has proposed that a booked admissions system should be used for non-emergency surgery. The system's description as revolutionary presumably implies another spin of that old fashioned invention— the wheel. I cannot be the only consultant who has used such a system before. Mine ran

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successfully from 1970 onwards at Northwick Park Hospital. It was much appreciated by the patients and was adopted by my colleagues. With only occasional hiccups due to such crises as red alerts it lasted uninterruptedly until the upheaval of 1987ߝ8 when the cash crisis led to closures of beds which totally destroyed any planning of admissions and ruined my system.
The hardware used was a series of hard backed exercise books, and the software could be described as ICCS + SK — standing for intracranial common sense plus surgical knowledge. I estimate that the total cost for the whole package over 20 years was about £12.50 in real terms".
Perhaps some enterprising person in the noble Baroness's department will take a leave out of Mr. Cox's exercise books.
As patron of the Dispensing Doctors' Association I have a particular interest in the provision of health care for patients living in rural areas. Under the present arrangements doctors who practise in country areas feel disadvantaged and vulnerable. They are unlikely to be able to become fund holders at least for many years and therefore are unable to compete with their colleagues in urban areas. Their patients will have no choice but to attend the hospital which has a contract with their local health authority.
Some patients who live on the periphery of urban areas may be able to choose to register with a larger practice in order to benefit from the wide choice offered. This will leave rural GPs who, because of the static nature of their population unlike the constantly-moving population of inner-city GPs, are unable to increase the size of their lists. They have no option but to offer the most basic service as their incomes decline disproportionately. In the longer term, closure of rural surgeries may result, leaving patients in remote areas with the dubious choice of travelling long distances to reach urban practices or having no medical cover.
The current reliance upon numbers for incomes makes it very difficult for the rural GP to provide facilities for minor surgeries and clinics which would boost his income. While most country people have the stoicism to accept that, it would be unreasonable to expect them to forgo all services. It is essential that the dispensing income of rural GPs is maintained and that these practices remain viable. Will the Minister say what is being done to protect and promote services in rural areas? I realise that it may be difficult in the context of her speech, but perhaps she will write to me.
I wish to make one small point. Has the Minister read about the practice of the Yorkshire Health Authority? I have run out of time so I shall sit down.
7.23 p.m.
Baroness Eccles of Moulton: My Lords, I too congratulate my noble friend Lord Harmsworth on his most informative and interesting maiden speech. I thank the noble Lord, Lord Ennals, for initiating a debate on such an important subject. It gives me the opportunity to report on progress within a health authority which has a general hospital applying for trust status in the second wave.
A keystone to the reforms is the emphasis on assessing the health needs of the population in order that resources can then be deployed more efficiently.
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The purchaser— that is, the district health authority or the GP fund holder— works out where the priorities lie for the population and then places contracts with hospitals and other provider units accordingly. The health needs assessment will be underpinned by funding calculated on a weighted per capita basis. The previous method of allocating resources, based on funding existing facilities, was an imprecise science by comparison. As a result we now have a much tighter approach to matching needs with the resources available to meet them than has previously existed in the life of the NHS. That in itself gives meaning to the reforms.
It has been accepted and indeed welcomed in enough hospital clinical departments and GP practices that greater financial responsibility made possible by greater access to relevant information is not only workable but also effective. Do we really want to return to a time when the senior members of the profession are responsible only for clinical decisions, playing no part in the decisions about how the resources are allocated?
I was distressed by the suggestions that there should be a delay in progress towards second wave trusts. I do not fully understand the reasons for those suggestions. Such delay would be a great mistake. Ealing General Hospital has a challenging and exciting atmosphere that did not exist before it started down the trust road. Nurse managers on wards are taking a close interest in their business plans. They are evaluating the equipment used on the wards for cost effectiveness and are negotiating with doctors over the choice of the most appropriate supplies. They are taking a greater interest in how the nurse training budget is used and are discouraging staff from attending courses which are not connected with the patients for whom they care.
Doctors and managers are working closely together on a corporate strategy for all departments. No longer can one clinical department attempt to go it alone asking for what others might consider to be a disproportionate share of the funds. Such decisions are now shared and are taken by all the consultants and managers concerned. It is heartening to experience the spirit of enthusiasm and excitement at the prospect of being accepted as a trust hospital next April.
It is accepted that there will be a tough running-in period and that time will be needed to achieve all the standards wished for. However, those involved would appreciate support and encouragement from outside the service. When I see such enthusiasm and optimism I wonder whether the lack of enthusiasm in other places arises from a degree of conservatism and resistance to change which feeds on the anxieties that can surround a brave attempt at something new.
Perhaps the time has come when the NHS should cease to attract so much attention through party political debate. That gives rise to needless anxiety and concern among patients and staff. Of course the NHS will always be high on the political agenda. However, a bipartisan or non-partisan approach to a service which is free to all, which needs to make the best use of its resources, which is staffed by dedicated and hard

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working people doing a difficult and demanding job and, above all, which exists to heal, comfort and support the population, is the best way to serve the public.
I do not need to remind noble Lords that the new style health authorities have been in existence since last September. The new purchaser-provider funding arrangements came into effect in April and the first wave trusts were born at the same time. There will always be criticism of detail. But is it right to criticise attempts to achieve advances in the service as a whole? It is unhelpful and premature to keep saying that the reforms are not working. It is high time to give them a welcome and to give the service the opportunity to make them a success.
7.28 p.m.
Bareness Robson of Kiddington: My Lords, whenever we debate the National Health Service it is obvious that Members on all sides of the House have a great love for the service and wish to see it progress and improve. I wish that we could attempt to avoid the use of emotional terms. I hate the phrase "opting out". It is a n emotional phrase and it is the wrong terminology for what is happening. I equally dislike the claim that the new system is all about increased patient choice. That too is untrue. We must try to keep to logic and truth.
When I was in the position in which the noble Baroness, Lady Cumberlege, now finds herself, patient choice existed. It has always existed; every general practitioner could send his patients to any hospital. The problem was that the financial arrangements were wrong and the money did not follow the patient. The accounting and control of finances by the chairman of a London Thames region were more difficult than under the present system.
It has been said that there is choice as long as there are fund-holding practices. We agree that that is so. A fund-holding practice can choose. The problem is that we shall never achieve 100 per cent. fund-holding practices in this country. Some practices in rural areas are too small to become fund-holding practices. Those will always have to rely on whatever contracts the district health authority has made.
I know that district health authorities are setting aside certain contingency funds to cover the referrals from non-fund-holding general practitioners. However, those sums are a pittance. They will not cover more than two or three operations at a hospital. Apart from having to pay for that, the contingency sums will also be used for expensive drugs, and complications arising from treatment, and treatment for homeless patients. Therefore, there will be a tremendous call on those special contingency funds.
I believe also that we should consider, if we could achieve 100 per cent. fund-holding practices, the kind of administrative increase which would be necessary in every hospital. They would not have to make a contract only with a district health authority, but would have to make a separate contract with each fund-holding practice and that could turn out to be 40,
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60 or 100. Therefore, that would increase administrative costs. I am not necessarily condemning it for that reason but we should bear it in mind.
What worries me most of all is a subject introduced by the noble Lord, Lord Walton of Detchant; that is, medical education. He referred to the medical committee of the Universities Funding Council which after meeting with the universities and NHS officers from every medical school in the country expressed anxiety that the new funding arrangements would make it more difficult for some teaching hospitals in larger conurbations to remain financially viable.
St. Mary's Hospital in central London has too few beds at present to allow students to follow two patients per week, which is the university's requirement. London is a very special, difficult problem because of its dwindling population. Therefore, we must realise that one or more of the university hospitals is expected to become insolvent and will probably disappear.
I am anxious because unless that is planned, that could happen in an arbitrary manner and not as a result of deliberate decisions to reduce the number in London. It could result in a number of the university hospitals becoming non-viable and functioning in a manner not conducive to good medical education.
A Coopers & Lybrand report was referred to by another noble Lord. That states:
"A number of hospitals could easily find themselves in this position and to some degree it would be a matter of chance which ones would be most seriously affected. It is not obvious that any closures forced would be the most appropriate".
We should concentrate on that because unless we have and keep the wonderful medical education which we have in this country, the NHS will not be the same organisation.
I admit that there were many good features in the Government's original White Paper proposals. I have already welcomed the fact that money should follow the patient. I believe in devolving management to hospital level. However, that could have been carried out without the major reorganisation which has taken place. I join with those people who asked the Government not to go on with the next batch of hospital trusts. Could we not look on the present 56 trusts as the pilot scheme for which we asked, learn from that and then proceed in the future?
7.35 p.m.
Lord Carter: My Lords, the House is grateful to my noble friend Lord Ennals for tabling this Motion for debate. We have had a good debate with many notable speeches, none more notable than the maiden speech of the noble Lord, Lord Harmsworth, particularly as he kept to his allotted time.
Everybody is always concerned about the health service. The Government must be acutely aware by now of the accuracy of the dictum of Nye Bevan that the sound of a bedpan being dropped in a hospital ward resounds through the corridors of Westminster. The central problem of the health service was summed up only last week by Mrs. Virginia Bottomley, the Minister for Health, when she addressed a conference of the Office of Public Management. She said:

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"We must accept that there is a limit to the number of major strategic changes which can be achieved at once. What is more, the impact of one change on another needs to be fully thought through and understood in the NHS."
In that context, I remind your Lordships that this is the fourth major reorganisation of the health service conducted by Conservative governments.
It seems a pity that the Government are determined to ignore the wise words of Mrs. Bottomley. During the NHS reform Act the Government resisted all attempts to have a trial run of the reforms in one or two areas. They ignored independent advice regarding financial viability as regards the majority of the first wave of opted-out hospitals. They have made it clear that they are determined to press ahead with the next wave of opt-outs regardless of public opinion.
We have all heard about the situation at Guy's which was described by the noble Lord, Lord McColl. He pointed out all that has gone wrong in the past 11 years. I remind him of the nature of the Government who have been in power during that time. Last year a consultation document was issued regarding application for NHS trust status. It is 231 pages long, is glossy and says absolutely nothing about the underfunding crisis at Guy's and the possibility of job losses. Indeed, on page 91, dealing with staffing, it states:
"An attitude survey recently carried out in this District by Price Waterhouse identified a range of factors that influence our current ability to recruit and retain staff. As well as pay and conditions the survey identified:— Inadequate staffing levels".
On finance it states:
"Throughout this District high priority has been given to the maintenance of tight budgetary control and cash management systems. Additionally, considerable efforts have been directed towards the introduction and maintenance of sound systems of financial control. As a result we have achieved clear external audit reports for the last three years".
It goes on to state:
"This District [of which the proposed Trust makes up 85 per cent.] has consistently remained within its budgets which are operated on an income and expenditure basis, and also within its cash limit".
The sums were wrong by £8.3 million in eight months. If a commercial company had been so badly wrong the directors and auditors would be called to account under company law.
In that hospital, about which we heard so much from the noble Lord, Lord McColl, I understand that only this week seven patients spent the night on stretchers in casualty because there were no beds for them.
The problems are not only at Guy's. An internal market depends above all on accurate information. A consultant anaesthetist told me that the accountants in his authority are deliberately pricing procedures to fit pre-determined targets. When the calculated price appears to be too high it is arbitrarily reduced to make the hospital appear more competitive. I understand that that is common practice.
That is confirmed by a consultant cardiologist in a different district. He estimated a figure of £56,000 for consumables in his department. That was promptly reduced by the accountants, without any reference to him, to £26,000 because that was the figure which fitted the budget. The same consultant said that it is
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hoped that his department will be on line to the pricing computer by 1993. Until then, the pricing will be mainly guesswork.
We have heard a lot about the two-tier service. There cannot be a two-tier service for everybody as suggested by the noble Baroness, Lady Cumberlege. That is a contradiction in terms. There is anxiety about this possibility of GP budget holders receiving preferential treatment. That was confirmed in a curious way only last week by the Secretary of State, Mr. Waldegrave, when he addressed the Royal College of General Practitioners. He said,
"Fundholders are absolutely right, like any purchaser, to seek improvements in waiting times for their patients…Hence I would expect District Health Authorities to learn from the contracting successes of fundholders and vice versa. I must equally make clear that all contracting arrangements, whoever the purchaser, must be deliverable within the hospital environment and contain sufficient flexibility, for example, to ensure that urgent cases can be accorded proper priority".
What are the successes of fund holders if they are not the improvement in waiting times for their patients— to use the words of the Secretary of State? If urgent cases are to be given proper priority then presumably the non-urgent cases will find their place in the queue depending on the budgetary arrangements of the general practitioners who send them. What is a non-urgent case? As the Guardian put it very brutally this morning, it means only that the patient will not die in a week.
What is the situation regarding non-contract referrals? I heard from a general practitioner in Warwickshire who said,
"A wheelchair-bound male pensioner from Luton came to stay for a short while with his daughter, who lives near here and is registered with a neighbouring practice. The pensioner developed a foot infection which needed to be dressed several times a week and my colleague arranged for the District Nursing Sister to visit the home for this purpose. She mentioned this matter to her Nurse Manager and was surprised to be told that in future she could not undertake such a task unless prior agreement had been obtained from the patient's home Health Authority that it would meet the costs".
In a following letter the GP added:
"I have this morning verified the facts with the Nurse-Manager concerned and she confirms that this is what she has been given to understand by her superiors".
I ask the Minister: how long is that pensioner supposed to wait to find out if his home health authority will meet the cost? Who will decide? Will it be a doctor or a bureaucrat?
A large part of the current problems in the health service come from the Government's insistence that health authorities should balance their budgets by 1st April, at a time when the global deficit is in the order of £110 million to £120 million. I repeat a question I have asked before in debates on the health service but to which I have never received an answer. Why were the Government able to write off billions of pounds worth of debt for the nationalised industries to prepare them for privatisation? They spent hundreds of millions of pounds on advertising fees for privatisation and found £4 billion to throw at the poll tax. However, they refuse to write off £110 million to £120 million of health authority debts; a refusal which led directly to bed closures, increased waiting times

