Lords Sitting of 21 October 1991

Preamble
The House met at half-past two of the clock: The CHAIRMAN OF COMMITTEES on the Woolsack.
Prayers—Read by the Lord Bishop of Chichester.
Lord Northbrook Lord Northbrook—Sat first in Parliament after the death of his father.

Personal Statement: The Viscount Ullswater
The Parliamentary Under-Secretary of State, Department of Employment (Viscount Ullswater): My Lords, I should like to make a personal statement regarding the question from the noble Lord, Lord Dorm and of Easington, during Starred Questions on Thursday, 17th October. In response to a supplementary question from my noble friend Lord Boyd-Carpenter about the number of people in employment (Col. 1215 of the Official Report) I said that the workforce in employment stood at 26,177,000. I also said that this figure did not include the 1.4 million increase in the number of self-employed since 1979.
I regret that the latter part of that statement was incorrect. The workforce in employment does include the 1.4 million increase in the number of self-employed. I apologise for any misunderstanding I may have caused.

House Building Figures
2.38 p.m.
Lord Dean of Beswick Lord Dean of Beswick asked Her Majesty's Government:
What are the latest figures for new starts and completions of house building for 1991.
The Minister of State, Department of the Environment (Baroness Blatch): My Lords, in Great Britain during the eight months up to August 1991 there were 115,200 new dwellings started and 111,800 new dwellings completed.
Lord Dean of Beswick: My Lords, I am grateful to the Minister for that answer. However, does she agree that with repossessions and the number of homeless still increasing, together with the number of people sleeping rough—who are not recorded in any figures—also still increasing, those figures are insufficient and do not deal with the problem? Is the Minister aware that her colleague, the noble Viscount, Lord Astor, when answering a Question on Monday stated that by 1993–94—two to three years hence—the housing associations will be building a maximum of 40,000 houses'' Bearing in mind that the figures of the Minister's own department indicate the need for more than a million new houses by the turn of the century, is not that performance appalling? Will the
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Government at last end their vendetta against local authorities and let them once again build corporation houses to let, mainly from their own funds which the Government are holding in bond?
Baroness Blatch: My Lords, neither I nor my department underestimate the seriousness of the difficulty of people seeking homes. However, I refer the noble Lord to a number of measures that have been taken. Total expenditure by local authorities is at £4.5 billion; housing revenue subsidy is now at £3.7 billion; housing corporation expenditure is set to rise to over £2 billion by 1993; there is an extra £50 million for low cost rural housing; an extra £268 million for estate action; £25 million which was announced only a couple of weeks ago to bring empty flats over shops into use—an extra £300 million over two years, on top of mainstream housing programmes, to help relieve statutory homelessness in London and the South East. There is a further £96 million to help to provide accommodation for the single homeless living rough in London; and that is not all of the measures.
Lord Hailsham of Saint Marylebone: My Lords, did I hear my noble friend aright on the figures which she gave in her principal Answer? Do the figures relate to the whole of the United Kingdom, to Great Britain or merely to England and Wales? How do they relate to the number of empty properties?
Baroness Blatch: My Lords, I cannot say how they relate to the number of empty properties. However, I can say that there are too many empty properties and that measures are being established to bring them back into use. The figures to which I refer are for Great Britain.
Lord Mellish: My Lords, we recognise that there are many bad councils, some of which have far too many empty properties. However, let us ignore those and consider the good councils. Why do not the Government allow them to build new houses with the money they get from the sale of homes to sitting tenants?
Baroness Blatch: My Lords, on the first point made by the noble Lord, yes, of course there is some bad management. The hope is that measures will be taken to improve the management of housing stock. With regard to capital receipts, I have said several times at the Dispatch Box that those authorities with the highest capital receipts are not necessarily those authorities with the greatest need. Therefore, capital allocations—credit allocations—is the Government's way of making sure that resources are targetted on those authorities with the greatest need and that surplus moneys from receipts are used to reduce debt.
Lord Stallard: My Lords, I certainly welcome the announcement of the measures to be taken. However, they certainly are not enough when put into perspective. Does the Minister accept that in 1979 there were 50,000 homeless households. That figure had doubled by 1991 to 145,000. In 1978–79 the building of 92,000 houses commenced. By last year the number had fallen to 13,000. That is a huge reduction. As has already been mentioned, local councils have

