Lords Sitting of 23 May 1991

Preamble
The House met at eleven of the clock: The LORD CHANCELLOR on the Woolsack.
Prayers —Read by the Lord Bishop of Manchester.

Defence Industries: Market Conditions>
Baroness Turner of Camden Baroness Turner of Camden asked Her Majesty's Government:
In view of growing unemployment in the defence industries, what plans they have for diversification.
The Parliamentary Under-Secretary of State, Ministry of Defence (The Earl of Arran): My Lords, how companies choose to respond to changing conditions in the market for defence equipment is a matter for the companies and not the Government.
Baroness Turner of Camden: My Lords, is the Minister aware that about 760,000 civilians earn their living directly from defence work? Many of these people are highly trained but would need retraining to change to work on peaceful projects. Does the noble Earl not believe that the Government should have a role in retraining? Has he seen the document prepared by a group of unions representing their members in industry which sets out a number of recommendations on what should happen so that we do not suffer as a result of the peace dividend?
The Earl of Arran: My Lords, the noble Baroness conjectures as to what might happen. The way ahead is certainly not yet clear with regard to what redundancies might occur. As she knows, under Options for Change all these factors have been carefully considered, including how and the right time to inform industry.
Lord Mellish: My Lords, the Minister will understand that the defence industry budget cut meant certain unemployment and that can be justified on any side of the House; the less that is spent on defence, the less the need for employees. But does he agree that the Government must surely have known what was to happen and have had some idea on what to do about the staff who were made redundant, bearing, in mind especially that many of them are highly skilled?
The Earl of Arran: My Lords, the issue should be kept firmly in perspective. The defence industry is planned to reduce by 6 per cent. in real terms over the next three years. Many industries regularly face fluctuations in the course of normal trading similar to those facing the defence industry.
Lord Boyd-Carpenter: My Lords, in view of the present state of the world, will my noble friend also make sure that an adequate defence industry remains effective in this country?
The Earl of Arran: My Lords, yes. There is need to keep a careful and thoroughly explored balance.
Lord Molloy: My Lords, will the noble Earl's department take into account that many of the workers in the defence industry may now be unemployed? Is he aware that these employees are not merely specialists and skilled craftsmen but they will be extremely difficult to replace if the need should arise? Can he say whether the Government are looking carefully at the situation of those who have now lost their jobs? Does he agree that they are not merely specialists and skilled workmen but they will be extremely difficult to replace if we suddenly have to re-examine our defence industry?
The Earl of Arran: My Lords, I hear what the noble Lord says. But the Government have consistently made clear that it is for senior management, directors and shareholders of the defence contractors to decide their future. After information from and consultation with the Ministry of Defence, the matter lies in their hands.
The Lord Bishop of Manchester: My Lords, is the Minister's reply sufficient on such a vital matter for the UK economy? Is it correct to say that between a quarter and one-third of British engineers and scientists are employed in the defence industry and that it absorbs about a quarter of all research and development funds? If the noble Earl agrees that that is true, does he not also agree that it is much too important a matter of policy simply to he left to the market in this way?
The Earl of Arran: My Lords, I repeat that it is the Government's opinion that the decisions to be made on the way ahead for defence contractors are for the individual companies. As regards research and development, it is not our policy to achieve a gradual reduction in the real level of spending on defence R&D so that it does not absorb a disproportionate share of available technical resources.
Lord Dean of Beswick: My Lords, does the noble Earl agree that it would now be prudent for the Government to re-examine their policy on the purchase of defence equipment from overseas? Does he accept that the Government should pursue an unadulterated policy of buying British, bearing in mind that the future of our supplies will be more secure if we do that rather than shopping throughout the world?
The Earl of Arran: My Lords, the first requirement is value for money, as the noble Lord well knows. I do not know whether he is aware that by far the major part of the procurement of British arms comes from United Kingdom manufacturers.
Lord Williams of Elvel: My Lords, is the noble Earl aware that there seems to be considerably less flexibility on his part than there was when we last discussed this matter? Does he recall that when the issue was last discussed at Question Time he announced that there was to be a trip by someone from what is called the Department of Trade and Industry—which as far as I know still exists—

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designed to encourage companies to diversify when Options for Change brought about defence reductions? Can he say what happened to that expedition?
The Earl of Arran: My Lords, I am not certain what happened about the expedition except that each side made its views known. I am happy to say that the Department of Trade and Industry still exists and will continue to do so for the foreseeable future.
Baroness Turner of Camden: My Lords, has the noble Earl taken into account the submissions from the unions, which have done a great deal of work on this issue and which are gravely concerned about the future of their members?
The Earl of Arran: My Lords, I believe that I have made clear that the Government regularly consult and inform defence contractors. It is for them to pass on the message to their unions.
Baroness Strange: My Lords, can my noble friend the Minister assure the House that before cuts are made in the defence budget the armouries and the arms which were used in the Gulf war will be replenished to their former state?
The Earl of Arran: My Lords, that is slightly off the mark of the Question. Certainly that kind of thing is being taken into consideration in the investigation into the operation in the Gulf.

Cambodia
11.13 a.m.
Baroness Ewart-Biggs Baroness Ewart-Biggs asked Her Majesty's Government:
What steps they are taking to promote a negotiated settlement of the conflict in Cambodia, and what progress has been made in the peace process.
The Minister of State, Foreign and Commonwealth Office (The Earl of Caithness): My Lords, we remain actively engaged in promoting the Cambodian peace process, both as a member of the UN Security Council and on a bilateral basis.
Baroness Ewart-Biggs: My Lords, I am grateful to the Minister for that Answer, although it did not contain a great deal of new information. Can he tell the House what subjects are being discussed by the officials from the ODA and the Foreign Office who are at present visiting Cambodia? Have they met members of the Cambodian Government and did the subjects discussed include the resumption of bilateral aid between the United Kingdom and Cambodia? In view of the fact that an estimated 300 amputations per month are caused by mine explosions, can the Minister say why the ODA has withheld support to the Cambodia Trust, which has been set up in Oxford and which is trying to ship artificial limbs out to Cambodia? Is that not the best humanitarian aid that Britain could offer?
The Earl of Caithness: My Lords, the noble Baroness rightly draws attention to the two British officials who are currently in Cambodia. That is but one of our bilateral contacts taking forward the peace process. They will be meeting senior Cambodian officials and will be urging the regime to respond constructively to the peace proposals now on the table. They will also be looking at the work of British NGOs in Cambodia.
I was slightly puzzled when the noble Baroness said that we should give aid to—Cambodia I think "reinstate" was the word she used. Since 1988–89 £2.25 million has either been spent on or committed to humanitarian assistance inside Cambodia; and £15 million has been spent since 1979 on humanitarian assistance for non-communist camps along the Thai-Cambodia border.

NHS Trusts
11.16 a.m.
Lord Dean of Beswick Lord Dean of Beswick asked Her Majesty's Government:
What guidelines they have issued to the newly formed self-governing hospital trusts regarding the treatment and admission of patients.
The Parliamentary Under-Secretary of State, Department of Health (Baroness Hooper): My Lords, National Health Service trusts are bound by the provisions of the National Health Service and Community Care Act 1990 and other statutory requirements. We have issued general guidance to all units within the National Health Service, both self-governing and directly managed, on the operation of the new contract-based system; and specific guidance to trusts has been issued under the title NHS Trusts: A Working Guide, copies of which are available in the Library.
Lord Dean of Beswick: My Lords, is the Minister aware that I have a letter in my possession which was circulated by the newly formed Christie Hospital Health Service Trust to district health authorities in its area suggesting that a ward which has been closed could be re-opened if district health authorities each make a financial contribution? The letter from Mr. Fry, the chief executive, contains the following short paragraph:
"Our aim is to secure the necessary funding from all of our purchasing authorities. In the event of authorities choosing not to contract with us for this even better level of service then the additional facilities will not be available to residents of that district".
Is it the intention of the Government that health trusts should behave in that manner? If the Government do not support that will they give them a categoric instruction to cease this type of practice, which in fact is an immediate introduction of a double tier health system?
Baroness Hooper: My Lords, the object of creating national health trusts was to allow flexibility for innovative and forward-thinking arrangements in the provision of health care for the benefit of patients at large. We want to see the purchasers of care learning

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from each other so that the benefits are spread to all patients as soon as possible. We want every opportunity to be taken to level up the provision of health care and we want to see all the available facilities used. If the noble Lord prefers certain facilities not to be used, then he presumably would go ahead and ban those opportunities.
Lord Dean of Beswick: My Lords, can we take it therefore that the Minister and the Government are totally in support of this disgraceful practice which will operate against the largest sections of the community attending that hospital for treatment? Is she standing by that practice?
Bareness Hooper: My Lords, we do not consider it disgraceful practice.
Lord Boyd-Carpenter: My Lords, can my noble friend say why the Opposition appear to have such an enormous prejudice against self-governing hospital trusts, unless it is a love of bureaucracy for its own sake?
Baroness Hooper: No, my Lords, I cannot explain why the Opposition wish to see these opportunities for improving the services to patient care going ahead.
Lord Molloy: My Lords, is the noble Baroness aware that one of the reasons we are apprehensive—and this is shared by nearly every sector of the medical profession—is that people could live in an area of a particular trust where the trust is not wealthy enough or cannot get the money to send patients for specialist treatment. Large numbers of the medical profession all over the country are of the opinion that that is a fundamental break from the principles that were created when the NHS was first formed.
Baroness Hooper: My Lords, a great many people in the medical profession are involved in the trusts; a great many people in the medical profession are enthusiastic about the opportunities that the trusts afford. If noble Lords want evidence, it is that there are well over 100 applications for trust status in the second wave.
Lord Mellish: My Lords, would it not be a good idea to allow the trusts a little time to settle down and do their job properly? It seems unlikely that a trust would be so foolish as not to consider the admission and treatment of patients as almost its entire priority. Without that there is no point in anything.
Baroness Hooper: My Lords, the noble Lord makes an important point. We are a mere seven weeks into the operation of the reforms. The benefits arising from this opportunity have not yet had time to be seen. We believe that the effect of the trusts will be to improve patient care.
Lord Gisborough: My Lords, can my noble friend say roughly how long it takes for a trust to start after an application has been made?
Baroness Hooper: My Lords, it is probably about a year. The formal applications so far received for trust
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status to start in April 1992 are already being considered. The decision will probably be made towards the end of this year.
Baroness Hollis of Heigham: My Lords, will the Minister confirm that no trust will be able to opt out of providing essential services such as geriatric care or mental health care without the express consent of the district health authority?
Baroness Hooper: My Lords, there is a good deal of misunderstanding about the way the reforms are operating. It is the duty of the district to provide for the health care needs of its population. The district will therefore contract with National Health Service trusts and other units. It is the duty of the trust to perform the contract that it has agreed with the district.
Lord Carter: My Lords, can the Minister confirm that there is no limit on the number of private beds in an opted out hospital whereas there is a 10 per cent. limit in directly managed hospitals? Why is there a distinction? Would the Government intervene if an opted out hospital decided to take more than 10 per cent. of private patients, particularly if the decision resulted from taking in private patients from overseas?
Baroness Hooper: My Lords, what is important is that National Health Service trusts should perform the contracts that they have entered into with district health authorities and GP fund holders. They will have to fulfil the terms of the contracts. If over and above the terms of those contracts to meet the health needs of the district they have spare capacity, there is no reason why they should not use that to earn income which will benefit general patient services. I refer the noble Lord to Section 5(9) and the relevant annexes of the National Health Service and Community Care Act 1990 which makes specific provision for safeguards in this area.
Lord Carter: My Lords, I should be grateful if the Minister could answer the first part of my question. Why is there no limit on private patients in opted out hospitals but a 10 per cent. limit in directly managed hospitals?
Baroness Hooper: My Lords, the system of contracting will ensure that National Health Service trusts provide the amount of care that is required by the district to fulfil its needs. Therefore there is no reason to specify a particular amount. It would be ridiculous to do so.
Lord Skelmersdale: My Lords, is it not a fact that self-governing hospital trusts are the same hospitals with the same patients, paid for with the same money and treated by the same doctors and nurses? How then can they be described as having opted out of the National Health Service?
Baroness Hooper: My Lords, my noble friend is perfectly correct. No one is talking about them opting out of the National Health Service except people like noble Lords on the Opposition Benches who clearly misunderstand the reforms.
Baroness Nicol: My Lords, when the noble Baroness agreed a short time ago that it was wise to allow the trusts to settle down to see how they worked out, did she mean that the Government will not accept or declare any more trusts until we have seen how the existing ones have worked out?
Baroness Hooper: No, my Lords. We have always said—we put forward the same arguments during the passage of the Bill through this House—that we would expect to see second wave and third wave trusts coming forward in subsequent years. We shall nevertheless have the experience of the first wave of trusts, which, as was made clear in the debate the other day, have been very successful so far in their first seven weeks. In introducing new and important services for patients, we shall have that experience to build on in making arrangements for the second wave of trusts.
Lord McColl of Dulwich: My Lords, does my noble friend agree that the ability of the Secretary of State to sack the chairman of a self-governing hospital is a clear indication that in no way can the self-governing hospitals be described as opting out of the NHS?
Baroness Hooper: My Lords, my noble friend is correct. I refer again to Part II of Schedule 2 to the 1990 Act which specifies that power among a number of other very important safeguards for the running of these publicly funded National Health Service units.
Lord Molloy: My Lords, if, as the Minister and her noble friend have said, there is so little difference between the new system and the system as it was before, why are the Government bothering with this change and causing such grave apprehension throughout the nation?
Baroness Hooper: My Lords, we are seeking a more efficient use of public funds in the National Health Service. We believe that the trusts, like the GP fund-holding initiatives, will be front runners in showing us the way forward. They have proved so far that that is the case.
Lord Sefton of Garston: My Lords, I should like the Minister to clear up the anxieties of some people who are not experts in this field. Assuming that contracts are entered into between the trusts and district health authorities, what control will the NHS or the districts have over the activities of the trusts? Will she put that information in the Library? Is there any direct control over the trusts apart from the power to sack the chairman of the body or to dissolve the trust? Does the NHS have any control over their activities?
Baroness Hooper: My Lords, compliance with guidance or directions given by circular or otherwise to health authorities or particular descriptions of health authorities is one of the conditions of being a National Health Service trust which is specified in the schedule to the Act to which I have previously referred. Furthermore, the contracts, which are the documents of most interest to patients in terms of the patient care that they expect to receive, are public documents and are published. They are certainly available in the districts. If the noble Lord cares to
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investigate the contract in a district, he may do so. In addition, an annual report is required to be published by every National Health Service trust. It has to be presented at a public meeting. There is ample opportunity for members of the public to know what is going on in the trusts. The Secretary of State, as for any other unit in the National Health Service, has ultimate responsibility to Parliament for the running of the National Health Service, including National Health Service trusts.
Lord Mellish: My Lords, in order to get the record straight, is the Minister aware that for 37 years I was associated with Bermondsey? I come through there every day of my life and I know what goes on. There is no demonstration against the decision of Guy's Hospital. It is a beloved hospital.
Baroness Hooper: My Lords, I believe that that goes for most of the National Health Service trusts. I thank the noble Lord.
Lord Dean of Beswick: My Lords, if the Government are so concerned about the interests of the patients or the consumers, can the Minister say why it is that the community health councils, which were established to protect such interests, do not have automatic access to National Health Service trust hospitals as is the case with the hospitals under the district health authorities? What is the difference? Further, is that not a diminution in the protection for patients?
Baroness Hooper: My Lords, in view of all the public documents that are available to the CHCs as well as to every member of the public, I believe that there is quite adequate access.
Lord Sefton of Garston: My Lords, I ask again: if in fact the NHS is not satisfied with a contract drawn up between a district health authority and a trust, what effective control do the Government have to insist that it is changed, short of sacking the chairman or dissolving the trust?
Baroness Hooper: My Lords, if the Secretary of State finds that a district health authority has not entered into an adequate contract or that the contract has not been performed adequately, he has powers to remonstrate with the district health authority and. therefore, impact on the operations of the National Health Service trust.
Lord Sefton of Garston: My Lords, that answer is not clear enough. I am not talking about the control that the NHS has over a district health authority. The specific question was: what sanction or control do the Government have over a trust, short of sacking the chairman or dissolving the trust?
Baroness Hooper: My Lords, the Secretary of State has exactly the same powers over National Health Service trusts as he has ultimately over any other unit in the service.
Lord Sefton of Garston: My Lords, I take that to mean that the Government can in fact impose a different contract on the trusts. Is that correct?
Baroness Hooper: No, my Lords.
Lord Sefton of Garston: My Lords, that is not very effective control, is it?

The Science Budget 1991–92: Select Committee Report
11.32 a.m.
Lord Flowers Lord Flowers rose to move, That this House takes note of the Report of the Select Committee on Science and Technology on Science Budget 1991–92 (3rd Report, 1990–91, HL Paper 37).
The noble Lord said: My Lords, today we are debating three reports of the Select Committee on Science and Technology. Two of them represent work mostly carried out last year. The third was produced in record time, thanks to high technology, earlier this year. A common thread unites them.
The noble and gallant Lord, Lord Carver, will introduce the report of his sub-committee on definitions of research and development. We often have to ask whether in Britain we spend enough on R&D, and on civil R&D in particular; and how that compares with what other countries spend—because, as your Lordships' committee has pointed out many times, international comparison is the most useful indicator of whether the spending level is about right. But before such comparisons can reliably be made, one first has to set up appropriate definitions that everybody both here and abroad will abide by. The report is important in the present context because it shows that in this country we spend less on R&D than is often stated to be the case.
The noble and gallant Lord, Lord Carver, will also present his sub-committee's report on how the United Kingdom responds to proposals for new international scientific programmes. That report is important in the present context because, as certain kinds of science get more expensive, international collaboration—often desirable in its own right, to be sure—becomes the only way to continue in the field when money is short. One therefore hopes that proposals for international programmes can be dealt with quickly and fairly. We found teat appropriate procedures exist for considering most kinds of collaboration, but they should work better than they sometimes do. As we shall see presently, however, international collaboration has one drawback, which is that it introduces a strong element of inflexibility into the affairs of the funding bodies; namely, the research councils.
The Third inquiry was chaired by me, and I shall introduce it now. It was concerned with the science budget for 1991–92. As your Lordships will readily understand, we have been methodically gearing ourselves up to examine the level of spending on basic research by bodies such as the research councils—the science budget, as it is called, to distinguish it from the total spending on R&D of which it is only a part. The precise budget for next year is something of a detail, your Lordships might think. We decided to look at it because of the shoal of anguished letters addressed to us during January and early February bewailing the
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drastic measures of retrenchment mooted by the Science and Engineering Research Council to circumvent a serious financial problem. There was talk of closing the unique Nuclear Structure Facility at Daresbury, of withdrawing from the European high flux neutron facility at Grenoble and of severely reducing the funds available for research grants and studentships in order to balance the budget.
However, it was not just the letters. In a public statement, the recently appointed chairman of the SERC, Sir Mark Richmond, did not mince matters; he thought that the settlement was "lousy". Moreover, the chairman of the Advisory Board for the Research Councils, Sir David Phillips, was reliably reported as having complained to the Secretary of State that the whole budget allocation was,
"substantially less than the sums needed to sustain the health of the UK science base".
Clearly, many believed that there was a crisis in the funding of science this year. We decided to find out to what extent this was so and how it had come about. However, while looking at the science budget, we tried to find out more about the likely effects of changes that the Government propose to make in the dual funding system; that is, the system whereby general support for research comes from the Universities Funding Council in addition to the more selective, and often more massive, support of the research councils.
That is a topic addressed by your Lordships' committee on many occasions. It is also referred to in the White Paper, which was published on Monday, but not in terms that add anything to what we already know in this particular respect, whatever the merits of that document may otherwise be. I hope that the noble Lord, Lord Dainton, will have more to say about it than I have. I shall say only that had the proposed transfer of funds from the UFC to the research councils taken place as originally intended, the resulting difficulties facing university research would have been even more severe.
Well, was there a crisis? Yes, there was; but although I shall not weary your Lordships by quoting too many figures, one first has to look at the longer-term financial envelope. Here I must thank our Clerk, Dr. Walters, our specialist adviser, Professor Roger Williams, and our special assistant, Dr. Ian Harrison, for their analytical skills and presentational flair.
The Government asserted, and we accepted, that there had been in real terms a 23 per cent. increase in the science budget in the 10 years since 1981-82. That budget is almost entirely allocated to the five research councils, of which in financial terms the SERC is easily the biggest and, it appeared, the hardest hit. It is allocated by the Secretary of State on the advice of the Advisory Board for the Research Councils.
However, the total money available for research also includes substantial amounts allocated by the Universities Funding Council specifically for the support of research under the dual funding convention. That sum has been shrinking, so that when the two allocations are added together—something that the DES apparently never does—the total increase since 1981-82 is only about 10 per cent.
Moreover, when allowance is made for the fact that the average costs of scientific research increase a little more than the overall inflation rate because of its increasing sophistication—say, 1 per cent. or 2 per cent. more—then the increase in the science budget is small or even negative over that 10-year period.
Even if that argument is rejected on the grounds that there is but one index of inflation and the Treasury deflator is its name, the Government have consistently underestimated the going rate when settling the current value of the science budget. Hence, there has been in effect a continuing squeeze for many years on the money available for scientific research, so that there is by now no fat left in the system to absorb or disguise short-term shortages unless drastic measures are taken to reduce still further the volume of research supported.
It is against that longer-term background that one has to see the allocations to the research councils this year. The DES argued that the additional money made available to the ABRC for 1991–92—£60 million in total—when appropriately massaged to allow for a variety of changing circumstances was equivalent in cash terms to an increase of 6 per cent., equal to the Treasury estimate of the rate of inflation. But much of that £60 million was not new money! It included £23 million capital expenditure that became available for general spending during this financial year. ABRC, however, had assumed that this money was in the baseline and had already committed it. When that is allowed for, this year's increase is more nearly 4.5 per cent. The precise analysis is given in the report and I shall say nothing more about it. Whether or not it is normal practice to treat baselines in that cavalier fashion, it seemed clear to us that the Treasury had pulled a fast one because the ABRC and the research councils had expected, and had been led to expect, otherwise.
When that reduced sum came to be shared out among the research councils some fared very badly. The SERC was given a cash increase for the year of just 2.9 per cent., much less than any realistic estimate of inflation. Under its former chairman, it had quite reasonably assumed that it would be treated more generously than that. Unfortunately, it had already acted on that optimistic assumption, a very unwise thing to do. I speak as a former chairman and accounting officer of that council. It should have known better than to run the risk of what in business terms would have been called bankruptcy. In effect it so committed itself to large items of expenditure from which it could not rapidly withdraw—international and other collaborative projects —that the only way it could escape a serious overspend resulting from the inflexibility of the budgetary allocations it had made was to cut the research grant and studentship budget. It cut it from £44 million to £25 million, leaving many of our most innovative young scientists with no means of support. If that is not a crisis I do not know what is. To escape from the ongoing situation, it precipitately proposed to withdraw, without adequate scientific reviews, from some of the big facilities I have mentioned.
Some indication of the gravity of the consequences for university research will be given by my noble friend Lord Porter of Luddenham, whose maiden speech we eagerly await. He is a most distinguished chemist and former president of the Royal Society. Indeed, I am tempted to describe him as "the Nobel Lord" for that is what he is. We are delighted to welcome him as a full blown Member of this House today, knowing that he intends to be a very active Member hereafter.
What has been the government reaction to this unhappy series of events? Mr. Clarke vehemently denied that there was a crisis, but he seemed not to have understood that there was really no other course open to SERC, once the position I have described had been reached, than to do what they have done. He seemed to wish to punish it by refusing to help in any way. Perhaps the officers responsible for such rash policies deserve some admonishment, but if no help is forthcoming the only real sufferers will be the disappointed research grant applicants from the universities who comprise so much of the science base of this country and who are in no way responsible for what has happened.
The SERC claims that it has been done out of £40 million which it was confident it would get. Be that as it may, we have done our sums too, and we reckon that on a conservative estimate it should be given, through the ABRC, the greater share of an extra £12 million for 1991–92, presumably from the contingency reserve. That would ameliorate somewhat the position on research grants and would enable the research councils, especially the SERC, to seek a better balance of expenditure so that difficulties of the kind which have occurred this year will not occur again. I hope the Minister who is responding for the Government today will be able to give some encouragement on that score. I hope too, that she will be able to offer some relief by way of recompense for increased VAT which, by raising the Treasury deflator from 6 per cent. to 7 per cent. amounts in effect to a further cut of £9 million.
The Minister may refer to the Written Answer that most conveniently found its way into the Commons Library early this morning. It appears to give the research councils more money. It does nothing of the kind. It merely announces the allocation for planning purposes of notional sums already agreed by government, but held back by the ABRC, for the two years following the one in which we claim that there is a crisis. At best it allows the research councils to proceed on level funding thereafter. It does nothing to reduce the crisis in their present funding.
That is almost the end of my tale but not quite. In our report we have been critical of Government and critical of SERC. But our chief concern as a Select Committee is, of course, with the health of science and technology in this country and the uses to which they are put in industry and elsewhere. At the start of my speech I said that there was a common thread uniting our three reports. It is the shortage of funds for research and development resulting from the fragmentation of responsibilities. On the one hand, the Government insist that industry should pay for what they are pleased to call "near market research". On the other, more and more voices are declaring that

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a healthy industrial performance presupposes a stronger science base. At best there is a huge gap in between that nobody wants to fund; at worst, neither side has been properly funded for years.
On 28th January, a group of us were privileged to he received by the Prime Minister, who wished to discuss our concerns about the organisation and funding of science. He said that he intended to ask the appropriate Cabinet committee to form an overview of the science and technology of the nation so that in future particular issues such as the size of the science budget can be judged in that wider context. We were impressed and delighted, but have heard no more since. Perhaps the Minister can report on the latest progress because something of the kind is sorely needed. If co-ordination cannot be made to work, the only alternative —and in my view it would be a retrograde step—may be to centralise responsibilities in a new department of science and technology. We cannot go on with the piecemeal approach any longer.
Moved, That this House takes note of the Report of the Select Committee on Science and Technology on Science Budget 1991–92 (3rd Report, 1990–91, HL Paper 37).—(Lord Flowers.)
11.48 a.m.
Lord Carver: My Lords, I have to introduce two reports. The first is Definitions of R&D and the second, International Scientific Programmes. First, I wish to express my thanks to all the members of the sub-committee which produced the reports, to those who gave evidence to us and to our specialist advisers, Professor Roger Williams for both studies and Dr. Mick Lomer for the second, and to our invaluable Clerk, Dr. Rhodri Walters.
As the noble Lord, Lord Flowers, said, a common thread runs through all three reports that we are considering today: it is the Government's policy towards and support of, or lack of support of, research and development, or to use another phrase, science and technology. Definitions of R&D, I must admit, is not an exciting title. I do not pretend that our report makes fascinating reading, but it is important. The reason why we embarked upon it was due to the concern that the Select Committee felt, and had expressed in its reports on civil R&D, that neither the Government nor industry were devoting sufficient effort t3 it. Also, Ministers had made statements which purported to show that all was well and that both the Government's and the nation's record compared well with that of our principal economic rivals in the field. The committee believed that this was not the case and that the arguments that Ministers used—of which we quote examples in the report—were distorted by including the Government's expenditure on defence R&D or what the Ministry of Defence calls R&D. That accounted for almost half the Government's R&D expenditure and was much higher as a percentage of GDP than that of Germany and Japan and slightly higher than that of France. However, the percentage of GDP that we devoted to civil R&D was significantly less than that of France, Germany and Italy, and much the same as that of
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Japan. In Japan, the effort devoted by industry to civil R&D represents a much higher percentage of GDP than in this country.
I have used the past tense because we carried out our study in 1989, working on figures related to 1987 and 1988. There have been changes since then, but not such as significantly to affect our conclusions.
If one is to use international comparisons in this field, one must try to compare like with like. That is not easy. The methods of support for R&D, both defence and civil, vary a good deal from country to country. The best means of comparison is to observe the manual produced by the Organisation for Economic Co-operation and Development, OECD, called the Frascati Manual, which I have in my hand. I believe that I am one of the few to have read it.
The first rule to observe is that everyone in the business should follow the definitions in the manual as closely as possible. We were concerned to find how few people either observed it or even seemed to know about it. It is at present being revised and we made suggestions for its improvement which we hope will be included in the new edition which is due next year.
One of our main complaints was that a large proportion, certainly more than 50 per cent. and perhaps as much as 80 per cent., of the large sum which the Ministry of Defence classified as development did not fall within the Frascati definition of experimental development as,
"incorporating an appreciable degree of novelty".
When one considers how large a slice of government expenditure on R&D that represents, your Lordships will appreciate what a degree of distortion is introduced if defence R&D is included when making international comparisons. We were glad to note that in their response, which took over nine months in gestation, the Government went some way to recognise this. They told us that work was in hand to improve the Ministry of Defence figures. We look forward to the results and hope that they will not be even longer in gestation.
The other important reason for having agreed definitions of R&D and observing them is that government policy is said to be based on giving financial support to some kinds and not to others. In theory, they accept responsibility for the support of basic research through the research councils, and, hitherto, the Universities Funding Council, and, both in their own laboratories and extra-murally, support for their own activities, such as defence, and their statutory responsibilities in other fields. They are also prepared to give encouragement, preferably on a shared basis with industry, to what has been called strategic research. The trouble is that people mean different things when they use that term. In their annual review of government R&D, the Government define it as:
"applied research in a subject area which has not yet advanced to the stage where eventual applications can be clearly specified".
That is close to the definition adopted by your Lordships' Select Committee in a previous report. However, in some fields, such as the medical field, it is used to describe the accumulation of knowledge, including data collection, as a general scientific