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and all the other problems of which we are aware, apart from the problems which relate directly to the so-called reforms.
I conclude by reminding the House of the situation facing the Government in the health service. It is similar to their problems with the poll tax. Like the health service reforms, that was a deeply unpopular measure which was rammed through ignoring all advice. It wasted enormous sums on bureaucracy and, finally, was defeated by the sheer weight of public opposition.
7.43 p.m.
Baroness Hooper: My Lords, I am glad to have the opportunity to be able once again to confirm the Government's commitment to the National Health Service and to the ideal of free and comprehensive health care for all. I am glad also to add my words of congratulation to my noble friend Lord Harmsworth for saying that he was a fan of the National Health Service and for being so positive and constructive about it. Like my noble friend Lord Skelmersdale I believe i t is depressing to hear an opening speech such as that c f the noble Lord, Lord Ennals, who insists on suggesting that doom and gloom are the order of the day. I am glad that subsequent speakers went a long way to correcting that very erroneous impression.
The National Health Service is currently embarked on a vital period of change and development. But change does not equal crisis. It means modernising and revitalising a great public service to make it even better. My noble friend Lord Nugent gave us some helpful background about the early days of the National Health Service. It is important to keep that kind of perspective in mind when we look forward to what the National Health Service can achieve in the 1990s and beyond.
The Government's approach is based on three key factors. It is worth stating those at this stage. First, due to the growing number of elderly people, the further development of medical technology and the rising expectations of society at large, the demands on the health service continue to rise. Nevertheless, our record is hard to beat. As has been said, plans for this year will mean record expenditure of £32 billion; that is an increase of 51 per cent. in real terms since 1978ߝ79. There are now 15,000 more doctors and dentists and almost 68,000 more nurses than 10 years ago. I need not repeat all the other good news facts which were effectively quoted by my noble friend Lady Seccombe.
Secondly, to go with the extra money and more staff we need the right funding arrangements, the right management structures and the right incentives. That is what the reforms are all about. Thirdly, looking ahead, we are developing a strategy to improve further the health of the nation. I am sure that your Lordships will join me in welcoming the forthcoming publication of a consultative document setting out our proposals for such a strategy.
I am grateful to the noble Baroness, Lady Robson, for correcting everyone on the terminology used in relation to National Health Service trusts. They have perhaps been the main theme of the debate although
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a wide variety of other valuable points have been raised. The noble Baroness, Lady Fisher, began by saying that we all know what National Health Service trusts— she used the other word— are all about, and went on to show that she in fact knows nothing about what they are about. They are certainly not a first step to privatisation. The noble Lord, Lord Carter, who quoted the privatised industries and the writing off of debts, should take heart from the fact that we are not moving down the road to privatisation.
National Health Service trusts have an essential part to play in the new National Health Service. While remaining fully within the service, trusts are operationally independent. They have the power to make their own decisions without being subject to bureaucratic procedures, processes or pressures from higher tiers of management. We believe that trusts will be able to use their new powers and freedoms to achieve better, faster, decision making to the benefit of patients, the community and the staff. My noble friend Lord McColl, with his considerable personal experience, was able to illustrate that and the fact that that is already happening.
We are a mere six weeks into the reforms and already our volatile Opposition are urging us to change again. We will see changes; I have no doubt about that. But they will be evolutionary changes adapting to the reforms, not changes recklessly reacting to newspaper headlines. We stand by what we have always said, that the levelling-up process on which we embarked will not happen overnight. We shall be watching carefully the progress of the first trusts to ensure that the experience gained is available to subsequent starters. Therefore, I promise the noble Lord, Lord Hunter, that as trusts develop we will be following their progress in that way. However, we do not intend to slow down the process.
My noble friend Lady Eccles will welcome that, and I say to the noble Lord, Lord Kirkhill, that when he quoted Professor Enthoven he omitted the fact that the said professor made a subsequent visit to this country. He admitted that he was wrong in suggesting that we were going too fast and too quickly with the reforms. He said that he had the favourable impression that all was going extremely well.
Much has been said about the accountability of trusts. As with all parts of the National Health Service, trusts will continue to be called to account for the services they provide. They will be accountable in several ways: to my right honourable friend the Secretary of State and hence to Parliament for delivering their financial duties; to purchasers for the quality, form and quantity of services specified in their contracts; and to the general public who will have access to the trusts' annual reports and accounts and will be able to attend their annual general meetings.
Quite a lot of fuss was made about job reductions in specific National Health Service trusts. Indeed, the noble Lord, Lord Ennals, quoted a Guy's document citing inevitable reductions in direct patient care and giving the example of Dr. Levison's directorate. The leaked memorandum to which he referred is in fact based on out-of-date and invalid assumptions about the level of cuts in the pathology directorate. At

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present the trust is reviewing services with its purchasers and no decisions have been taken on possible service reductions.
As my right honourable friend the Secretary of State for Health has commented, and as borne out by my noble friend Lord McColl, the trust has inherited problems engendered by a bureaucratic system which produced first-class health care but, sad to say, second-rate management structures. Therefore they are now quite rightly organising their resources to meet the demands of purchasing health authorities as detailed by the contracts they enter into. It is blatantly untrue to suggest that trusts are putting profit before patients. They are simply ensuring that they are in a healthy financial state in order to respond to the priorities set by purchasers. Action to remove deficits and redeploy resources into services which purchasers identify as being of a high priority, is a sign of good management and an indication of future success of the reforms.
I quote in that regard the signs of developments and improvements in patient care within the National Health Service trusts that we are already seeing. One of the examples is the Rugby National Health Service Trust. New laser equipment has been introduced which for the first time allows surgeons there to perform major surgery with pinpoint accuracy and just keyhole incisions, thus speeding patients' recovery.
In the Kingston National Health Service Trust work has begun on a patient hotel where national Health Service patients who do not require full medical care, but who are not well enough to go home, can be looked after in a warm and caring environment. The Liverpool Cardio-Thoracic Centre plans to increase its number of beds by 37 per cent. and increase the staff complement by 66 whole-time equivalent posts. The East Gloucestershire National Health Service Trust plans to increase the number of consultants by six and to take on more nursing staff. That is all happening.
I now turn to the business plans. There has been a great number of calls for the publication of both National Health Service trust business plans and the publication of the independent assessments of Coopers & Lybrand Deloitte. Both the financial projections and the business plans have been prepared by trusts on the basis that they will be confidential between the trust, the management executive and my right honourable friend the Secretary of State.
Lord Ennals: My Lords, why?
Baroness Hooper: My Lords, they are working documents for the trusts' management. In them the trusts were encouraged to examine various options as to how they provide the services the purchasers required and how they would accommodate changes to patterns of service that purchasers might also require. As such, both documents can be said to represent the trust management's thinking in private in order that it can present a coherent strategy to purchasers and patients.
Lord Ennals: My Lords, that has been paid for by the taxpayer.
Baroness Hooper: My Lords, it is that strategy which the public want to know about. Furthermore, trust contracts themselves are public documents. Annual reports and accounts will be published. It is from these that the public will be able to see what services the trust intends to provide and how successful it has been in delivering them. In deciding which applicants to approve for trust status one of the criteria considered by my right honourable friend was whether the trust was financially viable. To that end Coopers & Lybrand Deloitte were commissioned to produce an independent assessment of each applicant's financial viability. The reports of their work were available to my right honourable friend when he made his decisions on which applications to approve. They were not audit reports, but management consultant reports. They naturally drew heavily on the financial projections I referred to a moment ago. Therefore, for the same reasons they too must remain confidential. They must also be confidential, like all such reports, so that the consultants are free to express frank opinions.
Nevertheless, I can tell the noble Lord, Lord Ennals, that the report actually said that there were few trusts which represented no or little financial risk. That is unsurprising. I am trying to respond to a point raised by the noble Lord, Lord Ennals. Few new enterprises start off with no risk attached to them. The report went on to say that only in a few cases were the risks of the magnitude that the application should be rejected. I trust that the noble Lord finds that reassuring.
My noble friend Lord Nugent asked specifically how the contracting process was proceeding. A number of other noble Lords raised queries about contracting. The new contract system was introduced on 1st April of this year so it is still only six weeks into practice. It is still in the early stages. But purchasers have successfully negotiated mainly block contracts with providers of health services. We have found already that even the simplest contract is a powerful tool. It defines quality and activity levels which can then be monitored and which provide a mechanism for bringing the health strategy to which I referred, and which has been generally welcomed by the medical profession, into effect.
Many questions have been asked about GP fund-holders. The GP fund-holding contracts represent something like 1 per cent. of the total contracting achieved by 1st April of this year. I believe it was the noble Lord, Lord Pitt, and the noble Countess, Lady Mar, who were concerned about a two-tier service with waiting time for treatment depending on whether the GP is a fund holder or not. The important factor is that the GP fund holders can now select the best provider unit for their patients not least on grounds of waiting time and quality of care. Fund holders can use the spare capacity of hospitals to provide extra services. They have also negotiated a range of improvements to services which providers can then extend to the patients of all practices.

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GP fund holders are not preferentially funded to treat their patients. They pay prices calculated on the same basis as for any other potential purchaser. They look at the various provider units offering the treatments that they need to buy and contract with the ones which they believe offer the best service to their patients, not least in terms of quality of service and waiting time. That is simply a development of the GP's habitual role of comparing hospitals on such issues before referring patients. As regards any restrictions in a GP's freedom to refer, the district health authorities will secure contracts with hospitals which GPs and their patients have indicated that they prefer.
Inevitably some patients will need treatment at hospitals with which no contract is held. A reserve of uncommitted funds will be maintained by the district to pay for them. As my noble friend Lady Cumberlege said, G Ps are shakers and movers in all this. She gave some interesting examples to prove that, so I do not need to quote additional ones. The contracts of the district health authorities are based on wide consultation with all GPs, not just fund holders, and on the GPs' preferred referral patterns. These patterns follow patients' choice. Where referrals are made off-contract because of patient or GP choice, they will be funded as quickly as resources allow.
There has been an unprecedented level of consultation between districts and local GPs to achieve that. Generally speaking, considering the time availab12, the scheme has been an enormous success. Nevertheless, my right honourable friend the Secretary of State has said that we stand ready to modify I he GP fund-holding scheme in the light of the experience of the first wavers, of the views of experts, and the outcome of the pilot project we are conducting into the expansion of the scheme. It should be clearly understood that we are monitoring closely all these changes and developments.
The noble Lord, Lord Walton, and others, including the noble Baroness, Lady Robson, in particular, raised anxieties about teaching and research suffering because of cost. I reassure them by saying that the Government are firmly committed to sustaining medical education and research. Teaching hospitals will be protected by SIFTR programmes. Units will use the money to offset their costs so that they are not made uncompetitive through their support for teaching and research. Therefore, purchasing health authorities do not have to meet these costs.
It must be right that medical teaching should be shaped around service needs and not vice versa. As regards the quality of research and development, it will be for the district health authorities and the GP fund holders who are commissioning the services from providers to ensure that their residents receive the right quality of service and account for that in the contracts that they negotiate.
The noble Lord, Lord Walton, and other noble Lords, referred to the low levels of pay in the National Health Service. Greater flexibility in National Health Service pay is being introduced throughout the service. T rusts will be free to negotiate new contracts of employment with their staff enabling them to move
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away from national arrangements. Both these changes are a move away from the rigid centralised system of the 1970s under which local recruitment and retention problems could not be tackled. Such freedoms will allow performance to be rewarded.
I have not been able to answer each detailed question, for which I apologise. However, the noble Lord, Lord Walton, asked me to take note of the anxieties expressed. I shall certainly do that as long as, if I may say so, noble Lords opposite acknowledge all the progress, all the enthusiasm and all the good news too.
8 p.m.
Lord Ennals: My Lords, I am most grateful to all who have taken part in this debate. What was very refreshing and different from previous occasions is that we were able to hear from people with experience of the health service on both sides, all committed to the National Health Service but taking pretty opposed views in terms of the Motion before us. I thank all concerned. I beg leave to withdraw the Motion.
Motion for Papers, by leave, withdrawn.

Education (Mandatory Awards) (Amendment) Regulations 1991
8.1 p.m
Baroness Blackstone Baroness Blackstone rose to move, That an humble Address be presented to Her Majesty praying that the order (S.I. 1991/827) be annulled.
The noble Baroness said: My Lords, the reason for praying against the new regulations on mandatory awards is that the changes to them which involve the abolition of the vacation hardship allowance will leave some students in very considerable financial difficulty this summer. The vacation hardship allowance is the only safety net for summer vacation hardship cases, as access funds have not been geared to cover that part of the year. Secondly, there must be strong objections to the new regulations, on the grounds that they represent a total reversal of commitments made by Ministers in this House and in another place less than a year ago. As such, they are yet another U-turn with the Government reneging on promises that they have made. In the circumstances, why should anyone any longer believe anything Ministers in this Government say?
I remind the House of what has happened. During the passage in 1990 of the Education (Student Loans) Act and the Social Security Act and ensuing regulations, Ministers in both Houses pointed to the vacation hardship grant as a way of ensuring that a safety net had been maintained for students who were facing hardship but who were no longer able to claim benefits. For example, in another place the Minister for Social Security and Disabled People said:
"The committee"ߞ
that is, the Social Security Advisory Committee—
"said that, during the long vacation, some students might be particularly hard hit, and that they should have recourse to a safety net. There is already a safety net— the power for local education authorities to pay hardship payments".— [Official Report, Commons, 9/7/90; col. 102.]

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The Minister reiterated that when he said:
"Of course, a safety net is necessary in these circumstances…As I said earlier in response to an intervention, local education authorities have the discretion to award vacation hardship allowances during the long vacations".
He went on to say:
"Those can be worth more than £50 a week to the student. The costs to the education authority are fully reimbursed. In those circumstances we do not believe that there is a case for retaining a social security safety net".— [Official Report, Commons, 18/7/90; col. 1101.]
In this House, the Parliamentary Under-Secretary for Social Security— I see that he is in his place— said that LEAs can make severe hardship awards to undergraduates in the long vacation.
As recently as March of this year, in an answer to the Labour spokesman on higher education in another place, the role of the vacation hardship allowance was acknowledged by the Parliamentary Under-Secretary at the DES. He went on to note that from 1988 to 1989 some £40,000 had been claimed. At that time there was absolutely no indication from the Minister of plans to abolish the allowance until an unsuspecting world learnt from the very same Parliamentary Under-Secretary— only three weeks later— that the allowance was no longer needed. There was no warning and no consultation.
The argument that the vacation hardship allowance is no longer needed is simply not true. Resources available to students have not been substantially increased and there is an unprecedented need for the vacation hardship allowance to remain available to students. I shall give some figures. The mandatory award for 1990–91 is £2,265 outside London. Had its value simply kept in line with inflation since 1979, the grant for this year would have been £2,803— in other words, £538 above its present value. The real value of the maximum loan of £420 currently available to students outside London, which is meant to make up this difference, is therefore minus £118.
Moreover, the mandatory award provides support for 38 weeks of the year. Student loans are meant to provide additional support for 52 weeks of the year. This means that during the summer vacation a student in London would have a weekly income of £8.50 and a student outside London a weekly income of even less than that. Post-graduates and part-time students are not eligible for loans. Is there anybody in this House who can live on £8.50 a week? I rather doubt it.
The vast majority of students have lost entitlement to welfare benefits, to housing and unemployment benefit and to income support. According to government statistics, at least £68 million— and probably nearer £100 million— has been lost in benefits by students this current academic year.
A recent survey on student financial support undertaken by the National Union of Students found that more than one-third of student unions stated that the average student in their institution had lost more than £400 in housing benefit during the academic year alone. The survey also showed that many students are finding it quite impossible to survive solely on the grant and student loan.
A number of students have found themselves with a weekly income well below the income support level.
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For instance, a student in London in receipt of a mandatory award and a loan from the Student Loans Company, with a weekly rent of £45 which is not a particularly high rent in London these days, will be left with £18 per week to meet all his or her other expenses. Again, could any of us manage on such a small amount? How are students meant to survive on that? Many other students outside London whose income is comprised of the mandatory award and student loan are having to live on a weekly income that is near or just below income support level.
I turn now to access funds. I know it is the case that the Government are making something of the fact that access funds can make up for the abolition of the vacation hardship allowance. Where students find that they cannot survive on this money during the vacation — that is, what they receive in mandatory awards and student loans— because, for example, of unemployment, we are told that college administered access funds will be adequate to prevent undue hardship. They will not be adequate. Research by the National Union of Students shows that colleges have not geared the access funds towards providing support over the summer vacation. That has been confirmed by the Committee of Vice-Chancellors and Principals. By February of this year, it was found that most colleges were distributing their funds on a three-term basis. Of the rest, many were allocating the funds over an even shorter timespan— usually two terms only— rather than the longer period which would encompass the summer vacation.
Moreover, guidance by the Department of Education and Science encouraged colleges to discount the summer vacation. Further education colleges were instructed to return to the DES any access fund money held in excess of the original 15 per cent. allocated by the 31st March. That had to be returned by the end of the academic year. The recall date has caused immense problems in providing for support during the third term, let alone the summer vacation. When the DES issued new guidance, stating that institutions could now retain money earmarked for the third term and summer, it was far too late to help the institutions in their planning.
Guidance to higher education colleges, as opposed to FE colleges, has been even more confusing. Originally the institutions were told to return any unspent access funds to the funding councils by 31st July, thus making it quite impossible to cater for hardship over the summer. The DES then caused severe disruption in January when it announced that any money held in excess of the original 15 per cent. now had to be returned by 31st March. That ruling had to be dropped due to representations both from college administrators and the National Union of Students. The DES finally stated that unspent money did not have to be returned until 31st August. What an appalling shambles! I say that as the head of a higher education institution. I know the trouble to which my colleagues are put by this sort of disgraceful administrative cock-up.
As a result of all that, college administration procedures do not provide for extra support for students during the long vacation. I suggest that the