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been prevented from spending on new houses the £5 billion that was set aside from council house sales. Does not that put everything into perspective and prove that the Government are not doing anywhere near enough in the present crisis?
Baroness Blatch: No, my Lords, I do not accept that the Government are not doing nearly enough, although there will always be a time when more could be done. Perhaps I may throw the question back to the noble Lord. Is he saying that the amount of money being spent on providing houses for people will be exceeded by the noble Lord's party should it come to government? If the noble Lord is saying that his party will allow all receipts to be used by local authorities, a great deal more money will be necessary to allow those authorities that do not have the receipts to provide for those in the greatest need.
Lord Molloy: My Lords, notwithstanding the encouraging part of her initial Answer, is the noble Baroness aware that local authority representatives of all political complexions are expressing in their magazines, month in month out—last month being the most severe—the savage problems that they have to face and the cruelty of the fact that their endeavours in trying to give homes to those who are badly in need are being frustrated? Would it not be wise to discuss these matters with representatives of all our local authorities?
Baroness Blatch: My Lords, I can assure the noble Lord that my department constantly discusses these matters with local authorities. The role of local authorities is to work as enablers with housing associations, private sector developers and private landlords, so that people are provided with housing from a variety of sources.
Lord Bruce of Donington: My Lords, is the noble Baroness aware that the completion figure for new houses, whether provided by local authorities, private enterprise or housing associations, is about 100,000 per annum lower than the number achieved by previous governments, including governments of her own political persuasion? Is she further aware that this shortage of housing is leading to additional claims being made on the National Health Service by people suffering from all the mental and physical effects of living in bad housing or being without housing?
Baroness Blatch: My Lords, I believe that the noble Lord is referring, as noble Lords opposite frequently do, to what local authorities are doing in the area of housing. It is important to take all providers of housing—
Lord Bruce of Donington: I have, my Lords.
Baroness Blatch:—and not to ignore that there are 2 million more houses in the housing stock than there were in 1979 and that 69 per cent. of people own their own homes; a figure infinitely comparable to that achieved by the party of the noble Lord.
Lord Bruce of Donington: My Lords, is the noble Baroness aware that I included those figures?
Baroness Young: My Lords, I welcome what my noble friend said in answer to some of the very difficult questions that have been raised. Can she tell the House how many empty properties there are today? Is it a fact that there are well over 100,000 empty council houses? How many empty properties are there in the private letting market? Could not all these properties be brought back into use?
Baroness Blatch: My Lords, my noble friend makes an important point. I cannot be specific—I shall write to her with specific answers to those questions—except to say that far too many houses stand empty in both the public and private sectors. We are looking at ways and means of making sure that they are brought into use. Better management of stock in the public sector would go a long way to bringing some of those houses into use. They could then be lived in by people who are in great need.
Lord Glenamara: My Lords, is the noble Baroness aware that far too large a proportion of the houses being built are in the £150,000 to £200,000 bracket whereas the need is for houses to rent and for houses for first-time buyers? Builders are building more expensive houses because they make more money out of them. That is depriving people who are in the greatest need. Can the Government do anything to tilt the programme in favour of people whose need is greatest?
Baroness Blatch: My Lords, the noble Lord raises an important point on which I shall try to give him some reassurance. First, the exceptions policy makes available in rural areas land that would not otherwise be used for housing. Secondly, a circular put out by my department requires local authorities, when giving planning permission to developers, to include as a condition of planning permission the making available of low-cost housing as part of the development.
Lord Winstanley: My Lords, is not one of the problems of the renovation of empty properties, especially empty properties in the private sector to which the noble Baroness, Lady Young, referred, that, in London in particular, they are renovated to such a high standard that no one can afford to live in them?
Baroness Blatch: My Lords, in terms of the way in which the capital receipts system works, the local authority is allowed to deduct the cost of refurbishment of empty houses being brought back into use before the capital receipts system is applied.

HMS "Endurance"
2.48 p.m.
Lord Boyd-Carpenter Lord Boyd-Carpenter asked Her Majesty's Government:
Whether they have now taken a decision to replace HMS "Endurance" for duty in the Falkland Islands.
The Parliamentary Under-Secretary of State, Ministry of Defence (The Earl of Arran): My Lords,