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background from which new ideas may spring. What is clear is that the Government believe that anything more applied than that, which they describe as "near-market" research, should be financed by those who expect to profit from it: that is industry. The result of vagueness in this area, as the noble Lord, Lord Flowers, said, is to leave a grey zone of considerable importance which is not well financed either by government or by industry.
One of our important conclusions was that although a more detailed breakdown may be useful for certain national purposes, when making international comparisons definitions should remain broad. More detailed ones have a spurious appearance of accuracy which they do not merit. Defence should be excluded and perhaps all development also. Attention should be concentrated on the effort devoted to research. The best comparison is gross expenditure on civil R&D—that is by both government and private sources—as a percentage of GDP and growth of that expenditure as a percentage of GDP. For those of your Lordships who are interested in the subject, I commend not only our report but also that produced by the Science and Engineering Research Council in July last year entitled, Research in the United Kingdom, France and West Germany: A Comparison. It came to the same gloomy conclusion as did our report. We said,
"that, as a nation, we arc investing too little in civil R&D and the situation is getting worse. Our national expenditure (particularly in the private sector) is not in line with our competitors".
The other sub-committee's report on innovation in industry had something to say about that.
I turn now to our report, International Scientific Programmes, published in February of this year, to which the Government have not yet made an official response. We embarked on this because we were told that there was general dissatisfaction about how the United Kingdom responded to proposals for international scientific programmes. We ourselves had been much concerned, when studying marine science, about the unsatisfactory situation at that time over United Kingdom participation in the ocean drilling programme. That was subsequently resolved. It was suggested to us that the procedures for considering participation in international scientific programmes and for evolving a co-ordinated response were not well known and involved serious delays. As a result the international scientific community gained the impression that although British scientists were highly regarded abroad, the Government were not interested in international scientific co-operation. Our study led us into a wider consideration of the subject than the narrow one of how, as a nation, we responded to other people's proposals.
It became clear to us that there are many different kinds of international scientific co-operation, varying from mutual co-operation between scientists working in the same field—perhaps each working from his own laboratory, requiring no bureaucratic structure to support that co-operation—to major international
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laboratories, involving considerable expense, of which CERN, the European Centre for Nuclear Research, is the most obvious example. Science in space is another.
There are also many different reasons for international co-operation. Advancement of science by exchange of ideas and experimental results is one; the need to make observations at many widely separated points of the globe or in different natural circumstances is another. That applies very much to the environmental sciences. The desirability of building up scientific expertise in other countries, particularly in the developing world, is another. Finally, the expense of creating and maintaining expensive facilities which few nations could afford on their own, such as the need to have access to space and to sources of neutrons and to study particle physics, is important.
We found ourselves classifying programmes as, first, informal and personal; secondly, formally co-ordinated, multi-centred and without funding, which does not mean that one does not need money for them—each participant finds the money from some source in his own nation—and thirdly, the same kind of programme, but with funding, where there is an international arrangement for funding. Finally, there are the large centralised programmes and facilities. We stressed the importance of the informal and personal which we saw as growing in importance as the nation's relative position in world science continued to fall. We expressed concern that the transfer of funds from the Universities Funding Council to the research councils should not result in a reduction of funds for travel, especially for young researchers.
We found no great problems with the second category in which we noted that EUREKA worked well, as indeed does the International Energy Agency. We commended the Department of Trade and Industry for the part it played in promoting EUREKA. We suggested that the research councils should expedite their machinery and procedures for responding to proposals for co-operation from our own sciences and should make the procedures more widely known.
In the third category we were inevitably much concerned with the European Framework Programme. However, we tried not to go over the ground that had already been covered by the European Communities Select Committee whose report entitled A Community Framework for Research and Development was the subject of a debate in this House on 28th January. We found the Treasury's attitude to additionality and attribution—once we had struggled to understand it—as unsatisfactory as the European Communities Select Committee did. I know that my noble friend Lord Sherfield will have more to say about that. We drew attention to the need for wider participation from the scientific community in considering proposals for that programme, and for regular evaluation of projects once they had been accepted. One cause of the attribution/additionality problem is the success that scientists in this country

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have achieved in attracting funds from the programme, to the envy of the French as we learnt when we visited Paris.
In the difficult category of large, centralised programmes and facilities, we did not support the suggestion that a new co-ordinating body was needed to consider proposals. However, we concluded that closer liaison was needed between the Cabinet Office science and technology secretariat and the Advisory Board for the Research Councils, and between the latter and chief scientists of government departments when they were significantly involved. We recommended that the Cabinet Office's document Guidelines for Future International Collaboration should be made widely known to the scientific community as a whole.
We made two observations. First, we deprecated the Government's negative attitude to hosting large scientific facilities in this country. That is a great contrast to the view taken by the French and German governments. Secondly, we noted that there is no supra- lational forum which takes a strategic overview of the development of large facilities in the context of the activities of national facilities. It could sometimes be preferable to convert a national facility into an international one rather than develop an international one from scratch. The Joint European Torus at the International Atomic Energy Authority's laboratory at Culham is a successful example of that.
Finally, I wish to make a personal observation arising from this study. I fear that we may not be thinking internationally enough in the scientific field. There is a danger in regarding the primary role of science as underpinning economic competition, whether in national terms or in making the European Community competitive with Japan and North America. That is to take too narrow a view and it will not produce the best science for the benefit of mankind. We sometimes forget that mankind includes ourselves.
12.3 p.m.
Lord Nelson of Stafford: My Lords, I am glad to speak to the three Motions which have been put forward. I shall confine my remarks to the two Motions tabled by the noble and gallant Lord, Lord Carver, about which he has just spoken. I shall frame my remarks primarily from the point of view of an industrialist but also as a member of the Select Committee of the noble and gallant Lord, Lord Carver. I had the privilege to serve on that committee and I commend the able way in which the noble and gallant Lord conducted the two inquiries. As he himself said, definitions are by nature a dull subject. I agree with him, but I must emphasise how important definitions are for all that. They are particularly important from industry's point of view.
R&D is an important factor in maintaining the competitiveness of industry, as all noble Lords will be well aware. The issues that were brought out in the reports are important and deserve the close attention of Her Majesty's Government. I shall touch briefly on one or two reasons why the two reports are so important. As the noble and gallant Lord said, definitions of R&D are often used for comparative
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purposes. There is no doubt that there was a wide divergence of view as regards the definition of R&D and as regards whether we were comparing like figures with like. Clearly we were not, and therefore there was a danger of becoming misled in using figures for comparative purposes.
I wish to pick out four reasons for the importance of this subject. First of all, there is a need for industry itself to record its R&D spend in a meaningful way so that the figures can be used in company accounts and can be studied by all interested parties. Those figures can then be used as part of our national statistics for comparative purposes on a national and international basis. Secondly, the figures are important because the DTI needs to associate the figures collected by industry with the Government's relative spend in similar fields. This would enable the DTI to take a meaningful overview of the position of this country's industries relative to those in other countries. I hope that not only will the DTI take such a meaningful overview, but that it will also use the figures for discussions with industry as regards what measures are necessary to maintain the full competitiveness of our industries in the international field. I hope that that will form part of the new activities outlined recently by the Secretary of State for Trade and Industry.
Thirdly, I wish to emphasise the point made by the noble and gallant Lord, Lord Carver, relative to the dominating position of Ministry of Defence expenditure in this field. That can be misleading if it includes a lot of expenditure which does not constitute research or development. Having worked in this industry, I am aware of the large sums of money which are spent, for example, on aero-engine testing, on flight testing and on aerospace equipment. That expenditure is extensive and it does not necessarily constitute either research or development directly. The situation must be clarified if the figures are to be meaningful.
Fourthly, it is frightfully important that our financial institutions and finance houses also take note of the figures and reconsider them in a meaningful sense so they can satisfy themselves that companies are adequately taking care of their future. The financial institutions can also give credit where credit is due to companies that are doing just that. We have received the Government's response to the report on the definitions of R&D. I, for one, welcome it as constructive and helpful. I hope that the Government will take further note of the recommendations.
I turn now to international scientific programmes. Again, I emphasise how important it is to consider these strategically and to ensure that we are taking the maximum opportunity to develop our science base through such programmes. I urge the Government to look closely at this matter for the reasons which the noble and gallant Lord, Lord Carver, mentioned.
I wish to make four points from an industrial point of view. First, participation in these programmes enables us to participate in high technology programmes which we would not otherwise be able to involve ourselves in due to the high expense involved. That should be taken very much into account. Secondly, it exposes the scientists and technicians who

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participate to high technology fields and also enables them to make contact with their peers in other countries. That can be extremely stimulating and rewarding and its value is not to be overlooked.
Thirdly, there are wide gains to be achieved from the acquisition of new technologies, new methods of measurement and instrumentation, new materials and so on, all of which will feed back into the more general field of R&D and make a very valuable contribution to our industrial research and development base.
The fourth point, which came out very clearly in our inquiry and which has already been made by the noble and gallant Lord, Lord Carver, is the opportunities represented through hosting major projects. When one hosts a major project in the country it widens exposure beyond the scientists and technicians participating directly and reaches many other scientists and technologists, giving them access to such a facility. Wider still, there are opportunities for students and others to participate and see something of the work. Hosting such projects also provides opportunities for our industrial companies to participate in the development and supply of the advanced equipment required.
It has been mentioned by the noble Lord, Lord Flowers, that government decision-making procedures in this field are very diffuse. That was brought out very clearly in relation to the question of decision-making on participation in and hosting of major projects. It seemed to be nobody's job to look at projects constructively and strategically and decide whether or not they would be worthwhile. We were left with the impression that they were judged largely on financial considerations by the Treasury. The criterion appeared to be whether they would pay on a direct financial basis rather than whether they would be worthwhile on a broad basis, taking into account the advantages that I have mentioned of participation, which can be much more important than the direct financial gain.
I hope that the Government will recognise that: we are at a disadvantage. We should face up to it, and the Government should face up to it. We are at a disadvantage in not having a Minister of science or some such arrangement to oversee science activity. I do not advocate that we should have such a Minister, but I believe that the Government should recognise the weakness of the present position and take conscious steps to ensure that the weakness is taken care of in some way which ensures that we are not at a disadvantage vis-à-vis our competitors.
I hope that the Government will take note of the recommendations. They are extremely important to our R&D effort and to industry. I commend them to your Lordships.
12.13 p.m.
Lord Shackleton: My Lords, it is with some hesitation that I take part in this debate, having recently come out of hospital and therefore not having served on the committees. However, it gives me the opportunity to pay tribute to the two chairmen who introduced the reports. I do not think that the House
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of Lords or many people outside it are aware how much work is involved in the chairmanship of such a committee. There is a prodigious quantity of paper to read. Whereas very few of the members of the committee can claim to have read all the papers, the chairman has to read them all.
These are brilliant reports and it is unfortunate that the Government have been so slow in making it possible to hold a debate. I know that the noble Lord, Lord Flowers, has views on that. If the Government had only reacted more quickly to the report on R&D we could have had a debate earlier. Each of the reports would have warranted a whole day's debate.
I echo the tribute that has been paid to the clerks, and in particular to the new clerk. However, let us also remember the original clerk who was responsible for the R&D report, Mr. Paul Hayter, who has gone on to higher things and has set an example which will be very difficult to follow. Mr. Rhodri Walters has done a very good job, as have the officials.
It is also unfortunate that this debate takes place when the Lord Privy Seal is unable to be present. Once again the noble Baroness, Lady Blatch, is landed with a tremendous chore, which I am sure she will carry out very well. She has done the same already in previous sessions of this Parliament and I am sure that she will do her best. I have received a letter of apology from the Lord Privy Seal in which he says that he greatly regrets not being able to be present on this occasion.
It is a formidable range of subjects which we have to debate today. Luckily the debate on atomic energy has been moved elsewhere, but we are still trying to carry a great deal. If it was not for the fact that this is nearly the Chief Whip's last day, I should have had something rude to say to him. However, the complaint is not so much against our people as against the Government and their indifference to the requirements of the House of Lords. I say that with good temper and I intend no reflection on anyone in this House.
The report on definitions of R&D, which we could with benefit have debated a long time ago, is a formidable one. It is worth recording—because we have had a very good introduction from the noble and gallant Lord who chaired the Committee—that the Committee recommends that the practice of quoting combined defence and civil R&D figures in the UK should generally be discontinued. Some comments on the subject have been made by ACOST. The Government could be a great deal less defensive. They go on defending a totally indefensible position on the grounds that they do not have an up-to-date estimate of what ought to be done. It is quite clear that putting defence R&D with civil R&D is greatly misleading. I am sure that my noble friend who will speak from the Front Bench will have something to say on that.
It is a very valuable report. It may not have a very exciting title Definitions of R&D—but it is a very important report. I commend noble Lords who have not had a chance to look at it at least to read the conclusion and the section on defence R&D. The problem is a very difficult one. How far the noble Baroness will be able to satisfy us I do not know, but

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I live in hope. She has satisfied us so often in the past when we did not expect to be satisfied that we still have hopes on this particular occasion.
I want to say something more about international scientific programmes. I should also like to say how very glad we are to have a past President of the Royal Society and past head of the Royal Institution in our midst. He served with great distinction in the Royal Institution and it is a wonderful thing to have him in this House. I do not believe that any committee in any country in the world has among its members such tremendous expertise as the Select Committee on Science and Technology. There are a few of us along for the ride because we are politicians and we sometimes help, but the distinction of members of the Committee is very great.
I should like to say a few words about the subject of international scientific programmes, which the noble a id gallant Lord, Lord Carver, introduced very clearly. As he explained, the committee undertook its investigation following allegations by the Royal Society that there was a procedural vacuum in the United Kingdom for assessing proposals for international programmes. We found that the United Kingdom's response to proposals did not raise such problems as to merit a radical departure, but we thought that the procedures were capable of being improved. I should like to say a few words on the aspect of the machinery of government.
In the United Kingdom, responsibility for the conduct of research and for research spending is diffused. We have no ministry of science and, in the absence of such a ministry, we look to the Cabinet Office science and technology secretariat and to the Chief Scientific Adviser. At one point during one of the meetings that I attended, we interrogated the Chief Scientist almost as if he were the Minister. He is a substitute for a Minister, and very good he is, but we should not—in any case, this is not the occasion—turn lightly away the idea of a ministry of science. It has worked exceedingly well in France, Germany and Australia, although there are criticisms even there. The subject needs to be considered. I am not totally committed to the idea of a minister for science. A great deal would depend on such a minister having the right status in the Cabinet. If he is a junior Cabinet minister, it may not be very good. The account of the meeting of some of my colleagues with the Prime Minister was encouraging and we look forward to hearing a little more, but there is no doubt that the Cabinet Office secretariat is a crucial institution in that respect.
As the noble Lord made clear, there are certain things in which the Cabinet Office does not need to be involved, such as some of the climate research programmes under the World Meteorological Office and the International Council of Scientific Unions, which rely on applications for research council funding. That might cause difficulty, often because many researchers have unrealistically high expectations of research councils' ability to respond quickly. That is a matter for potential collaborators and research councils to sort out between them, and we recommend that they do so.
The other problem that we identified was that of
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expediting UK responses to proposals for large centralised programmes and facilities such as the ocean drilling programme, the European synchrotron radiation facility or the James Clerk Maxwell telescope. Much of that decision-making involves the research councils, the ABRC, the DES and, ultimately, the Cabinet Office. Decision-making can be paralysingly slow. Sir Herman Bondi wrote to tell us how important it was to come to an early decision on the principle of such programmes. We resisted the siren voices which suggested that we should have another layer of bureaucracy, but we recommend that existing Cabinet Office machinery be made to work rather more expeditiously. There should be earlier contact between the Cabinet Office and the ABRC as soon as such proposals for collaboration are mooted, whether "top-down"—to use an extraordinary piece of language—by governments or "bottom-up" by research councils or groups of scientists.
Where proposed collaborative projects are supported by a government department rather than by a research council, the Chief Scientific Adviser should direct the department—again, I am talking about him as if he were a Minister—to take advice from the ABRC wherever a proposal might have a significant impact on financing. The Cabinet Office Guidelines for Future International Collaboration should be given a dissemination that goes wider than government departments. We thought that the Department of Education and Science might helpfully append to those guidelines practical procedural advice to a scientist wishing to advance a proposal as rapidly as possible. Perhaps the Minister who is to reply to the debate will have something to say on those matters.
The report raises other important issues, but I wanted to concentrate on the machinery aspect because it is a sensitive matter. Some of it works extraordinarily well in difficult circumstances and some does not. In this age of "steady state", which is sometimes called "shrinking state", international scientific programmes are an essential feature of the progress of our nation. The least we can do is to oil the wheels so it works rather better than it has done.
12.25 p.m.
Lord Kirkwood: My Lords, I wish to comment first on the Science and Technology Committee's Report on R&D definitions and then to say something about its report on the science budget.
As the noble and gallant Lord, Lord Carver, outlined—the noble Lord, Lord Nelson, also referred to this point—the first report has dealt with the importance, as far as possible, of obtaining accurate and consistent data; of obtaining agreed and clear definitions on what constitutes R&D and what does not; of avoiding the selective use of statistics; and of comparing like with like. It warns about the difficulties involved in classification when there are too many subdivisions of R&D. As has been mentioned, it warns particularly about including defence costs when making international comparisons because much of the expenditure in that area is not strictly R&D, according to Frascati definitions. When making comparisons with Japan and Germany, that can be

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misleading because of their small investment in defence R&D. As we have heard, the report's recommendation is that total civil R&D as a percentage of GDP should be used as an international comparitor. On that basis, it is shown from OECD statistics for 1987 that France and the US spent somewhat more than the UK, but also that Japan, Sweden and West Germany all spent about one third more than us.
The report is rightly critical of the selective use of statistics to suggest that UK investment in civil R&D is up to the level of our industrial competitors. We have recently been treated to a further example by the Secretary of State for Trade and Industry who stated that the British Government spent a higher percentage of GDP on civil R&D than Japan. That is strictly true: 0.55 per cent. for the UK as against 0.42 per cent. for Japan. I am sorry to throw figures at your Lordships, but that is the nature of the debate. However, it is only part of the truth and therefore dangerously misleading. It ignores the fact that Japanese industry invests a huge amount in civil research—four times as much as their Government—making a total of 2.8 per cent., as against our total of about 1.8 per cent. It is the total investment in civil R&D that is crucial for the health of manufacturing industry and the country, not necessarily its source.
If we wish to compare government funding alone, it would be wiser to compare with countries that have a more similar scientific and economic structure to our own. Government-funded R&D is 0.75 per cent. of GDP in Italy, 0.86 per cent. in France and as high as 0.92 per cent. in Germany, which is almost double the amount that the Government spend in this country. As I said, our figure is 0.55 per cent. Selected comparisons of statistical data chosen to make a political point, ignoring contrary data, is at best short-sighted. It is the nation which is the real loser when the facts are manipulated to conceal the truth.
Perhaps I may now turn to the report on the science budget. We have a crisis, to which the noble Lord, Lord Flowers, referred, as a result of the funding of research councils falling short of their expectations. In particular, the SERC, which is the main provider of research funds in universities, received £40 million less than anticipated, which will have dire consequences for the availability of research grants for new students this year.
The Government claim that there has been a 25 per cent. increase in real terms in the science budget since 1979. On the face of it that appears indisputable although, as shown in the science budget report, a more realistic inflation factor would provide a less healthy picture. Whatever the reason for the disastrous situation in which the research councils find themselves, whether it is the result of their own mismanagement or whether the DES is responsible in not making the situation clear enough, what needs to be stressed is that government spending on academic research in science and technology in this country is abysmally low in comparison with other nations.
The Committee of Vice-Chancellors and Principals has produced its own statistics to show that the United
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Kingdom spends 49 dollars per head of population compared with about 60 dollars in Germany, Holland, France and the United States; in other words, they pay 20 per cent. more. We should need to spend another £300 million to bring us into line with our European neighbours. I think that this places into perspective the shortfall of £40 million in the SERC budget. It shows contempt for the value of scientific research in this country.
If the Government should challenge with their own statistics the figures produced by the CVCP, I hope that they will do so in the spirit of the report of the noble and gallant Lord, Lord Carver, in making more complete comparisons of like with like. We all know that, in the hands of the unscrupulous, statistics can be made to demonstrate almost anything: lies, damned lies and statistics, as Disraeli said. But for honest truth-seeking folk such as your Lordships, taken with a pinch of healthy scepticism and some intelligent interpretation, they can be a very useful guide.
12.32 p.m.
Lord Porter of Luddenham: My Lords, in rising to address this House for the first time I should like first to thank noble Lords for the very great kindness that they have shown to me since I came here last year. In particular I should like to thank the noble Lord, Lord Shackleton, for his most gracious words about me this morning. I was hesitant to ask your Lordships' indulgence in hearing me until I had time to benefit from the great wisdom which is to be found—indeed, abounds—in this House. But being mindful of the fact that by definition a life Peer is not immortal, I shall tempt fate no longer.
Over the past months I have been privileged to serve on your Lordships' Select Committee on Science and Technology and today is something of a feast day for us as we take note of three of its recent reports. I am grateful to my noble friend Lord Flowers for his kind reference to me. I shall confine myself to a few remarks about the report on the science budget, which he summarised so clearly for us. I hope that what I say will not be controversial. I shall speak about the way in which the budget is spent rather than its absolute amount, as that is, or at least should be, a matter for scientists as much as, if not more than, politicians.
A first glance at the graphs in the report which show trends in funding over the past 13 years might indicate to noble Lords that, apart from an ominous recent downturn in the funds coming from the Universities Funding Council, support for the universities is not so bad after all. But if funds provided over this period by the Government to the research councils have stayed roughly constant in real terms, why has support for so many university research workers almost dried up? It is because only a very small proportion of those funds ever reach the university scientists who work in the basic sciences of mainstream physics, chemistry and biology.
As one of those poor research workers, perhaps I may declare a personal interest. I and my colleagues at Imperial College—a group of nine young research fellows and students—are trying to unravel the fundamental processes of photosynthesis. It is an

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important and competitive area of research and one that is moving rapidly. In order to move even more rapidly into the fast time domain of femtoseconds where the action now is, we need an instrument called a copper vapour laser. This is made in this country by Oxford lasers.
Four years ago we applied to the only funding body available to us for this purpose, the Science and Engineering Research Council. Our work had just been rated excellent for scientific merit and also cost-effectiveness and placed in category 1 by that council. Our application was unsuccessful. We resubmitted the application four times over the next three years. In one case the reason for rejection was given; it was on the grounds that—to quote the letter:
"it is not the Committee's policy to provide lasers directly to academic groups, but rather to encourage the provision of lasers at the Rutherford Appleton Laboratory".
That is an in-house establishment of the SERC. Our other applications were rated alpha but unfunded and the most recent one was graded top of all the applications to the committee considering it. One might therefore have grounds for hope that a fifth application would be successful. But now, as my noble friend Lord Flowers explained, there has been a cut of nearly 50 per cent. by the SERC in the amount available to its science board for research grants, and the funding of research applications will be further delayed
Over this period we have had to use old and inadequate equipment. We spent an inordinate amount of time filing applications and borrowing apparatus, including the laser itself, which we managed to borrow from the manufacturer. I estimate that I and, much more important, my young colleagues have lost at least two years, they at the beginning of their careers, by this saga. There is nothing unusual in our case; it is just about par for the course.
How has this state of affairs arisen? The £40 million, which we have heard referred to several times and to which the SERC overcommitted itself is less than 10 per cent. of its total budget and might have been accommodated were it not for the fact that most of its expenditure is on expensive, in-house establishments and prestigious big projects which it is almost impossible to run down. Almost the only flexibility margins available for cuts are those allocated to small, responsive mode applications (I apologise to the sensibilities of noble Lords for that awful jargon). The £25 million which we have heard remains this year to fund all these important applications in all the universities of the country is less than 6 per cent. of the £450 million which the SERC receives from the Government.
The long-term solution is surely to have a long-term solution. The funds available for the support of scientific research must be planned over a time which is commensurate with the time taken by the research itself. Otherwise how can the scientists plan? Furthermore, to avoid a recurrence of what seems to be a natural drift away from responsive mode funding (bottom tip funding) to top down direction, we need a separate funding body—or better still, several of them, a plurality of them—for these small grants. The Royal
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Society has operated a small grants scheme over the past three years and it has been a life saver for many of our best young scientists. Without some ring-fencing of this kind matters are likely to get worse as the remaining research funds under university control are transferred to the research councils, never, many of us fear, to be seen again by the universities.
Most of our great scientific discoveries of the past have come from individuals and small groups working within or very closely associated with our universities. This country has been proud of its science and has given its scientists encouragement, if not bounty. Today support seems to be given not only sparingly but grudgingly, with all sorts of strings attached.
Throughout history all great civilisations have pursued the arts and the sciences while their industry and trade flourished. These activities are inseparable, and if one is diminished, so are the others, and so is the country itself. Britain had, and still has, a leading place in the development of modern science. I believe that we should maintain that.
I thank noble Lords for hearing me on this subject which is so important to all of us.
12.40 p.m.
Lord Walton of Detchant: My Lords, I regard it as an exceptional privilege to have the responsibility, on behalf of the whole House, of congratulating the noble Lord, Lord Porter of Luddenham, on his outstandingly lucid, erudite and arresting maiden speech. It has been an even greater privilege to listen to him. No one could possibly speak about British science with greater authority. He is a most distinguished scientist, jointly receiving the Nobel Prize for Chemistry in 1967. He holds a clutch of honorary degrees. He holds the Faraday, Davy and Rumford Medals of the Royal Society, of which until recently he was such a distinguished president. He presided with equal distinction over the affairs of the Royal Institution. We all listened with great attention to what he had to say. I have noted from Dod's that his recreation is sailing. I would simply like to congratulate him on his maiden voyage in your Lordships' House. I feel sure that we shall look forward to many such interesting and exciting voyages with him in the future.
I make no apology for turning briefly at the outset, because of the research element of the debate, to the present position of the National Health Service. The only reason why I do so—some noble Lords may feel that the topic has been exposed; some may even feel that it has been overexposed in your Lordships' House —is because of the situation facing medical research today in many of our NHS hospitals. It was accepted in last week's debate that between 1979 and 1990 the Government have increased the funding of the NHS by 50 per cent. in real terms based upon governmental estimates of the rate of inflation. However, throughout that period nationally agreed salary increases for nurses, doctors and other members of staff have never been fully supplemented and health authorities have been required to find the extra money from efficiency savings.
Medical costs, like many science costs—to which reference has been made in this debate—have risen