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Government must accept responsibility for this and recognise that the vacation hardship allowance must be retained in those circumstances, at the very least for this corning year, assuming that clearer guidance and increased resources are given for the future.
Aside from the difficulties caused over the return dates, a more worrying finding from the NUS survey on access funds is that the funds will be totally depleted before the vacation even begins. If that turns out to be the case, the access funds will be unable to provide a safety net— which the Government claim they can provide— over the long vacation, assuming that the DES was willing to issue further guidance allowing colleges to do so. But, in any case, the higher education institutions have found that the sums available for access funds are hopelessly inadequate to meet the needs in term time, let alone cover the long vacation. That is what the CVCP and also, I believe, the polytechnic directors are saying.
In the light of previous government statements, it seems to me that the Government are obliged to accept the principle of the safety net and not go back on the promises that they made. Previously, students were able to fall back on the benefit system if they were facing undue hardship in the long vacation. That option is no longer available. The loan system and access funds, as I have already made clear, fail currently to compensate for the freezing of the mandatory grant or for the loss of benefit. Yet again, our students are being left much worse off than they should be.
In the long-term a full review of student financial support is needed so that we can have a clear system which is both easily administered and understood. Such a system will need to target extra resources where living cost are higher— that was the great merit of housing benefit— and where needs are greatest. However, in the short term, vacation hardship allowances must be maintained to ensure a safety net is available for students, or the Government must come forward with an alternative way to ensure that students in genuine need can avoid destitution this summer.
Everyone in this House is fully aware of the fact that there are now over 2 million unemployed. The figures are increasing every month. In those circumstances, can the Minister tell us how she thinks students will be able to get jobs this summer? I suspect that very few of them will be able to find employment.
Finally. both the Association of County Councils and the Association of Metropolitan Authorities recognise the continued need for the vacation hardship allowance. They have invested a great deal of time and resources investigating ways of finding a straightforward system for administering the allowance. The AMA and the ACC have both asked the DES to issue more detailed guidance to LEAs in recommending as simple a system as possible for administering the claims for the allowance, based on the grounds of fairness and equity. Instead, the Government have absolved their responsibility by bringing forward an amending regulation to abolish
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the allowance at a time when it is most needed. To abandon their responsibilities to students in that way is a national disgrace. I beg to move.
Moved, That an humble Address be presented to Her Majesty praying that the Order (S.I. 1991/827) be annulled.—(Baroness Blackstone.)
8.16 p.m.
Earl Russell: My Lords, like Winnie the Pooh, we do not want to be greedy. We do not want to ask the Government to annul all these regulations. Parts of them are excellent. We on these Benches have no objection to the privileges of membership of the European Community being extended to citizens of the former German Democratic Republic; indeed, we welcome it warmly.
However, our anxiety, like that of the noble Baroness, Lady Blackstone, is confined to the student vacation hardship allowance. For that reason, if I had managed to get this topic on the Order Paper before the noble Baroness, I should not have put down a prayer to annul; I should have put down a Motion inviting the Government to withdraw the regulations and amend them. I should have asked the House to divide on the matter because it seems to be a matter of that magnitude.
It disconcerts me somewhat that we are now debating regulations which came into force on 17th April. They were tabled on 27th March, which was immediately before a Recess and, as some of us will remember, that was a day upon which we were much occupied with another piece of business. Those Recess days count towards the days for the regulations coming into force; but they do not— very properly — count towards the days for praying to annul. I believe that we have here a procedural point and one which might be given some attention.
As a university teacher, I must declare an interest. If these regulations are not withdrawn, I shall not be able to do my job to the standards which I find acceptable. That is a strong statement and one which calls for justification. The basic point is that in this country, unlike anywhere else, we have a three-year degree. I have taught elsewhere in a country which had a four-year degree. The students there did approximately the same amount of work in four years that we do in three. This is a very intensive system. From the Government's point of view it is cheap. However, it is only possible if students can first work full time during term; and, secondly, can afford to do academic work for something like 50 per cent. of the university vacation. If they cannot do so, they simply do not get through the work. In that case, we cannot give a degree of equivalent quality to that which is given in other countries overseas.
This is a matter of some significance. Of previous forms of student support, the only one which was geared to vacation and which therefore made it possible for undergraduates to do the sort of vacation work upon which good degrees have always been based, was the social security entitlement. The noble Baroness and I have had many exchanges on the matter. I shall not go over the arguments in detail. However, she will be familiar with the fact that

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practically everyone in the academic world from the Committee of Vice-Chancellors and Principals to the National Union of Students agreed that, in relying on the survey carried out by Research Services Limited, the Government considerably underestimated the extent to which students were dependent upon social security. They therefore considerably underestimated the amount of money that was being lost, and considerably undercalculated the amount of money that needed to go into the access funds. I agree with everything the noble Baroness, Lady Blackstone, said about the access funds. In effect, they are maundy money. Of course, they are not geared into the long vacation. The need for the long vacation is far too big for the access funds even to begin to meet it.
In his letter to Mr. Twigg of the NUS, Mr. Howarth explains the sudden decision to withdraw the allowance by saying that there was reason to expect a flood of claims. I do not see why Mr. Howarth was so surprised. Of course there will be a flood of claims. I was just about to forward 20 myself, all from members of my special subject class. I was going to tell them that they could not do the work necessary to obtain a good degree unless they could, as always before, read their texts during the long vacation. I do not believe that I was being irresponsible. I was trying to fulfil what, in the face of all ministerial discouragement, I still regard as my duty— to get my pupils the best degree possible. Without that, I and they will be in severe difficulties.
It is a little curious to withdraw an entitlement because there are a flood of claims for it. It sounds a bit like closing fire stations because there are too many fires. This year it is early in the year to see what has happened. Mr. Howarth relied upon the low level of take-up of student loans. From what I can learn from regular conversations with my pupils, Mr. Howarth's figures may be a little out-of-date. There seems to have been a sudden flood in the take-up of loans in the past six weeks or so. I do not know whether that is a general picture, but I think it extremely likely. I have discussed the taking-up of loans with all my personal pupils, and I find that they share the fears of going deeply into debt expressed in the House by the noble Lord, Lord Boyd-Carpenter, and many others when we debated the Bill.
Mr. Howarth also relied in that letter on the claim that the grant was up by 25 per cent. If we accept that figure, we have to put it beside the Government's own figure in the White Paper on student loans that in the years to 1982 the grant had fallen by 21 per cent. It has gone right down, and come up to somewhere which, by my calculations, is still rather below what it was in 1979. Of course that is where it is in an election year. Not many people expect it to stay at so high a level thereafter. It is not a sufficient explanation for a permanent abolition of an entitlement to say that the grant for this year is at a slightly less disastrous level than usual.
What seems to me to be happening is that, first, a great many people are relying, if they can— not all of them can — much more heavily on their parents than they have done hitherto. The other thing that I suspect
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is happening— I do not always get to hear about this because it is against college regulations and incompatible with obtaining a good degree— is that people are taking jobs during the term. It has been proved this year that a great deal less work is being done by undergraduates than in any previous year I have been teaching. That is threatening the standard of the degree. Financial hardship is worrying, but I know of only one case of someone driven to obtain a job during the term. That is someone who had to wait three months to obtain a grant from the London Borough of Wandsworth.
We have here something which is threatening and I believe has already produced a real loss of quality in the degree. I said on 1st May that we can no longer match the best degrees offered in the United States at Harvard and Yale. Changes in the level of student support are one of the most important reasons for that. When I said that, I was aware of meeting a good deal of resistance in the House. It felt rather like talking to a brick wall. By contrast, when some of my colleagues saw that speech, the only comment they passed upon it was a slightly bored, routine congratulation, which indicates only a desire to be courteous. They did not see that I had said anything particularly wrong. In fact I believe that they thought that practically everyone had known for years that that was true.
We have here a pretty big communication gap. I have been trying for a good many years to find a way to cross it, because if we cannot get across I do not see how we shall carry on. It tempts one on occasion to behave like Mr. Plimsoll on a memorable and not especially admirable occasion in another place slightly over a century ago. It sometimes makes one feel a little like Cassandra, but of course if one starts talking like her, one only makes the problem worse. I am constantly reminded of a former family doctor who was asked whether he made it his practice to discount half his patient's symptoms. He replied yes. That doctor, by following that practice, failed to diagnose an acute gall bladder condition for several years. Anyone here who served under Sir Anthony Eden (as he then was) may appreciate how serious that can be.
I am trying to say that something on that level of seriousness is going on now. That is not exaggeration. In my view the Committee of Vice-Chancellors and Principals and the NUS are gravely understating their case. It is a good deal worse than they say it is. The inability to get through the point that we cannot manage to keep up quality on the amount of money available is extremely frustrating. If noble Lords opposite find it difficult, it may help their imagination if they stop to think what it feels like to work in the City under Labour. They might then understand what we are talking about.
8.28 p.m.
Lord Addington: My Lords, I thank the noble Baroness and my noble friend for doing most of the hard spade work on this measure. They have done a good job of pulling apart the nuts and bolts. I shall try to explain what the action means from the undergraduate point of view. I am using a

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fast-diminishing advantage of being rather closer to that undergraduate point of view than other noble Lords. The noble Baroness will no doubt be glad to hear that I do not intend to use it much longer as I do not fed that I can.
The last safety net of the old social security system is being removed from undergraduates. It was something upon which they relied if they could not obtain jobs during the summer. The vast majority of them wanted jobs during the summer. No one likes managing on 20-something pounds a week. There is not a great deal of fun to be had anywhere on 20-something pounds a week. If one happens to be a masochist and likes eating oatmeal and being dependent upon one's parents, that is what one looks for.
Fortunately most students have parents who can support them. The parents tend to be middle-class although the trend is changing. Because they have nice houses they can usually support their children even if it is only by guaranteeing a loan. The Government said that they were trying to expand the student base — where they came from and their social background — and that we needed to increase the number of students.
However, the Government are withdrawing the provision in the regulations to allow students enough to live on, to eat and nothing more during the holidays. We are encouraging people from traditional working class backgrounds who are not used to debt, for example, to take out student loans. I gather that my not le friend Lord Russell is quite correct that students will now take out loans; they did not wish to do so previously because no one likes being in debt any more than they have to. Most undergraduates have managed to cotton on to interest payments so that the shorter the time they are in debt, the less interest they pay, even if it is only equal to the rate of inflation.
The situation is that these students will be hit far harder. Word gets round and we suddenly have a huge new pra3lem of convincing more people to go through a financially insecure period for what they regard as a risky training. They are not guaranteed any occupation at the end of it.
Through this regulation, the Government have basically removed the last safety net available to people— the hardship allowance. In addition, they are doing it before they know the results of the student loans scheme. I described student debt and student hardship as snowballing. In the first year students are in the halls of residence, they get most support from their parents. As I suggested, they receive extra spending money from their parents in their first two terms bemuse everyone is glad that little Johnny has gone to university. This is a trend, as most people would agree. Students become more of a nuisance and more expensive as years go by. The levels of grants are now and they were even in 1979 pitifully small in real terms. Students find this level of income so low that they get more into debt, they have to borrow more and everything builds up. That is why they look for jobs in the first place.
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Seeking jobs is nothing new. That is why it was so important for there to be some support in case they did not get a job. I pointed this out previously, repeating myself for the umpteenth time, but we have been asked the same question so we give the same answer. If a student is looking for a job he may not find one for the first three weeks of the 14-week vacation. He will probably have to leave the job two or three weeks early to get back to college. Thus there is a period when his ability to take a job is only for about ten weeks— a maximum of 12 weeks in the best case scenario. There are still two weeks at either end of the vacation during which students have no money coming in, and on top of which there are travelling expenses. It is worth considering that the travel allowance has been removed from English students; I am not sure about the Scots but I hope that it has not been removed.
The snowball of debt is growing. We do not know the effects of the Education (Student Loans) Act 1990, how many people will come in and what is the take-up rate. There is effectively a system which most people agree is built on a shaky foundation. It has not been given enough time for us to see whether it is working. I do not believe that it can work, but nevertheless we shall not know during the first year. People are only just starting to take out loans at this stage of the year. From previous academic years, because we have not encouraged a social spread for our students, there may still be those who are just able to get by on their parents' support. Students coming in for their first year and relying on debt will be the best off; they always will be because the majority will be in student accommodation. However, even that has been under hideous pressure at the start of this academic year. We all remember the pictures of students living in sports halls.
Thus the last safety net has been removed. My noble friend Lord Russell expressed the feeling of virtually everyone involved in this when he said that the behaviour patterns of this House were rather restrained in the amount of emotion generated.
I finish with a technical point of which I have only been able to give a little warning to the noble Baroness. If she has no specific answer at this time, I shall be quite happy if she would write to me. When we discussed disabled students being accorded special allowances, including deaf students, we were successful in bringing about one of the Government defeats during the whole of the proceedings on the student loans Bill. We also discussed dyslexic students and I remember describing how dyslexic students are in a bad situation when it comes to employment. Most types of employment available to students require literacy skills. I described how one cannot be a waiter if one cannot write accurately. Dyslexia manifests itself most strongly in the written skills and sequencing is bad. In other words, direct, accurate memory is bad.
Most of the minor clerical positions in times of full employment or close to it are available to students. I discount the diminishing number of manual jobs because the average student is not suitable for them. Of course, I had one slight advantage over some students in terms of employment. Dyslexic students

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will not be able to take up these jobs and thus they are in a bad position. The Government ultimately refused our proposals because they could not find a good enough definition of dyslexia as a disability. I wonder whether the Government have managed to come up with a good definition. This group has real disabilities and is classed as disabled for work. I have a green card which states exactly that and dyslexics are classified as disabled when they are in school. Before that government legislation, such people were counted as being disabled. For example, before the regulations came in I received an extra grant to allow me to dictate my essays to a typist so that the tutors could read them. I conclude with this question. Will there be a definition to allow dyslexics to come into the disabled category?
8.37 p.m.
Baroness David: My Lords, I add my voice in protest against the amending regulations. What the Government have done is monstrous, and it has been done in a most dishonest way. If we look at the Explanatory Note at the end of the amending regulations, as the noble Earl, Lord Russell, said, first it explains that the regulations come into force on 17th April. It seems to me dishonest not to have provided us with these regulations before that date. Seven-eighths of the explanatory note is taken up in describing proposals for the students from the former German Democratic Republic. I agree with the noble Earl that we have no objection to any of that. However, slipped into the last line is that the vacation hardship allowance has been abolished. That is a peculiar way for the Government to go back on everything they said earlier. Ample proof of that has been given by my noble friend Lady Blackstone and the noble Earl.
Students are now getting into debt in a big way. I was speaking to the noble Lord, Lord Lewis of Newnham, yesterday. He told me that he had been talking to a number of students who came from varying backgrounds. The average amount of debt that they had at the end of their first or second year was £2,000. That is a bad situation for students, and they do not like it. The thought of getting into debt will prevent some students, whom we should like to see in higher education, from doing so. No wonder the loans are taken up rather more rapidly if that is the situation; but it will not make much difference. Anyway, the loans must be repaid in the end. I hope the Minister will say that these regulations will be reconsidered. It seems to me that they are both dishonest and unfair.
8.40 p.m.
The Parliamentary Under-Secretary of State, Department of the Environment (Baroness Blatch): My Lords, the subject of our debate is the Education (Mandatory Awards) (Amendment) Regulations 1991 which came into force on 17th April 1991. These amending regulations made a number of significant changes to the arrangements for mandatory awards in England and Wales.
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First, they gave effect to the arrangements for architecture students announced in another place on 6th February. Following the redesignation of architecture courses, these regulations provide for a mandatory award this year to any eligible student who has not already received a bursary under the temporary scheme established last autumn.
Secondly, they provided for awards for certain students whose ordinary residence included periods spent in the territory of the former German Democratic Republic before its unification with the Federal German Republic. This puts those students on the same footing as students whose qualifying residence has been in the European Community. It fulfils our responsibility to our European partners.
Thirdly, the amending regulations dispensed with the allowance which has hitherto been payable, at the discretion of local education authorities, to students who in the opinion of the authority would otherwise suffer undue hardship during a vacation.
The amending regulations also made some changes of a technical nature which as they have not been referred to during the course of the debate I do not think I need detain the House by describing.
It has been on the third provision, the abolition of the vacation hardship allowance, that the debate today has centred. The essential thing is to see this change in the context of the Government's overall policy on student support. The White Paper, Top-Up Loans for Students (Cm 520, November 1988) described our intention to share the cost of student maintenance more equitably between students themselves, their parents and the taxpayer. We have since then introduced student loans and established the access funds while removing most full-time students from eligibility for income support and housing benefit. We have announced our intention to freeze the main rates of mandatory grant and to hold steady in cash terms the contribution expected from parents, as from the start of the next academic year.
In doing these various things, we have not only reshaped and improved on the previous arrangements but we have actually increased the resources available to students. In that light it can clearly be seen that the need for a separate vacation hardship allowance is no longer the same. In the current year the resources available to students from grant and loan together are 25 per cent. higher than the grant alone in 1989ߝ90. Moreover, most eligible students have yet to draw on their loan facility this year. Substantial extra resources are available to help support these students in the summer provided that they enter into a loan agreement before 31st July.
I said that the need for this allowance is no longer the same. All except a very few students hitherto have had no need of it at all. We believe that that will now apply to the minority of students whose needs may not be met entirely from grant and loan. First, we have set up the access funds to help those in particular difficulties. How and when these funds are allocated are matters for the judgment of the institutions which control them. We have made clear to institutions that