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the Government announced on 14th October that MV "Polar Circle" had been chartered to replace HMS "Endurance" in the Antarctic this season. "Endurance" is no longer fit to deploy in Antarctic water; and is to be decommissioned.
Lord Boyd-Carpenter: My Lords, I thank my noble friend for that reply. Does he recall that in the late hours of Wednesday night, when he announced what he has repeated today about "Polar Circle", he indicated only that she would operate for this forthcoming season? Can he now say that it is the firm intention of the Government that either "Polar Circle" or some other ship will carry out these duties in future years? Will he consider also whether that other ship or "Polar Circle", as the case may be, could very appropriately be renamed HMS "Endurance", both as indicating continuity and also as a very proper tribute to Lord Shackleton?
The. Earl of Arran: My Lords, in response to my noble friend's first question, I have already said that the Government are committed to maintaining the programme carried out by HMS "Endurance". Longer-term arrangements will naturally depend in part upon the operational experience which will be gained this year in operating in those waters. As regards the name of the ship, certainly no decision has been taken at present. However, a decision will be taken before she sails, which will be towards the end of November or at the beginning of December.
Lord Williams of Elvel: My Lords, I must tell the noble Earl that my noble friend Lord Shackleton much regrets not being able to be present in the House on this occasion. However, does he recall that the motto of the Shackleton family is:
"By endurance we conquer"?
Can the noble Earl give us an assurance that the decision to commit the Government must and will be taken by 24th January, and not at the end of the season? If a positive decision to renew the charter is not taken by that time, the owners are prepared to put the "Polar Circle" up for rechartering. As I understand it—and I understand that my noble friend is so informed—there is an Italian authority waiting even now with cheque-book in pocket to take over the ship. Further, will the noble Earl agree that it would have been much better if the Government had taken a permanent decision and had gone for a long-term charter, or purchase of the ship, and renamed her appropriately?
The Earl of Arran: My Lords, I take the points raised by the noble Lord, Lord Williams, concerning the great part that the Shackleton family has played in the history of HMS "Endurance". In relation to the future commitment of a ship in those waters, a decision will be taken at a time that the Government think appropriate. I take note of what the noble Lord, Lord Williams, said about 24th January. However, I should remind him that the end of the season is towards April-May time.
Lord Campbell of Alloway: My Lords, in view of the last answer given by my noble friend, perhaps I may ask the question again. Is it the policy of Her Majesty's Government to fly the flag in the Antarctic?
The Earl of Arran: My Lords, I have just said that during the forthcoming season we have committed the "Polar Circle" to take up the programme previously carried out by HMS "Endurance" in those waters.
Lord Chalfont: My Lords, is the noble Earl aware that that is really not good enough? The question is: has Her Majesty's Government made the decision to maintain a long-term naval presence in the Antarctic? Is not the noble Earl aware—I am sure that he is—that this is an area of growing strategic importance? It is not good enough to say that the programme of HMS "Endurance" is to be continued. Are the Government committed to a long-term presence in the Antarctic?
The Earl of Arran: My Lords, I believe that the noble Lord, Lord Chalfont, is fully aware that all government departments, including the Ministry of Defence, regularly and annually review their commitments and therefore their expenditure.
Lord Shepherd: My Lords, surely that response is unacceptable. The need for a replacement for HMS "Endurance" is essential for our position in that part of the Antarctic. Apart from the political and international reasons, there is a need for a ship of this sort for a reasonable length of time. Is it not now time for the Government to say that they will replace the ship either by charter or by building a ship of the right standards for that particular task? I think that the Minister could well lead others to believe that we are not serious in our intentions in that part of the world.
The Earl of Arran: My Lords, I hear what the noble Lord, Lord Shepherd, says. However, equally, I must give the same indication to him as I gave to previous speakers. I repeat, the Government are committed to maintaining the programme carried out by HMS "Endurance". As I said, the season ends at April-May time. After that, obviously the matter will be very carefully reviewed as regards the future. We shall learn a great deal from the point of view of our ability or otherwise to operate in those waters.
Lord Geddes: My Lords, can my noble friend remind the House as to the duration of the charter of the "Polar Circle"? More particularly, in the light of the initial Question put by my noble friend Lord Boyd-Carpenter, can he say whether the charter is a time charter or a bareboat charter? That would have a significant effect on the ability to change the name of the ship.
The Earl of Arran: My Lords, I am not precisely certain as to which kind of charter is involved. However, I can inform my noble friend that the name of the ship will be decided upon before she sails.
Lord Kennet: My Lords, does the noble Earl remember that the withdrawal of a ship called HMS "Endurance" was commonly regarded at the time, and later, to have been among the causes predisposing Argentina to invade the Falkland Islands more or less