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some 30 per cent. faster than the retail prices index and other factors upon which the government estimates of inflation are based. We know that the demands for health care for a progressively ageing population have increased costs by about 2 per cent. per year over the same period. There have been major additional costs resulting from the introduction of new and effective drugs and from the development of advanced medical technology.
Thus, despite the hugely escalating costs of our National Health Service there has been a general agreement among most health authorities and the majority of the medical profession that the NHS remains significantly under funded. Research has inevitably suffered. Last week the Committee of Vice-Chancellors and Principals expressed the gravest concern about the funding of our universities, pointing out that with increased costs arising from the VAT increase in the last Budget, they are now in seriously straitened financial circumstances, unable to pay anything more than a token increase in salary to their staff, and that they will be unable to pay to clinical academic staff—who in the past have been guaranteed comparability with their NHS colleagues—the pay award recommended by the Doctors' and Dentists' Review Body. That could be the final nail in the coffin sounding the death knell of the declining discipline of clinical academic medicine, in which segment of our universities some of our most able and innovative research workers are employed. We are told that, after suffering major cuts in resources over many years, universities now need £500 million extra this year simply to stand still.
About two weeks ago the medical subcommittee advising the Universities Funding Council expressed grave concern about the future of clinical teaching in the light of recent cuts in services in the teaching hospitals. Now we have before us these carefully argued statements in the excellent report so ably introduced by the noble Lords, Lord Flowers and Lord Carver, indicating that government support for science is in an equally, if not more, parlous state.
I shall not repeat the arguments that they have adduced, nor the many which are so dispassionately but forcefully argued in the reports of the Select Committees. Can it really be right that the Science and Engineering Research Council should have been compelled to cut its new research grants by 50 per cent. and its research studentships by 15 per cent.? Is it right that the Medical Research Council, like that body, should have rejected on purely financial grounds first class research projects so that all around us we hear the same: "Approved, but not funded".
These matters are the lifeblood of British science and of university research, upon which not only the scientific but also the future economic and industrial well-being of this country, and improvements in the health of its people, depend. We spend less on government support for science in relation to our gross national product than virtually all of our major competitors in Europe as well as Japan and the United States. Even Australia, despite its recent national economic problems, has made the positive decision in
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the interests of that country's future to increase government funding for science, including medical research.
I fully understand the Treasury's wish to restrict public spending. However, its almost obsessional preoccupation with that objective could well destroy the seed corn of future scientific discovery in the UK, just as it could have similar disturbing consequences in relation to medical care and education.
Perhaps I may express my especial personal concern about the present position of medical research, upon which the Department of Education and Science, through its Medical Research Council, spends more than £200 million annually—an amount which nevertheless, I am told, is less than the tobacco companies in the UK spend annually on advertising. Speaking as a former member of that council, and as the former director of a laboratory concerned with research into neuromuscular disease, but also as the current chairman of a charity, the Muscular Dystrophy Group of Great Britain and Northern Ireland, which funds substantial research in the neuromuscular field, I can only echo the rising tide of anxiety and deep concern being felt by my medical and scientific colleagues.
As several noble Lords have pointed out, the dual support system under which research in this country has for many years been funded in this country requires that there should be provided in our universities, hospitals and other appropriate institutions of higher education, an infrastructure consisting of well-found laboratories with a full range of basic equipment and services, and secretarial, technical and library support. As a former medical school dean, I can say that, in my medical school years ago in some departments in clinical medicine, that infrastructure, though minimal, was nevertheless crucial. In my own department of neurology, which had an annual research grant income when I left it in 1983 of about £350,000 a year, all the technical staff were paid for on "soft" money for over 20 years until we achieved university support from the dual support infrastructure, some admittedly provided by private endowment. It was an index of the loyalty and dedication of our staff that they stayed despite the personal insecurity involved in moving from one short-term appointment to another.
There is irrefutable evidence to the effect that the dual support system has crumbled both in the universities and in the National Health Service. Because of the financial restraints to which I have referred, the research expenditure in each of those areas has often had to be cut in order to preserve teaching and patient care.
The noble Lord, Lord Flowers, referred to the extraordinary proposal through which it is intended to remove the financial component providing the research infrastructure of the dual support system (the so-called DR component) from the university grant and to transfer it to the research councils. While my comments probably come far too late, I must say that I cannot imagine a more ill-conceived proposal. Now that, according to the recent Government White Paper, the polytechnics are to become universities,

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many more institutions will compete for these shrinking research funds. There is evidence that the DR money will be spread thinly across the entire higher education structure.
There is, of course, a suggestion that much of the funding may be restricted to favoured universities and departments of proven research achievement. But my experience as dean of a medical faculty—in some respects like a university in microcosm—led me to recognise that one never knew where the next rising research star would emerge from. Sometimes such individuals appeared in the most unexpected departments or quarters of the faculty. Only when a core research infrastructure is available is that emergence from the chrysalis likely to be nurtured.
Above all I am deeply concerned about the position of the charities, which for some years have provided more money for the direct costs of research than has the Medical Research Council. It is perfectly proper that universities and health authorities should charge commercial organisations overheads when they commission research. However, the informal agreement of long standing with the charities to the effect that, in view of the dual support system, they, like the research councils, do not pay overheads has been a crucial component of research support in the UK for many years. I cannot believe that it is right to suggest that hard-earned funds collected by these charities and their innumerable supporters through a variety of fund-raising events throughout the country should be spent upon providing that basic infrastructure of the research environment which should be a part of the provision of the well-found university and of the National Health Service.
The seriousness of the position cannot be overestimated. I urge the Government to think again and, first, if it is not too late, to overturn their remarkable decision about the DR component; and, secondly, to review as a matter of urgency in the country's best interests their science funding policy.
12.53 p.m.
Lord Sherfield: My Lords, after hearing the opening speeches in this wide-ranging debate I rise to make only a couple of points and to venture a general comment. First, I shall comment on the way in which the Treasury deals with the financing of the European Framework Programme, with particular reference to the practice of attribution and additionality. Do not be alarmed, my Lords; it is not my intention to discuss the merits of that arcane subject this afternoon. However, there is a point which is perhaps one of substance as well as of procedure.
As was said by the noble and gallant Lord, Lord Carver, the subject was first addressed by subcommittee B of the Select Committee on the European Communities whose report was debated in this House on 20th January. That committee, on to which I and other members of the Select Committee on Science and Technology were co-opted for this item, heard some lucid and well presented evidence from Treasury witnesses. In the debate the noble Lord, Lord Hesketh, went to great trouble to expound the Treasury policy and his speech was much appreciated.
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Owing to absence abroad I was unable to be present at the debate. However, I understand that as the report came from the Select Committee on the European Communities, the noble Lord's speech was the substantive reply to the committee's recommendations. That is different from the Select Committee on Science and Technology, which receives written responses from the Government to the recommendations that it makes.
I also gained the impression that the Treasury felt that its elucidation of the policy would in itself suffice to convince your Lordships of its merits. That is not so. In its report on international scientific programmes, introduced today by the noble and gallant Lord, Lord Carver, the Science and Technology Select Committee returned to the subject. It may be thought that too much committee and official time has already been devoted to the subject. However, your Lordships' Select Committees must take account of the evidence that they receive and there is a great deal of unhappiness in the scientific community about this subject.
Of course no one expects the Government to depart from the fundamental principles for the conduct of public finance, especially in respect of what they probably regard as non-cost-effective units. It is also understandable that the Treasury, having laid down the guiding principles, is happy to leave the departments to deal with the fall-out. However, there are still unresolved questions and the effects of the system appear to be arbitrary and difficult to justify. For example, we were told in evidence that overall the net additionality which came out of the system was 30p to 35p of the total sum. The noble Lord, Lord Hesketh, said in his speech that the amount was more than that. The noble Lord, Lord Ezra, picked up that point. However, the way in which the additional sum was made up and what it amounted to was not at all clear, at least to me.
Not many people will have read and digested the speech made by the noble Lord, Lord Hesketh. Much more transparency and flexibility need to be applied to the procedures. More explanation is required. I hope that the noble Baroness, Lady Blotch, will be able to assure the House that such a detailed written response to the committee's recommendations will be forthcoming.
I recently left the Select Committee which the noble Lord, Lord Shackleton, and I were instrumental in setting up and on which I served for 12 years. I believe that it has done some useful work and it has seen some of its recommendations accepted. However, it has not yet succeeded in changing the Government's negative attitude to the vital importance of a strong science base—the infrastructure to which the noble Lord, Lord Walton of Detchant, has referred.
In its report on the definitions of R&D the committee was perhaps rash to venture into the minefield of comparative statistics. I suggest that the Government's response to it is a masterpiece of bureaucratic obfuscation with a sting in the tail. But—and again I shall not weary the House with the detail—there is no doubt that the United Kingdom is at the bottom of the first league table in the level of its

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support for R&D. That was pointed out by the noble Lords, Lord Flowers, Lord Kirkwood and Lord Walton, and is borne out by other independent inquiries.
Of course one can do almost anything with statistics. In paragraph 27 the response refers to the indicator of comparative performance known as bibliometric data. It says,
"In these output terms the UK's record is excellent".
What it does not say is that the recovery is due, after a steep fall in previous years, to the increased volume of papers on applied research. The volume of papers on basic research has fallen, and basic research, as has again been said this afternoon, is the seedcorn of scientific achievement.
I have one more example. A Minister recently drew attention to the fact that the United Kingdom has won more Nobel prizes than any other country except the United States. That is true but rather misleading; 94 per cent. of those were awarded before 1981. Since that time the score is the United States 32, Germany 8, the United Kingdom 4 and Japan 2. But I must say that I do not believe this to be a particularly useful measure of a nation's general performance in science and technology.
It is not surprising that the committee made so little impact on the fundamental attitude of the English towards the relative importance of scientific and technological proficiency. It is well known that for over a century warning voices, from the Prince Consort onwards, about the dangers to British industry from the competition from Germany and other European countries have been disregarded.
I came across an example recently which I hope your Lordships will not regard as wholly frivolous. In the 1880s there was a row between geologists about the rocks in north-east Scotland. One of the protagonists was the celebrated Sir Archibald Geikie. The row spilled over into the press and the public arena and, fed by the poor performance of British industry in the international exhibitions of the period, was used as peg for a vociferous demand for more money for scientific research and development; compare our debate today. But the Government were not to be moved.
One Ralph Lingen was then Permanent Secretary to the Treasury. He was so strongly opposed to government money being used for scientific research that he managed to curtail any extra spending on it throughout the 1870s and the 1880s and the Royal Society's government grant remained static throughout that time. One wonders on whose shoulders today the mantle of Ralph Lingen has fallen.
I should add that I do not overlook the fact that after World War II, when scientific research and development was much better resourced, it was foreign rather than British industry which in general reaped the benefit. That encouraged the view that research and industrial performance are not related. Our competitors certainly do not appear to agree with that opinion.
In November 1989 I received a letter from the then Prime Minister in response to a brief interim report of
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the Select Committee of which I was then chairman. It was the one year in the decade in which the Government had made a significant increase in real terms in the science budget. The Prime Minister wrote:
"The Government notes the Committee's warm welcome for the substantial enhancement of the science budget for the current year. The increased resources will sustain top quality science across a broad field of basic and strategic, directed. and curiosity-motivated research programmes. They will enable important new scientific opportunities to be grasped and underpin the excellence of UK science into the 21st century".
Fine words; alas they have buttered no parsnips.
Though on the one hand the Government continue to maintain that they are increasing the science budget, on the other hand they have undermined any increase by clobbering the universities. I find one of the saddest features of the present situation to be the stand-off between the universities and the Government. I am sure that the Select Committee will continue to bring these issues before the House and one day perhaps the penny will drop.
1.5 p.m.
Baroness Platt of Writtle: My Lords, I was delighted to have the privilege of listening to the maiden speech of the noble Lord, Lord Porter. It is not often that we have the opportunity of welcoming a former president of the Royal Society into this House. He may not be immortal but we hope that he will contribute to our debates for many years to come.
Today we are debating three closely allied reports of our Select Committee on Science and Technology. As I was only involved in the inquiry into the science budget by the noble Lord, Lord Flowers, I shall confine my remarks to that area. Our scientific and engineering research and development are crucial to the maintenance of our competitive position in world markets and therefore to our future prosperity. As technological developments accelerate more rapidly, that will become more important in the future, not less. Historically, as the noble Lord, Lord Sherfield, outlined, science and engineering, whether pure, applied or in their subsequent development, have had to fight for the budget.
This month we celebrate the 50th anniversary of the first flight of a jet-propelled aeroplane of the war-time era. Frank Whittle battled unsuccessfully for many years for Air Ministry backing for his research. Fortunately, with war looming, he finally received support for the prototype aircraft and it flew successfully. Where should we be today without his scientific and engineering breakthrough in the field of jet propulsion and gas turbines? His brilliance founded a peace-time industry that powers the airlines of the world.
As Margaret Thatcher appreciated when she said, when opening ISIS in 1985,
"Basic research can be a springboard to the creation of wealth".
We all know that it then needs substantial persistence and industrial commercial encouragement if it is to proceed into the international market successfully. But the initial breakthrough in pure research must be

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made and needs to be funded at a time when its success is by no means guaranteed and when it might be labelled "blue skies" research.
Not surprisingly, Sir Frank Whittle, with his past experience, joined with over 70 other distinguished scientists and engineers, fellows of the Royal Society and the Fellowship of Engineering—the two most prestigiaus institutions in Britain in these fields—to protest that more money needs to be put towards research and development in science and engineering.
Many people today worldwide are anxious about global warming and the Government are committed to making a United Kingdom contribution to combating its possible disastrous effects. The report of the noble and gallant Lord, Lord Carver, who chaired our Select Committee on the subject, emphasised the uncertainties of future prophecies without knowing the effects of thermal inertia within the oceans.
Recently the parliamentary and scientific committee had a most interesting lecture on proposed research in that field. It is a worldwide problem and should be financed worldwide. But we have the expertise in the United Kingdom and we will want to be involved. It is very expensive research that will need to be financed in the future. Already the National Environment Research Council is having to cut back on the expenditure it wishes to allocate to global, environmental and oceanic research. Other councils covered by the survey are cutting back expenditure and research relevant to this field, too. That does not augur will for the future of this vital field where time is running out. The Government need to plan ahead for substantial expenditure to demonstrate their international commitment to the solution of complex global environmental problems.
The Government have scientific advisers, but I feel that the majority of civil servants are not sufficiently scientifically qualified. That has an unfortunate effect on the science budget. We need more expertise in these matters throughout the Civil Service and especially in the Treasury. I hope that the Government will take that very much to heart. The principle of annuality puts scientific budgets very much at risk, whether it be big projects, such as I have mentioned, or the small ones such as studentships and grants. The Government have allowed 2 per cent. flexibility. I was glad to see that my right honourable friend the Secretary of State for Education and Science, Kenneth Clarke, said that he would watch the situation and review it We heard in evidence that an increase in flexibility would be very much appreciated. There is nothing worse than sudden spending on less worthwhile projects at the end of the financial year in order no to underspend. Scientific and engineering budgets reed above all to be carefully quantified and planned ahead over a period of say three to five years with an expectation of stability in funding. That way money should be spent wisely. I hope that the Government will investigate ways of moving to that more stable mode of operation.
That brings me to my second point. In our report we refer to the policy of SERC under its previous chairman in,
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"over-committing available resources in the expectation of settlement for 1991–92 at a level which simply did not materialise … we roundly condemn the practices and policies which have put so much at risk—whatever the excuse".
Scientists and engineers are realists. They know that they live in a finite world. They are supremely numerate. They must put into action that numeracy and judgment which they undoubtedly possess wherever they are operating. I know their feeling of frustration. I was chairman of education in Essex, later chairman of finance, and finally chairman of the Equal Opportunities Commission for a number of years at a time when successive governments of both political parties were cutting public expenditure. We could not do all the worthwhile—and to us essential —things that we wanted to do. Full allowance was not made for inflation or for wages and salaries negotiated elsewhere. We felt hard done by, especially on behalf of those we aimed to serve. Nevertheless we had to take note of expenditure agreed in previous years and how it committed us in the annual budget under consideration. We had to make the difficult decisions of putting cherished projects, both large and small, into orders of priority. We did not like it, but we knew that in the spending of public money we had to grit our teeth and do it.
There is never enough public money. The competition for its allocation for many—one might say a myriad of valid sources will continue. We must never forget that it comes from millions of small taxpayers who also have cherished projects of their own that they have to postpone. In David Copperfield Mr. Micawber said that annual income of twenty pounds and annual expenditure of nineteen pounds nineteen shillings and sixpence resulted in happiness while annual income of twenty pounds and annual expenditure of twenty pounds and sixpence resulted in misery. The figures are different but the feelings are the same. I am glad to say that the present chairman of the SERC is determined to take a tough line in controlling expenditure and I admire him for it. But because of past action his job will now be much more difficult. I was also shocked to read a report in The Times this month that the Public Accounts Committee of the House of Commons felt that the SERC had been "insufficiently rigorous" in the sale of Herstmonceux Castle for £8.1 million in 1988 despite offers which it rejected of £9.25 million and £14 million.
Such action undermines our confidence in the complex arguments about statistics and how the science budget is allocated. That is unfortunate, as I believe that scientific and engineering research is vital. We all rely on the intelligence, care, judgment and integrity of those who negotiate it on both sides of the equation. This time it is the young people, the studentships and the grants, which seem likely to suffer. That is not right as they are the seed corn of our future success. The other designated victim in future is the nuclear structure facility at the Darsbury laboratory about which we have received a great many letters in support of the need to retain that important facility for which there is no alternative in the United Kingdom.
The situation is aggravated by our eternal enemy, inflation, but also by the fact that our support for a

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number of international scientific projects is calculated with reference to the UK GDP and other national currencies. Exchange rates and fluctuations in GDP are entirely external to the scientific world. It would be of great assistance if the science budget could be protected against these factors, as we recommend. I hope that the Government will consider the matter very seriously.
In conclusion, I hope that the Cabinet committee on science and technology, with the Prime Minister's encouragement, can find a better solution to the problems laid out in our report, if possible this year, but certainly in the future. We need a top level committee with the necessary overall clout to sort out the difficulties in the science and engineering budget which is so vital to our country's future prosperity and standard of living. I hope that the Government will act decisively.
1.18 p.m.
Lord Kearton: My Lords, I had the privilege of serving on two of the committees which produced the reports now under discussion. One concerned the science budget and was chaired by the noble Lord, Lord Flowers, and the other was on the definition of research and development and was chaired by the noble and gallant Lord, Lord Carver. They have very cogently summarised their reports and I do not propose to go into great detail about the recommendations. They are well thought out and considered. The Government would be very well advised to give full weight to what has been said.s
As regards the science budget, my impression is that the present dual-funding system is not working very well. In particular I believe that the SERC has got itself boxed into a corner with great rigidity in the way it spends its money. It has enormous overseas commitments. For example, I believe that at CERN it is spending £60 million. The SERC has enormous other commitments in astronomy and in its own major laboratories. Its single most important function is to support the universities in getting younger scientists and to give them their opportunity. At the end of the day it has fallen completely behind in that function.
It is absolutely ludicrous that the most important function of supporting young scientists and new ideas is the one provision that is cut. The report, under the chairmanship of the noble Lord, Lord Flowers, stated that a relatively trivial sum of money could put that matter right for this year. In spite of the lack of response from the Government so far, I hope that they will give us some encouraging news today about that. I would not mind if they coupled it with a determination to find the money from future SERC spending on some of their so-called fixed expenditure.
The whole business of our universities is under threat. Last year I took part in a debate in Cambridge with Mr. Robert Jackson who was then responsible for higher education. If my memory serves me right, at some stage he said:
"As far as the Government is concerned"
—and he was the Minister for higher education
"science is just another lobby".
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How damned stupid can you get? It was an absurd thing to say and I am glad to see that he has been moved.
One of the most interesting documents published in recent times—and I do not know how many of your Lordships have had an opportunity to see it—is Innovation, Competition and Culture by the right honourable Peter Lilley. It is a most encouraging document and one of the most important documents on policy that the Government have produced this Session. I should like to congratulate Mr. Lilley and the Government on it. Even so, Mr. Lilley puts on record some of the misconceptions about our universities and science. Under the heading "Academic Snobbery" he says:
"Since Victorian times our educationalists have attributed esteem to subjects inversely to their practical and vocational content. Thus pure science was accorded more esteem than engineering. And engineering, when finally allowed into the university curriculum, was taught with a more theoretical bias than abroad, and usually with no commercial content in the course at all".
A little later on he said:
"Business was not attracted by the academic bias of engineering and science degrees nor by the anti-business attitudes often imbibed with them".
He went on:
"The idea that Government expenditure on 'ivory tower' research automatically generates industrial spin-offs is decisively refuted by our experience".
I think that that is sufficient evidence of a deep-seated feeling on the part of the Government that universities have been letting us down. I believe that they could have legitimately taken that point of view up to the beginning of this decade. However, partly because of the Government's actions and very much because of the universities' self-examination and reforms, in the 1990s the universities are a very different kettle of fish indeed from the universities of the 1980s, 1970s and 1960s. The famous Robbins expansion looking back was much too generalised and gave a lot of people too much freedom of action to spend money how they wished on things of interest only to themselves and was not a very good investment from the point of view of the country. I think it is right that the universities should have a look at what they are trying to do and how they are trying to do it.
There are at least four chancellors taking part in this debate—and I am one of them—and they will all tell you that universities today are absolutely marvellous institutions, operating under enormous difficulties. They desperately need some help and encouragement from the Government.
Reference was made by the noble Lord, Lord Walton, to this extremely sober document, The State of the Universities, which was published a few weeks ago by the Committee of Vice-Chancellors and Principals. It is very moderately phrased and very cogently argued, and it comes down to the fact that unless of the order of £500 million a year is injected into our universities, our university system is in danger of collapse. It is always easy to cry wolf. It could be said that we have cried wolf before, but anyone concerned with universities will now be absolutely at one that it is not crying wolf this time. Unless the Government take this belief very seriously indeed, nationally we are heading for disaster.

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It is extraordinary that the Secretary of State for Education and Science refuses to meet a delegation from the Committee of Vice-Chancellors and Principals, saying, "What is the point? There is no money anyway, so why should I talk to you?" I do urge the Minister to change his mind. In all sorts of other aspects Mr. Clarke has shown himself to be an extremely realistic, an extremely able and an extremely energetic man. However, I do think he has got hold of the wrong end of the stick with regard to universities, and the sooner he changes his mind the better.
I should like to see much more money going to universities directly under the dual support system rather than through the ABRC. Most university people were very worried by the ABRC attempt a few years ago to grade universities as first-class universities doing a lot of research, middle universities doing a bit of research, and teaching universities doing no research at all. That was argued against and defeated, and has not come to pass. Under the new education reform'; announced by the Prime Minister this week there are indications that it could still be another rather indirect way of achieving the same objective.
The university departments, of which I have first hand knowledge, are now the most useful tool we have for the future to introduce economic prosperity into our country. We have all been studying what has been happening in Japan, Germany and other countries which are moving ahead of us, and it all comes down to the fact that it is the proper exploitation of science and technology on which our whole future depends.
It was a great privilege to hear the noble Lord, Lord Porter, make his maiden speech. The noble Lord is probably the most distinguished scientist alive in Britain today. I knew the noble Lord in the early 1950s when h was the Assistant Director of the Rayon Research Association. That is pretty practical. Rayon made a great deal of money for various companies in the early years of this century, but by the 1950s it was in retreat against all the new so-called chemical fibres like nylon, the polyesters and so on. During the 1960s and 1970s, and to a certain extent the 1980s, rayon has continued its retreat but research has continued. Rayon now has a revival. In the recent figures produced by all the major fibre companies, it is ironic that probably the most profitable fibre is again rayon. The only fibre on which large sums of money have been spent to build new plants at the present time is the new variety of rayon derived from recent research. In other words, great advantage comes from research. If something fades, you can, with a new development, bring it lack again. The recent story of ICI, which is vulnerable to a bid by what might be called a non-scieiltific company, shows how we need new products the whole time. ICI's new products have been in pharmaceuticals and that is producing more than half its profits. It spends about £600 million a year on research—I think the last published figure was £640 mill ion—and it is still trying to find new products to take the company forward. The secret of the Japanese success when we looked into the whole Japanese economic miracle a couple of years ago, was in bringing forward new products new innovations.s
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They were not always brand new products hut, as in the case of rayon, they improved existing products very considerably.
We now have the opportunity to send a signal to the universities that we believe in them, that we want to encourage them, and that we want to take away from them all these pettifogging constraints with which they are currently occupied. There is a chance for a major revival in this country which is university-based and which will go straight from the university to the industry. The new partnership between universities and industry has been one of the most encouraging developments in my lifetime. We want to nurture it and encourage it. A very simple way to do that would be that every time industry gives a grant to a university the Government should either double or treble the money and so show that there is a partnership between the universities, government and industry.
We are having this debate at the end of the Session. It is one of the most important debates for the future prosperity of this country. I ask the Minister to give us some encouraging news.
1.27 p.m.
Lord Lewis of Newnham: My Lords, may I say how much I valued and appreciated the excellent maiden speech by my noble friend Lord Porter of Luddenham. I have been privileged to know him for many years and have recognised in him a man of supreme ability and knowledge in science, which has clearly been stated by a number of our previous speakers. Rarely can anyone have claimed to have put science into a new timescale, but his work on flashphotolysis did just that. He has scaled the highest heights in science, and I certainly, and I am sure I speak for all of us, look forward with great anticipation to the very valuable contributions that I am sure he will make in this Chamber.
Today we are considering a wide range of problems of science contained in these three excellent reports. If I may, I should like to turn to one aspect of the topics of debate today; namely, the report of the Select Committee on Science and Technology relating to the science budget 1991–92. Owing to the limited amount of time available, I should like to restrict my comments to some aspects of an area that has direct impact on my role as a Professor of Chemistry; namely, the budget of the SERC, with particular emphasis on the position over the cuts in studentship awards and research awards. In so doing I think noble Lords will find that I have a lot of sympathy with what my noble friend Lord Porter has been saying.
The new chairman of the SERC, Sir Mark Richmond, has inherited a difficult problem and I should like to record my appreciation of the way he and his council have tackled this impossible situation. The council of the SERC has directed 10 per cent. savings from its four boards, with a very important proviso that the basic philosophy is to try to protect the research grants and studentships.
The science board, with which chemistry is primarily associated, has a budget of approximately a quarter of the total SERC allocation in other words,