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access funds can be made available to help students in financial difficulties at any time during the academic year, including the summer vacation.
Secondly, we have taken care to protect the position of certain groups of students. The disabled, lone parents and the partners of students have retained their eligibility for housing benefits and income support. This shows that, against this background, our decision to withdraw the vacation hardship allowance is fully justified. But there are some further points that I ought to make.
The withdrawal of vacation hardship allowance in no way affects those students who have to attend their course for part of the summer vacation. For those students, there has always been the extra weeks allowance of between £33.15 and £63.15 a week depending on whether they live with their parents or study in London. It will continue to be available.
Another factor in our decision was the clear sign that there was likely to be a flood of unnecessary claims for vacation hardship allowance this summer amounting virtually to an abuse of the system. Had that happened, local education authorities would have been burdened with processing these extra claims when they were busy assessing next year's grants. They would have had to satisfy themselves that applicants were suffering undue hardship, and that other sources—
Earl Russell: My Lords, may I ask the noble Baroness to withdraw the words "an abuse of the system", or is it an abuse of the system to try to get one's pupils good degrees?
Baroness Blatch: No, my Lords. I shall not withdraw my remarks because there was an expectation of a campaign to flood the system with applications. All the historic evidence shows that the kinds of numbers of applications we were expecting to receive were not made on the basis of hardship but rather on the basis of working the system.
Baroness Blackstone: My Lords, I am sorry to interrupt the Minister. It seems to me extraordinary to use the term "abuse of the system" when that is based merely on an expectation of what will happen. It was not long a go that a Minister in another place could not even say how many students had applied for vacation hardship allowances last summer. Therefore I do not know how the Government can predict in advance that the system will be abused.
Baroness Blatch: My Lords, as regards the number of applications made last summer, I can tell the noble Baroness that it was 300. I believe the cost to the country as a whole was £50,000. As regards the speculative statements that have been made by the noble Baroness and the noble Earl, they were clearly making guestimates of sums vastly in excess of £50,000. If that had not been the case, there would be no significance to this debate.
Earl Russell: My Lords, I beg the House's pardon for intervening again but the point is of importance. Do the Government accept or do they not accept that
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undergraduates must do a substantial amount of academic work in the vacations or their standard of degree will fall?
Baroness Blatch: My Lords, it is a matter for the individual student to determine when he does his studying. Some students will study in the vacations; but it is not for me or for governments to prescribe specifically when students will study.
As I have said, local education authorities would have had to satisfy themselves that applicants were suffering undue hardship and that other sources of public support and any scope for temporary employment during the vacation had been exhausted. Given what I have said about the increased level of resources for students and the availability of access funds, it was our view that the overwhelming majority of such claims would ultimately have been rejected. We judged it right to avoid if we could the waste of time and effort which a flood of rejected claims would mean, and— importantly for students— the delays which this would have caused to next year's grant payments.
Finally, play has been made of past references made in both Houses to vacation hardship allowance, and attempts have been made to portray those references as committing the Government to retention of the allowance as some form of safety net. Such a portrayal misunderstands the context of those past statements and takes no account of the current position. The earlier references to the allowance were made simply as a matter of fact because at the time those statements were made the allowance was then available. No commitment was made— indeed, how could it have been?— to its continued retention.
I shall reply to a number of points that were made during the course of the debate. The noble Baroness, Lady Blackstone, asked why we had decided to abolish the hardship allowance. We decided to do so because we judged that it was no longer needed in the same way it had been previously. The total available student grant was increased by 25 per cent., if one includes the facility for loans. We have set up the access funds this year to help students.
Most eligible students have yet to draw on their loan facility. That suggests that many students are managing on the up-rated grant alone. The noble Earl, Lord Russell, referred to the loans take up. It is true and encouraging that the take up of loans has increased as the year wears on. But even now the take up is very much less than 100 per cent. Even though the loans are available on much more favourable terms than commercial loans, which students still seem willing to take up, the low take up hardly suggests that students are as financially disadvantaged as noble Lords opposite suggest.
As I have already said, it is open to institutions to help students during the summer vacation from their access funds, if the institutions judge that to be appropriate. We have made it clear that access funds can be made available at any time during the academic year, particularly in the summer vacation. While most full-time students are no longer eligible for income support, unemployment benefit or housing benefit during term time or the vacations, it needs to be said

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that students who are lone parents or are disabled continue to be entitled to income support and housing benefit if they meet the normal criteria for those benefits. Students' spouses will continue to be able to claim benefits in their own right or on behalf of the family unit if they meet the normal criteria. Students' entitlement to other social security benefits, for example child benefit and refunds for medical or dental charges is unaffected.
Students with dependants or other special needs can still claim the relevant supplementary allowances as part of the student grant; for example, the disabled students' allowance or the supplementary grant for extra weeks of studying during vacation. Part-time students may still be eligible for relevant social security benefits if they meet the usual criteria. I believe that these provisions, coupled with the new student support arrangements, should enable the range of these to be tackled.
The noble Baroness, Lady Blackstone, referred to the access funds. Again, I say it is true that the Department of Education and Science altered the guidance on the retention or surrender of unused access funds. But this was in response to representations from the higher education institutions themselves, and I believe that the changes were made in time for students to benefit from them if they wished to do so. The Government would, on the contrary, have been criticised if they had not introduced this greater flexibility, which was requested, and given institutions greater scope to exercise their own discretion in the interests of their own students.
The noble Lord, Lord Addington, was worried about the definition of dyslexia. For the purpose of student support, there is no definition of dyslexia. But what I can say to the noble Lord about the degree of difficulty presented to a local education authority by a student, is that there is access to specific grant which enables him either to have support in the form of technology— in other words, technological support for somebody who has particular difficulties— or even personal support. It may well be that somebody needs personal support and there are grants available. It was part of the new system that that should be so.
Finally, I should like to refer to the criticism made by the noble Baroness, Lady David. I found it extraordinary that anything should be read into the Explanatory Note. The Explanatory Note is exactly what it says. The particular changes that had to be made to accommodate the young people from eastern Europe were very complicated, very technical, and required a technical explanation. The particular change that needed to be made for archaeology students was relatively small and is only one short paragraph. On the abolition of vacation hardship, there is nothing to say other than that it was abolished, because this is an Explanatory Note about the technicality of the order itself.
These amending regulations are now in force, and most of their provisions will I am sure have been positively welcomed by those directly affected. For example, architecture students and those studying here who became members of the European
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Community when the German Democratic Republic ceased to exist, and so on. The only thing that has been missing from this debate was something to match the exaggerated quantifications of what was required for student support by all noble Lords opposite, by pledging specific funds on their behalf to spend. I have to assume that, in the absence of that, the sums that were not quantified but certainly were exaggerated by noble Lords opposite, are to be spent.
Baroness Blackstone: My Lords, I am sorry to interrupt the Minister again. Can she give me chapter and verse of what these exaggerated claims were? I simply quoted the figures that are currently.in existence so far as concerns student grants and loans.
Baroness Blatch: No, my Lords, I was referring to all the speculative statements about what would be required to give us these vast numbers of students, who hypothetically would qualify for vacation hardship allowance in very large numbers which have been mentioned by both the noble Baroness and the noble Earl. All I am saying is that I have listened very hard and long to Mr. Straw, who has not pledged these vast sums of money to meet this quantification that has been mentioned by the noble Baroness.
Baroness Blackstone: My Lords, when the noble Baroness reads the report of my speech, she will not see any quantification of either the amount required or the numbers. All I said was that I think that in the circumstances, when we have a totally new system of student loans being introduced and a freezing of mandatory grants, at least in this transitional period we ought to have maintained the existing vacation hardship allowance. I do not know how many students will apply for it, and I made no claims about the numbers. It is the Minister who has been saying that there will be an abuse of the system in very large numbers. I suspect that only those students who are destitute and in very considerable need will apply, but I do not know what the numbers are.
Baroness Blatch: My Lords, I referred to 300 students being helped at a cost of £50,000. Very much more than £50,000 has been put into the system to compensate, to cover that number of students who may have been in difficulties. I have taken it from what the noble Baroness and the noble Earl said that they are referring to many more students who might have been in difficulties.
The withdrawal of vacation hardship allowance has, naturally enough, not been welcomed in the same way, and I hope that these few words today have shown to the satisfaction of this House— though I doubt it now— that our decision was carefully considered and is soundly based. We shall of course keep under review the financial needs of students and the arrangements for meeting them. I hope that the regulations will have a safe passage through the House.
8.55 p.m.
Baroness Blackstone: My Lords, I am grateful to the Minister for what she said, but I will not pretend to be convinced or other than disappointed. I know

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that she has not denied the fact that members of this Government on repeated occasions both in this House and in another place said that they would maintain a safety net. They have not kept to that promise and that is very regrettable.
But may I go on to say that the noble Baroness argued that we must look at the situation, so far as vacation hardship allowances are concerned, in the context of the Government's overall policy on student suppont. She made a great deal of the fact that this year there has been an increase in resources or funds available of up to 25 per cent. But that is, as the noble Earl has already said, on the basis of an incredible decline in support for students over the previous 11-year period. I have already mentioned in my speech that the position of students this year will be worse, even with the advent of student loans, than it was in 1979.
I make one other point which relates to access funds. In her reply the Minister made much of the fact that higher education institutions would have discretion and they should judge what is appropriate. Of course, I welcome that and it is desirable that they should have discretion, but they want a little more than discretion. They want adequate funds to make it possible to avoid some students being in real hardship this summer. What the institutions are reporting back is that they have had to spend all the funds available to maintain students because of the abolition of social security and welfare benefits.
I am glad that the Minister said that the system will be monitored and that what happens will be examined. I have absolutely no doubt that the Government will find that there are many students suffering severe hardship this summer. I hope that in the light of that the Government will think again. I beg leave to withdraw the Motion.
Baroness Blatch: My Lords, may I intervene before the noble Baroness sits down? She said that I did not deny that reference had been made to keeping and maintaining the grant. I repeat what I said in the course of my speech. The earlier references to the allowance were made simply as a matter of fact because at that time the allowance was available. No commitment was made— indeed, how could it have been made?— to its continued retention.
Motion, by leave, withdrawn.

Animal Carcasses: Hygienic Disposal
8.59 p.m.
Baroness Masham of Ilton Baroness Masham of Ilton rose to ask Her Majesty's Government how they propose to help those who are experiencing increasing difficulty in the hygienic disposal of farm and equine animal carcasses.
The noble Baroness said: My Lords, on Wednesday, 27th March I asked a similar question, but it was a Starred Question. Unfortunately, the time allocated for Questions had run out and we were given only a measly three-and-a-half minutes. We were stopped by the Leader of the House before many of your Lordships who had travelled long distances had the opportunity to ask important questions.
I felt that this vital question of carcass disposal should be debated fully and I sincerely hope that tonight the Government will be able to give your Lordships and the country some satisfactory answers. Anxiety is growing and I have heard pleas for help from Scotland, Wales and England. I hope that the Minister will also be able to tell us about the current situation in Northern Ireland, which should not be forgotten just because it is across the water. I know that Northern Ireland has a considerable problem of dumping.
Earlier this year at the AGM of the National Pony Society, the growing problem of fallen ponies was brought up. One of the members, a pony and sheep breeder from Aberdeenshire, said that the problem must be addressed with urgency. I gave the undertaking that I would raise the matter in your Lordships' House. A few weeks ago I was telephoned by the secretary of the Highland Pony Society, which is graced by having as its patron Her Majesty the Queen. The secretary told me of the horror that old, ill or disabled ponies might be sent abroad for slaughter, suffering on the way. That might happen because of the expense of having them put down humanely at home and the problem of disposing of the carcasses. It could come about if minimum standards are eradicated in 1992. I sincerely hope that they will not be.
Many people are working hard to stop the export of live equines for slaughter, but unless we have stricter standards for export, adequate knackers and safe, hygienic disposal facilities, the future could look bleak and dangerous.
In recent years there has been a severe decline in the value of meat, bonemeal and tallow which has adversely affected the profitability of rendering. In consequence, instead of paying for abattoir and knacker waste, vendors are now making collection charges. Those charges have substantially lowered the profitability of the knackering sector. Furthermore, knackers have had to face the additional problem of falling prices for hides, meat and pet food. BSE is also a major factor. Bonemeal from specified offals from bovine carcasses cannot be used as a feed and at present is disposed of in landfill sites. Collection charges for specified offals are therefore higher— about £90 per tonne as compared with £60 per tonne for other abattoir waste. In practice, in many cases all bovine offal from knackers incurs the higher collection charge. Knackers and some hunts have had to pass on those charges in order to cover their own basic costs. Some farmers say that, if that happens, they will put a charge on the hunt for riding over their land. All those problems could not have come at a worse time for farmers.
At present government policy is to remind farmers of their legal obligation to dispose of fallen stock in a suitable manner. That is the very worrying and serious crux of the matter: an existing service is diminishing with disastrous results. Unless satisfactory and safe disposal is organised there could be a serious public health problem.
I tried to secure a debate which would be held earlier in the day because this is an important subject.