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immediately thereafter? If that is the case, what reason do the Government have for believing that the withdrawal of a ship in that area in a year's time will not predispose Argentina to invade the Falkland Islands again?
The Earl of Arran: My Lords, I can tell the noble Lord, Lord Kennet, that I have just returned from a visit to the Falkland Islands. I can confirm that there is a very significant garrison presence in the area. There is also a very strong naval presence and an airstrip which would provide for rapid reinforcement. The situation at present is totally different from that of nine years ago.
Lord Boyd-Carpenter: My Lords, will my noble friend bear in mind that any apparent hesitation or doubt about the continuance of the presence of such a ship will simply be an encouragement to those who may wish to repeat the efforts of Argentina in 1982?
The Earl of Arran: My Lords, as I just mentioned, there is a very strong military presence in the area. The "Polar Circle" is committed much more for hydrographic and scientific survey.
Lord Williams of Elvel: My Lords, perhaps I may press the noble Earl on my major question. Is it not the case that, if the Government do not commit themselves by 24th January, the owners will put the "Polar Circle" back on the market on a short-term charter?
The Earl of Arran: My Lords, I can tell the noble Lord that such matters are still under consideration.
Lord Greenway: My Lords, is the noble Earl able to confirm whether the Government looked at any ships other than the "Polar Circle", or was she the only one that seemed to fit our requirements?
The Earl of Arran: My Lords, she was the only ship thought appropriate to sail down to those waters.
Lord Glenamara: My Lords, why is the noble Earl making such heavy weather of the matter? There is a perfectly simple solution and that is to ask Swan Hunter's on Tyneside to build a new ship. The company would be delighted to do so.
The Earl of Arran: My Lords, I can only take note of the noble Lord's comments.
Lord Chalfont: My Lords, I apologise for prolonging the matter still further. However, will the noble Earl at least go back to the Ministry of Defence and put the following question with the utmost seriousness? It is not good enough to say that long-term commitments are subject to annual costings. We are aware of that fact. It is possible for the Government to make a long-term commitment to NATO. Therefore, why is it not possible for them to make a long-term commitment concerning the strategic importance of the Antarctic?
The Earl of Arran: My Lords, I take on board the comments of the noble Lord, Lord Chalfont.
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However, I remind him again that all our commitments, and thus our expenditure, are regularly and responsibly reviewed.

Banana Imports
3 p.m.
Viscount Montgomery of Alamein Viscount Montgomery of Alamein asked Her Majesty's Government:
When they will permit bananas from Latin America to compete on equal terms with imports from the Caribbean.
The Minister of State, Ministry of Agriculture, Fisheries and Food (Baroness Trumpington): My Lords, we have long established arrangements which give preferential treatment to our traditional suppliers in the Caribbean. The Community also has commitments to ACP suppliers under the Lomé Convention. The Commission has yet to produce proposals on bananas in the single market but we shall continue to press for arrangements which maintain our trade in bananas with our traditional suppliers.
Viscount Montgomery of Alamein: My Lords, I recognise that Britain has obligations to Caribbean producers, but is my noble friend aware that bananas arrive from the Caribbean under a specially protected regime whereas Latin American bananas are subject to a quota and to a 20 per cent. tariff? Is my noble friend further aware that in Germany, which has a free market, prices are 25 per cent. lower, and per capita consumption is higher, and that therefore the consumer benefits considerably? Does she agree that from 1992 when a single European market comes into force a more level playing field would be more appropriate?
Baroness Trumpington: My Lords, Latin and South American countries benefit from a range of concessions under the EC's generalised system of tariff preferences. Additional concessions were recently granted on a number of products to encourage production of legitimate alternatives to narcotic crops. Bananas were excluded because of Lomé commitments. Dollar bananas enter Germany tariff free. Exemptions specific to Germany were granted in the Treaty of Rome. They are subject to a quota which is roughly equal to demand. Of course, we want the best quality bananas for our people. Quality in all countries is variable, but we have been working with Caribbean producers on a programme to improve quality. The programme has been successful although there is still room for improvement.
Lord Molloy: My Lords, is the Minister aware that there has never been any complaint about the standard of bananas from Latin America? That is not the point. The point made by the noble Viscount, Lord Montgomery, is that with fair trading and with so-called free enterprise Latin America should not be subject to inhibitions which do not apply to the Caribbean. As I understand it, the noble Viscount is saying that there should be fairness on all sides. What is wrong with that?
Baroness Trumpington: My Lords, dollar bananas are important in the UK market. On average, over the past five years they have accounted for 22 per cent. of the market. The Government are firmly committed to maintaining effective preferential access for our traditional suppliers. We have a duty to ensure that those upon whom we have depended for so long are not left unprotected.
Lord Pitt of Hampstead: My Lords, I thank the Minister for affirming the Government's commitment to ACP suppliers under the Lomé Convention. Will she confirm that the Lomé Convention provides that no ACP state shall be placed, as regards access to its traditional markets and advantages in those markets, in a less favourable situation than it has enjoyed in the past or enjoys at present? For many Caribbean countries access to the UK market for their bananas is vital. Is she aware that bananas represent 70 per cent. of Dominica's export earnings; 60 per cent. of St. Lucia's export earnings; 40 per cent. of St. Vincent's export earnings; and that there is no country in central or south America in which bananas represent such a high percentage of their export earnings? Will she further confirm that the banana industry in those islands is in the hands of small farmers and that consequently the crop is more expensive to produce than in the larger states of Latin America?
Noble Lords: Speech!
Lord Pitt of Hampstead: My Lords, it is not a speech, I am asking a question. I am asking the Minister to confirm that the loss of the market can be balanced only by diversification into other crops, which will require several years to fructify, and so any loss of the UK market can only create unnecessary hardship for the people of those islands.
Baroness Trumpington: My Lords, what I and the noble Lord have said bears out the fact that bananas have an important role to play in the economies of the places that he mentioned.