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of the order of £120 million. This is broken down to research grants, studentships and about one-third for the establishments. It is with the last category that the savings are intended ultimately to be associated. However, this is clearly the most difficult area to make the instant savings required by the present financial allocation. So in the short term the soft targets of the research grants and studentships are to be cut.
I should like to make some personal observations on what I believe this will mean within universities. I can assure the House that the universities are in considerable turmoil about these factors.
In chemistry we are under considerable pressure this year for studentship places. The cut of 5 per cent. to 10 per cent., although not appearing too severe, could not have occurred at a more difficult time. The position in the chemical industry—I remind the House that the chemical industry is the No. 1 manufacturer/ exporter in this country, with a balance of payments surplus of £2 billion—is not at the moment healthy. Recruitment directed to industry has been reduced this year, with a preference being shown for Ph.D. students. This has placed the present generation of graduating students in a difficult situation. That is to be coupled with a decrease in enrolment from the City, a significant recruiter in the immediate past.
For a given student graduating this year, this is his year; there is little hope or consolation in the knowledge that the studentship position will be resolved in two years, as we are led to believe. We are at risk of losing very able students at a time when I believe the country needs them. I remind the House that these will be the Ph.D. students three years from now when we hope industry will be back on the recruiting scale. There will be many disappointed first-class graduates this June/July who had hoped to do research. They will look in directions other than science —certainly chemistry—to fulfil their needs. A number of them will go overseas.
On the research side, the problem is even more acute. In the projected cuts, the allocation to the research grants is to be cut by around 50 per cent. I should like to emphasise a statement made by my noble friend Lord Porter. The grants have not been able to satisfy the needs of the community, in the immediate past anyhow. Thus, for inorganic chemistry, an area in which I am involved, there have been 120 applications this year to the appropriate committee. This is over two rounds of the committee, one for a September submission and one for a February submission. For the first time to my knowledge, arising presumably from the financial crisis, the two have been considered as one, so that people submitting in September have been left in suspense and have not been given the results of their applications. This makes planning, particularly for an October entry, extremely difficult.
It is compounded by the fact that when the grants are to be announced there will be a delay in many instances for a January funding. A discontinuity of this nature is extremely difficult. One cannot expect people to go away for three months and then come back and start up again. I have been told by the
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chairman of the committee that approximately 10 awards will be made-10 out of a total of 120—and the probability is that they will not be fully but only partially funded. Seventy-five per cent. of the awards —a total of 90—were at the alpha grade. I return now to the point made by my noble friend Lord Porter.
This will result in many of the applicants being told that their grant was graded alpha but was unfunded —the infamous "alpha-unfunded" award. When I was chairman of the chemistry committee we funded not only the alphas but were able to get down to the betas on certain occasions. I am sure that this reflected the better form of funding available in those days.
I should like to put this into more personal terms. We can talk about large figures, but at the end of the day it is people who matter in this issue. I have a young lecturer who over the past three years has submitted grant applications to the SERC. He has had six alpha awards, all being unfunded. I ask you, what can one say? Although he has received some support from industry, if it were not for the dual funding operation, which is also under threat, I do not know what we could do to maintain his research.
With reference to the potential changes in the dual funding, I must agree with the statement of Sir Mark Richmond to the committee, at paragraph 3.12, that
"very bright young potential researchers, in parts of the higher education system that do not attract research support through research councils are less likely than now to be able to fulfil their vocation".
The position is compounded by the fact that when I was a young researcher there were many alternative sources for grants. This point was alluded to by my noble friend Lord Porter. The range has been drastically reduced. However, the reintroduction of the small grant scheme by the Royal Society, primarily due to the efforts of my noble friend Lord Porter, is a welcome change and has helped considerably to maintain a certain morale among the younger members of universities. The changes in the dual research funding to the universities will further reduce the flexibility and ability to sponsor the independent research worker. Research councils normally sponsor areas of research within subjects. These are often established areas or areas where potential is proven. The presence of alternative funding allowed the less popular areas—potentially the areas of the future—to be funded. That point must be emphasised again and again in our consideration of the dual funding operation. How will a young university lecturer who suffers this treatment react to a lucrative offer to go to the USA? My problem with the brain drain is not one of quantity but of quality.
Thus I strongly support the suggestions in paragraphs 2.38 and 2.40 of the report—essentially, the £12 million to which the noble Lord, Lord Flowers, referred in his speech. We are concerned with a crisis of confidence in many chemistry departments throughout this country. I hope that the Government will respond quickly and effectively to the above and other recommendations in the report. The immediate needs covered by paragraph 2.40—the £12 million —is a minimal level of support.
1.38 p.m.
Lord Dainton: My Lords, I join in the chorus of welcome to the noble Lord, Lord Porter of Luddenham, and congratulate him on his maiden speech. It is an especial pleasure for me to see him in this House because he is not only a fellow physical chemist but our lives have been linked in various ways over many years. He, like myself, is a Yorkshire man; he was educated in chemistry at the University of Leeds where I spent 15 very happy years; and he did much of his seminal work in the University of Sheffield with which I have enjoyed a close connection for about 12 years. I am sure that he will make a splendid and distinguished contribution to your Lordships' House, even though, as he said himself, he is unlikely to achieve that immortality which he thought the title Life Peer by definition would deny to him.
I appear at the end of the list of speakers as a member of all three committees whose reports are under discussion today. I reflect that if one great British statesman from the past could shed light, perspective and wisdom on the issues under discussion today, it would be Lord Haldane of Cloan. As one of the founding fathers of the research council system, who learnt much from his observations as a student in Germany, a country whose scientific policies today we could do well to emulate, he understood better than most that science policy has two major elements; namely, policy for science and the use of science to serve public policy. I do not want to talk about the latter. That us not because it is in any way unimportant; it is because what is done in that sphere is defines by the objectives of individual government departments which pay for the scientific work that they need and to that extent are responsible for formulating priorities and for managing that policy. Moreover, its benefits are generally more immediate than that which concerns us today.
In contrast, the devising and management of a policy for science are much more subtle and complex processes. That difference arises from two causes. In the first place, it is in the nature of scientific inquiry and progress that, if it were not resource limited, it would auto-accelerate. That is simply because the more a scientist knows about science, the better placed he or she is to gain more knowledge more quickly. Unfortunately, that also means that the costs rise rapidly accordingly. For many years now no advanced country has been able to allow expenditure on scientific research to grow proportionately to the demand of its scientists. Consequently, each country sets a limit on what it will spend. The critical policy problems lie in deciding that limit and in what areas the money within that limit shall be spent, including the increasingly important contributions to international scientific programmes about which the noble and gallant Lord, Lord Carver, has already spoken.
The second cause of difficulty is that the objectives of work in basic science—by which I mean, in order to get our definitions clear according to the committee of the noble and gallant Lord, Lord Carver, that which is self-chosen or curiosity-oriented scientific, sometimes called "blue sky", work—are manifold. The practical benefits of the inception of the work are
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often unforeseeable, although there are many examples which I could cite to show that the return on the investment in basic science has been quite enormous. For example, one can immediately cite such British discoveries as the antibiotics, penicillin and cephalosporins, the magnetron valve, the non-invasive imaging of the human body, and so on.
That unpredictability of outcome, at the time when one begins work, but confidence that scientific work is never wasted and the fact that some of it pays many times over for its cost and also for the cost of other scientific work, was very well encapsulated many years ago by a distinguished American scientist who, when challenged as to what the value of his work for the future was, said: "Damned if I know. But sure as hell they will tax it one day!"
The various objectives of basic research include many things: first, the general advance of scientific knowledge and understanding; and, secondly, the production of well trained lively minded young people, many of whom will be needed in society in the future as teachers, as leaders within science-based industry—as mentioned by the noble Lord, Lord Kearton—and who, because they contribute to knowledge acquisition in their fields, are uniquely alert to developments in those fields which are made outside the United Kingdom. They are therefore ready to enable this country to profit from what is discovered elsewhere. They are the seedcorn from which future harvests will come.
The best places for carrying out such basic scientific work are the autonomous universities or those institutes embedded within them when one has the added benefit that able younger people are inspired to become apprentices in the scientific enterprise simply because they are taught by those who are engaged in research. They are highly sceptical and self-critical and the young scientist becomes imbued with the same scientific and very important attitudes.
As I said at the beginning, Lord Haldane saw these matters very clearly over 70 years ago. He was chairman of the proto-University Grants Committee. Incidentally, I wonder where the chairman of the University Grants Committee, the noble Lord, Lord Chilver, is today; one might have thought that he would have had something to contribute to the debate, or that he might possibly have learnt something from it. What Lord Haldane knew 70 years ago, and what history has subsequently confirmed, is that universities must have money of their own which they can spend as they think best on research, in particular to provide resources in well-equipped libraries and laboratories which can both sustain the work of the young researcher and be the basic infrastructure for those senior colleagues who need extra resources in manpower and equipment for their own researches and which they can win from the research councils in open competition with others.
From those basic ideas of Haldane put forward so long ago, the United Kingdom's dual support system has evolved over the years to its present form. I must emphasise the fact that for many years that dual support system, which this country can take pride in having invented, has worked admirably. But now it is

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crumbling and this causes dismay in the scientific community. Moreover, as we have heard, it is discouraging to the able young. It makes Britain a less satisfactory partner in international scientific programmes and bodes ill for the future of our country. The noble Lord, Lord Flowers, referred to the widespread anxiety in the scientific community about the situation. I can confirm that observation from my own knowledge, but I shall not elaborate further.
The primary cause of that malaise is that Britain has set the limit of funds that it is prepared to provide for those purposes at a level which is too low. It is not in dispute that, expressed either as an amount per head of population or as a percentage of the gross domestic product, it is less than those of the USA and major European countries, as the noble and gallant Lord, Lord Carver, reminded us. Moreover, even using official deflators (which notoriously underestimate the true inflationary index for scientific research) the trend in the total of the sums available for research from the combined university and UFC resources has been very significantly downwards since 1987. I know that the Government will argue that international comparisons are irrelevant and that we in Britain arrive at our expenditure limits in other more sophisticated—some may say, more mysterious—ways. I remain quite unconvinced that we in this country are right and that all the others—that is, the Germans, the French, the Americans and so on—are wrong. I am worried that a country like ours, with a splendid past record of producing good science and scientists, should be willing, for the sake of a relatively small sum, to surrender its proud place and so disadvantage itself in the increasingly scientific and technologically competitive world which we shall continue to inhabit.
The second reason for the current malaise is that government have chosen at this juncture, of all junctures, to tamper with the delicate balance between both sides of the dual support system by switching money from the Universities Funding Council vote to the research councils so that the latter can pay the indirect costs—or, as most of us understand them, the "overheads"—incurred by universities when research grants are made to their scientists; and which universities were accustomed to meet out of their own block grants. It is said that the effect will be neutral. That is obviously true in the crude mechanical, arithmetical sense; provided that all the money so transferred finds its way back into universities, the university system as a whole will not lose money.
However, what is patently absurd and very worrying is the fact that the principle of transfer and the amount to be transferred were decided before any investigation had been carried out to assess the magnitude of the indirect costs and therefore to know whether there was any problem at all for which such a step could be regarded as a solution. But it has recently come to my notice—and very reliably so—that research councils estimate that the cost of effecting this unwanted change is about £800,000, money which could be better spent, as we have heard in the eloquent pleas which came from the Benches
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behind me, on much needed studentships and fellowships. Last Friday, in a rare display of agreement, the vice-chancellors voiced their opposition.
No less significant is the fact that our inquiry revealed that this step gave the recently retired chief executive of the Universities Funding Council, Sir Peter Swinnerton-Dyer, great anxiety and, moreover, since the establishment of the new style ABRC, which had deprived him of his former ex-officio place on that body, he had no formal locus standi to make his views known in the forum where such matters are discussed. Having myself been, at various times, chairman of the UGC and also of the ABRC (indeed a member of the latter for some 15 years, if my memory serves me correctly) I am at a total loss to know how the latter body can function effectively without top level representation from the UFC and I hope that this defect can speedily be remedied. If it is not, we may have far more of the unfortunate situations I have described. Meanwhile, I am not reassured that such discussions as have gone on between the universities and the research councils have led to any kind of agreement either as to the magnitude of those indirect costs, or as to the advantages and disadvantages associated with such a transfer, and whether safeguards can be built into any new system to protect money from leaking away—I use that fashionable phrase—from the universities where it ought to be placed. In particular I should like to see safeguards which ensure that enough non-teaching resources are available to all the universities to enable them to meet the costs of the research of able young scientists, even in those universities which do not have many research contracts, and therefore have less of that kind of money restored to them. I say that based on many years of knowledge of splendid developments in smaller less prestigious universities. One recalls what everyone sees every day now—the effect of liquid crystals on our lives, which have their origins in a small university which I shall not name for fear of embarrassing it.
I too was one of the small group that saw the Prime Minister on 28th January, and I also was encouraged by the careful attention which he gave to what we had to say to him about science policy. I hope that it is not too much to ask that he, his Cabinet committee and his advisors give some consideration to both the level of overall spending from UFC and ABRC sources on basic research, and as to whether the proposed transfer is justifiable in logic, sensible use of resources or practicality.
1.53 p.m.
Lord Peston: My Lords, in speaking for the Opposition in this important and interesting debate, my first pleasant duty is to congratulate the noble Lord, Lord Porter, on his maiden speech and to welcome him to our deliberations. I was interested in his description of his experience in trying to obtain a piece of laser equipment. That cheered me up a great deal because, after all, he is the winner of a Nobel prize. What he experienced is what people like myself have experienced throughout our academic working

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lives when we are turned down for almost everything. I speak as the only social scientist contributing to the debate. That is the normal experience. I remember applying for a piece of equipment many years ago. The Social Science Research Council merely told me that I was mad and that it did not give equipment to social scientists. Things have now changed a little. I am sorry that the noble Lord did not obtain his piece of equipment, but it put my experience into perspective.
The noble Lord is a chemist. I hope your Lordships will allow me to say a word about Helen Sharman who is orbiting the earth every 90 minutes.
Lord Dainton: My Lords, she is a Sheffield chemistry graduate.
Lord Peston: My Lords, I was about to say that she is a chemist. I had not realised that she is a Sheffield chemistry graduate. That makes her even more distinguished. She works in food technology and is a member of the Royal Society of Chemistry. We should be proud of her performance. I shall add a slightly acerbic note. She will not be performing any chemistry experiments while in space, because no funding was forthcoming from any source in the United Kingdom to finance or sponsor the Juno space mission. I hope that those Ministers who decide that the best thing they can do when she lands safely, as we hope, is to be photographed next to her, will bear that fact in mind.
While I am in a congratulatory mood, perhaps I can take the opportunity to congratulate my good friend, the noble Baroness, Lady Blatch, on her promotion. She and I are of the same vintage—as I suppose. I should call it—but she has far outdistanced all of us who were created peers on that list, and deservedly so.
There are many topics that could be discussed, but I must confine myself to one or two. I should like to start with the definition of R&D. I disagree with the noble and gallant Lord, Lord Carver. I thought his report fascinating. It is overwhelmingly correct in the sense that if we cannot satisfactorily define research and development, we do not know what to measure. If we do not know what to measure we cannot measure. If we do not measure we cannot put any of these matters into any quantitative perspective. What the noble Lord seeks to do is overwhelmingly right. We must take these matters seriously.
I am not saying that the noble and gallant Lord's report--he does not claim this—or the present state of knowledge enable us to come up with a hard-and-fast classification system. There will always be blurrings at the edges, and I shall say a word about that aspect in a moment. That we need to undertake such work and do it seriously is right. In that connection, I shall say something about paragraph 1.35 of the report which states:
"Then: is general concern in industry about the lack of feedback from the DTI"
on the question of data collection. I find that worrying. It is surely an area where one needs all the time to check whether what industry and others are delivering is what the DTI expects to receive and what it believes that it is receiving. There is the major
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problem of whether the system of data collection is correct. I hope that the Government will take that paragraph seriously.
I shall say a word about the classification of R&D. I understand the difference between basic science and basic research and applied and strategic research and all such matters. It is not because I am ignorant of the natural sciences as opposed to the social sciences, but I find it hard to understand the concept of someone not doing basic research. That has always puzzled me. Whatever applied work one does, one is somehow drawn inextricably into thinking about fundamentals. I have never understood how anyone ever does research without thinking about fundamentals. That relates in particular to the MoD question.
The first article on economics that I wrote was financed by the Office of Naval Research in the United States. I have never found out what it thought that it was paying for, as I have said to your Lordships before. I believed the research to be basic research. If it had been asked what it was paying for, it would have said that it was paying for applied research. That has always led me to need to distinguish what the payer believes he is paying for and what is done. That leads to a further result. Although there are some people doing work in this field, we need more research into what happens in research. It is a difficult subject but we know far too little about what happens from the moment a research contract is awarded until the outputs are delivered.
As the noble and gallant Lord, Lord Carver, is chairman of the committee, I can say that I did my share of military service as a member of something called the Army Operational Research Group. I assume that operational research is applied research. I spent a proportion of my time doing theoretical work on games theory, because that is what I found to do. The MoD may be under the impression that it never finances any basic research. My view is that it probably finances a great deal of basic research without knowing or without anyone ever telling it that is what researchers are doing.
More generally, on the value of research and international comparisons, I am aware of all the difficulties of looking at and interpreting ratios, time trends and all of that. It is a complicated matter. I may add that the definitions which apply to R&D apply more generally to investments. The real point on international comparisons towards which the noble Lord, Lord Dainton, leads us is that at least they pose relevant questions. Let us assume that other countries spend more of their GDP on R&D than we do. We do not have to say that they are right and we are wrong. We must ask why they do it. That may lead us to the answer that they are right and that we are wrong. If the Germans spend more, do they do so because, for example, they are less efficient than we are? Do we spend less because we are much better at it? Even to say that sounds rather unconvincing to me. Are the Germans spending more because R&D is more productive in Germany? That may be the correct answer, but if so it needs to be examined. The reason for looking at international comparisons is not to jump to conclusions but to ask the right questions.

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Therefore, I believe that the noble Lord, Lord Dainton, was right to guide us towards that conclusion.
On the benefits of R&D, if we examine all the economic research evidence rather than specific evidence, putting all the strands together, we get a picture of R&D as overwhelmingly contributing to the economy. If we enlarge the picture to start from basic science, the point holds a fortiori. There is much evidence that innovation is enormously helpful to exports and therefore to the balance of payments. There is not much innovation without R&D and we do not get suitable R&D without basic science. Each part carries on the previous stage. To put it differently, do those who doubt the economic benefits of R&D and basic science, suggest that as concerns the economy we could stop all that and only do it for the sake of our scientific traditions? I can find no one who would logically support that conclusion.
I believe that the case is overwhelming. The report on the science budget brings out clearly that the case that we are funding the science base at too low a scale is overwhelming. To revert to the subject of chemistry, which interests me, reference has been made to ICI. Such a firm ultimately depends on the chemists whom we produce in the country. We shall not have ICI without them and that is why they are important. More generally, pharmaceuticals happens to be one of the industries in which we are world leaders. There are multinationals, but our own firm is a multinational. Without basic university science plus R&D we shall lose that position.
It worries me and always has worried me in everything to do with higher education that we erode the system. The word "crisis" has been used, but there is no crisis. What happens is that 20 years later we ask, "Whatever happened to higher education in Britain?" or, "Whatever happened to science?" It does not come about instantaneously; it happens over time. That is why the scientists who are accused of being boring and going on too long are right to do so. They are right to point to the dangers because those dangers affect our long term future.
As concerns measuring the funding, one of the biggest mistakes the Government made in their period of office was to say, "We will look at the so-called real terms solely in terms of an RPI or GDP deflator". I do not say that the deflator is irrelevant. The RPI measures nothing of value. However, the GDP deflator is more useful and to some degree will measure the value of resources forgone by science. The question is not what the value of the resources forgone was but what could have been bought with the money that the scientists would have been given. There we need a different deflator. The standard decision, which existed until the Government came to power, distinguished real terms in cost terms and real terms in so-called volume terms. We need to revert to a proper deflator to measure volume terms in science.
The reports we looked at have tried manfully but obviously arbitrarily to adjust the deflator by one or two percentage points. There is a broad brush view that somehow science becomes relatively 2 per cent.
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more expensive according to the GDP deflator. The authors of the report, I believe, would agree that that is quite arbitrary. We do not know whether that is so. There is need in an important area of research—one which the CSO and the Department of Trade and Industry will seriously take on board—for proper price indices. The Government do not have to commit themselves to more resources; they need to know the correct figures in order to debate the subject rationally. That is the plea I put forward. I believe that we ought to put more resources into science, but before reaching that conclusion I wish to know what we are doing.
I am not sure that I shall have many friends in your Lordships' House in what I say next. Of course I accept the value of international scientific cooperation programmes. We know the arguments on division of labour, economies of scale and scope, the need to avoid excessive duplication and the value of the direct exchange of ideas and experience. All those are reasons why I favour international scientific collaboration. Nevertheless, having spent most of my life in university, I think that my colleagues spend too much time on international scientific collaboration and too little on science. They become besotted with international scientific collaboration. I cannot remember which noble Lord mentioned the subject—it may have been the noble Lord, Lord Porter—but there is a symmetry, a ratchet. We can build projects up but we find ourselves in an incredible battle when we ask whether we need to go on doing something. I am not against international scientific programmes; quite the contrary. I do not believe that they are sacrosanct.
If the Treasury agrees to finance such programmes, it should finance them properly. It should not play silly games, especially with exchange rates. I hope that we do not reach the stage where social science, or more importantly the SERC, operate in the forward exchange market in order to hedge against future subscriptions to projects. If we are going to do it, let us do it properly.
I wish to make two other points. First, in terms of resources, another concern to me and many is what has been happening to salaries of scientists and researchers, and, more importantly, their conditions of employment. It seems to me—I assume this is as true of the natural sciences as it is of economics—that far too many people are on short-term contracts where their working lives are constantly in peril. That also leads to a distortion of research priorities. One ends up saying, "I must find some research money so that X does not get fired" rather than asking oneself what research one wishes to follow. In other words, one is constantly having, quite rightly, to take human beings into account, but that may distort one's research judgments. We must reconsider the question of salaries and career structures.
I believe that the dual support system is the right way forward. One needs to meet the teaching costs in higher education and then the research and scholarship costs for all academics. I still believe in the old-fashioned view that every academic should be a researcher or a scholar. Further, there must be

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additional institutional and departmental funding of a dual kind and specific moneys must be provided for the research councils. We should not be doing what the noble Lord, Lord Dainton, warned us of, that is, solving a specific crisis in one area by pinching a little of the available money and allocating it elsewhere. We must look at costs systematically.
I strongly support dual support but my main question concerns the polytechnics. It was on Monday, I believe, that we were told that polytechnics are about to become universities, or at least they will call themselves universities. I was rather shattered to read the newspaper reports. If the polytechnics are to go in that direction, we must have some general principles of finance that fund the polytechnics on an equal basis with other institutions. In other words, if dual support applies to the universities, it must also apply to the polytechnics. That is my view. I should like to know the Government's policy.
I conclude by again congratulating all those concerned both with the reports and with the debate today. We have learnt a great deal from the debate but what we all require is not merely a general chat about these matters but some policy and some moves in the right direction. In this case overwhelmingly, moves in that direction mean in the first instance providing more funds for the science budget.
2.10 p.m.
The Minister of State, Department of the Environment (Baroness Blatch): My Lords, I first wish to extend the profuse apologies of my noble friend the Leader of the House for not replying to the debate. I note happily that he is now in his seat. I also join with all other speakers in welcoming the maiden speech of the noble Lord, Lord Porter of Luddenham, whose reputation came far in advance of his arrival in this House. With respect to all scientists, eminent and otherwise, both in this House and outside, it is not an understatement to say that the noble Lord reigns supreme in the world of science. His knowledge, wise counsel and powers of communication in matters scientific are boundless. It is my privilege to reply to a debate in which the noble Lord has made his maiden speech. I speak with great trepidation as my speech comes at the end of a most distinguished line of speakers. The whole House will look forward enormously to hearing much more from the noble Lord, Lord Porter.
I also thank the noble Lord, Lord Peston, for his kind remarks about my promotion. Noble Lords will have to forgive me for sounding a little self-effacing today in replying to such an exciting and stimulating debate. It is good to see the noble Lord, Lord Shacklelon, out of hospital and in his seat in the House, making contributions to our debates.
The noble Lord, Lord Flowers, and many other noble Lords have referred to the interest shown by the Prime Minister in this subject. I assure the House that the record of this debate will be reported fully to my right honourable friend and brought to the notice of the Cabinet Committee.
I have listened with interest to the debate on the three reports produced by the Science and Technology
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Committee. Before commenting on them I should like to congratulate the noble Lord, Lord Flowers, and the noble and gallant Lord, Lord Carver, and their committees on their painstaking investigations into these very important subjects. If I may say so, it is an excellent example of the contribution this House makes to national affairs. The Government welcome this opportunity to discuss their findings and will of course be formally responding to the two more recent reports in the normal way.
A number of important points on the individual reports have been made in the discussion and I hope to cover these during the course of my speech. I would first like to set them in the context of the Government's arrangements for funding strategic decisions on science and technology, and hence to answer some of the points raised by the noble Lord, Lord Flowers, in his concise introduction to this debate. In 1987, in their response to an earlier report by the Science and Technology Committee on civil research and development, the Government noted that Ministers would collectively consider science and technology priorities under the leadership of the Prime Minister—and that the Government would determine in the context of the annual Public Expenditure Survey process their priorities for the contribution which science and technology can make to national economic success while satisfying wider government objectives. Since taking office, the Prime Minister has confirmed that those arrangements will remain in force and has maintained the strong interest shown by his predecessor, as he told the noble Lord, Lord Flowers, and others at their meeting on 28th January. Ministers have been considering science and technology issues under his chairmanship, and that will continue.
However, science and technology cannot be considered in isolation. Decisions are firmly set in the context of the annual PES process and the potential contribution to the nation's well-being. That means, quite rightly in my view, that science and technology priorities have to compete with all other demands on government resources. Although we have heard much concern expressed in the debate today, I believe that the Government's record in support of science and technology over the past decade is a good one.
On that note I should like to comment on the first report under consideration today, Science Budget 1991–92, and in particular on the Government's record in support of the science base. When this Government came to office the science budget stood at £329 million. It now stands at £920 million. That represents a substantial real terms increase of 22 per cent., keeping pace with the growth of GDP over the same period. That is a record any government would be proud of. It provides convincing proof of the importance which the Government attach to a proper level of science funding.
The noble Lord, Lord Flowers, and others drew attention to the fact that the DES supports research through two sources, the science budget and the UFC block grant, which together make up the science base. It has been suggested that public funding of the

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science base has increased more slowly than funding of the science budget. That may be so, but the difference is smaller than has been claimed.
The problem over science base statistics is that UFC funds are provided as block grants and so the actual spend on research is known only in retrospect. The latest firm figures we have are for 1989–90, when the total science base spend was about 16 per cent. above the 1979–80 level. However, in the two years since 1989–90 UFC recurrent funds distributed on research-based criteria have risen by 10 per cent. in each year, keeping well above inflation.
The noble Lord, Lord Porter, past President of the Royal Society, made a number of important points in his erudite maiden speech. He stressed in particular the importance of supporting researchers at the bench, especially young scientists. I acknowledge that there has been difficulty over new grants this year from the Science and Engineering Research Council. However, in a longer-term perspective there has been a 68 per cent. real terms increase since 1979–80 in the value of research grants made by research councils to higher education institutions, even taking into account the temporary problems this year.
As to the future, my right honourable friend the Secretary of State announced yesterday additions of £15.8 million to the 1992–93 indicative science budget allocations for SERC. Those sums were recommended by the advisory board specifically to support the SERC's grants programmes. The noble Lord, Lord Flowers, asked whether that was new money. While a total distribution of funds was announced last November, the SERC's evidence to the Committee was made on the basis of funds already allocated to the council. Hence this is a new allocation to the SERC and should have a significant impact on the grants programme.
I listened with interest to the anxiety expressed by the noble Lord, Lord Porter of Luddenham, about the difficulty of obtaining funds from SERC for his laser project. I promise him that I shall draw his concern to the notice of my right honourable friend the Secretary of State for Education and Science.
We must not concentrate on inputs only. The object is to produce good science and good scientists. Proof that the science base in this country is in excellent condition is provided by the scientists themselves. They have continued to carry out first-rate work over the past decade, with the result that in many fields the UK's record in terms of scientific achievements is world class.
The noble Lord, Lord Sherfield, referred to the highly specialised technique of bibliometrics. I can say only that, like other statistics and indicators, bibliometric data should be used only to indicate broad movements and volumes. Attempts to derive conclusions from small changes in soft indicators are inappropriate.
The changes in the dual support system announced by the Secretary of State for Education and Science last November will make for the more efficient use of public resources made available for scientific research undertaken by the research councils in higher
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education institutions. They will make more explicit the funding of research in higher education. They will encourage better management of limited resources. That must be good for the taxpayer and for our researchers.
Perhaps I may now refer to the specific points that have been raised with regard to the reason for the reform. The new arrangements announced in November clarify lines of responsibility between the research councils and higher education institutions. Those changes will take effect in 1992, but there are no plans for further changes beyond that. We shall check to see that funds are not lost to the universities. We shall arrange to monitor the volume of research that councils sponsor at universities. In practice. I do not foresee any difficulty in ensuring that overall the councils maintain at least the present volume of research that they sponsor at higher education institutions. The councils collectively have increased their real terms investment at universities by 78 per cent. since 1979.
The ABRC's 1987 paper, A Strategy for the Science Base, drew attention to the increasing muddle in the operation of the dual support system. We believe that the changes will help to solve that problem by making it much clearer who is to pay for what. With regard to the final point on the dual support system raised by the noble Lord, Lord Lewis, the transferred funds from the UFC will be associated only with the funds that at present provide the dual funding of research council-supported work. There will remain the funds to support other research funded entirely through the UFC grant.
Of equal benefit to the funding of research in higher education will be the new framework foreshadowed in the Government's White Paper on higher education, published earlier this week. This proposes that for the first time there should be a single body to distribute teaching and research funding to the whole of higher education. That should enable scarce resources to be divided both selectively and fairly to those institutions—be they currently universities or polytechnics—carrying out research of the highest quality.
Turning now to the second report on definitions of R&D, the Government's response, published in March this year, expressed full agreement with the Select Committee on the importance of accurate statistics on research and development. They are an essential tool for the setting of priorities and informing all other policy considerations in this field—
a point that was very well made by the noble Lord, Lord Peston. The widely acclaimed annual review of government funded R&D, published by the Cabinet Office, provides a substantial centrally collated body of information on government expenditure on research and development. Over the years its coverage has been extended and improved. The Government are grateful to the Select Committee for its investigation into the difficult area of R&D definitions and the uses that they serve.
One of the Government's prime concerns is to facilitate international comparisons by using the same definitions as other countries, in this case, the OECD Frascati definitions. The Government have been an