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Many people do not realise the urgency with which Britain should approach the subject. We are talking of about 5,500 tonnes of carcasses a week in the United Kingdom, not including Northern Ireland. One million animal carcasses are not going through knackeries and are shallow buried. What will happen if more knackers close down? Should not fallen stock, which is classed as high risk, be in a different section from clean offal? Is it not a separate category which should be treated differently? Surely all dirty offal should be disposed of and burnt. I who use animal feeds for animals hope that it is clean and uncontaminated. To me the idea of feeding animal to animal is distasteful. The housewife wants the assurance that all food is safe and clean.
Last year in the hot weather there was a disaster when many chickens died. I believe that about 30 tonnes of chickens were buried. Some time later a disposal expert was called to the farm because the fermenting rotten chickens had risen to the surface having made a cesspool of decomposed chicken bodies. Had someone fallen into the pit, think what a terrible end they might have had. Do we want that kind of thing happening to our lovely countryside and contaminating our water supplies? If there are millions of rotting bodies, some with living viruses, what might happen to future generations? What might happen if the viruses mutate?
This matter is very worrying to farmers and equine owners. If the improper disposal of dead animals were to constitute a statutory nuisance district councils could take action under the Public Health Act 1936, under which the penalties range up to a fine of £2,000 plus £50 a day. That is serious money.
I have been asked, and I ask the question myself: if horses do not suffer from bovine spongiform encephalopathy why the problem of getting rid of their carcasses? The reason is that there are vast numbers of fallen cattle, sheep, pigs and chickens, all of which get various infectious diseases. Compared with their numbers, the numbers of fallen horses are small so, if the knackers disappear because of the EC regulations, horse owners suffer too.
I should like to sum up the current situation. Over the past 12 to 18 months there have been immense financial pressures on the UK knacker and rendering industries and on many stock farmers. From a situation in which customers such as farmers and slaughterhouses might have been paid for waste or animal carcasses they are now being charged for removal of animal material.
A number of factors have led to this situation. There has been a marked fall in world hide and skin prices. Lack of demand for leather and skin products is claimed to be a major contributory factor. Tallow prices have fallen considerably. In 1985 the lowest recorded tallow price was £211 a tonne for grade IV material whereas today prices stand at about £130 a tonne. The use of substitute oils is being blamed for that price drop.
BSE has directly affected the UK rendering, knacker and slaughtering business. Specified offals from all cattle carcasses must be disposed of
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separately. Not only does that cost more in itself but the incidence of BSE in the UK has affected the market for all material manufactured from animal by-products.
European Community Directive 90/667/EEC was adopted at the EC Agricultural Council on 27th November 1990. It harmonises the arrangements for the processing and disposal of animal waste in the community. It designates animal waste as either high risk or low risk to human and animal health and lays down requirements for its processing and disposal. For the time being the knacker trade, which is almost unique to the United Kingdom, will be allowed to continue. However, its function is under review. What then? Can we have some assurances for the future? I hope that the Minister will give an answer.
Because of the cost of disposing of specified offals and the declining markets and prices for animal by-products, the knacker trade can no longer pay farmers for fallen stock. Indeed, the situation is becoming quite the reverse. Knackers are having to charge for their services. In many instances even that has failed to keep them in business. With a significant decline in the knacker service farmers and horse owners are being forced to look at other methods of disposal.
The first of these is the transport of live animals. Where animals are not already dead there may be a temptation to transport live animals to the slaughterhouse in order to avoid the cost and difficulty of disposal. That would be a retrograde step in terms of animal welfare, but undoubtedly some farmers may see it as their only option.
The second option is burning. Some farmers have set up on-farm incinerators or have the use of local incineration facilities. At present only pig units can justify the expense of installing on-farm incinerators. Even so, they are often less than satisfactory. Few public incineration plants exist in the United Kingdom which farmers can use, so that also is not a practical option in many cases. Where slaughterhouses and knackers have applied to build incineration facilities plans have usually been strongly opposed by local residents. Good planning is needed.
The third option is burying. In the past many farms always disposed of stock in this way, particularly in the more remote areas. However, an escalation in the number of dead-pits and the potential to contaminate water courses is cause for concern. Responsible farmers seek advice from river authorities often only to be told that they cannot bury carcasses on their land. In the case of larger animals such as horses or cattle it may be very difficult to bury a complete carcass.
The fourth option for disposal is collection by renderers. That would seem a sensible solution. However, at the moment renderers are geared up to collect material from central points where there is a continued, steady supply— for example, from slaughterhouses. Few companies would be prepared to set up a farm-to-farm collection service. I should like to ask the Minister whether a collection service could be exempt from VAT. That might help.
The final option is dumping. Some farmers faced with a disposal problem will dump the carcasses of dead animals off their land. That is an irresponsible attitude. However, when ear tags are removed it may be difficult, if not impossible, to trace the culprit. It may be possible for farmers to take small animals such as pigs and sheep to household waste sites with the agreement of the local authority but there are very good public health reasons why that should not be encouraged. Can the Minister say who is responsible for a dumped animal on somebody else's land?
There is a need for government to assist in co-ordinating disposal facilities throughout the UK. The best solution seems to be either through a network of incineration facilities and/or by establishing a contracted collection service. In addition, sound advice needs to be available to farmers and equine owners wishing to bury or burn carcasses on their own farms. Advice and facilities need to be forthcoming for people who do not have their own land. They may rent a field and the animal in it— for example, a horse— dies.
Veterinary surgeons can perform on-farm slaughter and the rendering companies can provide a collection service. However, to date it is only the knacker who, as well as being a licensed slaughterman, can take the carcass. Whoever has the task of collecting casualty stock must take on the task also of humanely destroying an animal on the farm if it has not already died. In addition, more formal training must be given to farmers and stockmen in humane destruction methods. It is not realistic to assume that the veterinary surgeons will be able to attend every single animal requiring destruction; and veterinary services are very expensive.
The ultimate aim should be to establish a regional or district system which ensures that old, sick or injured stock is destroyed as quickly and humanely as possible, and the carcasses removed and dealt with without undue delay. There will always be unfit and fallen stock. But the market for the products from these animals will rise and fall. When it is unprofitable, many individual businesses will cease to exist— generally the smaller companies. The large operators remaining might well be able to cope but their geographical location means that they may not be able to provide the local service that is needed. To leave the task of disposal of unfit and fallen stock purely to market farces would therefore seem unwise both in terms of animal welfare and public health.
The Humane Slaughter Association is developing a concept of a mobile slaughter facility— for instance, bringing the slaughterhouse to the farm when it is needed. A few basic units can be found in Northern Europe, but no facilities exist in the United Kingdom. There are also a few mobile units in the United States of America. I am told that the welfare of the animals is exceptionally good. However, the standard of hygiene would have to be improved before being acceptable in the UK.
I ask the Minister this question: what do the Government think of such units? I also ask the noble Baroness about the practicability of item 30 in a draft publication from the Secretary of State for the
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Department of the Environment and the Welsh Office, P95/3(91), entitled Guidance on Animal Carcass Incineration Processes. It reads:
"Animal carcasses should be incinerated as soon as possible after arising. Unless animal carcasses are incinerated within 12 hours of the death of the animal, they should be stored in a refrigerated storage area".
How can a hill farmer, or for that matter most average farmers or horse owners, have such facilities available?
I am told that research is being undertaken to try to neutralise the agent of the BSE virus. That is welcome news. What progress has there been? The virus seems to be complicated, taking about eight years to develop.
In an Unstarred Question debate I have no right of reply. I should like therefore to thank all noble Lords who will take part in the debate. I am sure that your Lordships' contributions will be both interesting and revealing. I hope that the noble Baroness, Lady Trumpington, will come up with some trump cards to help with positive solutions. We must find ways to enable animal owners and those people providing safe disposal of carcasses to perform their duty in a way which is viable for the animal owners, humane for the animals, safe for the environment and provides a living for the people dealing with the carcasses. Unless ways to provide those services are found, the whole matter may well go underground in more ways than one with disastrous results such as anthrax or plague for future generations. I thank noble Lords for their support.
9.20 p.m.
Lord Soulsby of Swaffham Prior: My Lords, I am grateful to the noble Baroness, Lady Masham, for bringing forward this topic for debate. The disposal of fallen animals is of considerable importance to the livestock industry and in particular to horse owners. It is an aspect of everyday life that few people realise exists. It is only when the system goes wrong or ceases to function that the wider population begins to take note and has a greater appreciation of the role of the disposal of fallen animals. The noble Baroness has clearly delineated many of the problems that occur when the system goes wrong.
The problem is causing public concern and hardship to the livestock owner. There is also a specific human health consideration to which I shall return. The issue poses many problems. First, the law is clear that the owner of the livestock is responsible for its disposal should it die or need to be destroyed. In general the knacker has dealt effectively with fallen animals. He has visited the premises and if necessary destroyed the animal and removed the carcass. Subsequently he has used the carcass in a variety of ways— for pet food, for rendering and for bonemeal subsequently to be fed to high-yielding ruminants such as cows. The carcass may also be salvaged for its hide, and the hooves used for glue and so forth.
The alternative to the knacker was the deep burial of carcasses. Although that procedure is feasible in respect of smaller animals such as sheep and small pigs, it is difficult in respect of larger ruminants such as cattle and horses. In some parts of the country it is

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almost impossible to bury an animal because of the terrain. In parts of Wales where I have been carrying out work there is approximately two centimetres of soil on top of rock and it is impossible to dig a hole to bury a sheep.
The advantage of the knacker was that some financial compensation was paid to the livestock owner as a result of the collection of the carcass. The amount depended on how valuable the carcass was for subsequent usage, whether it might be fed to pets or rendered down. There is no legal requirement for fallen animals to be handled by knackermen. Legal requirements are applied to them in respect of health regulations, especially having regard to the pollution of waterways and rivers. The National Rivers Authority has a say in deciding where animals can be buried because of the possibility of pollution. Although the knacker has no legal responsibility to collect animals he has played an important role throughout the years.
Much has changed since what appeared to be the halcyon days in respect of fallen animals. The advent of bovine spongiform encephalopathy means that meat and bonemeal in particular which derive from several sources including knackermen is banned from being used as a ruminant supplement. Hence the major profit motive in the knackeries has fallen. Consequently, some have gone out of business while others have considered it unnecessary to compensate the owner of the dead animal but instead to impose a charge for the collection or the destruction of the animal should that be necessary on humane grounds. Indeed, even official slaughter houses now levy a charge for the disposal of some offal, amounting, as the noble Baroness said, to about £90 per tonne. That is an entirely different situation to what pertained two or three years ago. It has caused the closure of several knackery businesses. I am informed by friends in Scotland that major closures have taken place there and that very few knackeries are operating to take fallen animals of any kind.
In my own part of the country— East Anglia— we are not too badly off. There are approximately 20 licensed knackers. However, one has closed and another is proposing to close. That has caused hardship to the many horse owners in the region. Previously, the dead horse was sent off for pet meat or was rendered down. It is now being charged for by the knackers. The cost of the destruction of a horse, its removal from the owner's premises and disposal elsewhere varies from £20 to £200 per animal. That is a considerable hardship for many of the teenage ladies who seem to be particularly keen to ride horses these days.
I am told that there are many examples of carcasses being dumped outside a knackery in the dead of night awaiting its opening in the morning. Even worse, live animals are tethered outside waiting to be destroyed. Their ear tags or system of identification have often been removed. Clearly, that sort of animal welfare is not to be condoned.
We must accept the legal position that the owner of an animal bears responsibility for its disposal if it dies.
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Nevertheless, there is a case for further serious consideration of how the present situation may be dealt with. The noble Baroness referred to an EC directive which proposes important provisions for further disposal of animal waste in the Community and the division of that material into high and low risk material. I understand that there is a provision whereby there will be a review of the knackery trade permitted until 31st December 1992. That is very welcome because hitherto there has been a well functioning disposal system in this country which has been the envy of many countries overseas.
I have mentioned the question of human health with respect to the disposal of fallen animals. In certain parts of the country which are densely populated by sheep— namely, central Wales and the west coast of Scotland— a disease known as human hydatid disease is a recognised health problem. It is a parasitic infection of the dog which is transmissible to sheep. I shall not bore your Lordships with further details of its lifecycle. However, the disease affects children primarily but can persist into adult life and, indeed, can be life threatening.
The lack of adequate disposal of carcasses of sheep in those parts of the country, largely for want of adequate compensation by knackers, or the inability to bury them because the terrain is too rocky is almost certain to increase the problem of hydatid disease. It provides the focus for dogs to scavenge on the hillside and become infected from the carcasses that contain the parasite.
There is every likelihood that the disease will increase in prevalence. Indeed, today I attended a medical conference where evidence was presented to indicate that that is taking place. Although I must declare a passing interest in the matter, I understand that the programme in Central Wales, which worked so well in controlling the disease, is to be terminated in September. If that is so, and if the question of fallen animals is not soon resolved, it may mean that more cases of this preventable disease will arise. One hopes not, and one hopes that further action will be taken, especially by the Welsh Office.
I return to the question of fallen animals and to the overall problem. It is one of seriousness and I hope that the debate will bring forward a positive result on how to handle it. It is a problem of specific concern to many owners of horses and livestock. And, dare I say, I hope that we are not flogging a dead horse by bringing the matter to the attention of the Minister.
9.31 p.m.
Baroness Nicol: My Lords, I congratulate the noble Baroness on her persistence in finally bringing this debate before the House. Those of us who are present understand that it is an important subject and one that must be dealt with shortly.
Both the noble Baroness and the noble Lord, Lord Soulsby, dealt in detail with the decline in the knackers' trade. Therefore I shall discard that part of my remarks. It is obvious that the new government regulations following the BSE scare and the EC

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directive 90/667 to which the noble Baroness referred, between them changed the whole scene in regard to the disposal of fallen animals.
As vice-president of the Institution of Environmental Health Officers I share the institution's concern that the present facilities and policies may not enable us to meet those very different standards being demanded. The institution is specifically concerned about I he availability of processing plants capable of meeting the requirements for high risk material. I understand that in the directive all fallen stock is regarded as high risk, including stillborn and unborn animals.
I asked a Question on an earlier occasion and the noble Baroness, Lady Trumpington, answered that there are at present 110 knackers in the United Kingdom. However, the noble Baroness did not say, and I should now like to ask, whether those are all capable of dealing with high risk material.
Baroness Trumpington: My Lords, if the noble Baroness will allow me; I wrote to her after she asked her Question in the House. I believe I gave her a full explanation.
Baroness Nicol: My Lords, the noble Baroness is mistaken. She gave me the total number but did not say how many were capable of dealing with high risk material. That is a small point which I am sure can be answered.
The other question related to whether the geographic spread was such that each farming area has access to at least one processing plant. As the noble baroness, Lady Masham, said, that is very important. I should like also to know what will happen after 1995. The noble Lord, Lord Soulsby, said 1992; my understanding was that the Government had achieved an extension to 1995 and perhaps that matter could be cleared up also.
The institution believes that if there are only small numbers of high risk processing plants, the competent authorities may come under increasing pressure to permit large-scale burial and burning. The directive allows for burial or burning on the farm when other means of disposal are not available. But there are obvious dangers if these practices become widespread especially if the work is not monitored. There is a real danger of pollution which could become a public health hazard especially if water courses are affected. I am very glad to know that the noble Lord, Lord Crickhowell, is to speak. Perhaps he will give us his views on that matter.
As the noble Lord, Lord Soulsby, said, on upland farms and other areas where the soil cover is thin, burying is not an option at all. The National Farmers Union draws attention to the fact that in most other, but not all, European countries the need for government help in disposing of fallen stock is recognised. They take action to ensure that there is a network of rendering sites available. When necessary, financial help ensures that the industry remains viable. It is in the interests of us all that our Government should look at the possibility of doing likewise. I understand that the countries which are best at this policy are Germany, France and the Netherlands.
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At a time when the farming industry is under considerable pressure it is obvious that the extra cost of disposing of fallen stock to approved centres cannot be absorbed in many cases and alternative and possibly unsafe uses will be found. Clearly, that is a problem which must be tackled. Any threat to public health is a responsibility of the Government and cannot be left to market forces. That will not do.
9.36 p.m.
Baroness Wharton: My Lords, when my noble friend Lady Masham of Eton raised this subject originally as a Starred Question, I telephoned a local knackerman who deals mostly with horses. I also telephoned a vet who uses the knackerman when he is called out to destroy a horse or other animal. Both knew that there was a difficulty within the knackering and rendering industry and that fallen animals were being dumped as a direct result of BSE. As yet there was no evidence to show that BSE, with its attendant problems, could be right there on their own doorstep. That was what they believed then.
The situation has changed. In addition to charging owners who then pay upwards of £90 a tonne for the disposal of the offal, there are also the knackerman's transport costs. Since the knacker's yard I refer to is situated in the Guildford area, it costs this particular knackerman a further £60 to ship the offal to Canterbury to renderers who are now simply acting as waste disposal agents. All the knackerman is left to sell is the meat off the bone and that to a diminishing market. In fact his business has fallen by 75 per cent.
However, without the help of the knackerman, how is the vet going to remove the carcass of a horse or other animal he has destroyed? He will now have to tell the owner that there will be a disposal charge. I am not for one moment suggesting that caring owners will refuse to pay for the removal of much-loved animals. Of course they will pay. It is invariably a question of how much. There may be those who choose a cheaper option to rid themselves of old, sick or lame horses in a live state in order to get them off the premises, possibly not knowing that the same animals could be packed into lorries and pushed through the back door to the Continent as live meat. Let us not forget that this is an all too possible situation after 1992. I am sure that your Lordships would not like to see that happen.
The other worry is the prospect of neglect meted out to those horses which graze on fields both around our cities or nearby countryside. The fields are invariably rubbish-strewn. Because these horses too have no commercial value at the end of their lives, and instead will now have to incur a substantial disposal charge, what is to stop some owners from abandoning them? Surely that raises difficulties for the animal welfare agencies. My main emphasis so far has been on the welfare of horses, but obviously the concern is for all animals which for one reason or another should be put down but instead are kept alive, possibly to find themselves pushed around the markets and accidentally into the food chain.
There is another problem which has already been referred to by my noble friend. If animals end up being dumped on waste ground, not only will they become