The British Library
3.4 p.m.
Lord Strabolgi Lord Strabolgi asked Her Majesty's Government:
Why they have decided to abandon plans to contribute to the purchase fund for works of art for the new British Library.
Viscount Astor: My Lords, the overall priority for the British Library at present is to complete the new building at St. Pancras on time and within budget. Against that background, the Government are unable to authorise at this stage the allocation of public funds for the purchase of new works of art.
Lord Strabolgi: My Lords, I thank the noble Viscount for that Answer. Is he aware that important art commissions were planned by the architect as an integral part of the new library building? Is he also aware that a clear undertaking was given by the Government that Treasury funds would be available
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towards the cost of those commissions? Is it the Government's intention that the new national library should open without any artistic enrichment?
Viscount Astor: My Lords, no. The Government undertook to consider some public funding. It was hoped that the British Library would also obtain some sponsorship. I believe that it has been unable to do so. The British Library has many important paintings and sculptures which will be used in the building. It will continue to seek sponsorship for new works of art. It is also investigating the possibility of loans from other institutions. The library has many objects of its own. In fact it will be unable to exhibit all its own works of art even in the much larger space that will be available.
Lord Annan: My Lords, does the noble Viscount agree that in this case the Government have their priorities right, and that the first thing that must be done is to complete the programme for the building of the library? While great sympathy may be expressed for the concern felt over this matter by the noble Lord, Lord Strabolgi, surely the embellishment of the library could come second? Should we not consider that neither Rome nor the British Library was built in a day?
Viscount Astor: My Lords, I must agree with the noble Lord. The new British Library is the largest civil public sector project commissioned in Britain this century. It will cost £450 million. It is within budget and within target. Phase I will be completed in 1993 and the final phase in 1996. Future government funding for works of art is not ruled out. We shall consider the point in the future.
Lord Morris of Castle Morris: My Lords, is the noble Viscount aware that we on this side of the House find the situation currently facing the British Library little short of scandalous in that the latest problem is part only of a long history of mismanagement by the Treasury and the Office of Arts and Libraries in the funding of what is possibly one of the largest civil projects undertaken in the past 100 years? Is he further aware that we view with incredulity this latest example of penny-pinching parsimony? If any of those works of art have already been commissioned, who will pay for them?
Viscount Astor: My Lords, many noble Lords on both sides of the House view the British Library as a major project of great importance. It will bring together most of the British Library's books under one roof, which will be a huge advantage to the public. The British Library accumulates some five miles of additional books each year. Space is needed. The project is a fine one, and we look forward to it opening.
Viscount Eccles: My Lords, I agree with what the noble Lord, Lord Annan, said, but does my noble friend agree that the Government gave some indication to those on the committee that they would receive some money? While I am not in favour of decorating a new building all at once, with art of one period, there should be a statue in the forecourt, which is what the plan intended that it should have.
Viscount Astor: My Lords, I said that we undertook to consider some public funding. I can only repeat that we have not ruled out funding in the future.

Business
3.9 p.m.
Lord Hesketh: My Lords, at a convenient moment after 3.30 p.m. my noble friend Lord Henley will, with the leave of the House, repeat a Statement that is being made in another place on Social Security Benefits (Up-rating).