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active participant in the discussions to improve Frascati and the Select Committee report provided material for its contribution to the international debate. With revised Frascati definitions in the offing, there is little point in making interim changes, thereby eroding one of the most useful qualities of statistical series—the ability easily to make comparisons over time. The Government will consider the use and definition of the term "strategic research"—one of the issues raised in the report—following publication of revised Frascati definitions.
Another question raised in the report—that of the classification of defence R&D—is a complex one. If there had been any easy solutions, we should no doubt have found them by now. The heart of the problem is that the, MoD, as well as funding programmes of research, is a major purchaser of military equipment and consequently engages in programmes for the development of specific items of equipment. Most of such development work is carried out under contract in industry.
The basic criterion for inclusion in R&D under the Frascati definitions is whether the work contains an appreciable element of innovation or novelty. Clearly, there c-.n be considerable variations in the degree of innovation involved within a given development contract and the customer has only limited visibility of the point at which it ceases to be significant. We make no secret of the fact that there is an element of uncertainty here. Nevertheless, Frascati is indeed applied by the Ministry of Defence on the basis of the best cur rently available data.
Lord Shackleton: My Lords, perhaps I may ask the noble Baroness a question as she is going rather fast. Will she comment on the committee's recommendation that defence expenditure should not be combined with civil in the estimates for national R&D; that is, recommendation 2.11?
Baroness Blatch: Perhaps, my Lords, the noble Lord will forgive me if I leave that particular question on the table for the Government's written response to the report. Does the noble Lord feel unhappy about that reply?
Lord Flowers: My Lords, we have had the response on that report.
Baroness Blatch: Then I fear that that is a point that I missed in the brief. I shall make sure that there is a written reply to the question of the noble Lord, Lord Shackleton.
If I repeat a little of what I said before, perhaps noble Lords will forgive me. We are not complacent about Iris matter. As the government response to the Select Committee's report makes clear—the noble Lord, Lord Flowers, is confirmed in his view—the Ministry of Defence has set in train a number of initiatives directed at narrowing the area of uncertainty, one of which involves a joint study with representatives of industry, and that has begun. I should make one final point on defence R&D. The present studies bear primarily on the classification of government spending rather than on the figures for total national R&D effort. The reason is that the latter
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are built up from data supplied by those carrying out the work rather than those commissioning it, and applying Frascati to R&D work carried out in-house as distinct from that contracted out is relatively straightforward. Noble Lords may take some comfort from that.
With regard to civil R&D, about which the noble Lord, Lord Shackleton, is concerned, the report states that we as a nation are investing too little. That is not so. Industry's own funding of R&D increased by nearly 50 per cent. in real terms between 1983 and 1989. An increasing proportion of UK government funding of civil R&D is through the European Commission's R&D programmes. Through that route UK companies receive levels of funding for collaborative research similar to those received from the DTI.
The noble Lord, Lord Flowers, spoke of a huge funding gap between basic research and near market research. But much of the Government's financial support for R&D in industry as well as work carried out by the Government themselves is targeted on that strategic area. Better definitions of R&D will help to present a truer picture of UK R&D spend with better international comparisons.
The noble Lord, Lord Flowers, and the noble and gallant Lord, Lord Carver, were concerned about the gap between basic and industrial research. The Government consider that industry should be responsible for funding near market research aimed at producing specific, profitable goods and services. They acknowledge and discharge their responsibility to fund basic science in the research councils, universities and polytechnics. There is a need to encourage innovation in industry, including the transfer of technology from the science base, and the DTI in particular maintains major programmes, including notably the LINK programme of cooperative research, to encourage the vital process of technology transfer.
The third report deals with international scientific programmes. The Government will publish their response in due course so I shall touch now only on the main issues. First, let me deal with those international scientific programmes in which our participation is voluntary. I shall then consider the European Commission framework programme, which requires separate consideration as our financial contribution to it is mandatory. Proposals for major new programmes are usually developed within the international scientific community before being brought to the attention of government. For a given proposal there is almost invariably a clear lead funding body, either a government department or research council, which assesses the proposal in relation to its overall scientific objectives against possible alternative national approaches. The assessment of those guidelines provides advice on assessing the programme and, where necessary, the Cabinet Office co-ordinates interdepartmental interests.
The noble Lord, Lord Shackleton, was concerned about delays in reaching decisions on international projects. By their nature major proposals raise difficult questions for a number of interests and involve major

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commitments. Powerful national and subject lobbies always urge speedy decisions and tend to exaggerate the speed with which our partner countries reach firm decisions backed by money. In no country, not excluding the United States of America, are hard decisions taken quickly and decisions do not involve solely national considerations. But I agree that there should be no unnecessary delays. As the report notes, there is such diversity in the nature and organisation of international scientific collaboration that no single approach can cover all needs. Flexibility is the key.
The committee's report draws attention to the problem of exchange rate movements in funding international programmes and in particular CERN. The new arrangement for calculating members' subscriptions to CERN have greatly reduced the UK's exposure to fluctuations in the value of the Swiss franc. For European Commission currencies, our membership of the ERM evens out the movement of sterling against European currencies.
The Government welcome the constructive comments on the European Commission framework programme on research and development and are pleased to note the Select Committee's satisfaction with the wide uptake of funds in the UK under the second framework programme. I am confident that this trend will continue under the third framework programme. The Government actively promote UK participation.
The Government note that certain members of the research council felt that they did not have sufficient influence on the European Commission R&D framework programme. I am confident again that that is a minority view. During negotiation of the third framework programme the Cabinet Office consulted closely with the relevant departments—notably the Department of Education and Science—and through them with the research councils.
The Government wholeheartedly agree with the committee that the evaluation of the European Commission's research programmes should be given higher priority. The Government continue to press the Commission at both ministerial and official levels to improve the scope, rigour and quality of its evaluation procedures.
The committee's anxieties on public expenditure arrangements for Community R&D are similar to those expressed in the European Community's Committee's 1990 report on the Community's 1990-94 framework programme. A detailed response on those attribution arrangements was given by my noble friend Lord Hesketh on 28th January. Those arrangements are designed to give an equal basis for assessing UK and European Commission expenditure on R&D.
The noble Lord, Lord Sherfield, was concerned about the issue of attribution and the arrangements for the framework programme. I confirm that the Government will address the questions raised on attribution on their written response to the report on international scientific programmes.
The noble Lord, Lord Flowers, made a request for additional funds in 1991-92. He also asked for
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compensation for VAT. On additional funds for the current year, it would be inappropriate for me—even in my new position—to anticipate the Government's response to the Select Committee's report.
In summing up, I should like to reiterate my thanks to the Select Committee for three valuable reports which make major contributions to the continuing dialogue on science and technology policy. With learned and constructive criticisms of such force, there is little possibility of the Government becoming complacent in this field.
By their nature, Select Committee reports and debates such as we have had today tend to concentrate on areas of concern. That is normal and healthy. However, it pays to stand back occasionally to take in the overall picture. I should like to balance our considerations today by noting one or two salient points on the current state of science and technology in the UK.
Government support for science and technology in the current financial year will be £5.5 billion; and total industrial innovation science and technology expenditure by Government will be £104 million—a 24 per cent. cash increase on 1990–1. Over this Government's period in this office, the science budget allocation has risen in real terms by 22 per cent. Expenditure on environmental research and monitoring and on R&D into renewable energy sources have together increased over 17 per cent. in cash terms this year.
I believe that these figures illustrate the Government's strong commitment to the vigour of R&D in the UK and that effective mechanisms to direct funds to priority areas are in place and functioning well.
2.35.p.m.
Lord FlowersLords, the debate has been fascinating and somewhat encouraging. There is no need for me to add to it and still less need to try to reply. After all, some of us have yet to try to find some lunch. I thank all noble Lords who have taken part; everyone has done so most effectively. I thank especially our maiden speaker, the noble Lord, Lord Porter of Luddenham. His speech was exactly right for such an occasion and we greatly enjoyed it.
I wish to thank in particular, first, the noble Lord, Lord Walton of Detchant, who reminded the House that the situation in the medical sciences is just as serious. If he had not done so there might have been an unfortunate bias in our debate. Secondly, I thank the noble Lord, Lord Dainton, who clearly spelt out our anxieties about the future of the dual funding system. Thirdly, I thank the noble Lords who gave support and encouragement to young university scientists whose work has been placed in such jeopardy by the present funding situation. I warmly thank the noble and gallant Lord, Lord Carver, for presenting his two reports so elegantly. He will presently move them himself.
I thank most warmly the noble Baroness, Lady Blatch, for responding on behalf of the Government. She gave us a little encouragement, for which I am

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grateful, though not much. We shall examine closely the figures that she gave and the comments that she made n order to see what we can get out of them.
The noble Lord, Lord Sherfield, encouraged your Lordships' committee to persist in the hope that one day the penny will drop. The committee's members will persist in the hope that it will be a pound that will drop. The £12 million of extra money for which I begged for the year 1991–92 is needed to meet a crisis. It is no good saying that when in six months' time the Government reply to our report they might have something to say about it. By then I fear that the crisis will have passed into something much worse.
On Question, Motion agreed to.

R&D Definitions: Select Committee Report
2.37 p.m.
Lord Carver Lord Carver rose to move, That this House takes note of the Report of the Select Committee on Science and Technology on Definitions of Research and Development (R&D) (3rd Report, 1989–90, HL Paper 44).
The noble and gallant Lord said: My Lords, I beg to move the first Motion standing in name on the Order Paper.
On Question. Motion agreed to.

International Scientific Programmes: Select Committee Report
Lord Carver Lord Carver rose to move, That this House takes note of the Report of the Select Committee on Science and Technology on International Scientific Programmes (2nd Report, 1990–91, HL Paper 24).
The noble and gallant Lord said: My Lords, I beg to move the second Motion standing in my name on the Order Paper.
On Question, Motion agreed to.

Highland Regional Council (Harbours) Order Confirmation Bill
Brought from the Commons; read a first time, and pursuant to the Private Legislation Procedure (Scotland) Act 1936 deemed to have been read a second time and reported from the Committee.

Motor Vehicles (Wearing of Seat Belts in Rear Seats by Adults) Regulations 1991
2.39 p.m.
The Minister of State, Department of Transport (Lord Brabazon of Tara)The Minister of State, Department of Transport (Lord Brabazon of Tara) rose to move, That the draft regulations laid before the House on 2nd May be approved [19th Report .from the Joint Committee].
The noble Lord said: My Lords, the regulations would require passengers aged 14 or more travelling in rear seats of cars and taxis to wear a seat belt where one is fitted and available. It is estimated that this
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measure will save up to 100 lives and 1,000 serious injuries each year. This would make a major contribution towards achieving our target of reducing road accident casualties by a third by the year 2000.
The benefits of wearing seat belts are well proven and widely accepted. The introduction of mandatory wearing of seat belts by drivers and front seat passengers in 1983 has prevented at least 200 deaths and 7,000 serious injuries every year since then. The extension of the law in 1989 to children under 14 occupying rear seats has saved an estimated 200 children from being killed or seriously injured in the first year alone.
That is convincing evidence for extending the law again to include adults in rear seats. I am sure many of you will have seen film of simulated crashes with unrestrained dummies in rear seats. Such film shows why we cannot accept the argument that people should be free to decide for themselves whether or not to wear seat belts. Passengers in rear seats who do not wear seat belts risk not only injury to themselves, but in an accident are thrown forward with tremendous force often injuring or killing other occupants of the car.
The consultation exercises that we have carried out, both on the proposal to introduce this legislation and later on the terms of the regulations themselves, have shown an overwhelming majority of responses in favour of requiring rear seat adult passengers to wear seat belts; the police, the motoring organisations, road safety bodies and the medical profession all strongly support this legislation.
As I have said, the regulations will only require seat belts to be worn when they are fitted and available. This principle recognises the practicalities of everyday life. Large families or groups will not be prevented from travelling because there are more people than restraints. Car owners will not be required to fit rear seat belts in cars which do not have them, although I would strongly advise them to have them fitted. Fitting of rear seat belts in all new cars and taxis has been required since 1987 and this means that almost the entire vehicle fleet should be equipped in two or three years' time. As with existing legislation on seat belt wearing, the regulations provide for a number of specific exemptions including exemption on medical grounds.
The penalty for not wearing a rear seat belt when one is available will be a £16 fixed penalty or, if the case goes to court, a fine of up to £100, but I am sure that most people will accept that this is a sensible and beneficial measure and that it will therefore be largely self-enforcing. That is certainly the case in respect of front seat belts where the compliance rate is almost 95 per cent., one of the highest in the world. It is vital that the public should be well aware of any new legislation of this sort and we plan to support introduction of the regulations with a major publicity campaign to increase public awareness.
The regulations will considerably reduce the terrible toll of deaths and serious injuries on our roads and I commend them to the House. I beg to move.
Moved, That the draft order laid before the House on 2nd May be approved.—(Lord Brabazon of Tara.)
2.43 p.m.
Lord Clinton-Davis: My Lords, the Opposition unreservedly support the draft regulations to which the Minister spoke. I compliment the Government on introducing them. The Minister may feel that it is an unusual state of affairs for me to compliment him on anything, but I do so today without qualification. I am more than pleased that he is proposing a substantial publicity campaign; that is a vitally important part of making the public aware of the provisions that we are discussing.
The Minister was right to draw attention to the benefits that have accrued from the requirement to wear front seat belts. There can be little doubt, based upon close examination of the situation by organisations such as the Automobile Association, the RAC, the British Medical Association, the Society of Motor Manufacturers and Traders—and the Parliamentary Advisory Council for Transport Safety concurs in the view—that this is a measure which is critically important in terms of saving lives and reducing injuries.
The Minister spoke of penalties; in my view the criminal penalties that attach are less important than the civil sanctions that have applied in regard to the non-wearing of seat belts. People who are totally innocent of any negligence by being passengers in a vehicle may nonetheless find that their damages are substantially reduced—between 30 per cent. and 50 per cent.—in the event of a claim being made because contributory negligence attaches to the fact that they may not have worn seat belts.
That civil sanction is perhaps not widely understood. In the publicity campaign which the Minister is about to launch will he take note of that point? Whether someone is fined £100 or less for not wearing a seat belt may be by the way. What is important is that people should understand the gravity of having a substantial claim for damages enormously reduced. From my experience long ago people were caught by surprise that the civil sanction applied. They tended to blame their solicitors. I hope that the Minister will take that point on board. It is part and parcel of the task of alerting the public not only to the benefits of wearing a seat belt in the rear of a car but to the critical problems and prejudice which they may suffer if they do not and are involved in an accident.
2.45 p.m.
Lord Callaghan of Cardiff: My Lords, both Front Benches are in favour of this measure, which I am sure makes it worth while, although some of us who are more sceptical may wonder. I look for a little advice and help from the Minister.
Perhaps I may begin with a personal account. When I am free and have nothing on my mind, I sit in the front seat of the car and securely fasten my seat belt. I proceed happily and safely to my destination. However, when I have work to do I retire to the back seat without a seat belt. I take out my papers, open them up, read them with some ease, put them back and even write a few notes. I manage to get my work
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done before I reach my destination. The question is this. Has the Minister yet discovered, and has he communicated to his colleagues, a foolproof and simple way of reading his official papers while travelling between his home and another destination? If he has, would he kindly pass it on to me because I have yet to find one.
Lord Boyd-Carpenter: My Lords, I hope that my noble friend will find my question simpler and easier to answer. It refers to paragraph 3 of the regulations. My noble friend enthusiastically maintains—and for once he is enthusiastically supported by the noble Lord opposite—that the wearing of seat belts has been a valuable factor in reducing casualties and injuries. In those circumstances, why do the regulations not apply to a,
"motorcar which is not constructed or adapted to carry more than 8 passengers in addition to the driver"?
In other words, why should the regulations not apply to a vehicle where there are more than eight passengers? Is the provision designed to prevent the application of the rule or principle to coaches? If so, why? I have often felt that the fast coaches which operate on our motorways, with their seats close together, are probably more dangerous in the event of an accident than if one is seated in the back of an ordinary car. If we are to apply these rules to the back seat of an ordinary car, it is a little difficult to understand why the Government are not contemplating extending them to coaches, where the danger is at least as great and many people think even greater? Perhaps my noble friend will indicate whether the opinion I have expressed on the reason for paragraph 3 of the order is the right one—it may not be—but if it is, do the Government have it in mind to extend the provision to coaches?
Lord Walton of Detchant: My Lords, I offer my warm support for these regulations. In doing so perhaps I should declare an interest, being a medical adviser to the Automobile Association. It has been a legal requirement since 1987 for all new cars to be fitted with rear seat belts. Many older cars have them. Now more than half the cars on our roads have these seat belts fitted. About 300 people are killed and over 4,000 seriously injured each year while travelling in the rear of cars. Studies in Sweden have shown that these injuries can be reduced by up to 55 per cent. when rear seat belts are worn. But the very low rate of the voluntary wearing of seat belts in this country minimises the benefits of these restraints.
As the introduction of the law requiring the use of seat belts in the front seat has, as the Minister said, increased the wearing rate to 95 per cent., legislation is obviously desirable. While it is true that it will cause minor inconvenience to some people—perhaps to many—I am sure that that is greatly outweighed by the saving of lives and the reduction in injuries that will result if these regulations come into force.
2.50 p.m.
Lord Brougham and Vaux: My Lords, I warmly welcome the measures so ably moved by my noble friend the Minister. When I was president of the Royal

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Society for the Prevention of Accidents we were, and it still is, in favour of passengers being restrained in the rear seats of vehicles. RoSPA has been pressing also for the inclusion of a requirement that vehicles which are required to be manufactured with seat belt anchorage but not required to have seat belts fitted should be subject to retrofitment over a period not exceeding 18 months. We were advised that the cost of so equipping a car would be less than the cost of purchasing a mid-range car radio cassette player. We also widerstand that, even with the decline in the number of these cars on the market, there would be a substantial saving of lives, which is conservatively put in excess of 100 people each year, with considerably greater savings in injuries.
The other matter to which we wish to draw attention deals with those who decide not to wear seat belts. We believe that offenders should be subject to a fixed penalty fine of not less than £75 and not £16 as my noble friend has suggested, I believe that that is far too low. 1 warmly support the measure.
2.52 p.m.
Lord Monson: My Lords, the fact that I am probably the only speaker who is going to oppose the measure this afternoon should not be taken as an indication of the support the measure has in the country, or even in this House. There are many noble Lords who privately agree with me, but who feel that to come along on a day just before a Recess to speak against it is spitting into the wind. Well, I for one have never been worried about spitting into the wind.
The fact that various organisations as cited by the noble Lord, Lord Clinton-Davis, support this measure would be of great significance were we a corporate state such as Mussolini's Italy. Since we are not yet a corporate state the views of individual organisations carry no more weight in law than the views of individual people. I am also interested to hear the statistics which the noble Lord gave. I know he gave them in good faith, but, if I may say so, they are suspiciously round-100; 1,000; and so on. Rather more than 10 years ago I well remember the noble Lord, Lord Houghton of Sowerby, putting down a Question for Written Answer asking how many people were killed as a result of smoking. Back came the answer from the DHSS-50,000. Within five years that fig Ire had doubled to 100,000. The DHSS is now rather more cautious and only increases that by 10,000 a year. Frankly, that is nonsensical. Either 50,000 was nonsense or 100,000 was nonsense and possibly 110,000 is too. Therefore we must regard these figures with a little caution, bearing in mind that the claims that 201) lives a year are saved by wearing front seat belts are a good deal less than the claims made at the time the original measure went through.
I turn now to a purely practical note, leaving the important matters of principle and morality to the end. Six days ago I tried to highlight the absurdity of applying this law to London taxis operating in built up areas with a speed limit of 30 miles an hour or less. London-style taxis are found not only in London, but in many provincial towns as well. There can be no question of a passenger coming into sharp contact
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with the driver in the event of a collision. The Minister on the day in question replied that on average 28 people in London were seriously injured in London taxis. As we know, serious injury can range from a simple fracture of the little finger, upwards. That is not necessarily serious by normal definition. I am prepared to bet that a far greater number of people are injured on London buses. I think that the noble Lord, Lord Boyd-Carpenter, probably feels the same way. However, there is no question of bus passengers being compelled to belt up. Standing passengers on buses, trains and underground trains are particularly vulnerable. I happen to know someone who not very long ago was seriously injured while standing in a London bus: she was flung against a metal seat. Buses, tubes and trains are by no means accident free. Logically, if one applies this law to taxis, one should apply it to all forms of transportation in London. I am certain that more than 28 people a year are seriously injured playing rugby football or similar dangerous sports. We read that 400 Londoners are seriously injured each year by dogs, not all of them by any means pit bull terriers or other of the breeds which the Government propose to ban.
I pointed out last Friday that the number of lives lost in taxis is minuscule compared with the number of deaths resulting from falling down stairs or from sun bathing, which produces skin cancer, as has now been made clear. Last year 500 men and 600 women died from that form of cancer. On past precedent, applying this regulation to taxis in urban areas will save three lives in every four years—that is to say, three lives in every 2,624,000. Put another way, if taxis in urban areas were exempt, 99.99989 per cent. of the population would still be alive.
The law will in practice be unenforceable. The taxi driver is most unlikely to know the name and home address of the passenger; and in the absence of identity cards, no passenger in his right mind will give his correct name and address to the police. What about medical exemptions for foreign visitors? Will the police be trained to interpret exemption certificates in Spanish, Hungarian, Urdu and Thai, or will an English doctor be called in to issue a separate certificate?
Let us consider the case of two elderly and possibly rather frail, physically or mentally, American tourists being driven from the Hilton Hotel to Shaftesbury Avenue to see a play. The driver does not himself have to wear a seat belt—the Government have failed to mention that significant point. Are taxi drivers dying in droves although they are not belted? I do not think so. The driver gets out to help them to buckle their belts which they are incapable of doing themselves. The taxi crawls up Piccadilly at an average speed of seven or eight miles an hour, which is the average speed at which cars travel in London. It is a hot night and the belts chafe the passengers' necks; both passengers happen to be less than 5'2" tall. On the return journey the driver gets out of his cab in the middle of Shaftesbury Avenue to help the passengers put on their belts. This causes a traffic jam stretching

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all the way back to St. Paul's Cathedral. It does not bear thinking about. The idea that it will not adversely affect the tourist trade is sanguine in the extreme.
The next objection, which applies to cars as well as to taxis, is both practical and moral. Unless suitable head restraints are fitted in the rear of both cars and taxis, which may of course adversely affect the rear view of the driver, whiplash injuries are all too likely. The consequences of whiplash injuries can be severe in the extreme. I did not think they were until quite recently when a close relation of mine by marriage suffered just such an injury, not in a car but while pursuing winter sports. He was told that he would very likely have died but for prompt medical attention. The effect of the whiplash, if I have my medical facts correct, detached the lining of his artery from the wall of the artery. That is not by any means a totally uncommon consequence of whiplash injuries. Therefore to tell people that whiplash injuries are a small price to pay for avoiding being thrown forward against a front seat will not wash.
On the question of pure principle, there is no mandate for this measure. It did not figure in any party's manifesto at the last election. Secondly, we are not being given adequate time to discuss nor the opportunity to revise this measure, as has been the case with all earlier compulsory seat belt measures. Your Lordships will remember that we spent many hours debating the law making it compulsory for children to wear seat belts in the rear seats of cars. It was vigorously opposed by Lord Bruce-Gardyne from the Conservative Benches by the noble Lord, Lord Cobbold, from the Liberal Democrat Benches and, of course, from these Benches by my noble friend Lord Erroll and myself.
This measure contradicts earlier assurances given by Ministers when the front seat belt legislation was going through Parliament. In answer to complaints that many passengers found seat belts extremely uncomfortable, the Minister's reply was, "Don't worry, they will always be able to sit in the back seats without having to wear seat belts."
I assume that the Liberal Democrats are supporting the regulations, although none of them has spoken yet. I say that because, when the children's rear seat belt legislation was going through this place, the noble Lord, Lord Tordoff, acknowledged that the case for imposing compulsion on adults was weaker than the case for imposing it on children. One can understand the Labour Party unreservedly supporting this measure because, with a few brave exceptions—and I can think of a few—the present day Labour Party is essentially anti-individualist and anti-libertarian.
The noble Lord, Lord Peston, gave the game away last Friday when he stated that the matter is to do with correct behaviour. That implies shades of the dreadful priggish disease which is sweeping through American universities—namely, "political correctness"—in which anyone manifesting the slightest suspicion of sexism, racism, ageism, heightism, weightism, and so on, is harangued like a back-sliding Chinese peasant in the days of Chairman Mao.
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It is curious that a Conservative Government should adopt bossy Scandinavian socialist-style dirigisme of this sort. In 1979 the Conservatives claimed to be the party which would return decision-making to the people. If one does that, it implies that one is giving people the right to make mistakes—or what are deemed by others to he mistakes—provided that they do not harm other people, only themselves. To some extent that is still possible. For example, people who sunbathe are allowed to take the slight risk of attracting skin cancer for the transient pleasure of acquiring a tan.
I do not understand why car passengers—provided that they are made aware of the statistics and provided that the driver of the car agrees, because he is, so to speak, captain of the ship—should not be allowed to take the statistically even slighter risk of death or injury for the pleasure of riding in what the noble Lord, Lord Callaghan, rightly pointed out was appreciably greater comfort. For that reason, I oppose the introduction of these regulations.
Lord Nugent of Guildford: My Lords, this is an echo of 10 years ago. The noble Lord, Lord Monson. is certainly consistent and must be congratulated on that fact, even if I cannot congratulate him on his personal judgment. It may be a matter of constitutional interest to him to know that the great vote in 1981, which concerned whether we should have compulsory seat belts in the front of cars, was a free vote. It was regarded as a matter which touched the liberty of the subject and therefore, as I said, it was a free vote.
We had a tremendous debate on the issue in this House in which I believe the noble Lord took part. We won the debate in this place, amended the Government's Bill and sent it back to the House of Commons. It very nearly did not get the vote on the Floor of the House because leaders on both sides, as the noble Lord, Lord Callaghan, may remember, arranged for the Lords amendment to the Bill to be taken late at night—in fact, it was the night before the wedding of his Royal Highness, Prince Charles—when they thought that the prospect was better for the Government side rather than the supporters of the amendment. However, I am glad to say that my supporters carried the day and we won.
It was certainly a democratic affair. The noble Lord, Lord Monson, cannot complain of any government being magisterial in the matter. I believe that since that time public opinion in general—as we see reflected from all sides of the House—is that that was a sensible thing to do. Indeed, everyone accepted it and within a very few weeks there was about 95 per cent. observance. We have since moved on from one measure to another. This is the final one.
I congratulate my noble friend the Minister on introducing the measure which will make compulsory the wearing of seat belts throughout a motor car, with the qualification that in rear seats it will apply only where seat belts are fitted. They will be progressively fitted in all motor cars and generally worn. They will undoubtedly save a number of lives and prevent many injuries. The figure will probably run into hundreds of lives. The statistics may be modified. They were on the wearing of front seat belts. We now have a figure of