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a health hazard but they will now have to be removed and disposed of by the local authority, with all the ensuing costs that that involves for the community charge payer. Usually all identification marks are removed and it becomes a local authority problem and not the responsibility of the unidentified owner.
The knacker man and the vet are linked to the rendering industry. The question facing them all is how to rid themselves of fallen animals given the breakdown of the system.
I suggest that the Government consider a major increase in the number of incinerators which can take up the fallen stock. It is for these reasons that I have been in correspondence with Mr. Hoskin of Evans Universal, who has advised me that the design, construction and operation of incinerators and cremators is now covered by the Environmental Protection Act 1990, which came into effect for these products on 1st April 1991. The Secretary of State's guidance (PG 5/3/91) dealing with animal carcass processes under one tonne an hour gives guidance as to the minimum requirements for these units. Therefore incinerators complying with these requirements will be closely controlled, using the latest technology with very low emissions to atmosphere and water courses. The ash produced— approximately 5 per cent. of the original carcass weight— can be disposed to a local landfill site without any difficulty.
Anybody wishing to install an incinerator must obtain a licence from the local waste regulation authority. Before a licence is issued it must be shown that the installation proposed can meet the requirements of the Secretary of State's guidance and must also show that planning permission has been granted. This procedure is a four-way negotiation between the installer and the authorities. Six months would not be unusual.
The requirements of the local environmental health officers can usually be satisfied by the installation of the correct equipment. It is the granting of planning permission which can delay or even cancel any proposal for an incinerator installation. There is nothing new in this. I am told that many companies in the United Kingdom have installed units for the disposal of animal carcasses. However, at the risk of repeating myself, progress usually grinds to a halt due to planning permission being refused for one reason or another. These companies operate on a commercial basis and the charges vary depending on the distance a carcass has to be transported and the quantity involved. The cost would probably be in the region of £200 to £300 per tonne basis.
The latest technology incorporating environmental safeguards is available. Freezer wagons are used for the transport of offal to incinerator plants and if not disposed of straightaway, the offal is stored in a chiller room, thus eliminating all odour problems.
With Government encouragement, sensible planning policies and easier access to incineration plants for those who need them, this surely has to be the way forward.
9.43 p.m.
Lord Stanley of Alderley: My Lords, most of the problems have already been dealt with so I have only two queries. First, can my noble friend give a guide, perhaps through examples, of when a farmer has broken the law by not collecting a carcass? Merely to say, "When the carcass becomes a health or environmental risk" is not much help to the working farmer. Let us live in the real world or, perhaps I should say, very sadly, a dead one. Secondly, does my noble friend accept that unless steps are taken to bring charges back to what they were a year or so ago— probably by grants towards disposal arrangements, as mentioned by a previous speaker— carcasses will be left in the field or dumped in hedges?
I have already picked up sheep in one of my spinneys by the side of the road. It is quite useless to say that a farmer should pay £6 for the removal of a dead sheep or £50 for a dead bullock. Of course he should— he should be responsible for his stock, as my noble friend said, in death as in life. However, since purchasing that animal, the agricultural industry has been plunged into deep recession — I would say virtual bankruptcy— and the needs of wife and children should come before picking up the collection of dead sheep and bullocks.
Cannot the Government and the public realise that this is merely the tip of a horrid iceberg? This is just one small result of a bankrupt farming industry. Unless matters improve, much worse horrors will occur. In Australia today they do not bother to go out and shoot their starving sheep; they cannot afford to do so. The sheep are just left to die. I speak with deep sadness and experience as my daughter lives in Australia.
I have not minced my words. I only hope my noble friend appreciates that what is happening to farming depresses me greatly. I have been in farming all my life, and I find it desperately sad. The inability to dispose of dead animals will continue unless action is taken. It is merely a warning of much worse things to come.
9.45 p.m.
Viscount Allenby of Megiddo: My Lords, along with other speakers, I should like to say that we are most grateful to the noble Baroness, Lady Masham of Ilton, for again raising this matter in the House. A Question was asked here and in another place on 27th March and, without in any way wishing to be discourteous to the noble Baroness who will reply, I suspect that the answer today will be the same. However, I hope that the Minister can be a little more forthcoming.
We all recognise that there is a problem in the disposal of fallen farm animals. The Government are funding research into possible ways of deactivating the agent causing BSE. Moreover, success has been achieved in Brussels over the European Council directive on the disposal of animal waste, which would otherwise have seen the end of our knacker industry. I should perhaps point out at this stage that the EC

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directive only gives some extension to the present disposal system and does not safeguard it for the long-term future.
We have already heard about the number of knackermen and slaughterers that there are in this country. But it may be worth drawing attention to the pet and small animal crematoriums. I know that they are not directly relevant to the Question before the House tonight. However, I believe that they produce a very worthwhile service to the veterinary industry and to the individual person who wishes to dispose of what could be called a farm animal, a dog or something similar. Those establishments appear to be coping extremely well. They provide a very good refrigeration and transport system with which the vets to whom I have spoken are well satisfied. They do not appear to be suffering from the same economic problems which the knackermen and slaughtermen are currently facing.
As we have heard, to a large extent, the problems are brought about by BSE, coupled with the fall in the price of feed protein which has meant that there is, allegedly, no market for meat and bonemeal. However, it may be worth pointing out that both meat and bonemeal have a value as organic fertiliser as they are 7 per cent. nitrogen and 14 per cent. phosphate. The problems, coupled with the fall in demand for animal hides for glue tallol, meat for pet foods, and many other products, have led to knackermen and slaughtermen charging for collections which are not always at economic rates and also to the widespread closure of slaughter houses.
Because of those economic pressures, the knock-on effect is leading to open farm site burial, as happens in the case of foot and mouth disease and as recently happened in Northern Ireland following a major outbreak of fowl pest. However, there are farms which do not have suitable burial sites, such as pig and chicken units which have large livestock mortality rates and often a small amount of land. Other options available, as we have already heard, include landfill sites where a health hazard could occur unless there are carful safeguards. Many cases of dumping are now being reported. There was a recent report in Northern Ireland of over 100 cattle being dumped with their name tags removed from their ears. No one could identify to whom they belonged. It is becoming a major problem. Animals are being dumped at the roadside. There was a report in the West Country of animal carcasses being dumped down mineshafts, in water courses and on other farmers' land. Those are irresponsible actions. There will be repercussions. Farming and animal husbandry will receive a bad name.
Our generation is in danger of leaving burial mounds of animal carcasses and atomic waste as we take ourselves off elsewhere through the crematorium doors. It is worth drawing your Lordships' attention to the fact that it is reported in Northern Ireland that Lisburn By-Products has recently started up its own collection and rendering service. Unfortunately until now the use of that service has been limited as the charges are uneconomic. However, Mr. Jeremy
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Hanley, a junior Northern Ireland Minister, has urged farmers to use it. Presumably there must be government support, even in Northern Ireland.
As I pointed out earlier, a number of profitable by-products result from fallen animals. They could balance the financial equation and make the service more attractive to farmers and others who have to dispose of farm animals, including horses. We have to go down the road of incineration or rendering. I support the rendering solution as do other European countries. Germany, France and Holland have set up an effective and cost-efficient collection and rendering organisation. We too should do that. We should link it with the existing slaughterhouse organisation. At the same time, the Government need to maintain the economic viability of the rendering process, if necessary with financial support.
I have one question to ask the Minister. Do the Government propose to support the plan put forward by Waste Care Company of Coleshill which was reportedly discussed with the Ministry of Agriculture and the Federation of Freshmeat Wholesalers for the placing of automatic conveyer belt-fed incinerators at up to four strategic sites? Is that proposal being followed or is it dead? I welcome what the Government are doing, but there is an even greater need now to become more actively engaged in what is or could be a serious health problem in the future.
9.53 p.m.
Lord Boardman: My Lords, like other noble Lords, I am most grateful to the noble Baroness for introducing this subject. As she rightly says, it raises an important issue and one which concerns us all. I shall confine my remarks to my experience in my county of Northamptonshire. I believe the turning point on this issue was BSE. Before BSE there was a convenient system which suited all parties concerned. Apart from the supply to the knackers, the main business of collecting fallen stock fell to the local hunt — the Pytchley in my case. An arrangement was entered into between the farmers, over whose land one rode, and the hunt. The stock was promptly collected and taken to the kennels where it was dealt with. The surplus over that required by the hounds was dealt with by the hunt servants. It was sold to the rendering industry. A small profit was made by the hunt servants who declared it for tax purposes. I say that in case it is thought that that was not done.
That was a convenient arrangement. It suited the farmers. There was prompt collection, at some considerable cost to the hunt. It collected fallen sheep, bullocks and horses from all around the countryside. It was a cost that the hunt was prepared and happy to pay in order to retain the farmers' goodwill.
Then came BSE and the whole situation changed. Instead of the renderers being prepared to pay for the offal which they could collect from the kennels, they required a charge. The charge started at £20 a tonne, then very quickly, by monthly jumps, it increased to £30 a tonne, £40 a tonne and today I gather that it is about £100 a tonne. It may give some measure of the financial seriousness if I quote to the House an example in which I should declare an interest. I am

1721
chairman of the finance committee of the Pytchley hunt. On average, 10 tonnes of offal, bones and other matter have to be collected from the kennels every week. It varies, of course; during the lambing season it is considerably more and at other times it is considerably less. If there is 10 tonnes a week to be collected and if the renderers charge £100 a tonne to collect it, it does not take a skilled mathematician to work out the cost per year. Some economies can be made, but they are limited.
It has been felt essential to continue that arrangement in the interests of farmers and the environment. In the instance which I quoted, most of the farmers have voluntarily made a contribution towards the costs but there is still a heavy charge which falls upon the hunt. The hunt has been happy to bear it in the interests of the farmer, of goodwill and of the environment until a more permanent solution can be found, but it must be found quickly. If it is not, then the burden falling upon the hunt and the countryside will be quite impossible for them to continue to bear.
For that reason, I believe that the Government must consider their responsibility in the matter. If the present system of collection being operated in the part of the country to which I referred continues, the financial burden cannot continue much longer. If the system were stopped, then the alternative of burying follows, with all the consequences to which my noble friend referred and to which my noble friend Lord Crickhowell will no doubt refer. Then there could be dumping on someone else's property to which my noble friend Lord Stanley of Alderley referred. The hygiene consequences on the environment and the countryside will be grave.
The Minister, Mr. Gummer, wrote some time ago summarising the situation in a way which I must say I found not entirely satisfactory, as I told my noble friend. I believe that I am fair in saying that it suggested roughly that this was the responsibility of the farmers and that they must deal with it. If they dealt with it in any way that was not hygienic they would be prosecuted. That is fine, but how do they deal with it practically? My noble friend asked how one deals with sheep which are brought up on hillsides with three inches of soil. The noble Baroness, Lady Masham, asked how one deals with a pony which drops dead in the rented paddock at the back of the house. The consequences are much more serious than was suggested or implied in the letter from the Minister.
I hope that my noble friend will be able to give some encouragement to us. Certainly as concerns those for whom I have a small responsibility, it is our wish to try to continue to deal with the fallen stock properly for as long as we can afford to. However, that course has a limited life. Unless my noble friend is able to give an assurance that the problem will be dealt with soon, the consequences for the environment could be serious.
10 p.m.
Lord Crickhowell: My Lords, the noble Baroness, Lady Masham, has rendered a considerable service to the House by bringing this matter before us today. In what I hope is a brief speech I must say that this is a matter of considerable worry to the National Rivers Authority. Last week the board of the NRA paid a brief but instructive visit to the Seale Hayne faculty farm near Exeter. In a peculiarly graphic way that farm illustrates the changes that have confronted the livestock sector over the past 30 years, and some of the problems that face the agricultural industry. In 1960 the farm had about 256 head of livestock and eight workers. On the week we visited the farm, there were 2,133 head of livestock of one kind or another and four workers.
The matter we are discussing is a major environmental problem that requires the most careful management. The quantity of stock on the farm that was visited illustrates the scale of the problem with which we are confronted in many parts of the country. Reference has already been made to the high intensity of sheep rearing in the uplands. That is certainly the case in my part of Wales. While we have always been used to seeing the occasional dead sheep lying in streams or on the mountainside, undoubtedly the problem has increased considerably.
It is not easy for farmers to dispose of dead animals. Again Seale Hayne farm illustrates that problem all too well as the water table is only just below the surface of the bottom land. It is quite impossible to bury stock there. The high ground comprises a thin coating of soil on rock. While it may be possible to bury the occasional sheep there, one needs a pretty big and carefully prepared hole to bury cattle safely and successfully. There have been cases of animals being disposed of by streams or in hedges deep in the woods. Such cases have been mentioned in the debate today. I heard of one case of two cattle which had had their ears removed being left in a lay-by close to the main road outside Exeter.
I know that the great majority of farmers are far too responsible to follow that kind of practice. However, at almost every recent meeting of the National Farmers Union of England and Wales in every county of England and Wales, and no doubt in Scotland and Northern Ireland too, this matter has been discussed. Farmers everywhere have rightly expressed their anxiety about the problem.
Reference has been made in many speeches to the legal responsibility for removing dead animals. That is perfectly clear when the animal is identified and is still on someone's land. However, there are a number of unanswered questions in this respect. Who is responsible for removing an animal from the river bank, from the roadside, or from a field if the animal does not belong to the owner of the field? This is a matter of concern to the National Rivers Authority. We in the authority are not clear at the moment whether we are responsible for having to remove animals from the river bank or whether that is the local authority's responsibility. Who is to pay the bill for such operations?