London Underground (Kings Cross) Bill
The Chairman of Committees (Lord Aberdare): My Lords, this Motion standing in my name and the one that follows are carry-over Motions as a result of Messages received from another place. I beg to move the first Motion standing in my name on the Order Paper.
Moved, That this House do agree with the orders made by the Commons set out in their Message of 17th October—(The Chairman of Committees.)
On Question, Motion agreed to, and it was ordered that a Message be sent to the Commons to acquaint them therewith.

London Underground (Safety Measures) Bill [H.L.]
The Chairman of Committees: My Lords, I beg to move the second Motion standing in my name on the Order Paper.
Moved, That the Commons Message of 17th October be now considered; and that the promoters of the Bill have leave to suspend any further proceedings thereon in this session in order to proceed with the Bill in the next session of Parliament, notice of their intention to do so having been deposited in the Office of the Clerk of the Parliaments not later than 12 noon o Tuesday 22nd October next;
That such Bill be deposited in the Office of the Clerk of the Parliaments not later than 3 p.m. on the second sitting day in the next session with a declaration annexed, signed by the agent, stating that the Bill is the same in every respect as the Bill at the last stage of the proceedings thereon in this House in the present session;
That the proceedings on such Bill in the next session of Parliament be pro forma in regard to every stage through which the Bill has passed in the present session, and that no new fees be charged to such stages;
That the Private Business Standing Orders apply to such Bill in the next session only in regard to any stage through which the Bill has not passed during the present session.—(The Chairman of Committees.)
On Question, Motion agreed to, and it was ordered that a Message be sent to the Commons to acquaint them therewith.

Export and Investment Guarantees Bill
3.11 p.m.
The Lord Advocate (Lord Fraser of Carmyllie): My Lords, I have it in command from Her Majesty the Queen to acquaint the House that Her Majesty, having been informed of the purport of the Export and Investment Guarantees Bill, has consented to place her prerogative and interest, so far as they are affected by the Bill, at the disposal of Parliament for the purposes of the Bill. I beg to move that the Bill be now read a third time.
Although the Bill is relatively short, its importance has been recognised by the thorough debate in this House at both Committee and Report stages, as well as in a number of important contributions and Second Reading speeches. The legislation provides the framework for the most radical change in the way in which export credit insurance will in future be provided within the United Kingdom since the establishment of ECGD over 70 years ago. It is therefore not surprising that your Lordships have wished to understand why the Government believe these changes to be essential, to probe the details of the Bill itself and in particular to be reassured that the changes will not be damaging to the interests of our exporters.
I hope that I have been able to satisfy your Lordships in all these respects and to demonstrate, as I indicated at Second Reading, that the Government's primary motivation has throughout been to ensure that the benefit of the services currently provided to our exporters by ECGD's Insurance Services Group can be safeguarded for the future against current and prospective challenges. The chief and immediate challenge is a commercial one: how to meet the growing competition from private sector insurers for better quality business, the retention of which is essential if the Insurance Services Group is to be able to continue to support the rather more difficult risks and maintain a financially viable scheme. There is also the need to meet the increasing demand from exporters for insurance packages covering both export and domestic business.
The secondary but no less real threat is that of a legal challenge to the continued involvement of the state in the provision of short-term export credit insurance on the grounds that this constitutes unfair competition to the private market incompatible with the Treaty of Rome. I hope that your Lordships were persuaded that the only sensible response to these challenges was to privatise ISG.
At Committee stage, attention focused on two concerns. The first was the desire on the part of a number of noble Lords for the firm ministerial assurances concerning the provision of reinsurance facilities after privatisation which I and my honourable friend the Minister for Trade had given at various stages during the passage of this Bill to be enshrined in the Bill. Your Lordships' concern persuaded the Government to look again at the possibility of writing these into the Bill, and I was pleased to be able to bring forward amendments