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200. My noble friend said that a thousand injuries a year have been avoided. They are substantial figures. We are talking about human lives. If we can secure the forecast number of saved lives and avoided injuries through the wearing of rear seat belts in motor cars, surely the noble Lord, Lord Monson, despite his arguments, is in favour.
I warmly congratulate my noble friend on being the Minister to introduce the final measure in the cycle. I have happy memories of the great dramas of the past. It is splendid that public opinion has now evolved and there is now general support for what is an entirely practical measure. I congratulate my noble friend and have much pleasure in supporting him.
Lord Monson: My Lords, before the noble Lord sits down, I take his point that it is desirable to save lives. But does he agree that as many lives could probably be saved by compelling motorists to drive with their side lights on throughout the day? That would not involve any restriction upon individual liberty.
Lord Nugent of Guildford: My Lords, I doubt whether that would make much difference.
Lord Marsh: My Lords, one of the things that I find fascinating, like many other noble Lords who have served in both Houses, is the number of debates where the degree of passion raised seems out of keeping with the issue involved. We see that, whether it is homosexual law reform or car seat belts. The noble Lord, Lord Monson, whose debating qualities are recognised by everyone in the House, moves marginally towards an exaggeration of the infringement of personal liberties involved in the measure. After all, I suspect that every Member of the House has spent many hours sitting in an aircraft, strapped to a seat. Perhaps I may help the noble Lord, Lord Callaghan, but I have never found a problem in eating, sleeping, drinking, watching bad movies and working.
Lord Callaghan of Cardiff: My Lords, that is different.
Lord Marsh: My Lords, it is different, but neither do I find any difficulty getting into my car seat and putting on a seat belt. I do it almost automatically. Occasionally, a policeman standing by draws my attention to the fact that I have not done so. I smile sweetly and put it on. I do not see the problem.
The biggest problem, which is why I was pleased to hear the Minister mention the publicity campaign, is that everyone recognises the risk and accepts the intellectual case, against which it is difficult to argue, but has the belief that it cannot happen to them. That is why it is important to have a publicity campaign.
There is no question but that seat belts have an effect. I had a crunch on one occasion. As a fairly large character, I managed to break seven ribs, but did not go through the windscreen, as a result of deceleration. There were other unpleasant effects. There have been many encouraging factors about this brief debate: first, the Minister's policy; secondly, the changes to the law; thirdly, the public relations campaign which will accompany the introduction of the measure; and,
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fourthly, the solitary, splendid isolation of the noble Lord, Lord Monson, who has just spoken against the measure.
The Viscount of Oxfuird: My Lords, I stand before your Lordships as a viable statistic. A year ago last February, my wife, my seven year-old son and I were involved in a serious car crash which kept us in hospital for many weeks. What is important about legislation of this nature is the effect it has on the concentration of minds. The mind can be concentrated only by establishing legislation which draws attention to a fact. As we see the cars on the motorways or the small country roads where perhaps greater dangers lie, we must consider all the people in the car and the restraint of as many as possible. Because of this restraint, fortune is on the side of my family and, I am sure, of many other Members of your Lordships' House.
My noble friend must be congratulated for dealing in solid terms with a situation which for a long time has not been properly addressed.
Lord Ironside: My Lords, I support the introduction of this legislation. I was a sufferer in that I had a serious car accident on 11th January 1978. Luckily I can remember nothing about it, so I can drive safely again. However, since I lay unconscious in hospital for three weeks, I realise the full implications of not wearing a seat belt. I had to spend four years justifying my actions in the High Court in order to claim damages and I was successful. There were technical reasons why that was so. When I thought of the accident afterwards I recognised that I was not wearing a seat belt because at that time in 1978 cars were not properly designed for belts. Therefore, people were discouraged from buckling them up in an easy fashion.
I see people at the moment not wearing seat belts in coaches, lorries, buses and taxis. To my way of thinking, the back seats of taxis are not designed for seat belts. If we are now considering having seat belts in the back seats of cars, taxis and coaches, much more attention must be paid to the design of vehicles to make it easy for people to wear seat belts.
Lord Brabazon of Tara: My Lords, I thank noble Lords who have been kind enough to support the regulations which I brought forward this afternoon. First, I shall answer some of the points made in the debate and then those made by the noble Lord, Lord Monson, who has been alone in opposing the measure.
The House was interested to hear the personal experiences of my noble friends Lord Oxfuird and Lord Ironside: that the wearing of a seat belt helped the former and would have helped the latter. We are pleased to see my noble friend Lord Oxfuird back in his place after another visit to hospital to sort out the problems he experienced after his car accident.
I thank the noble Lord, Lord Clinton-Davis, for his warm support for the measure. We welcome his support for any measure that the Government propose and look forward to more occasions like this. He made an important point which was reiterated by

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the noble Lord, Lord Marsh, about publicity for the regulations. I wish to take the opportunity to congratulate the Kwik-Fit company for running its television campaign at present about the benefits of wearing rear seat belts. We shall mount our own campaign at the beginning of June, running up to the implementation of the measure on 1st July.
The noble Lord, Lord Clinton-Davis, made an interesting point about the possibility of civil actions in respect of negligence and damage. I shall look into it. Whether or not it would be right for the Government to attempt to influence the courts in their actions I do not know. It may be possible to point out in some way to people that this could be the result of failing to obey the new law. However, that would require a certain amount of investigation. The noble Lord, Lord Callaghan, made an interesting point about attempting to study papers in the back seat of a car. In many ways I endorse what he said, but personally I prefer not to attempt to read while driving as I find that rather difficult.
Noble Lords: Oh!
3.15 p.m.
Lord Brabazon of Tara: My Lords, I meant to say that I find it difficult to read while travelling as a passenger rather than as the driver of a car. I hope noble Lords will not misunderstand me.
Over the years the improved design and fitment of seat belts in the rear of vehicles allows them to be worn with considerably more comfort and with a great deal less loss of convenience than used to be the case. My noble friend Lord Boyd-Carpenter touched upon the wearing of rear seat belts in coaches and mini buses; in other words, those vehicles with more than eight seats. Belts are required to be worn where they are fitted; that is to say, to all forward facing exposed seats. However, it is not as yet a requirement for all seats to have rear seat belts fitted. That is because under the terms of the relevant EC directives no manufacturer can be obliged to fit seat belts or anchorages other than to the front seats and all exposed forward facing seats. We have pressed the Commission to bring forward proposals as soon as possible which would require seat belts to be fitted on all seats in coaches and mini buses. We strongly encourage the voluntary fitting and wearing of such seat belts. However, as I have said, at the moment we are held up by circumstances beyond our control.
My noble friend Lord Brougham and Vaux considered that we should introduce retrospective fitment. I am afraid the Government do not agree with that view. Such a measure would be unduly difficult to insist upon. As I said in my opening remarks, almost the entire fleet of cars will be fitted with rear seat belts by the mid-1990s. My noble friend also suggested that the fine was too low. That is a matter of opinion. It is the same as the fine for failure to wear a front seat belt.
I am most grateful for the kind remarks of my noble friend Lord Nugent of Guildford who congratulated me on introducing these regulations this afternoon. However, it is my noble friend who should be
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congratulated as he can be considered to be almost the father of seat belt wearing. It was his tireless work which has got us where we are today. As my noble friend said, we are now on the last chapter in the book. My noble friend also answered some of the points which the noble Lord, Lord Monson, raised.
The noble Lord, Lord Monson, suggested that he was one of many, both inside and outside the House, who oppose this measure. Noble Lords inside the House must speak for themselves on this matter, but as they have not in general spoken against the measure today I trust that that is a fair indication of sentiment. There has been a number of speakers this afternoon and I believe it is fair to say that, apart from the noble Lord, Lord Monson, speakers have all been in favour of the measure.
A recent opinion poll by the GALLUP organisation showed support for the compulsory wearing of rear seat belts at some 82 per cent. I know one should not always believe everything that is claimed for opinion polls, but when the percentage in favour of the measure is so high it needs to be taken into account. The noble Lord, Lord Monson, suggested we had no mandate to introduce this measure, but I do not believe that that is the case. We have a mandate to improve road safety. This measure is one step in that direction.
Lord Monson: My Lords, is it not better to try to prevent accidents happening in the first place rather than merely try to mitigate the consequences of accidents?
Lord Brabazon of Tara: My Lords, the noble Lord is quite correct. That is what we are doing. This is only one measure in a series of measures to improve road safety. To prevent accidents happening in the first place we need to build better roads as we are doing—and to make improvements to the design and construction of cars. We shall be pressing for such improvements. The noble Lord suggested that the measure contradicted earlier assurances given at the time when the wearing of front seat belts was introduced, and that this measure was an extension of the nanny state. I certainly do not wish to see the nanny state extended.
However, times change. The success of the measure relating to the wearing of front seat belts has determined that we should press on with this measure. I remind the noble Lord that whatever interpretation he may wish to put on the statistics, despite a 44 per cent. growth in traffic, the number of front seat passengers and drivers killed or seriously injured in 1989 was 16 per cent. lower than in 1982, the last year when seat belt wearing was not compulsory. In the first two years following the introduction of the new law, car occupant casualty victims arriving at hospitals fell by 15 per cent. and admissions fell by 25 per cent. Those figures speak for themselves.
The noble Lord suggested that taxis should be exempt. However, in the case of taxis overall, not just London taxis, casualties among taxi passengers are not insignificant: some 140 people are killed or seriously injured each year. Taxis are not limited to operating in urban areas. Many operate on

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motorways, to and from airports, for example, along the M4 and clown to Gatwick where high speeds are obtained.
I am grateful to noble Lords who have so strongly supported the regulation. I do not suppose that whatever I say will ever convince the noble Lord, Lord Monson, and I shall just have to allow him to remain in the minority.
The Earl of Selkirk: My Lords, perhaps I may ask a question which may affect a number of us. What happens in the case of those of us who have cars without seat belts on the back seat? Is there any obligation to fit them or to have the car changed?
Lord Brabazon of Tara: My Lords, there is no obligation to fit rear seat belts if they are not fitted compulsorily—as they must be in cars built post 1987. However, if my noble friend were to decide to fit rear scat belts—and I would urge him to do so—I am sure that he will find it most beneficial.
Lord Harvington: My Lords, perhaps I may ask the noble Lord one very quick question. Supposing seat belts ate fitted and someone rather stupidly takes it into hip head to remove them, would he then be breaking the law?
Lord Brabazon of Tara: Yes, my Lords.
On Question, Motion agreed to.

Employment Codes of Practice (Revocation) Order 1991
3.22 p.m.
The Earl of Strathmore and Kinghorne The Earl of Strathmore and Kinghorne rose to move, That the draft order laid before the House on 15th April be approved [16th Report from the Joint Committee].
The noble Earl said: My Lords, one of the Government's first measures in their step-by-step reform of legislation on the closed shop was to issue a statutory code of practice on the subject in 1980. That code gave guidance on how union membership agreements and arrangements should be operated, so as to obviate the worst excesses of the closed shop. However, a succession of Acts of Parliament, culminating with the 1990 Employment Act, has made all forms of the closed shop effectively unlawful. It is therefore clear that the Closed Shop Code of Practice no longer serves any useful purpose. In the 1990 Act Parliament gave the Secretary of State the power to revoke obsolete codes and I am sure that the House will agree that revocation is the appropriate course of action where the Closed Shop Code of Practice is concerned.
I turn now to the other code of practice covered by the draft order, which is generally known—in so far as it is known at all—as the Industrial Relations Code of Practice This code was published in 1972 to:
"give practical guidance for promoting good industrial relations",
in accordance with the principles of the previous year's Industrial Relations Act.
The industrial scene has, of course, changed enormously in the 20 years since that Act was passed, and the code cannot help but be an anachronism today. Fortunately, much of the subject matter which is of lasting value is available in a more up-to-date form, either in the ACAS codes of practice or in the popular series of ACAS guidance booklets.
That being so, I hope that noble Lords on all sides of the House will agree that the time has come for the Industrial Relations Code of Practice and the Closed Shop Code of Practice to be revoked. I beg to move.
Moved, That the draft order laid before the House on 15th April be approved [16th Report from the Joint Committee].—(The Earl of Strathmore and Kinghorne.)
Baroness Turner of Camden: My Lords, I thank the Minister for his usual clear statement of what the order entails. I appreciate that this arises from legislation already passed by both Houses and that we therefore have little choice but to accept it in accordance with the traditions of the House. Nevertheless, I should like to make a few points.
The order arises from government legislation based in the employment field, although almost all of it is concerned not with employment and certainly not with the intention of strengthening employee rights relative to the employer, but rather with restricting the rights of trade unions. The Government will claim that their legislation has improved the industrial relations climate in this country, citing the diminished number of disputes, although that situation is changing. I believe that, where that has happened, it has had as much to do with threatened unemployment and particularly with the decline of jobs and job opportunities in manufacturing industry as it has had to do with the so-called employment legislation, although that of itself has had a weakening effect upon the power of employees to oppose redundancies and the withdrawal of rights inflicted upon them.
There is little that one can say about the 1983 code of practice which is being revoked as a result of the order. As has been indicated by the Minister, this arises directly from recent employment legislation which has been passed by the House. As to the revocation of the code of practice known as the Industrial Relations Code of Practice, I believe that I am right in saying that it was originally introduced by a Conservative Government. It is now maintained that it is not necessary because, I gather, ACAS codes of practice have rendered it redundant. No one will quarrel with the notion that a code enacted almost 20 years ago needs revision and updating, but to leave it entirely to ACAS seems to me to be mistaken. It signifies that the Government are prepared to bow out of responsibility in that important area.
As has already been pointed out in discussion of the order in the other place, employers' activities could do with some form of guidance as to good practice, which is what codes are all about. The Government often seem to give the impression that all disruptive behaviour in the industrial scene arises from the actions of employees supported by their unions. However, such actions are all too often reactive. The employers take some step which is widely perceived to

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be unfair and that leads to disruption. The most recent example is the action by Rolls-Royce in relation to the contracts of its employees. I should have thought that that was bad industrial practice by any definition, and it may well be illegal. That may be for the courts to determine, but codes of practice should indicate what is good practice, and that certainly is not.
As I said earlier, I do not like the legislation which the Government have initiated and which has been passed by both Houses. The Government have weighted the odds very much against employees and their unions and heavily in favour of employers, but that has not improved our competitive position or employment opportunities, as current figures show. When we at length have a Labour Government, we shall introduce legislation designed to give a fair and balanced framework of industrial law which preserves rather than destroys individual rights. The Government are gravely mistaken if they think that there is electoral mileage to be gained by flagging up an intention to introduce yet more restrictive anti-union legislation if they are returned for another term. What has already been done is widely perceived as being unfair.
Having said that, we on this side of the House accept that it is not the tradition to oppose orders which have been passed by the other place or orders which are based on legislation already carried by this House. However, it would have been wrong for me to give the impression that we are in any way happy about what has happened. The noble Earl will know that we are not, but, having said that, I offer no opposition to the order.
Lord Meston: My Lords, I had not intended to speak, but I share the anxieties of the noble Baroness. It may be that the closed shop code is otiose, but, like her, I am concerned with the revocation of the industrial relations code. Codes have an inherent value in setting and raising standards. They also have an evidential value. Only two days ago I was in an industrial tribunal and was able to refer to the industrial relations code, which is now being revoked. I wonder whether the Government can be so sure that the vacuum which will undoubtedly be created will be filled by the non-statutory ACAS codes.
I ask the Minister whether any attempt was made to bring up to date the Industrial Relations Code of Practice. The message which seems to come from this order is that standards no longer matter or no longer concern the Government. Looking now at the legislation that we have in force in this country, people will see that there is a statutory provision for the creation of codes of practice; but they will also see that that code of practice has been revoked. It is a matter of concern and should not pass without comment.
3.30 p.m.
The Earl of Strathmore and Kinghorne: My Lords, I shall attempt to reply first to the noble Baroness, Lady Turner, and then to the noble Lord, Lord Meston. The position on union membership is perfectly clear. No individual can lawfully be refused
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employment or be dismissed from his employment just because he is or is not a trade union member. Everybody knows the position and there is no need whatsoever for guidance.
The Government have made it clear that a job applicant who is engaged in the basic activities that are a natural part of being a member of a trade union should have nothing to fear. But the Opposition continue to want special recruitment protection.
Baroness Turner of Camden: Perhaps, my Lords, the Minister will allow me to intervene. He has just said that the position about trade union membership is absolutely clear. Does that include the situation so far as the Government are concerned in relation to GCHQ?
The Earl of Strathmore and Kinghorne: I think, my Lords, that that is a different point from the subject on the Order Paper today.
The Industrial Relations Code of Practice was published in 1972, as I said earlier, in order to:
"give practical guidance for promoting good industrial relations",
in accordance with the principles of the previous year's Industrial Relations Act.
As the noble Baroness, Lady Turner, acknowledged, the industrial scene has changed enormously in the 20 years since that Act was passed. The code cannot help but be an anachronism today. The noble Baroness believes that the Government should issue a new, more up-to-date code to replace the 1972 code. The Employment Act 1980 gives the Secretary of State the power to issue codes of practice containing practical guidance for the purpose of promoting the improvement of industrial relations. Indeed, as noble Lords will be aware, last year the Secretary of State issued a code of practice entitled Trade Union Ballots on Industrial Action, and an updated version has just come into effect. In addition the Secretary of State has announced his intention of updating and possibly revising the code of practice on picketing which was first issued in 1980.
However, I hope that the noble Baroness is not overlooking the fact that much of the subject matter of the 1972 code which is of lasting value is already available in a more up-to-date form. The section of the 1972 code dealing with disciplinary procedures was superseded by the ACAS code, Disciplinary Practice and Procedures in Employment, which came into force into June 1977. Paragraphs dealing with disclosure of information were similarly superseded by the ACAS code, Disclosure of Information to Trade Unions for Collective Bargaining Purposes, which was brought into force in August 1977. Another two sections of the 1972 code were superseded by the ACAS code, Time Off for Trade Union Duties and Activities, which first came into force in April 1978. Other parts, although still technically in force, are now comprehensively covered in the popular series of guidance booklets published by ACAS.
That being the case, the Secretary of State is not persuaded that there is any present need for the Government to issue a new code of practice dealing with the areas covered by the 1972 code. I am sure

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however that ACAS will continue to give careful consideration to areas in which guidance could usefully be given, whether by code of practice or by booklet.
The noble Baroness referred to the situation in Rolls-Royce. I cannot comment in detail about recent events at Rolls-Royce. It appears that the company took legal advice before sending out dismissal letters and gave individuals their due period of notice. Employment contracts can of course be lawfully terminated at any time by giving the correct period of notice and following any procedures which may be laid down in the contract. In any case, decisions about how Rolls-Royce, or any other company, should remain competitive and meet the challenges of the changing marketplace are for the company concerned. It would be counterproductive for government to try to inter) ere in the commercial decisions of companies. There i5 no reason to believe that the retention of the 1972 cote or the production of a replacement is called for as a result of those recent events.
Baroness Stvar: My Lords, before the noble Earl sits down, perhaps I may ask him to enlighten my ignorance. A code is not legally binding. However, it can be used valuably as evidence at a tribunal. Does the ACAS code have anything like the same force? That is a matter of considerable importance. I do not know the answer.
The Earl of Strathmore and Kinghorne: My Lords, I was ai3out to come to that point. ACAS codes of practice are statutory codes of practice. I hope that that answers the point.
Baroness Turner of Camden: My Lords, will the Minister say a little more about the Rolls-Royce situation? He said that it was a matter for the employers. We are now referring to good practice. As I understand it, there was no consultation whatsoever. Does he regard that as good practice? Is that not a matter that employers should be advised strongly to have regard to in industrial relations?
The Earl of Strathmore and Kinghorne: My Lords, I fear that I cannot go further down the road the noble Baroness wishes. I cannot comment on what individual companies do.
I hope that noble Lords are content with what I have said. I commend the order.
On Question, Motion agreed to.

Financial Services Act 1986 (Extension of Scope of Act) Order 1991
3.36 p.m.
Viscount Astor Viscount Astor rose to move, That the order laid before the House on 30th April be approved [18th Report from the Joint Committee].
The noble Viscount said: My Lords, with permission, I shall take the two orders together. The two orders have been laid under separate powers in the Financial Services Act and are subject to slightly different procedures.
The delegation order has been laid in draft under Section 114 of the Act, which gives the Secretary of State power to transfer certain functions, either in whole or in part, to a designated agency. Under Section 114 no delegation order shall be made unless it is approved in draft by a resolution of each House. Under Section 81 of the Act the Secretary of State may make regulations as to the constitution and management of authorised unit trust schemes, the powers and duties of managers of such schemes and the rights and obligations of participants in them.
The purpose of the draft order before the House today is to transfer to the Securities and Investments Board powers to restrict or regulate the investment and borrowing powers exercisable in relation to certain types of authorised unit trusts. Because they restrict the kind of property in which authorised unit trust schemes may invest, the investment and borrowing powers regulations effectively limit the categories of collective investment schemes which may be sold to the general public.
Powers to make regulations dealing with other aspects of authorised unit trusts were transferred to the SIB in 1988. Last September the Minister for Corporate Affairs announced that the SIB would draft new investment and borrowing powers regulations for certain classes of authorised unit trusts in parallel with developing its product regulation and marketing rules.
The SIB has consulted extensively. Its proposals are set out in its comprehensive proposed regulations for collective investment schemes, copies of which have been placed in the Library. They cover pricing arrangements and scheme particulars as well as the powers which are the subject of the draft order. Those regulations include detailed provisions as to investment objectives and as to the investment limits imposed on each category of fund. They also extend the scope of the existing regulations by allowing funds to employ efficient portfolio management and stocklending techniques.
The draft delegation order covers existing categories of funds and four new categories of funds: futures and option funds, geared futures and options funds, property funds and warrant funds. The new categories of funds are intended to increase customer choice while providing an adequate level of protection for investors. They will also enable managers to utilise the sophisticated facilities now available in London to the benefit of a wider range of private investors.
The Secretary of State is satisfied, as required by Section 114 of the Financial Services Act, that the SIB is able and willing to discharge the functions being transferred and that the detailed proposals will afford investors an adequate level of protection. In accordance with Sections 121 and 122 of the Act, and having regard to a report by the Director General of Fair Trading, the Secretary of State is also satisfied there are no significant competition problems.
The second order, the Financial Services Act 1986 (Extension of Scope of Act) Order 1991, has been laid under Section 2 of the Act. Because it extends the meaning of investment for the purposes of the Act it has been laid before Parliament after being made. It would cease to have effect if it were not approved by

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a resolution of each House within 28 days of being made. The order was made on 30th April and, provided that it is approved, it will come into force on 1st June, with the effect that building society deferred shares will then be an investment falling within the scope of the Financial Services Act 1986.
Most building society shares are similar to interest bearing savings deposits repayable to the investors by the society. Because these shares are in substance deposits rather than risk bearing equity, it is not thought appropriate that they should fall within the scope of the Financial Services Act. Investors are protected by the Building Societies Act and the building societies investor protection scheme.
Deferred shares are a special type of building society share, originally used to capitalise new societies. The concept has now been extended by the Building Societies Commission in two orders to come into force on 1st June. Established societies will be allowed to issue deferred shares to strengthen their capital position in the more competitive and risky market conditions that they face and to give additional protection to their ordinary shareholders.
The first order made by the Building Societies Commission defines deferred shares. They may be repaid only on the winding up of a society after all other shareholders and creditors have been paid or with the prior consent of the Building Societies Commission; and holders of deferred shares are not protected by the building societies investor protection scheme.
The second order specifies a class of deferred share called a permanent interest bearing share (PIBS) which societies may count as part of their capital. PIBS will to all intents and purposes be risk bearing equity share capital analogous to company preference shares and they may be transferred. The Government therefore believe that it must be right to give investors in them and all other building society deferred shares the same protection afforded by the Financial Services Act to investors in company shares.
The effect of the order will be that anyone carrying on an investment business in building society deferred shares, unless an exempt person, must be authorised by the Securities and Investments Board, by a self-regulating organisation or by a recognised professional body and will be subject to rules made under the Financial Services Act. I beg to move.
Moved, That the order laid before the House on 30th April be approved [18th Report from the Joint Committee].—(Viscount Astor.)
Lord Clinton-Davis: My Lords, I thank the noble Viscount for that explanation of what is undoubtedly an extremely complicated matter. I fear that I shall detain the House for more than a few moments in order to raise a number of points that are highly germane to the issue. My anxieties relate primarily to the geared futures and options funds—otherwise known by the delicious acronym of GFOFs—and to the warrant funds.
The gravamen of the Minister's case appears to be that the order paves the way for the provision of "an adequate level of protection" as and when the
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additional funds achieve their unit trust authorised status. Is that right? The Minister is being far too bland, if not complacent, in reaching that conclusion. I contend that, far from necessarily providing that adequate level of protection, the new instruments could well involve investors in additional risks because of the way in which the Government have dealt with the situation. The Minister seems to discount that possibility.
Quite apart from giving the GFOFs and the warrant funds the status of being unit trusts—and I am not satisfied that that should happen—they have not been satisfactorily or properly integrated into the marketing rules introduced by the Life Assurance & Unit Trust Regulatory Organisation, LAUTRO. Am I right in supposing that the GFOFs and the warrant funds may be sold in the retail market in the same way as unit trusts? If so, that could mean that small investors, who may not appreciate the risks and the higher volatility involved with GFOFs, being exposed to greater risks. Associated with the question of greater risk is the danger that the GFOFs may prejudice the unit trust industry as a whole.
The unit trust industry is highly respected. On the whole it has worked remarkably well and the Opposition believes that that standing should not be exposed to unnecessary risk. That I fear is what will happen. Why should the GFOFs and the warrant funds be treated alongside conventional unit trusts? Why not treat them alongside investment trusts? That would be far more appropriate. After all, if one examines the Security and Investments Board's own consultative document, No. 49, one sees that the funds are offshore and unregulated. Paragraph 9 of the consultative document specifically poses the question as to whether the unit trust is an appropriate vehicle for investment in derivatives. The reason for asking that question is that unit trusts which invest in derivatives could be perceived as being high risk and could therefore damage the unit trust industry's image.
The consultative document was concerned that a futures and options unit trust might well incur liabilities in excess of its assets with the corresponding risk for investors that they might lose their investment altogether. Those are important issues but were not addressed in another place and have not been addressed today by the Minister.
I believe that the SIB sympathises with the point of view that I express. It has asserted that the only vehicle now available that provides the possibility of a significant tax advantage for collective investment is the authorised unit trust. The real question posed by the SIB is how that vehicle can be best adapted to enable new products to be developed. In addition, the collective vehicles that are available are not regulated by the Financial Services Act 1986. That is an Act which led to massive confusion and monumental difficulties.
Another matter which gives rise for concern is that, despite what the Minister said this afternoon, there has been no proper co-ordination in the way that negotiations have been conducted between the Department of Trade and Industry, LAUTRO and