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At the present time very real problems confront us in this regard. Noble Lords have explained why these problems have arisen and have referred to the costs involved in producing efficient incineration services and in getting stock disposed of. I do not pretend to have an immediate answer to offer to my noble friend who is to reply to the debate. I am all too conscious of the huge range of problems which flood in upon MAFF at the present time. However, my noble friend should be left in no doubt that this is an extremely serious problem. It cannot simply be left to guidelines issued to farmers who face a host of problems. The Ministry will have to give a lead in finding solutions to this problem.
10.4 p.m.
Lord Walpole: My Lords, I, too, am grateful to my noble friend Lady Masham for raising this matter and for her amazing amount of research which has made most of my speech totally irrelevant. I say that rather cynically. However, I wish to discuss the disposal of fallen farm stock in the context of East Anglia.
It is sad when a pony dies. It is also to a farmer very sad when stock dies. It is a loss. It is a sentimental loss as well as a financial one.
To take the history of the matter, we have now disposed of the knacker. He was the chap whom one used to ring up and occasionally a cheque would come back, which was always delightful. But, as your Lordships know, we are now no longer chandling tallow, we do not make glue out of the hoof and horn, the Italians do not make handbags for us to carry around, we do not paint our cottages as they do in South Norfolk and North Suffolk by mixing whitewash with blood and I thank my noble friend Lord Allenby for suggesting that perhaps at least the bonemeal could be put on our roses. As your Lordships can see, what with rendering disappearing, the problems with BSE and not recirculating flesh, the knacker has had it.
Three or four years ago, having discovered that the knacker had had it, or had had his day, and was not prepared to remove animals whether he paid us, we turned to the hunt. The hunt at that time was pleased to pick up animals, but not pay for them. But if the noble Lord, Lord Boardman, looks at his books correctly, he will find that it is better to dispose of all his problems of knackering and buy Pal meat for dogs for his hounds. It will probably be cheaper. My hounds have, unfortunately, discovered that one, so we cannot dispose of things there.
However, living on an arable farm, or a farm that probably has more acres devoted to growing crops than to growing grass, until 1992—I hope that the noble Lord, Lord Crickhowell, will forgive me for
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saying so—I am going to dig a hole in the safest possible place and bury the animals up. After that, I shall have to ask him whether I am doing it in the right place. I think that is correct. The noble Baroness will undoubtedly tell me that in 1992 I shall be in trouble because I shall be standing in my farmyard with a dead animal and before long someone will attempt to prosecute me under the 1906 Dogs Act.
As regards the size of the problem and I obtained these figures from the Ministry, so the Minister need not quote them back to me— if you run a unit of pigs of 150 sows and take the progeny onto fattening, what you are likely to lose on average is six-and-a-half tonnes of flesh to be disposed of every year. I suspect — the next newsletter on sheep has not yet come out — that the equivalent would be an 800 ewe flock of sheep.
The suggestion of the noble Baroness, Lady Wharton, of £200 to £300 per tonne for getting rid of this unwanted flesh is pushing the farmer very much indeed. Incidentally, it has been pointed out— but it must be reiterated— that in the old days the hide and offal often paid for the slaughtering of proper animals, fat animals going to market. Of course, the farmer now has the cost of slaughtering taken off the cheque which he is given for his animals.
However, having said that— which probably reiterates what has been said already— I discovered from my friendly ADAS adviser that it is possible to put in some pits. I am sure that the noble Lord, Lord Crickhowell, will not like these because they are open bottomed and have rings of concrete. You pour the animals in, you get a culture medium which you add to it and the things digest themselves away. This is cheaper than incineration. But I am extremely concerned about these pits. The obvious place to have them is well away form any water course, well away from any house, well away from any dwelling of any sort or anywhere that might be dangerous. Incidentally, I ask the Minister whether there is any grant payable on such a pit. It is not the cost of digging the pit; it is the cost of the security and of keeping people out. The Farm Inspector Dissolves might perhaps be a future Agatha Christie novel.
I have merely written down here that I shall listen with interest to the Minister's reply as to whether she would like those digestive pits to be an alternative to the much more expensive way of doing things by incineration. Perhaps she will also tell me whether she would be kind enough to pay me a grant, not specifically to dig a hole, because I have had to do that anyway, but because I have to keep people away from the hole at all costs as they would not only put their unwanted cows, cats and mothers-in-law down it, but as I do not particularly want everyone to know where it is.
10.10 p.m.
Lord Mancroft: My Lords, I too thank the noble Baroness for putting down this important Question today. It has attracted a good deal of publicity and I hope that my noble friend the Minister will bear that point in mind when she replies. The advantage of coming some way down the list of speakers is that others who are better informed than oneself and have a greater command of language can make most of one's points on one's behalf, so I have been happily casting sheets of my speech on to the other end of the Bench and it has become shorter as the debate has progressed.
However, I have a little first-hand experience of the matter. When I was 18, I worked as whipper-in to a hunt in Dorset where my duties included driving around the farms collecting carcasses, and skinning and rendering. Your Lordships' House is rightly said to have an expert on every subject that you can name and some that you cannot. Well, my Lords, I am the resident knacker. Having performed the less fragrant tasks that the job entails and as a former master of hounds, I can testify, as my noble friend Lord Boardman has already done, to the huge and vital role that the hunts fulfil be they foxhounds, staghounds, beagles, harriers or mink hounds, in collecting and rendering the carcasses from the farms and passing on the bones, skins and offal.
It is important to remind the Government that hunts do not need to perform that role. It is easier by far for hunts to feed concentrates, as they do in America— not quite the "Pal" that the noble Lord, Lord Walpole, suggested, but much less labour-intensive than the existing method. The goodwill of the farming community towards hunting, again mentioned by my noble friend Lord Boardman, is not, as some would claim, solely dependent on their continuing to pick up flesh. If that were so, the hunts would hardly be as welcome as they are in arable country where there is no livestock to collect.
However, the current situation has made many farmers more aware of the value of the service that hunts have provided at no cost and are striving to continue to provide, but the stopgap situation that currently prevails cannot continue. The hunts cannot indefinitely carry the burden of the vastly increased costs of collecting and rendering while being unable to sell on offal, and with the falling price of skins. Over the past year, the enormous increase in dead livestock coming into the kennels, caused by increasing costs of collection imposed by knackers, and the closing down of some knackers' businesses, as already mentioned, imposes too great a cost on farmers already hit, as my noble friend Lord Stanley said, by falling livestock prices, and too great a cost on the hunts.
I welcome the Government's decision to exempt the smaller incinerators from inspection and authorisation requirements, but I ask my noble friend whether the Government could facilitate in some way the granting of planning permits, which are at present so difficult to obtain, and lower the cost of licensing for the larger incinerators. The 50 kg per hour incinerators do not fit the bill.
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I am also led to believe that there is no reason why the meat and bonemeal from specified offals from bovine carcasses, currently restricted because of BSE, could not be used as fertiliser as they are rich in nitrogen. Lifting that unnecessary restriction would create a market for offal which would allow the system to flow again as it did before. The free market so beloved by the Government is currently restricted by regulation, so the long-term solution must be to allow it to work as it used to.
The Government must get to grips with the problem in the way that other European Community countries have done. Neither the farmers nor the hunts can continue indefinitely as at present. The sight of carcasses lying in the fields and on the sides of roads is unacceptable in a civilised society, apart from the health hazards. We look to the Government today for positive plans, not procrastination.
10.15 p.m.
Lord Palmer: My Lords, as so many speeches this evening have been in the same tone let us hope that by the end of this debate we shall have got the message through to the Government.
My noble friend Lady Masham of Ilion deserves the heartfelt thanks of your Lordships' House for asking this Question as the disposal of animal and equine carcasses— and we must not forget fish and fowl— is one of the most serious problems facing our countryside today.
I must declare an interest. In the first instance, I try to farm and have 240 head of cattle. Secondly, I am the landlord of a pack of foxhound kennels where kennel staff in years gone by removed 475 tonnes of animal carcasses from the countryside each year. Thirdly, like the noble Lord, Lord Mancroft— although he was a professional and I was an amateur — I have been fortunate enough to have had a thorough training in the skinning of casualty animals. So now there are two knackermen in your Lordships' House.
I have for some time been concerned as to how we deal with the problem. Having made inquiries I am appalled at how serious the problem is and how much more serious it will become. The noble Lord, Lord Stanley of Alderley, mentioned that this is the tip of the iceberg. We must cut off that tip as soon as possible.
We are talking about 195,000 tonnes of material per annum, produced by 1.4 million casualty animals. Of that tonnage 44 per cent. comes from cattle, 34 per cent. from pigs, 22 per cent. from sheep; horses and ponies account for the remaining 2 per cent. By region, Scotland, needless to say, produces the most material, accounting for 13 per cent. of the total UK tonnage.
Why, we must ask, has my noble friend raised this Question? The answer is simple. If only the solution were as easy.
Ever since Professor Lacey's outburst on the scares of BSE, the knackering and rendering industries, as many of your Lordships have mentioned, have been turned upside down and inside out causing heavy bankruptcies and huge redundancies. On average, over the past year, the industries collected 92 per cent.

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fewer sheep, 49 per cent. fewer pigs, 45 per cent. fewer older, cattle and 40 per cent. fewer calves. Within the next 12 months there may well be fewer than half the current number of knackers in business. Already there are no knackers in parts of Cumbria, Dumfriesshire, Fife and the Lothians, which creates a serious problem in itself.
Many noble Lords have mentioned the cases of animals being dumped at the side of the road. I sympathise fully with the farmers who take their dead cattle and dump them outside slaughterhouses at the dead of night. It is bad enough for a farmer to lose a cow, a calf or a sheep, but then to have to pay to have it taken away adds insult to injury.
Long gone are the days of casualty stock having any value. Ten years ago the value was as much as £20 per tonne. Many of your Lordships have mentioned charge; of £90 a tonne to have casualty stock removed today. In my part of Scotland the cost is £120 a tonne whereas this time last year we received £3 a tonne.
With beef farmers going out of business at an average: rate of over 20 per week over the past decade due to the intensely difficult farming scenario and with farm incomes at their lowest level since the war, the Government must once and for all tackle this issue with great urgency, sensitivity and care. I implore the Minister and her department to find an urgent solution to this very grave problem.
Of course, in some parts of the country burial is an option. However, in the long term do we really want 1.4 million graves littering the countryside every year? That is 14 million graves in 10 years. Burials will be well nigh impossible to police and could cause severe health problems to our already overstretched water supplies. One can also envisage carelessly dug graves which encourage rodents, foxes, disease and smell. I remind noble Lords that we are talking about 1.4 million animals each year.
As in other EC countries, in particular Germany, France and Holland, the Government must give financial help to the knackering business if we are to live in a hygienic countryside rather than in the middle of an animal burial ground.
I beg the Government to act now before it is too late and to consider running a safe and hygienic subsidised knacker service for the well-being of the nation, and to the benefit of the countryside.
10.20 p.m.
Lord Burton: My Lords, I too thank the noble Baroness, Lady Masham. She has highlighted a very substantial problem in the countryside. It is one which could become a serious environmental difficulty. I hope that my noble friend on the Front Bench will have noted that the pleas come from all parts of the country. They have come from the far north, Wales, Northern Ireland and all parts of England. I am not sure what reply she will receive from Monmouth tomorrow; I hope that it will not be adverse.
In some areas it may be fairly easy to dig large holes, but in addition to water problems and rock, there will be increasing difficulties as suitable areas fill up. What are the vets in the towns to do with animals that they have had to destroy in their surgeries? My
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noble friend Lord Mancroft applied for the job of resident knacker. Perhaps I may apply for the job of stalker, as I have some expertise in skinning and cutting up deer.
Different situations apply in different parts of the country. On a West Highland deer forest, for instance, it is better to leave any dead animal because the flesh will soon be eaten by crows, buzzards, eagles, and even badgers and foxes. The bones will be eaten by deer and cattle. That leaves trace elements on the hills. Such trace elements are being steadily leached out of the surface of the ground or removed when the carcass of every animal is taken off the hill. The calcium in the bones is of value to the deer, in particular stags which have to grow a pair of horns every year.
At the other extreme, in areas where there is heavy density of animals and people, one cannot leave dead animals lying about. Several noble Lords have said that that is being done: it is unfortunate. I am told that in the circumstances one can use anaerobic digestion. The noble Lord, Lord Walpole, spoke about disposal of animals. I am not well versed in the process. I believe that the principle is to exclude oxygen from the carcasses causing rapid breakdown of the body. In most areas, however, the best solution is undoubtedly incineration, as many noble Lords have said. The problems that arise from that method are cost and finding suitable sites. The public perception of such burning is smoke and the horrid smell which used to pervade the countryside when cattle with foot-and-mouth disease were being disposed of. That is now unnecessary. Smoke and smell can be eliminated as in modern human crematoria. The preferred fuel for those ovens is gas. The site therefore needs to be near a gas main.
One is still left with the problem of cost. By far the biggest item is the interest on the initial capital outlay for incineration. It seems scarcely necessary further to emphasise the financial state of the farming industry. Farmers should not be burdened with vast additional costs. The issue is an environmental and public health problem. It is one which could become severe. It seems not unreasonable to ask for suitable buildings and equipment to be set up by the Government and/or the European Community. Thereafter the system could be operated on a commercial basis. A proportion of the running costs could be set off by other operations making use of the surplus heat generated.
We in the Highlands have a further problem; we have many tonnes of dead farm fish. One day a Highland village was permeated by a terrible smell. The environmental health officer was called in. He discovered that a local fish hatchery was using a JCB to bury its dead fish. Unfortunately, the machine had cut into an old hole already filled with dead fish. For a time the dead fish were carted away to an old mine in Fife. However, that practice has been stopped and the fish are now disposed of in an in-fill site in central Scotland. That must be expensive in haulage costs alone and again it is unsatisfactory. The fish could well be burnt in the animal incinerators.
Perhaps I may tell a short story to illustrate the undesirability of burying dead animals. While digging forestry roads we unearthed some large and ancient

1729
bones. Naturally a halt was called. I found a large skull which no one present could identify. We thought that perhaps it was that of some prehistoric beast. The local museum was most interested in the find. However, a local vet eventually identified the skull as that of a horse which must have lain there for nearly 200 years. I ask my noble friend as a matter of urgency to ensure that something is done to remedy the problem of disposing of dead animals.
10.26 p.m.
Lord Mackie of Benshie: My Lords, obviously as I am listed to speak second to last in the debate there is nothing left for me to say! I pay tribute to the noble Baroness, Lady Masham, for introducing the subject. She has put her finger on the problem, as we expect from her. Within this House she is regarded with great liking and respect, and also with a certain amount of fear. That is good for us all.
All noble Lords who have spoken have detailed the problems caused to the industry and the great change that has taken place. I remember the days when one was able to telephone the knacker to come out and lift an animal. If it were a cow he might pay a pound or two for it. He would take the animal away and the problem would be solved. I rang a relative who has a large number of cows to ask what disposal was costing him. He said that it cost him between £3,000 and £4,000 a year to pay the knacker to take the beasts away. In respect of a reasonably sized farm the amount would be about £1,000 per year. That is an enormous charge to an industry which is in poor financial shape.
Many other factors are entering the business of disposal. There is a hysteria in the public's perception of food and farming. The most telling example is that of hormones in beef production. On the instructions of the Commission the scientific committee sat to look into the problem. Due to the pressure of public opinion the European Parliament would not wait until the committee reported before banning the use of hormones. In fact, the committee reported that the hormones were natural and should not have been harmful.
Today, such problems are widespread. We have the example of mad cow disease— BSE. That is almost the same as scrapie in sheep, which has been known in Scotland for about 200 years. The favourite food of the thrifty Scot was sheep's head broth containing the sensitive part of the animal. While many Englishman believe that the Scots are mad, that is by no means proven.
The Government must tackle such a totally unscientific attitude. I am told that the BSE virus is killed at 135 degrees centigrade, though it is not killed at boiling point, which is the norm.
Perhaps the noble Baroness will tell the House what sort of work is taking place to disprove the fables. A sensible policy should be produced which would once more, as the noble Lord, Lord Mancroft said, allow us to use some forms of bonemeal on the land as fertiliser; and, indeed, to allow the pet food industry to buy the very large quantities which they used to buy
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and feed to a large number of pets until some idiot conducted a post-mortem on a cat and found that it may have contracted some form of BSE. However, the Government bear the responsibility to see that the information is correct and to pay for the necessary research.
The noble Lord, Lord Walpole, who was extremely amusing about his mother-in-law—
Lord Walpole: My Lord, with respect, my wife is sitting below the Bar and I was not referring to my mother-in-law but my neighbor's mother-in-law
Lord Mackie of Benshie: My Lords, that was very wise of the noble Lord. The digester is an idea which ADAS is promoting. That is a fairly expensive method but is much less expensive in the long run than incineration. Perhaps the noble Baroness will tell us whether the Government are considering assistance in their construction. I understand that they must be about 15 foot deep, 3 foot wide, covered, and probably locked to prevent the insertion of mothers-in-law! That is an expensive method but the Government could promote it to help solve the problem, which may worsen.
Our anxiety has been amply demonstrated this evening and I trust that the reply will demonstrate the anxiety of the Government.
10.31 p.m.
Lord Gallacher: My Lords, at this late hour I do not propose to repeat many of the points which have already been made this evening on this Unstarred Question. They have all been well and effectively made and I hope that the noble Baroness will not believe it remiss of me if I say that she has a fairly stiff mountain to climb this evening. The fact that I do not repeat the points does not mean that on this side of the House we are not fully aware of the problem and are not sympathetic to it. It has reached dimensions at which action must be taken. That has emerged clearly from the remarks made on all sides of the House this evening.
Until the Minister speaks, we assume that Her Majesty's Government's position on this matter is still as defined in a letter from the Minister of Agriculture to a Member of Parliament in another place dated 31st January 1991. It was widely circulated at the time and the noble Baroness sent a copy of the letter to me.
That letter, which was quoted in passing by the noble Lord, Lord Boardman, took the view, as the Minister said, that disposal was a problem for the market to solve. In order to get on the record the Minister's view at that time I should like to read the paragraph in which the market solution is advocated. It states:
"This is in my view largely a problem for the market to sort out, within the framework of national and Community controls which I believe are adequate and necessary to protect the environment and human and animal health. No responsible farmer should contemplate illegal disposal in order to avoid collection charges, and I am sure that Local Authorities, whose job it is to enforce these controls, would take the same attitude. My Department has stepped up its surveillance and State Veterinary Service staff have been instructed to liaise with Local Authority Environmental Health Departments as necessary".