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which met the anxieties expressed and which imposed a permanent new obligation on the Secretary of State to keep the need for these facilities under review. As a result, we will send the Bill back to another place with two important amendments to Clauses 11 and 13. I am sure that these amendments will be considered sympathetically there since they respond to concerns similar to those expressed by your Lordships voiced in that place during the early stages of the Bill's passage through Parliament.
The second concern was to safeguard the interests of those of ECGD's staff who will be leaving the service of the Crown to work in the private sector. I have emphasised the Government's commitment to ensure that these highly regarded staff should be employed in the new company on terms at least as good as those which they enjoy at present. I was therefore pleased to be able to announce at Report stage that 590 of ECGD's staff have now expressed a preference to join the new company on the terms offered by NCM, the Government's preferred purchaser, rather than to remain in the Civil Service. This is the real proof that the Government's objective on terms and conditions has been achieved.
We have perhaps been less concerned about those aspects of the Bill which will provide the Secretary of State with revised powers in relation to the activities of the continuing ECGD. I am sure that this is because the House has recognised that the intention of those powers is to enable the continuing and new ECGD to carry out its primary and vital function of supporting UK project exports even more effectively than is possible under the existing legislation.
I am grateful to my noble friend Lord Henley, who also contributed to the debates from this side of the House, and to other noble Lords who participated. While much of our debate concerned itself directly with I he provisions in the Bill, I have no doubt that my honourable friend the Minister for Trade has also taker clear account of the expressions of concern about the performance of our exports from the United Kingdom if there is not the proper insurance to support them. I commend the Bill to the House.
Moved, That the Bill be now read a third time.—(Lord Fraser of Carmyllie.)
3.15 p.m.
Lord Williams of Elvel: My Lords, the House will be grateful to the noble and learned Lord for introducing the Motion that the Bill be now read a third time.
I apologise if I take up rather more of your Lordships' time than he did. If I do so it is because we on these Benches still have serious objections to the Bill which have not been at all alleviated by the debates that have taken place in your Lordships' House. On Second Reading I asked this question: does the Bill help UK exporters or does it hinder them? Even after all the successive stages through which the Bill has passed in this House I am bound to come to the conclusion that on balance it will hinder UK exporters rather than help them. Even with the inclusion of the two government amendments to which the noble and learned Lord referred, it still lacks
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the assurance of support which UK exporters seek, in that the previous role of ECGD of encouraging exports has been discarded. Furthermore, the Government will not have a role in determining what short-term export credit insurance will be available to UK exporters. The provisions for government-backed reinsurance for the privatised ISG are, in our view, far from adequate. I wish to take these points in turn.
On support for UK exporters, during the passage of the Bill we tried—and I recognise that your Lordships did not accept this—to make sure that the primary function of any export credit insurance activity was to encourage exports, not simply to facilitate them.
Perhaps I may turn to Part I of the Bill as it leaves your Lordships' House. I am sad to see that the noble Viscount, Lord Weir, is not in his place. He supported an amendment that we moved requiring that premium rates charged by ECGD should be subject to annual review. The noble Viscount said:
"I wish only that it had gone further and not merely sought a review but sought that the review he published".—[Official Report, 14/ 10/91; col. 988.]
I am again sorry not to see the noble Lord, Lord Trefgarne, here. He also felt strongly enough to press for a Division on the amendment, presumably to register a protest at the high premium charges currently being levied by ECGD. There is clearly a great deal of support from noble Lords on the other side for our position that there should be a review and that it should be published. Such a review would compare ECGD's premium rates with those offered by other credit insurers. It could examine the effects of those premium rates on UK project exports.
I recognise that the Government have proclaimed their view that they are mounting a campaign to persuade OECD credit insurers to charge rates comparable to those of the ECGD. In the course of time that may or may not achieve a certain measure of success. However, it must be recognised—and noble Lords opposite who are at the forefront of our exporting industries have done so—that most of the major ECGD competitors such as COFACE in France, Hermes in Germany and SACE in Italy currently charge much lower rates. Therefore any increases on their part will still leave UK exporters paying considerably more than their non-UK competitors.
I recognise that ECGD will continue, through the various international export credit for a where it is represented, to campaign for other export credit agencies to charge what they would regard as unsubsidised rates. But I must echo the point made by the noble Lord, Lord Trefgarne, on Report last Monday when he said that exporting was a nasty and difficult business and any disadvantage to which our exporters were put could rebound only in the form of a deficit on our balance of payments which, goodness knows, is bad enough as it is.
I continue to direct my remarks to Part I of the Bill as we have it. The future of ECGD is a matter of considerable suspicion. We still do not have an assurance from the Government that the ideal of what is known as the zero option is not part of the Government's programme. The implication of that, in the light of relatively high current premium charges, is