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the SIB. In consequence we have two separate consultative documents issued by the SIB. LAUTRO conducted its consultations on the marketing process over a period of 10 days while the SIB did not publish its final proposals until after that. That is an extraordinary way to conduct these affairs. In fact the industry had only one day during which it had before it in a properly documented form the final proposals and the market mechanisms by which they were to be applied. That is thoroughly unsatisfactory.
The Minister will be glad to know that I raise no complaint about the efficient portfolio management format, the EPM. It is good for the industry that contracts and derivatives should be used to reduce risks arising from the fluctuation of prices, interest rates and cash flow rather than simply leaving that to speculation. That is not due to the Government. It results from the Directive on Undertakings for Collective Investment in Transferable Securities. The directive allowed investment in contracts and derivatives if they were in the format of the EPM. So the Government cannot congratulate themselves on that situation.
There are a number of other matters on which I ask the Minister to offer further explanation to the House when he responds. The first point relates to the initial outlay involved with the GFOFs. It seems that the amour: that may be invested in margins on future contracts or on premiums on options was set initially by the SIB at 10 per cent. Then it was resolved that it should be 20 per cent. That means that at least 80 per cent. of the fund becomes available for direct investment in securities, liquid assets and so on. The second point is that at the same time as the limit of the initial margin outlay is raised to 20 per cent., the rules on diversification are removed. That will lead to a further increase in volatility and risk for the investor. It is critically important that the rules which are still being discussed by LAUTRO should take note of that fact.
In SIB Consultative Paper No. 49 it was suggested that no more than 2 per cent. of the total value of the fund should relate to initial outlay regarding any single derivative contract. No more than 4 per cent. of the total value should be allocated to any single category of derivative contract. That could relate to shares, commodities and so on. Moreover, limits on diversification were to apply, thereby offering a balance against the initial outlay. We now know that all that is to go. What is left is a simple requirement that the fund manager should ensure that investment in derivatives is "suitably diversified". Does not the Minister appreciate that the term "suitably diversified" is likely to lead to enormous problems in terms of legal interpretation? That is a matter which needs to be addressed. I hope that the LAUTRO rules which are still under negotiation will take the point fully into account.
The third point that I raise relates to commodities. The SIB regulations will permit the geared futures and options funds to invest in derivatives relating to the commodities market. These are extremely problematical when it comes to predictions. The fact is that the final SIB regulations have no requirement for funds to
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diversify their initial outlay into different types of derivative contracts. Therefore one finds that a GFOF could hold the full 20 per cent. in commodities contracts. Bearing in mind the risks attaching to that, is it really sensible that that should be the case?
If one wants experience in the matter one does not need to look further than the United States and the Securities and Exchange Commission, which does not allow that to happen. A person there who wants to follow that particular route can operate in partnership. Why not apply the considerable experience and expertise of the SEC when dealing with the position in the United Kingdom, which is unquestionably far more lax than in the United States?
What would be the situation concerning liability in the event of a GFOF insolvency? The SIB regulations provide that no investor in a GFOF can lose more than his initial investment. But the gearing effect on trading on the margin is that price movements in the underlying asset can have a disproportionate effect. It can lead to the investor owing more on a derivative contract than his initial outlay. The Minister must reply to this point: who is responsible for the liabilities of a GFOF in circumstances of the kind that I have just postulated?
Is it the trustees? Is it the fund manager? Is there a joint and collective responsibility as far as both are concerned? What the Government are doing here—of course I exculpate the noble Viscount from all this—is to eschew any responsibility, simply passing it on to the SIB. They are passing the buck. The competence of the SIB depends on the powers delegated to it by the Government. That is a thoroughly unsatisfactory state of affairs.
The next point I want to raise relates to something called cold calling. The Minister will know what that means. On paper it is prohibited. We know from experience that in practice prohibition simply does not stop it from taking place. It does go on. I know that there are denials, but the experience of many people illustrates that it goes on. The rules relating to cold calling are far too lax. This laxity in the marketing regulations brings the unit trust industry into disrepute.
In conclusion, I would say yes, we are anxious about the nature of investor protection as far as concerns GFOF when it is put on to the market. We do not accept the bland reassurances of the Minister in another place, in particular the reassurances contained in his press release of 30th April when he said that customer choice is to be increased without detracting from investor protection. He is increasing customer choice, but he is detracting from investor protection. In our judgment too much depends on the discretion of the individual manager. One has to take human frailty into account. Not all managers are good managers. In my judgment the Government should think again about this. The reputation of the unit trust industry is far too important to be tampered with in the way now envisaged by the Government. I believe that the measures the Government are seeking to put before us today—or at least some of them are essentially misconceived.
3.57 p.m.
Viscount Astor: Before I answer some of the more detailed points made by the noble Lord, Lord Clinton-Davis, I should like to say that the points he has made were correctly raised in another place; the Minister for Corporate Affairs answered them. It is important to remember that the Secretary of State is satisfied that there will be adequate investor protection. That is an important point.
I shall now deal with some of the specific points raised. The Unit Trust Association is concerned about geared futures and options funds. There is no requirement on the industry to set up such funds; nor is there a requirement that any investor should invest in them. Investors should be free to choose, provided that they are made aware through clear warnings of the risks involved. The Unit Trust Association's concern is that potentially risky funds should not be marketed as unit trusts and that they should have some other name. The underlying characteristics of GFOFs and warrant funds are those of a traditional authorised unit trust. That is how they fall to be categorised under the Act. I understand that some regard open ended investment companies as offering a more appropriate vehicle for these funds. At present UK legislation does not provide for these kinds of companies. The Department of Trade and Industry are considering the issue and have asked the Unit Trust Association for its considered views on the form any future legislation might take.
The noble Lord, Lord Clinton-Davis, mentioned marketing rules. These marketing rules are for the SIB and LAUTRO. In reaching his decision on the transfer of the powers the Secretary of State took into account the broad objectives of the marketing proposals published by LAUTRO on 19th April. The Department of Trade and Industry has kept in touch with with progress. The SIB and LAUTRO understand that the high standards of disclosure and other protections appropriate to the new products must be maintained. The noble Lord is absolutely right that the SIB's proposed marking arrangements will prohibit the cold calling of geared futures and options funds. Moreover, the marketing regimes for these funds will be strengthened to ensure that investors are fully aware of the risk characteristics. In a way the firm will be required to make clear the degree of risk involved, the potential volatility and the way this affects the return to the investor if he decides to cancel. The SIB and LAUTRO are aware of the need to act swiftly and surely if any breaches of the marketing arrangements are suspected.
The SIB consulted widely on increasing the initial outlay from 10 per cent. to 20 per cent. It concluded that by increasing the level to 20 per cent. wider diversification will be achieved together with a potential of lowering volatility. Comments received by the SIB suggested that detailed diversification requirements could force managers to invest in areas in which they did not have full expertise. The SIB proposal is for a simple requirement that the manager should ensure that investments are prudently
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diversified. This will, like other duties imposed on the manager of a fund, be monitored in the first instance by the trustees.
The noble Lord asked what will happen if things go wrong. The investors compensation scheme would compensate unit holders who are private investors if they are owed money by the manager or the trustee and the firm has gone into liquidation and is unable to pay their claim. A claim cannot be met, however, if it relates to a failure of an investment or a failure to meet or match a guarantee given or representations made.
There has been close co-ordination at every stage, including on the proposed LAUTRO marketing rules. In the light of the concerns of the Unit Trust Association, LAUTRO extended its consultation period well beyond the end of March.
4 p.m.
Lord Clinton-Davis: My Lords, before the noble Viscount sits down, he will appreciate that he has not been in a position to respond to a large number of the points that I have made. I do not blame him for that. He rather anticipated that in any event. I ask him to ensure that, after reading my remarks, he responds in writing to the various points that are still outstanding and perhaps even put the reply in the Library because I think the matter is of more general interest than to me alone.
Viscount Astor: My Lords, I am happy to give an assurance that I shall certainly respond to the points that I have been unable to cover in detail today and that I shall put a copy of my reply in the Library.
On Question, Motion agreed to.

Financial Services Act 1986 (Delegation) (No.2) Order 1991
Viscount Astor Viscount Astor rose to move, That the draft order laid before the House on 30th April be approved [18th Report from the Joint Committee].
The noble Viscount said: My Lords, I beg to move.
Moved, That the draft order laid before the House on 30th April be approved [18th Report from the Joint Committee]—(Viscount Astor.)
On Question, Motion agreed to.

Smoke Detectors Bill
4.2 p.m.
Lord Wade of Chorlton: My Lords, I beg to move that the Bill be now read a second time. Home Office fire statistics show that in recent years about 700 people have been killed in fires in the home every year and that another 10,000 have been injured. Fires involving textiles, upholstery and furnishings account for the majority of those deaths and injuries. Many of them might have been avoided if an early warning of fire had been given while there was still a chance of escaping from the premises. This is the purpose of smoke detectors.
The term refers to a device which sounds an alarm when the presence of smoke is detected. The simplest

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types are battery operated and cost as little as £6. Installation is very straightforward and the Home Office has produced a guidance leaflet for householders on their selection, installation and use. Recently mains power versions have also become available, some of which also have a battery back-up. There is some evidence that householders can overlook the need for the regular replacement of batteries in battery-operated detectors, particularly when they are not themselves responsible for the original installation. Mains power detectors may therefore prove more reliable. The additional cost of installing mains power smoke detectors in a new house or flat is estimated to be £30 to £40 per unit, although in an existing dwelling the cost would be higher. The purpose of this Bill is to ensure that all new dwellings have smoke detectors installed at the time of their construction. It does not attempt to cover existing dwellings.s
Quite apart from any argument about how far Parliament should go in requiring householders to take measures to protect themselves in their own home, it is very difficult to envisage how any legal requirement relating to existing dwellings could in practice be enforced. However, in the case of new dwellings, there are already requirements which are aimed primarily at the protection of health and safety in the building regulations. The Bill is intended to operate in parallel with those requirements.
I turn now to the provisions of the Bill. Clause 1 provides that the person who in the course of his business constructs dwellings is guilty of an offence if such dwellings are not fitted with smoke detectors which make adequate provision for the early detection of the outbreak of a fire. Therefore, it is the builder who has to meet the requirements. The Bill does not place any obligation on the subsequent purchaser or on the owners or occupiers of existing houses. Clause 2 would enable that requirement to be relaxed if there were any particular reasons for doing so. For example, there might be problems in a case where an historic building was being converted for residential use.
Clause 3 provides for the Secretary of State to approve; and issue guidance as to the fitting of smoke detectors. There are similar provisions relating to guidance on building regulation requirements in Sections 6 and 7 of the Building Act 1984. It would clearly pot be appropriate to include all that material in this Bill. Experience of building control has shown that a better and more flexible system of control can be ach eyed through the use of short, functional requirements and approved guidance documents than by setting out lengthy and detailed requirements in regulations.
Under Clause 4, local authorities would have the duty to enforce the Act. They already have the duty to enforce building regulations. The other clauses are ancillary and similar to existing provisions relating to building regulations in the Building Act 1984. Like the 1984 Act, the requirements of this Bill will apply only in England and Wales. That is because Scotland and Northern Ireland have different legislation relating to building control.
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It may be said that this is a modest measure because it applies only to new dwellings. However, it will demonstrate Parliament's concern on the subject in a practical way. Moreover, as the housing stock is being renewed at a rate of 1 per cent. or 2 per cent. per annum, the effects of a measure of this kind will soon mount up. It may also be suggested that we should leave the Government to deal with the matter. I am aware that proposals have been put forward for the revision of the relevant provisions in the building regulations. ut decisions on those proposals have not yet been taken.
The Bill provides us with the opportunity to register our views on the importance of installing smoke detectors in new dwellings without cutting across what the Government are doing. I commend the Bill to the House.
Moved, That the Bill be now read a second time. —(Lord Wade of Chorlton.)
4.8 p.m.
Lord McIntosh of Haringey: My Lords, as is normally the case with Private Members' Bills, the Opposition as such do not express a view on the merits of the Bill. Therefore, any observations I make will be my own rather than those of the Labour Party. However, I have been consulted by, and have consulted with, the Association of Metropolitan Authorities which will be heavily concerned in the implementation of the Bill should it become enacted. It is only right to tell the House that the association is very much in favour of the Bill in its present form. I wish to say to the noble Lord, Lord Wade, in particular, that an advisory group has been set up consisting of building control, fire authority and housing officers in metropolitan authorities. If the noble Lord is in agreement, the group would be very glad to talk about the Bill with him and make suggestions for improvement. I, too, should be happy to participate in that process if he wishes me to do so.
Of course, the Bill is very different from the one which first appeared before another place. It has been greatly modified in that the original Bill covered all dwellings, not just new ones. I understand that the Bill went through another place without debate. It was tagged on to the end of a number of Private Members' Bills. It deserves a little more attention because there should be additional protection against smoke and fires. That should start in respect of new buildings.
I have a number of specific points, some of which are for the noble Lord, Lord Wade, and some of which seek information from the Government as to their attitude towards certain aspects of the Bill, although I appreciate that they will be officially neutral on the Bill as a whole. Clause 1(1) provides:
"A person who, in the course of a business carried on by him, constructs or arranges for the construction of a dwelling".
That appears to exclude self-build. I am puzzled as to why that is the case. Given that the standards of self-build housing might not be as high as those of professionally built houses, there might be even greater necessity for smoke detectors to be installed in

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self-build houses. I should be interested to know why that exemption has been put in and whether it would be insisted upon if it were challenged.
Clause 1(3) suggests that the fine should not exceed level 3 on the standard scale. That is £400. People employed in the local authorities think that that is low and that the figure should be more like £2,000 which is the level 5 fine. These days £400 is a minimal amount.
Clause 2(1) provides that an authority—presumably the building control inspectors—may give a direction dispensing with or relaxing the requirement for smoke detectors. It might be as well to involve the fire authorities as well as the local authority in that aspect of the matter. Local authority building inspectors are capable of covering the point made by the noble Lord about historic buildings being converted for residential use. The building is one thing: the likelihood of that building being subject to fire is another. That is an area in which the fire authorities are expert and where consultation with them could be valuable.
In their other functions, building inspectors have rights of entry to enforce their powers. There is no provision for rights of entry for building control inspectors under the Bill. I wonder whether the noble Lord will consider whether it might be appropriate to bring this part of their new duties into line with their existing powers.
My next question on Clause 3 is for the Government. The clause starts by saying that the Secretary of State may issue guidance. My question is: will he? It is no good saying "may" unless the Government say that while they do not oppose the Bill they are prepared to issue guidance. Similarly on Clause 3, there are precedents, especially in relation to gas boilers, for there being not merely guidance in respect of installation, but also instructions for users. Gas boilers can still be dangerous. If one is installed, instructions for users are mandatory. That may well apply to smoke detectors. I am thinking about battery-operated smoke detectors where the replacement of the battery from time to time may be important.
Again on Clause 3, it may be appropriate for there to be reference to standards covering for instance the definition of smoke detector. We need to consider whether the standards to be applied shall accord with a recognised British standard and if not, the advisability of including a recognised British standard within the Bill.
My final question to the Government concerns Clause 6(3) at the end of the Bill which provides:
"This Act shall come into force on such day as the Secretary of State may by order made by statutory instrument appoint".
Can the Government give any guidance as to when they are likely to bring the Bill into effect, if it is passed by this House? From a personal point of view and that of those involved in such matters in local authorities, the Bill is welcome. It does not seem to us to be perfect, but it is certainly a move in the right direction.
4.15 p.m.
Baroness Blatch: My Lords, as we discuss this Bill the death of four young children in a fire today is very much in our minds. I repeat, as did the noble Lord. Lord McIntosh, that by convention the Government remain neutral on Private Members' Bills. This Bill is no exception to the convention. However, on behalf of the Government I make the following comments.
The Government fully endorse the use of smoke detectors in dwellings. While we recognise that they are no substitute for the normal personal vigilance which is needed to prevent fires from starting, they can provide an early warning in the event of a fire breaking out. Such a warning can save lives by giving those inside the home a better chance of escaping. To promote the voluntary installation of smoke detectors in dwellings, the Home Office have devoted substantial resources to educational and publicity programmes aimed at bringing the life-saving potential of these devices to the attention of the public. These programmes have achieved considerable success and we have seen the proportion of dwellings where alarms are installed increase from 9 per cent. to 40 per cent. over the past four years.
There are requirements in fire precautions and health and safety at work legislation which ensure that smoke alarm systems are installed in many non-domestic premises. There are at present no equivalent requirements relating to dwellings. We are, however, already consulting on a proposal to include such a provision in the building regulations. There has been a considerable amount of support for this proposal, but it forms part of a wider review on which decisions are unlikely to be announced until the autumn.
The building regulations apply only to new building work, and it is sometimes suggested that there should be legislation to require the installation of smoke detectors in existing homes as well. The Government have a natural, and I believe proper, reluctance to legislate to require householders to take special measures to protect themselves in their own homes. But the overriding problem is that any such legal requirement would effectively be unenforceable. It would involve giving enforcement authorities the power of entry into private homes on an essentially random basis. Such powers would be unacceptably intrusive. Enforcement would also require a large and expensive army of inspectors, and all the supporting bureaucracy that goes with it. As I have said, however, the Government are fully in sympathy with what my noble friend said about the desirability of encouraging the use of smoke detectors in dwellings.
Turning to specific questions, I said on the timing of the main Bill that we should hear more in the autumn. On the issue of guidance, since this is a Private Member's Bill, it would be appropriate to wait for the Bill to progress to a further stage and see its shape as it goes through the processes of the House. If appropriate, the Government will consider guidance.
On the miscellany of points raised by the noble Lord, Lord McIntosh, we have sympathy with some of them. We shall discuss them fully with the promoters of the Bill before the Committee stage. We

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have already had discussions with the NHBC and the Bill's Promoters about reducing confusion concerning implementation of the measures. It seems to us important that as much as possible be worked out before the Bill passes its Committee stage.
Lord McIntosh of Haringey: My Lords, perhaps I may take advantage of what the Minister said to ask her and the noble Lord, Lord Wade, whether we can be given guidance as to when the Committee stage is likely:o be reached. Perhaps the noble Lord will respond when he winds up.
Baroness Blatch: My Lords, I hope the noble Lord, Lord Wade of Chorlton, can answer that point, as I am afraid I cannot. The Government are fully in sympathy with the Bill and all that has been said about the appropriateness of smoke detectors in new buildings. The Bill represents a small but practical measure which is consistent with the measures that the Government are already considering. The Bill has our support.
4.20 p.m.
Lord Wade of Chorlton: My Lords, I wish first to thank the noble Lord, Lord McIntosh, for his support of the Bill. I also thank my noble friend the Minister for giving the Bill government support. I am particularly grateful to the noble Lord, Lord McIntosh, for offering to help in discussions with some of the outside bodies which are interested in this Bill. I shall take up that offer so that we can work together to make this a successful Bill that suits everyone concerned. As the noble Lord is aware, this is a Private Member's Bill which has been brought forward by a Member of another place. I know that it is his intention to get the Bill on to the statute book as quickly as possible.
I cannot answer the point about timing that the noble Lord raised, as I understand that that has not yet been settled through the usual channels. However, it is our understanding that the Bill will be enacted as soon as possible. As my noble friend said, it is hoped that the Bill will be on the statute book by the autumn to coincide with other building regulations which will be brought forward at that time.
The noble Lord raised one or two points which I shall try to respond to. As he said, at the moment the provisions of the Bill do not apply to self-built houses. However, all properties do of course come under the building regulations, whoever builds them. As the noble Lord suggested, this is a point that could be further considered. However, one also has to consider how far the law should protect from his own follies someone who wishes to build his own house.
The noble Lord referred to the fine. The Bill proposes a fine of about £400 to £500. The noble Lord suggested that it should be £2,000, but I believe the fine proposed in the Bill is correct. Perhaps that is something that we can review in the light of the noble Lord's comments. The noble Lord asked about the fire authorities. I can assure him that people would not be able to get around the regulations very easily. However, it is intended that the fire authorities will be consulted on this matter.
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The noble Lord referred to the right of entry. The Bill is no different to other statutes in this respect. The provisions in the Bill come into force during the building of new dwellings. It will be the duty of the authorities concerned to ensure that all the requirements of the Bill are fulfilled. Once the building is completed and handed over to the purchaser, the purchaser has no legal responsibility for these requirements. The smoke detectors will be subject to the normal British standards. This matter is mentioned in a pamphlet which has already been issued by the Home Office. Further pamphlets will be issued to all the bodies concerned as guidance. I believe I have answered the points raised by the noble Lord. I am grateful for the support he gave to the Bill. I commend the Bill to the House.
On Question, Bill read a second time, and committed to a Committee of the Whole House.

Sunday Entertainments (Video Supply) Bill [H.L.]
4.24 p.m.
Lord Newall: My Lords, I beg to move that the House do now resolve itself into Committee on this Bill.
Moved, That the House do now resolve itself into Committee.—(Lord Newall.)
On Question, Motion agreed to.
House in Committee accordingly.
[The DEPUTY CHAIRMAN OF COMMITTEES (Lord Strabolgi) in the Chair.]
Clause 1 [Amendment of Shops Act 1950]:
Viscount Brentford Viscount Brentford moved Amendment No. 1:
Page 1, line 9, leave out ("supply") and insert ("letting on hire").
The noble Viscount said: To save the time of the Committee, in moving this amendment I shall speak also to Amendments Nos. 3, 4 and 5 as they all deal with the same point.
I am glad to say that following the Second Reading debate in the House there is no difference of opinion between my noble friend Lord Newall and myself on the main point, which is that the Bill should deal only with the letting on hire of videos and not with the selling of videos. The four amendments all cover the same point, by two different methods.
Amendment No. 1 in my name simply substitutes for the word "supply" in line 9 the words "letting on hire". That is simple and straightforward. The problem arises because the definition of "supply" in the Video Recordings Act 1984, as set out in Section 1(4), reads as follows:
"'supply' means supply in any manner, whether or not for reward, and, therefore, includes supply by way of sale, letting on hire, exchange or loan; and references to a supply are to be interpreted accordingly".
Following Amendment No. 1 through, that would mean deleting the word "supply" in line 9 and substituting "letting on hire" and then deleting the words "'supply' and" in line 10, as set out in Amendment No. 2. On line 11 the plural would be

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changed to the singular—"have" to "has"—as my noble friend Lord Newall has stipulated in Amendment No. 5, with which I fully agree.
The alternative method is that proposed by my noble friend in Amendment No. 4, in which he gives "supply" a different meaning from that in the 1984 Act, restricting it to supply by way of letting on hire. That would have exactly the same effect as my Amendment No. 1. However, it is confusing that the word "supply" has two different meanings in connection with videos.
The problem in relation to Amendment No. 1 arises with the use of the word "supply" in the Title of the Bill. If it were not for that I should undoubtedly say that I preferred my version unequivocally. However, I appreciate that there is a problem because of the inclusion of the word "supply" in the Title of the Bill. Nevertheless, Amendment No. 1 seems to me to be much the more straightforward and much the easier amendment to adopt. I believe that it would result in less confusion in the future.
That only goes to show that the effect of the Bill is to increase the anomalies in relation to Sunday trading rather than to decrease them. I echo what my noble friend the Minister—the noble Lord, Lord Reay—and I said at Second Reading, namely that we did not believe that dealing with the matter piecemeal was the right way forward. Nevertheless, that is the proposal at the moment. I beg to move.
Lord Morris of Castle Morris: I spoke on the Bill at Second Reading when I said everything that I wish to say on the topic. The Opposition Front Bench is by convention neutral on Private Members' Bills and we are neutral on the whole question of Sunday trading. My stance on the amendments must consequently be neutral. My attitude must be that of the concerned but disinterested spectator, though I shall be actively interested to know the Government's attitude to the amendments.
The Minister of State, Home Office (Earl Ferrers): My Lords, as the noble Lord, Lord Morris of Castle Morris, asked me to give the Government's views I shall be happy to do so.
The Government's position on the whole Sunday trading issue was explained by my noble friend Lord Reay during the Second Reading debate on this Bill to which my noble friend Lord Brentford referred.
We do not believe that the way forward lies in seeking to make fresh amendments to the fifth schedule to the Shops Act 1950. Our policy remains to try to assist those on both sides of the Sunday trading argument to reach agreement on proposals for legislation which are practicable, enforceable and capable of commanding widespread support both in Parliament and in the country at large. With regard to the amendments to the Bill, we are content to leave the question of acceptance or rejection entirely to the Committee to decide.
4.30 p.m.
Lord Newall: In principle, I have no problem with the amendment. It is entirely in line with my Amendment No. 4, which says exactly the same thing in a different way and gives effect only to the hire, not the sale, of video cassettes on a Sunday. In many areas it is that vital trade—not the sell through market—that is being damaged by the Shops Act 1950. My noble friend's amendment, which seeks to remove the word "supply" and insert the phrase "letting on hire", is similar to my amendment. However, although they would have the same effect via a different route and would remove the word "supply", I do not think that that is appropriate. As my noble friend said, the word "supply" is in both the Long Title and the Short Title. Although I have no argument with the amendment basically, it is cleaner and stylistically better to retain the word "supply". I therefore hope that he will not press his amendment any further.
Viscount Brentford: I appreciate what my noble friend Lord Newall has said. I have said everything that I had to say. I do not accept that the wording is cleaner because it gives the word "supply" two different meanings in the same context, which seems to muddle and make dirty rather than cleaner. However, in view of the title, I suggest that the way forward is probably as he has suggested. I therefore beg leave to withdraw the amendment.
Amendment, by leave, withdrawn.
Viscount Brentford Viscount Brentford moved Amendment No. 2:
Page 1, line 9, after ("recording") insert ("by a shop whose floor area does not exceed 1,500 sq.ft.").
The noble Viscount said: In moving this amendment I shall speak also to Amendment No. 6, standing in my name, as the two go together.
As I understand it, the main aim of the Bill is to permit the local video establishment to let on hire videos on a Sunday. In principle I do not disagree with that as it fits entirely with the rest principles which I support and which provide for recreation on a Sunday. The object of the two amendments is to provide for that smaller local shop, rather than the larger, warehouse-type establishment, to be open for the letting of videos.
One of the problems with the Bill is that there is no scope in it for introducing any employee protection on Sundays for those who work in the shops. Again, therefore, it is an incomplete measure. There are examples of Government-drafted legislation providing for that on Sundays which I should have liked to see incorporated. However, they were not relevant to the Bill, which simply inserts a new trade into the fifth schedule to the Shops Act.
>Limiting trading to the smaller shop—1,500 square feet is quite substantial; there is nothing particularly magical in that measurement—means that the trading will be lawful for those smaller establishments, which may therefore have better personal relationships between the employer and the employee. That provides, so far as I can envisage that it is feasible, protection for the employees who in theory may not have to work on Sundays, but who in practice are made to do so when they do not wish to. This factor

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again shows the danger of piecemeal amendment of the law. I should like to reiterate that a new Government Bill is needed as soon as the Government's consultations on the subject are completed.
I hope that my noble friend the Minister will be able to say that those consultations are proceeding swiftly. I have not yet received an invitation to talk to the Minister concerned. I hope that she will act more quickly to pursue these consultations so that the law, the enforcement of which is deteriorating fast, will be changed speedily. It is for that reason that I beg to move this amendment.
Earl Ferrers: Perhaps I may give a general response to this amendment by saying that the setting of any particular figure in this context is bound to be arbitrary. It could quite possibly lead to shopkeepers taking steps to bring their premises artificially within the limit set, for example, by temporarily closing off part of their shops. We are also inclined to draw attention to the possible difficulties to which this approach may give rise when the question of enforcement is considered. Since we are, in the context of this Bill, concerned only with shops which trade in one particular category of merchandise, I accept that it might not be too difficult for local authorities, which are the enforcers of this particular law, to determine in the first instance which shops in their districts may qualify for the exemption from the Bill, if amended. However, local authorities would still thereafter have to monitor premises on a fairly regular basis in case any additional floor space were subsequently brought into use.
We can therefore see that there are certain difficulties associated with any attempt to try to prescribe by law that only shops with a floor area which is below some specified upper limit may open for the serving of customers on Sundays.
Perhaps I ought also to mention that, to comply with the Units of Measurement Regulations 1986, which implemented a European Community directive, references to floor areas in Bills of this kind ought now to be expressed in square metres rather than square feet.
That aside, I can assure my noble friend that the discussions to which he referred are being continued by my right honourable friend and, if he has not yet received an invitation from her, I see no reason why he should be totally despairing.
Lord Newall: I am very glad that my noble friend the Minister is in agreement with what I too feel. However, I have some additional comments. One reason for resisting the amendment is that the British Video A3sociation cannot agree that the hiring of video cassettes on a Sunday should be restricted to shops of 1,500 square feet. The extra qualification and restriction would do nothing to the measure that we propose. The size of a video rental shop is determined entirely by the number of customers who come in and the amount of business that it handles. It is only that which expands or reduces its size. In many country areas the shops are very small. In towns the vide
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rental shop is often not in the high street but in some other area which is more suited to where the residents live.
This Bill is designed only to legitimise the rental of video cassettes on Sunday. It does not at all have the effect of enabling large high street stores to open. The space limitation would not affect the opening hours of other stores because the Bill applies only to video rental. I do not believe that any employee problems are likely to arise, because we are not dealing with large numbers of employees but often with owners who in many instances run the shops themselves. Moreover, opening on Sunday would not put pressure on any other high street shops to open on a Sunday because they are not next door to the video shops.
With this Bill we are trying to achieve the deregulation of outdated legislation which discriminates between Sunday entertainment businesses. The amendment proposed by my noble friend would add an unnecessary restriction to what is widely perceived to be a much desired alteration in the law. After all, cinemas and theatres are not restricted on Sundays by their size of audience. It is not possible to predict what future trends there may be in shopping hours or retail patterns. This caveat might soon become very outdated and a totally irrelevant piece of legislation.
It is difficult to say exactly how many video rental shops have a floor area of over 1,500 square feet. However, the guess that I make with the help of those who know better than me is that there could be well over 1,000. There seems no reason why larger shops, in particular those in London which supply only rented videos, should be ruled out by means of this amendment. None of them is a department store. The largest video rental shops are dedicated simply to video rentals.
Perhaps I may speak briefly to Amendment No. 6, in the name of my noble friend Lord Brentford. I believe that there is a flaw in it. It refers to "inspecting and purchasing goods". The Bill has nothing to do with purchasing any goods. It refers purely to rental of videos. I therefore urge my noble friend to withdraw his amendment.
Viscount Brentford: In view of what has been said, while reserving the right to reconsider the matter at a later date, I beg leave to withdraw the amendment.
Amendment, by leave, withdrawn.
[Amendment No. 3 not moved.]
Lord Newall Lord Newall moved Amendment No. 4:
Page 1, line 10, after (" "supply" ") insert ("means supply by way of letting on hire").
The noble Lord said: We have discussed this subject and have aired it quite satisfactorily. My noble friend Lord Brentford and I agree on the principle. That is the way that we shall go ahead. I beg to move.
On Question, amendment agreed to.
Lord Newall Lord Newall moved Amendment No. 5:
Page 1, line 11, leave out ("have") and insert ("has").
The noble Lord said: This amendment is entirely consequential. It perfects the wording. I beg to move. On Question, amendment agreed to.
[Amendment No. 6 not moved.]
Clause 1, as amended, agreed to.
Remaining clauses agreed to.
House resumed: Bill reported with amendments.