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We acknowledge what the Minister is doing and has done. Indeed, in that letter he goes on to detail some of the work currently undertaken by his Ministry. The question which must be answered this evening is whether that is sufficient in view of the on-going incidence of BSE and the consequential ban on specified offals for use as feed.
Her Majesty's Government's policy is to remind farmers of their legal obligations to dispose of fallen stock in a suitable manner. We acknowledge that government-funded research is going on into various aspects of the problem. No doubt the Minister will tell us something of that when she replies. The Question has also recently received attention in another place. In Questions and Answers at column 387 on 7th May there are some illuminating replies. In one Answer the Minister stated that he will not prohibit breeding from the offspring of BSE affected cattle. We hope that that is the right decision.
On the problem of disposal, the Minister acknowledged that applications have been made for planning permission for incineration plants, and requests received for national policy guidance. Does MAFF propose giving guidance to local authorities, or is it proposed to rely on the state veterinary service? As we know, incineration is preferred to burial, and my best advice is that 90 per cent. of the disposals are by incineration. But if problems remain, especially financial problems of the kind detailed in many speeches this evening, will not the incidence of burials tend to increase? That raises the question of whether or not burials, when they do take place, are safe, particularly burials of BSE infected stock. For example, is there no risk of subsequent soil contamination from the burial of BSE infected animals?
I should like to ask the Minister also whether she will say that it remains the view of MAFF's veterinary officers that the likely cause of BSE infection was and is the use of certain offals in feedstuff which is now prohibited. Does Her Majesty's Government still rule out the introduction of some kind of system to assist with the problem? We would not rule out some form of insurance for the disposal of fallen animals, certainly for as long as present emergencies and prohibitions last. It might be possible, for example, to marry a levy system with an insurance fund, to which the Ministry could make a sizeable contribution. In that way there could be an injection of money into the solution of the problem, unless of course the Minister has a better solution to offer this evening.
That the problem will not go away is certain; that it is increasing is equally certain. We on this side look forward with interest to what the Minister has to say about it.
10.37 p.m.
The Minister of State, Ministry of Agriculture, Fisheries and Food (Baroness Trumpington): My Lords, I apologise before I begin. I am suffering from the most terrible cold.
The Government are fully aware of the concerns of farmers, horse owners, slaughterhouse owners and others about the current difficulties being faced in the
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disposal of fallen animals and animal waste. This evening's debate confirms those concerns. Your Lordships have asked questions, but I have not heard many solutions offered, apart from government money.
The Minister's letter as quoted by the noble Lord, Lord Gallacher, stands its ground. Your Lordships will surely agree that it is the responsibility of all types of undertaking to find ways of handling the waste that they produce. Changes in the cost of by-product disposal is just one of the factors in the economics of the industry as a whole. The Question of the noble Baroness, Lady Masham, asks how the Government propose to help those who are having difficulty in the disposal of carcasses. "Help from the Government" is often another way of saying "money from the taxpayer". Yet it is worth remembering that the taxpayer is providing £800 million in subsidy to the livestock industry this year, up from £450 million last year.
My noble friend Lord Stanley of Alderley is not alone. I know only too well what a difficult time this is for farmers and for the livestock sector in particular. We have increased the help we are giving, and those considerable sums of public money demonstrate the Government's commitment to the livestock industry.
The noble Baroness, Lady Masham, asked whether a carcass collection service might be exempted from VAT. That would amount to a subsidy from the taxpayer for the disposal of fallen animals, and it would be no easier for the Government to accept that principle than a direct subsidy.
My noble friend Lord Soulsby set out why the problems with carcass disposal have arisen. For the record, they have arisen principally from the very depressed market for the by-products of the rendering industry and for hides and skins. The result is that knackers are having to charge farmers for the removal of fallen and casualty animals. Clearly that represents an additional cost to farmers and horse owners.
Keeping minimum values for the transportation of live horses, which the noble Baroness, Lady Masham, knows full well the Government fully support, has nothing to do with the subject that we are discussing this evening.
Baroness Masham of Ilton: My Lords, it is very worrying. If the minimum standards go and the expense of getting rid of old and infirm horses rises, then some people may send them to the Continent for slaughter. So there is some relevance.
Baroness Trumpington: My Lords, there are too many "mays" in that sentence. The noble Baroness may accuse me of taking a hard line, but horse owners too have to accept that one way or another their animals will die and that the carcasses will need to be disposed of. The knacker's services are usually available at a price. Other possibilities may be hunt kennels or incineration. A veterinary surgeon will normally be able to advise, and the local waste disposal authority will also offer guidance on safe disposal and may be able to handle the disposal itself although it will charge a reasonable price for the service.

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The knacker trade is in difficulties in this country for one simple reason. Farmers are not willing to pay the modest charges which knackers have had to impose to cover their costs. Some farmers would rather break the law than do so. It would be quite wrong for the Government to allow understandable concern about the situation to lead Ministers to take action which runs counter to their approach to the economy as a whole. The noble Baroness, Lady Masham, asked about the situation in Northern Ireland. The position there has improved markedly in recent weeks since the major renderer there re-commenced handling a wider range of offals. I welcome that change. I know that my colleagues in the Northern Ireland Office are continuing to keep a close eye on the situation.
The noble Lord, Lord Palmer, referred to what happens in other EC countries. Other countries, apart from Ireland, do not have the same knacker trade as we do. The normal arrangement is for rendering plants to take fallen animals. Some member states give a local monopoly to individual rendering plants. In a few cases, notably in Germany, there may be an element of subsidy from the taxpayer if a rendering plant makes a loss. As I have made clear already, it would not be consistent with the Government's approach to waste management for the disposal system to be subsidised here.
The noble Viscount, Lord Allenby, asked me what the Government were doing about the increasing number of cases involving the dumping of fallen animals. It is neither legal nor acceptable to dispose of animal carcasses in this way. The State Veterinary Service is monitoring the situation closely and liaising with local authorities who are responsible for enforcing controls. We expect them to use their powers fully if and when the need arises.
The noble Baroness, Lady Masham, asked me about EC regulations forcing the closure of knackeries and what assurance there was for the future. Against the opposition of most member states the United Kingdom worked hard in Community negotiations to secure the continuation of the knacker trade. It was a major success to have achieved agreement for them to continue in operation until 1995 at least. Their future after that date depends on a review within the Community. We shall continue to press hard to secure arrangements which continue to meet our needs.
Returning to the United Kingdom the charges being imposed by knackers are variable. But typically they are of the order of up to £60 for an adult cow, £7 for a sheep, and £50 for a horse. It can cost the Ministry of Agriculture up to £350 to dispose completely of a cow that has had to be slaughtered under a disease control programme, so it will be apparent that they represent only a small proportion of the actual disposal cost.
I think I am right in saying that one of the scenarios put forward by the noble Baroness, Lady Masham, concerning BSE is faulty. I am not absolutely certain that I heard her correctly. I hope she will forgive me if I have misunderstood her. BSE is a notifiable disease and dumping would be a criminal offence. As we pay
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compensation for suspect BSE cases under which the farmer receives the full market value of up to a ceiling of around £600, it is highly unlikely that any BSE animals would ever be either dumped or get into the chain.
Some noble Lords referred to complaints that in some parts of the country no knackers are left to service the farmer. Of course we might argue that it is the result of farmers choosing to use other methods of disposal that has led to some knackers closing. But looking through the advertisements which I have before me— at this stage I feel like a worn out cow — from the local farming press around the country there seem to be knackers offering their services from all the regions.
I must say a few words about the 300 or so hunts in this country which feed to hounds carcass meat from fallen animals provided to them by farmers. They too have had to pay high charges for the collection of waste from the parts they do not use. But they have borne this additional cost with fortitude and continue to provide a very substantial outlet and indeed a valuable service in disposing of fallen stock.
My noble friend Lord Boardman will be interested to know that I am pleased to report that we have been able to meet the request from hunt kennels, farmers and others that there should be an exemption from the inspection and authorisation requirements of the Environmental Protection Act for the smaller incinerators. This will reduce the installation costs to those hunt kennels and farmers contemplating purchasing small scale incineration plants.
Lord Boardman: My Lords, I am most grateful to my noble friend. The problem is that the exemption applies only to very small incinerators which are inadequate to cover the case I quoted of 10 tonnes a week.
Baroness Trumpington: My Lords, I agree with my noble friend, but he refers to a very large hunt. The smaller hunts are finding this a very useful provision. It is nice occasionally to have a kindly word from someone.
The noble Baroness, Lady Masham, asked for the Government's view on the proposal for a mobile slaughtering facility. This is unlikely to be cost effective because of the need, to protect consumers, for the whole carcass to be subjected to meat inspection. It is a better option to slaughter an animal on the farm and arrange to move it to the slaughter house under a veterinary certificate.
In answer to another question from the noble Baroness, whatever method of disposal is followed the arrangements must comply with legal requirements designed to protect the environment and avoid risks to human and animal health. It is the responsibility of local authorities to implement these requirements and my colleagues in the Ministry of Agriculture, Fisheries and Food have recently reminded them of the need to do so. The noble Baroness also asked about the responsibility for a dead animal found on one's land. The owner of the land has that responsibility and in default of taking action could also be responsible for any nuisance or pollution caused.

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My noble friend Lord Crickhowell mentioned the responsibility for the removal of animals not identified and not owned by the land owner. I say again, the land owner is responsible. If the animal is in the river, the NRA is responsible; and, if it is beside the highway, the responsibility rests with the highway authority.
Baroness Masham of Ilton: I hope that the Minister can answer the following question. If a cow or a bullock is dumped in your garden, are you responsible for it?
Baroness Trumpington: My Lords, yes you are; that is, unless there is an identification tag on it.
The noble Lord, Lord Walpole, will wish to note that the State Veterinary Service is monitoring the situation on the ground closely and, together with local authorities and water companies, is providing free advice on alternative methods of disposal which are principally burial or incineration. My noble friend Lord Crickhowell will be well aware that the Ministry has already published for consultation a draft code of good agricultural practice for the protection of water, following consultation with the National Rivers Authority. That has been available since January of this year. A final version will be available shortly to farmers.
The noble Baroness, Lady Wharton, spoke about incinerators. We are continuing to advise the planning and regulatory authorities about the importance of adequate disposal facilities and the need to take this into account, especially where planning permission is sought for animal carcass incinerators. In addition, the Planning and Compensation Bill will, when enacted, require county councils to draw up waste development plans in relation to waste disposal in their areas. That should ensure that they develop policies which take account of the place of incinerators in patterns of waste disposal.
The noble Lord, Lord Walpole, suggested that we should add to all the measures which have so far been taken by giving grants for disposal pits. Such pits may play a useful part in relation to the disposal of smaller carcasses. Indeed, many livestock producers already have them. But grants could only be considered for such pits if farmers' representatives accepted that it would be at the expense of the resources available for the existing farm waste grant schemes. That is something to think about before one starts on that line.
My noble friend Lord Soulsby and the noble Baroness, Lady Nicol, asked about high-risk waste. As I said, I wrote to the noble Baroness on the matter. I shall virtually quote from my letter to her. The position is as follows: Under the EC directive on the disposal and processing of animal waste which was adopted in November 1990, animal waste is either designated as high or low-risk waste. The definition of high-risk waste in the directive includes material coming from fallen animals, although we argued in Brussels that it ought to be classified as low-risk waste since our "notifiable" disease arrangement would have detected seriously diseased animals.
The directive stipulates that high-risk material must be sent to a rendering plant which is approved to
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handle such material or that can be disposed of by burning or burial under certain conditions. In this country, animals which are slaughtered because of serious notifiable disease are incinerated or buried. A derogation also allows member states to permit the use of certain high-risk material, including fallen animals, to go to knackers' yards for use after sterilisation as pet food and to go to other outlets such as hunt kennels or for feeding to zoo or circus animals. I have the letter with me. I am sorry that the noble Baroness asked the question again.
I was also asked about the threat to humans from hydatid disease from unburied sheep on hills. The cycle of disease from dog to sheep can be broken by the adequate worming of dogs— I am nervous of saying this to my distinguished noble friend Lord Soulsby— and the risk to humans can be further reduced by appropriate hygienic practices in the home such as handwashing and avoiding the licking of faces by dogs.
Baroness Nicol: My Lords, I return to the Minister's letter for which I am grateful. I have read it many times, but it still did not answer the one question that I put again tonight which was: are all the 110 knackers yards in the United Kingdom suitable for dealing with high-risk waste?
Baroness Trumpington: My Lords, the answer is yes.
Baroness Nicol: My Lords, I thank the Minister.
Baroness Trumpington: My Lords, the noble Baroness asked me whether all knackers were capable of handling high-risk material. In effect, yes, because the derogation which we secured provides for the handling of fallen animals. I hope that we have now cleared up that point.
In reply to the noble Baroness, Lady Masham, and the noble Lord, Lord Mackie of Benshie, perhaps I may say that the Government are also committed to research and development in the field of animal waste disposal and are involved in a major study, costing nearly £500,000, to determine which rendering processes may be able to destroy pathogens which affect the value of rendered products.
The livestock industry and the Meat and Livestock Commission are undertaking and commissioning studies to investigate alternative methods of disposal, including ways of minimising the costs involved. We are in close touch with the MLC on those matters and have been encouraged by the interest shown from all sides of the industry in the recent seminars held by it on that topic.
The Government have also been involved with the UK Renderers Association in considering whether there are any useful alternatives to landfilling for meat and bonemeal derived from specified bovine offal which currently has no market outlet. Clearly any such uses could help to reduce the costs of removal of that offal from slaughterhouses and knackers and the level of charges currently being imposed by renderers.
The Department of Energy is also working closely with the UK Renderers Association— this is interesting— to see whether it is feasible to use rendered meat

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and bonemeal as a fuel and energy source which, if successful, might alleviate some of the current problems. The signs are encouraging on this aspect.
In addition, if rendering businesses can come up with imaginative ideas for recycling animal waste products, grants towards investments are available from the European Community under a scheme to encourage the marketing and processing of agricultural products.
The noble Baroness, Lady Masham, asked about progress in the neutralisation of the agent causing BSE. The experiment is making good progress. Material has been prepared under a range of different rendering processes, and the process of measuring the presence of the BSE agent has begun. It is bound to be a number of years before definite results are available, but I hope not as long as the eight years mentioned by the noble Baroness.
Lastly, my noble friend Lord Mancroft asked about the use of meat and bonemeal from specified offal as a fertiliser. Small quantities of the material only are involved— some 25,000 tonnes per year— but for that to be a regular outlet it will be necessary to ensure that there is no risk that any BSE agent present would be a risk to animals using the land. The Government will need to assess carefully any possible risk on the basis of scientific advice.
While I must repeat that the responsibility for disposal of fallen animals remains that of the owners, I hope that I have made it clear that the Government fully recognise that a range of factors has combined to make the disposal of fallen animals more difficult and costly than it has been in the past. The Government are doing all they can to be as helpful as possible. In
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return, we urge all sides of the industry to increase the level of their co-operation so as to respond to this new unwelcome challenge.

Water Industry Bill [H.L.]
Reported from the Joint Committee without amendment, and recommitted to a Committee of the Whole House.
Water Resources Bill [H.L.]
Reported from the Joint Committee with amendments, and recommitted to a Committee of the Whole House; the amendments ordered to be printed.
Statutory Water Companies Bill [H.L.]
Reported from the Joint Committee without amendment, and recommitted to a Committee of the Whole House.
Land Drainage Bill [H.L.]
Reported from the Joint Committee with amendments, and recommitted to a Committee of the Whole House; the amendments ordered to be printed.

Water Consolidation (Consequential Provisions) Bill [H.L.]
Reported from the Joint Committee with amendments, and recommitted to a Committee of the Whole House; the amendments ordered to be printed.
House adjourned at one minute before eleven o'clock.