"Non-Pop" Music Radio Station
4.43 p.m.
Lord Thomson of Monifieth Lord Thomson of Monifieth rose to ask Her Majesty's Government whether they are satisfied with the procedures announced by the Radio Authority for the provision of a "non-pop" music national commercial radio station.
The noble Lord said: My Lords, the Unstarred Question arises from the deep anxiety that we on these Benches have that the new Radio Authority has drawn up the licence specification for the first independent national radio channel too narrowly and bureaucratically. It has imposed unnecessarily heavy financial conditions to the detriment of the range of choice and quality which should be available to listeners.
The background to the problem lies in the recent Broadcasting Act with its excessively free market, highest-bid provisions. These are worse for radio than for television. It is significant that there is no Becher's Brook of quality to be surmounted for radio as there is for television. Perhaps more significantly, the shadow Radio Authority, unlike the shadow ITC, made no apparent effort during our proceedings on the Bill to have such a provision inserted. Radio has long suffered from being in the shadow of television when broadcasting policy is debated. We on these Benches did our best to correct that imbalance during the proceedings of the Bill in this House. However, we had only limited success.
The choice of the first national commercial radio channel to compete with the BBC is an exciting and important event. INR1 was to be the flagship of the new radio system. In Committee on the Broadcasting Bill, the noble Earl emphasised that the new national channel should not be allowed to become non-stop pop simply because such content might be the most profitable way of exploiting the channel. Your Lordships provided some innocent entertainment for the nation by trying to define pop music. The House was assisted by the noble Earl's memorable description that it was something that went "thump, thump, thump". He was particularly insistent on the third thump which no doubt indicates his personal, deep in-built sense of rhythm.
Thus was formed the famous definition of non-pop to be found in Section 85(2) (a) (ii) and (6) of the Act. The section provides for:
"a service which consists, wholly or mainly, in the broadcasting of music which, in the opinion of the Authority, is not pop music".
The authority was left with the admittedly far from easy task of interpreting the Act.
In the summer of last year there were a large number of potential applicants; approximately 39 registered an interest with the shadow Radio Authority. Many hoped that the authority would
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encourage a wide range of innovative and creative ideas which, subject to the hazards of the bidding process, would allow listener choice to be enriched.
That appeared to be the hope of the Home Office last summer. On behalf of the then Minister, David Mellor, the Home Office sent a letter to Mr. Anthony Field, the chairman of Heritage Broadcasting on 21st August last year. The Home Office stated:
"The sort of service you have in mind would certainly appear to broaden the range of choice for listeners and on the face of it there seems to be no reason why it should not feature among the contenders for a licence".
But the kind of service that the applicant had in mind has been effectively ruled out by the Radio Authority developing an interpretation of the Act which, in my judgment, is narrow, mechanistic and bureaucratic. There is no doubt that it has excluded a number of applicants with interesting and innovative ideas.
The phrase "mainly music" contained in the Act is defined by the Radio Authority as being a minimum—I emphasise the word "minimum"—of 75 per cent. "non-pop" music, leaving only 25 per cent. for speech possibilities, in each three-hour period. Why on earth could not the phrase have been interpreted flexibly as meaning a majority of non-pop music—"majority" can reasonably be defined as mainly—the time period being a day rather than three hours? That would have allowed more varied programming. "Diversity" is interpreted in terms of the Act as requiring a mixture of different artists or composers in any six-hour period. Again, I am puzzled about why the period is six hours.
Both those restrictions would make it difficult, for example, properly to cover the Edinburgh Festival, which my local radio station, Radio Forth, has done so well, or to co-operate in the sponsorship of a long opera. Such restrictive interpretation of the Act has been compounded by penal financial conditions which seem designed for those with the longest purses in the bidding process and to encourage increased pressure for cheap programming.
Directly attributable to the Treasury is the auction bid money which I notice that The Times today estimates as perhaps running at around £5 million, plus a 4 per cent. levy on all the revenue that the channel generates either from advertising or sponsorship. In addition the Radio Authority demands an application fee of £10,000 and an annual licence fee of close to £1 million, despite the fact that it has discretion under Section 87(4) of the Act to,
"specify different fees in relation to different cases or circumstances".
A combination of a greedy Treasury and a greedy regulatory authority is the worst of all worlds and a poor lookout for broadcasting quality. It is little wonder that the Radio Authority found that its original deadline of April did not produce a credible response and had to be extended. Report has it that there was a great deal of rushing around to encourage the three applications which emerged yesterday from the original 39 hopefuls.
I am deeply saddened by the whole situation. I have my own reasons for being proud of the standards of commercial broadcasting in this country. The

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independent television network was able, over the years, to match the BBC in programme excellence and to carry off all the great international prizes. Some of us fought hard to see independent radio put on equal terms with the BBC by being allocated national channels. We hoped that, as with ITV, INRI would then match the BBC with its own distinctive programming of quality. Instead it looks as though we shall end up with wall-to-wall recycled music; one more record shop of the air.
The Radio Authority appears to feel that it will have done its duty and widened choice if the kind of records on INRI are different from the pop records on the other channel. But good radio is much wider and deeper than that. It concerns a great deal more. It is not only about music, recorded or otherwise; it is about programmes about music. In addition to music it concerns programmes about books, the theatre and other lire-enhancing leisure pursuits.
I do not want to comment—indeed, I am not in any position so to do on the three applicants who have come forward. However, I profoundly hope that the Radio Authority will feel that it has a duty to do a little more than simply pass on the highest bid to the Treasury, and that even at this late stage and with its own interpretations, it will do what it can to encourage the emergence of a first Independent National Radio channel which will be of some distinctive quality and character. We hope that it will not be just another easy listening station, this time on a national scale. That would be to squander a great new opportunity to add to the range of British broadcasting.
I conclude by asking the noble Earl the question I tabled originally. Are the Government satisfied with the procedures announced by the Radio Authority for the provision of a non-pop music national commercial radio station? If so, we shall be interested to hear what the government defence is of the behaviour of the authority.
4.55 p.m.
Lord Colwyn: My Lords, I am sure that we are all grateful to the noble Lord, Lord Thomson of Monifieth, for raising this subject this evening, for asking this Question, and for the fact that it is timely. As he said, the applications had to be in by yesterday. I preface my own remarks by declaring an interest as a director of London's jazz radio station, Jazz FM. That interest is in a local radio station and one which, among others, receives support by virtue of revenue derived from its coverage of a specific area of the country.
All the existing commercial stations which make up the independent radio network are the result of an orchestrated approach to the expansion of broadcasting in this country. Orchestration, planning, regulation—call it what you will —is the natural balance required of a system that also imposes artificial limits on ownership and where market entry is also restricted by a limited delivery system—that is to say, the total amount of frequencies available. The
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new lighter touch regulatory environment is a welcome change, but it remains essentially an orchestrated approach.
I see nothing in the licensing of a non-pop independent national radio service which is inconsistent with the practice of planned expansion. The service serves two important purposes. First, in the face of limited frequencies, the public interest is served by avoiding undue duplication of formats. That is something I dealt with during the discussion on the Broadcasting Bill. Secondly, the commercial interest is served by ensuring that new licensing delivers to the independent sector the means by which it can attract listeners from the BBC who are so vital to its advertising growth.
The existing independent radio network already challenges the BBC extremely effectively in those formats represented by both Radio I and Radio 2. That leaves the audience attracted by Radio 3 and Radio 4, still as yet without a significant challenge on a national basis from the commercial sector. The two formats represented by Radio 3 and Radio 4, and particularly Radio 4, can be extremely expensive to produce. In the case of Radio 3 it may have a limited audience. For that reason alone both the Government and the Radio Authority were correct in my view to see the opportunity of national radio as being one of giving significant audience coverage to formats that would otherwise be difficult to sustain on a local basis.
The scramble to use the national radio opportunity of pop and rock formats is what gave rise to the non-pop definition and no doubt resulted in the rather clumsy attempt to enshrine it in the Broadcasting Bill. I have some sympathy with those charged with translating the now famous definition of my noble friend Lord Ferrers of "thump, thump, thump" into statutory language. I cannot help but think that asking such a silly question deserved the silly answer that it got. It was those seeking to circumvent the non-pop specification who gave rise to the necessity of definition. Most sensible people clearly understood what was meant and the effect that was sought. The formats covered by the pop umbrella were essentially ones which could expect to be maintained in local markets and therefore need not be dependent on a national platform for their viability.
If the response to the advertisement of this first national licence has been less than fevered (we have heard that there are three applicants) it is not because the Government were at fault nor that the Radio Authority did anything other than what was required of it. The only factors that can be said to have dampened enthusiasm must have been the prevailing economic climate, the high cost of transmission and the most unwelcome attempt by the record industry to impose royalty rates of an eye-watering magnitude and on a broadcasting industry which had already suffered from a heavy burden of royalty payments. These may be increased in some cases by as much as 20 per cent. Although a concessionary rate will be applicable to INR for the first four years, it could mean that the new station might have to find an extra

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£1 million. It is also possible that the Performing Right Society might try to follow PPL, possibly involving a further £1 million.
It is fair to point out that the Radio Authority could have modified its requirement of universal coverage and thus reduced transmitter costs. However, it will no doubt feel that it had good reason to insist on a network of over 20 transmitters. What, in contrast, is unforgivable is the assault on our radio industry by the predominantly foreign record companies, which is both vicious and on a scale every bit as unpleasant as I and other noble Lords warned this House it would be during our deliberations on the Broadcasting Bill. It is nothing short of scandalous that this country permits these record companies to frustrate government policy in this way. I only hope that the Copyright Tribunal which now has to deal with this problem dismisses PPL's claim with all the contempt that it deserves.
With respect, I think that the noble Lord, Lord Thomson, is wrong to imply misjudgment by the Radio Authority, if that was his intention. The authority acted in accordance with the Broadcasting Act in pursuit of both the public and commercial interests. I am sure that it is right to leave the principal challenge to BBC radio's pop format in the hands of existing local radio companies. I urge the authority to continue to see the opportunity of independent national radio as being complementary to the existing commercial system and not competitive. The competitive challenge should be the one of commercial radio versus the BBC.
5 p.m.
Lord Morris of Castle Morris: My Lords, we should have some sympathy for the Radio Authority and the position in which it finds itself today. The authority has been placed in a most unenviable posture by the Government with their determination to ensure vigorous market competition, while at the same time being very uncertain and vacillating about the very nature of the product which is on the stall.
Last year, as the noble Lord, Lord Thomson of Monifieth, has said, there were said to be nearly 40 consortia interested in bidding for the three channels on offer. Yesterday, when the FM channel bids were closed after a month of what we would call extra time, only three runners actually appeared at the start line. One can hardly say that this represents a crescendo or a passionate commitment to the subject; and one might be forgiven if one thought that the present situation is characterised by a deep and slumberous apathy, a disinterest, a lethargy illustrated by a great yawn of boredom. That is a pity. However, it is surely the direct consequence of the Government's failure to do either one thing or the other. To follow their own ideology, either the Government should have legislated clearly to ensure that a viable market with an identifiable product was created, or they should have allowed crude market forces to rule and simply allowed a general music franchise to go to the highest bidder, regardless of quality. The Government have fallen quite literally between two stools. We on these
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Benches—and in particular my noble friend Lady Birk —throughout all the stages of the Broadcasting Bill have emphasised always the importance of quality control and quality performance.
The rock on which this enterprise has foundered is that terrible phrase, "wholly or mainly non-pop". Is there not an inherent absurdity in defining something by saying what it is not? The music for this channel. whatever it may actually be, must not be pop—whatever pop is. It was distinguished at one stage from rock music, and your Lordships may well recall the problems that this posed for the noble Earl, Lord Ferrers, when he spoke on 16th October 1990. I shall quote him, because I think what he said was important. The noble Earl said:
"It has been argued that rock music is not the same thing as pop music. I do not know whether it is or is not. But I do know that it would be an odd result—and not, I am sure, what your Lordships intended—if a rock music or similar application were able to win the licence for the non-pop service. Apart from the fact that that would be a perverse outcome, the result would also almost certainly be that two of the new national services were not genuinely different from each other, given that a rock or pop-based service will be well placed to win the third, unrestricted licence".
He went on to say:
"We are not saying that a rock-based proposal will not be eligible for any national radio licence. It would in fact he well placed to bid for the one out of the three licences for which eligibility is unrestricted. All we are saying is that a rock or pop-based application should not try to pretend to be eligible for a licence specifically designated as non-pop".—[Officia/ Report, 16/10/90; col. 752.]
I read that carefully the day after he said it and I have read it again since. The noble Earl makes his meaning very clear. But such argument in such detail must surely be guaranteed to have deterred investors and entrepreneurs, unless they had been promised vast profits, from working it all out. They calculated that the profits were not vast, and quite clearly they declined the invitation to puzzle out what the noble Earl and the rest of us had tried to define for them. They did not bother to compete—and who can blame them?
This piece of social engineering, however worthy its motives, has failed, and it has clearly been seen to do so. The enterprise has perished; the patient has died. A post mortem would seem to be indicated to ascertain the reasons for this very public decline and fall. I would suggest just three. First, the stringent restrictions of the Broadcasting Act were narrow, ideological and, above all, unclear. The Government wanted a commercial rival to Radio 3 or Radio 4. What is now clear is that that will not happen. Whatever else the FM channel will give us, it will not give us kontakions by Stockhausen or madrigals by Gesualdo. Secondly, the definitions laid down by the Government but left to be interpreted by the Radio Authority were absurd. We recall—and we have done so this afternoon—the noble Earl describing pop music as "thump, thump, thump". It has been pointed out to me by my noble friend Lord Carter that if he had added one other "thump" and given it the appropriate emphasis, "thump, thump, thump, thump", he could have given us the opening of Beethoven's Fifth Symphony.

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The absurdities produced by the definition are well summed up in Richard Morrison's article in The Times today, which I commend to your Lordships. He says:
"As things stand, it will be allowed to broadcast Elvis Presley's. 1956 hit 'Heartbreak Hotel' but not his 1961 'Are you lonesome tonight?'. Domingo's `Nessun dorma' may be played; Pavarotti's may not".
Lord Chalfont: My Lords, perhaps the noble Lord will give way on a point of information. That may have appeared in The Times but it is totally inaccurate. I speak as the chairman of the Radio Authority. The licensee who wins the licence for this non-pop station can brcadcast 25 per cent. of the music time as pop music. He can therefore broadcast both Pavarotti and Domingo and anything he likes of Elvis Presley.
Lord Morris of Castle Morris: My Lords, I must accept the noble Lord's correction. He knows more than any of us about this matter. I hope that he will also take the opportunity to correct Mr. Richard Morrison on this and on another matter to which I shall come in a moment.
The third point on which I think we might meditate is that in this case the price was not right. Subject to the correction of the noble Lord, Lord Chalfont, Mr. Morrison said:
"To 'win the licence, the bidder must pay a £10,000 application fee, a £1 million licence fee collected by the Radio Authority … and make a cash bid, which could be around £5 million paid annually to the Treasury, in addition to 4 per cent. of all advertising and sponsorship revenues. Then it must forfeit an estimated 15 per cent. of revenue in copyright and royalty fees (which have just been raised considerably for commercial stations). Add to all that approximately £4 million in transmission costs and a minimum of £3 million spent on marketing the station in its first year".s
I am grateful to the noble Lord for his confirmation of that.
The price was obviously extremely high, which must have acted as a deterrent to a number of people who would otherwise have made useful and good bids. The Broadcasting Bill, as we remember it in its passage through this House, was intended to ensure diversity, quality and choice. Alas, the FM channel will provide none of those. It will not be able to mount a credible challenge to BBC Radio 3; it will be at best a pale shadow of a watered down version of an imitation of Radio 2.
Let us hope that the Government will admit that this experiment has gone off at half cock and be prepared to profit from their experience by going back to the laboratory bench and starting all over again.
>5.10 p.m.
The Minister of State, Home Office (Earl Ferrers): My Lords, I thought that we might have an interesting debate of this nature; indeed, we were not disappointed. The noble Lord, Lord Thomson of Monifieth, could not avoid resuscitating the feelings of disenchantment which he expressed so graciously and most sincerely about 12 months ago when we discussed the Broadcasting Bill. But I dare say that even the iob1e Lord was not quite sure about what he was going to say today, until yesterday evening; nor was I. I that because, until that time, none of us —that is, including the noble Lord, Lord Chalfont,
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the chairman of the Radio Authority, who I am delighted to see is present today —could have known for certain what applications there would be for the non-pop licence, the closing date for which was 5 o'clock yesterday evening.
We now know that there are three applications, despite the gloomy predictions of some dismal Jonahs that there would be none; and despite the gloomy predictions of the noble Lord, Lord Morris of Castle Morris, that we should all go back to the drawing board and start again. I am bound to say to him that that was a particularly unhelpful suggestion, but I accept it in the way that he said it. He seems to have forgotten that there were actually 39 letters of interest for the licences. Some of those who expressed an interest earlier will no doubt want to apply for an AM licence or for either the speech-based or the unspecified third service.
There never has before been a national radio service in this country run on a commercial basis. Those who want to run such services have not had the opportunity to do so. We have removed the unnecessary barrier. But, of course, it is for the market to determine what it wants to do. I readily accept that we do not yet know whether these three applications will all fulfil the requirements for a national radio station set out in the Broadcasting Act 1990. However, we do know that there are entrepreneurs who want to rise to the challenge and who are prepared to take the opportunity which independent national radio offers.
The noble Lord, Lord Thomson, asks whether we are satisfied with the procedures which were announced by the Radio Authority for the provision of a non-pop music national commercial radio station. I am bound to tell him that the short answer is, yes. The slightly longer answer entails appreciating what the Government's objectives were when we introduced the provisions which govern independent national radio in the Broadcasting Act, which passed through your Lordships' House last year and to which the noble Lord, Lord Thomson of Monifieth, was a notable contributor.
There is, at the moment, the potential for three new national radio services—one on VHF, and two on medium wave. We felt that it was right in principle that these should be made available to anyone who wishes to offer a national radio service and who believes that he can thereby establish a viable business. But, the economics of radio being what they are, we realised that it was likely, unless we did something to regulate the programming format of the new channels, that all three stations could end up by being stations which would provide what is colloquially called "pop-music".
We felt that national radio stations ought to be used to cater for a range of national tastes and interests. I do not think that that is an unreasonable thing to do. While we did not think that it would be sensible to try to lay down in great detail what each of the new stations should offer, it seemed to us to be very important to ensure that there was a broad framework within which these stations should all be able to operate.

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We decided, therefore, to require that one of the stations should be predominantly speech-based; that one should offer music which was predominantly not pop music; and that the third station would be unrestricted in its content, and could easily be a "pop" or a "rock" station. To the connoisseur of these niceties—what one might call the "aficionados",—I can tell your Lordships that there is a marked distinction between the two. We do not think that those classifications impose major restrictions on entrepreneurs who wish to provide a service, and that was not our aim. The non-pop station, for example, could be a classical station. It could be a light classical station. Or it could be, although the noble Lord, Lord Thomson of Monifieth, would not like it, an "easy listening" station. But the important thing is that it should not be just another pop channel. It is interesting to see that those bids which have been submitted for the non-pop channel cover each of those three musical styles.
The non-pop station could build up a substantial audience nationally and it could be a major force in radio broadcasting. We did not accept the fairly pessimistic scenario that no station, which operated along those lines, could ever be viable. We believe that it could be.
The Radio Authority issued an invitation on 11th January to apply for the non-pop music radio licence which will use the VHF frequencies. The original closing date for applications was to have been 22nd April, but the authority decided to put that date back to yesterday, 22nd May, because of the announcement by Phonographic Performance Ltd of the revised rates of charges for the use of records by radio stations. That inevitably affected the business plans of potential applicants.
My noble friend Lord Colwyn made a blistering attack on PPL's pricing structure. He described it as excessive. During the Bill's passage we realised, as did the MMC, that some of PPL's practices amounted to an excess use of monopoly power. One of them was clearly the needle-time restriction. That is why we took steps to ensure that that restriction could not be unilaterally imposed. We all recognise that PPL has a right to make a fair charge for the use by radio stations of sound recordings. The central issue is how to determine what is to be a fair practice. The Act makes provision for the Copyright Tribunal to adjudicate where there is a difference of opinion.
My noble friend said that his amendment might have solved the problem. I recall him tabling a number of amendments on the subject during the passage of the Broadcasting Bill. They came at an inconvenient time of night, and they were inconveniently complex. They would not have prevented PPL from adopting its proposed pricing policy. The amendments were designed essentially to govern the way the Copyright Tribunal considered cases. I am satisfied that the Copyright Tribunal will be able to assess the issue on its merits within the statutory framework that we have devised. Your Lordships will of course be aware that there is provision for the tribunal to award costs
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against one of the parties in any case brought before it. The right course is for the tribunal to proceed to consider the merits of the case.
The noble Lord, Lord Thomson of Monifieth, suggested that the Radio Authority was being unnecessarily rigid and bureaucratic in requiring the non-pop station to consist of a minimum of 75 per cent. of music in each three-hour period, and, of that music, 75 per cent. to be non-pop. But the Act itself requires that the service should consist "wholly or mainly" in the broadcasting of music which is not pop music. I doubt whether the requirements of the Act could be said to be fulfilled if substantially less than 75 per cent. of the channel's output was not music.
As it is, the channel would in any three-hour period have to play at least two and a quarter hours of music. The remaining three-quarters of an hour could be devoted to speech or to advertisements, or to a combination of the two. I do not believe that that format would be unduly restrictive. Those, who wish to offer a service with substantially more speech content, would perhaps be better advised to apply for the speech-based channel which will be advertised in due course.
The noble Lord, Lord Thomson, suggested that the Radio Authority was also being restrictive in its interpretation of the internal diversity requirement. The Radio Authority has said that that requirement could be satisfied if, as a minimum, in any period of six consecutive hours, the work of a number of different artists and composers is broadcast.
That does not seem a particularly rigorous requirement. Indeed, there are many who argue that it does not go far enough. I do not believe that the Radio Authority would penalise any licensee who might occasionally play music from a single composer over the whole of, say, a six-hour period, provided that, elsewhere in the schedule, there was compensating variety. Clearly, those who have bid for the non-pop licence do not themselves regard these requirements as unnecessarily prohibitive.
Some people have suggested that the Radio Authority should have done more to encourage bids for classical music stations. So far as the Government are concerned, we have never said that the non-pop station should be a classical station, although my right honourable friend Mr. Mellor—who has now left the exalted position of being the Minister in charge of broadcasting in the Home Office and has moved to the even more exalted but more detached rostrum of Chief Secretary to the Treasury—made no secret of his own personal hope that it would be. The noble Lord, Lord Thomson of Monifieth, expressed the same hope.
The Radio Authority had and has no power to specify the format for the station, except to rule on the amount of pop music which could be played on the non-pop station. Nevertheless, I note that one of the bids from Classic FM is for a popular classical musical channel, and that the UKFM bid proposes to offer popular classical music in the evening.
Concerns have also been expressed at the prospect of pop music being allowed to be played on the non-pop station. I remind your Lordships that the Act does not say that there should be no pop music on the

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non-pop channel. It merely requires the service to consist wholly or mainly in the broadcasting of music which, in the opinion of the authority, is not pop music.
We then come to the problem of what is pop music. Rather like an elephant, it is difficult to describe, but you recognise it when you meet it. We included in the Act, for the sake of clarification, some guidance as to what constitutes pop music. It was never intended to be an exclusive definition and the Radio Authority has itself decided to add to the further definition. The authority has indicated that the non-pop service would satisfy the statutory requirements provided that 75 per cent. of the music which is played on the channel were to be music other than pop music. By simple translation that means that 25 per cent. of the music can he pop music.
The definition of pop music therefore helps to indicate not what specific type of music should form the majority of the musical output of the station but what type of music could form a minority of the musical output. It has no greater significance than that. Some have suggested that the definition of pop music, which has been adopted by the Radio Authority, is somewhat bizarre. I am bound to say that I do not think that we shall ever find an exhaustive definition which would succeed in separating all pop from non-pop music.
Lord Harvington: My Lords, will the noble Lord permit me a question? What would happen if there were litigation and a judge had to decide whether it was pop music or not, whether it had gone over the 25 per cent and all the other matters? It is rather sketchy, according to what we have heard from the noble Lord. I hope he understands my point, I may not have made myself clear.
Earl Ferrers: My Lords, I entirely understand the point. T le answer is: leave it to the judge. The noble Lord, Lord Thomson of Monifieth, recalled, as did the noble Lord, Lord Morris of Castle Morris, that I had ventured to suggest that a simple, understandable and fairly realistic definition of pop music might be "thump, thump, thump". The noble Lord, Lord Thomson, rightly said that it was not "thump, thump". But the noble Lord Morris, was quite wrong. It is not "thump, thump, thump, thump"—four thumps. If that had indicated any Beethoven symphony, I think it ought to have been the Fourth Symphony, not the Fifth since there were only four thumps.
Lord Morris of Castle Morris: My Lords, will the noble Earl give way? I did not suggest that he used four thumps, I know perfectly well that he used three. I pointed out that if he had one extra thump and accentuated it in a particular way, he would have given us the opening bars of Beethoven's Fifth, not the Fourth symphony.
Earl Ferrers: My Lords, I am not quite so dumb, I realised that. I suggested that it ought then to be called Beethoven's Fourth Symphony. Be that as it may, the parliamentary draftsman considered that it would not provide a sufficiently legal and watertight definition. I
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thought my noble friend Lord Colwyn went a little over the top when he said that if one asks a silly question one will receive a silly answer. Frankly, the question had to be asked, and I thought the answer was a smashing one on the whole.
I have a sneaking suspicion that my definition is probably just as good as any other. But the definitions which have been placed in the Act and which the Radio Authority has adopted are intended to be a little more specific and dignified even if they have lost a little colour in the process.
I readily concede that any attempt to define the indefinable is unlikely wholly to succeed. But I remain of the opinion that some common sense attempt has to be made in order to provide a degree of guidance if the non-pop station is to be properly distinguishable from the third, unspecified, channel.
The noble Lord, Lord Thomson of Monifieth, was concerned about the licence fee which is set by the Radio Authority. No one likes paying licence fees. Everyone always says that the fees are too high. If one is paying the fee, one is usually justified in holding that view. However, the Radio Authority is required to become self-supporting as quickly as possible. At the same time the authority is anxious to spread the burden of its charges fairly between all its different licensees. It has, therefore, drawn up a tariff which sets fees on the basis of the number of listeners which the relevant service could reach. As more services are licensed over the next few years, the Radio Authority may be in a position to review, and even to reduce, its fees.
As regards the costs of the service, one of the main aims in the Broadcasting Act was to give the station operators greater control over their running costs. They are free to determine their programming and studio costs, and they have a large say in the station's transmission arrangements. Any complaints about royalty payments which are imposed by Phonographic Performance Ltd. or by the Performing Rights Society are a matter for the Copyright Tribunal to settle.
The Broadcasting Act provided for the first time an opportunity for the development of independent national radio services. It was quite an exciting new venture. It has had problems, as any new venture does. However, we did not then claim that the companies would be successful, and we do not do so now. That is not the business of government. However, we wish to ensure that they are given the chance to be successful. We see no reasons why they should not be successful. In the last analysis of course it is for the owner of the station to provide a service which is consistent with the Act's requirements and which attracts listeners. The service will exist for its listeners, and it is they who will be the judges of whether it succeeds or fails.
As your Lordships rise for the Whitsun Recess, I conjure up a vignette of the noble Lord, Lord Thomson, walking along a beach with his Sony Walkman tuned in to Radio 3 while longing to have it tuned in to an independent national radio station. He has that look of glassy eyed detachment which always seems to accompany those who use these instruments

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of modern technology. It is completely incomprehensible to others who hear a somewhat disembodied, sepulchral twittering which emanates from the earphones of those machines. That will be a lovely vignette of the noble Lord to retain over the Recess.
It is with a sense of sorrow that I realise that the end of this debate is the last chance for us to hear my noble friend the Chief Whip use those well-toned and well-honed words which it is his privilege to use in adjourning the House before a Recess. We shall miss hearing him pronounce them on future occasions.

New Roads and Street Works Bill [H.L.]
Returned from the Commons agreed to with amendments and with a privilege amendment; the amendments ordered to be printed.

River Usk Barrage Bill [H.L.]
Bill withdrawn.
House adjourned for the Spring Bank Holiday Recess at twenty-eight minutes past five o'clock.