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that in future the business of ECGD on project finance could easily be provided on a strictly commercial basis with every effort being made to ensure that the prospects of ECGD having to pay a claim are minimised before ECGD commits itself to providing cover for an export transaction. That is not the way that our competitors operate. I understand that the Government are extremely concerned about the effect of this measure on public expenditure, but our exports are fundamental to our future prosperity. I hope that the Government will give us a further assurance on that matter.
On the subject of support for UK exporters, I should add that we moved an amendment on Report which would have enabled ECGD in its residual form to provide short-term cover on business which might be rejected by ISG when privatised. The noble and learned Lord the Lord Advocate replied that that power was still contained in Clause 1(1) of the Bill as it stands at present. He said that the amendment was unnecessary. That is possibly the case but the question is: How will the Government exercise these powers to require ECGD to offer short-term credit insurance should ISG in its privatised form fail to do so, or not wish to do so, or be unable to do so in the case of bankruptcy? We do not know what would happen in those circumstances. If ECGD is not able and is not instructed by the Secretary of State to provide such short-term cover, exporters are likely to lose the support they need not on OECD markets—those markets are easily insured—but on the riskier markets. It will be perfectly sensible for the new company to concentrate on OECD markets. It is the riskier markets that will be difficult for our exporters. Are the Government prepared to state categorically that the powers contained in the Bill to provide short-term export credit insurance cover will be used? Or is it the Government's intention to allow those powers to remain dormant?
I now turn to the matter of the new company. The noble and learned Lord has rightly said that there have been negotiations between trade unions and NCM, which is the preferred bidder. However, in the staff information pack which has been jointly produced by NCM and ECGD, NCM has stated that its primary objective is to turn ISG into a profit-making company. Apart from reducing staffing levels, other ways in which profitability could be increased are premium rate increases, withdrawal of the less profitable facilities and cover for the least cost-effective markets, tighter examination of claims and even a refusal to take on exporters with poor claims records. Any such measures would be disadvantageous to UK exporters. In support of those remarks I refer to a report which has lain behind the thinking on this Bill. I refer to the report as the Kemp Report for brevity. That report did not, as your Lordships have understood, recommend immediate privatisation. The Kemp Report outlined the problem thus:
"The private-sector facilities are generally felt to be inferior to those available from ECGD as regards: continuity…accessibility…and underwriting approach".
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The new company will have no obligation to encourage UK exports. In contrast, NCM's relationship with the Dutch government as its agent on political risk reinsurance places it in a different position with regard to Dutch exporters. I must again state that I regret that the noble Lord, Lord Trefgarne, is not present today. On Report in your Lordships' House he asked time and time again what would happen when NCM was faced with requests for cover from both British and Dutch companies for a single project. He asked which company would have preference, the Dutch company or the British company. I am sad to say that the noble and learned Lord could give no clear undertaking that the British company would receive proper encouragement.
I now turn to the matter of the staff. It is true that there have been negotiations between NCM and the trade unions on staff conditions. However, secondment to the new company—that is secondment from the Civil Service—will only be offered to a small number of ECGD staff who have specifically opted for secondment. I fully understand that staffing flexibility will be required by the new company and that will be achieved by employing on short-term contracts some 80 casual staff currently employed by ECGD. I hope the noble and learned Lord will be able to tell me that the Government will give an assurance that only the staff who had chosen secondment rather than a permanent transfer to the new company will be seconded and that no ECGD staff will be compelled to be seconded.
Finally, I wish to deal with possibly the most vexed question that your Lordships have dealt with which has been the subject of Government amendment. It is the matter of reinsurance. On Second Reading many noble Lords said that the major flaw in the Bill was the inability of the Government to provide reinsurance on political risk. In my view the Government have gone some way towards meeting those concerns. I recognise that that was done under pressure from noble Lords on the Benches opposite who have been vocal on the matter. However, the difficulty still remains that the Government seem to have confidence that their initial placement of reinsurance in the private market will continue. As I said on Second Reading, the reinsurance market in the commercial sector is not a fixed quantity. It is like a concertina; it goes up when business is good but it is the first thing to be retracted when business is bad. I have absolutely no confidence—even after the three-year top-up programme is phased out—that the privatised ISG will be able to secure a reinsurance line in the commercial market that will be satisfactory.
I accept that the Government have gone some way to meet that particular problem and have introduced two amendments which, as the noble and learned Lord said, addressed the problem. However, it is very difficult to know how those amendments will operate. Even those experts who have read the text of the amendments are divided in their opinion as to whether there is a serious and real obligation on the Government to act as reinsurer of last resort or whether it is an optional arrangement subject, as the noble and learned Lord said, to the commercial

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operation of the scheme, to whether the financial performance of the facility proves satisfactory and to whether the Government consider it essential to meet the reasonable needs of exporters. It is impossible to know how it will operate.
I believe that when the Bill leaves your Lordships' House and goes to another place debate will focus on the government amendments on reinsurance. I very much hope that the Government will recognise that those need to be beefed up.
Earlier I raised the question of whether the tendering process should be reopened. As I have explained in correspondence with the noble and learned Lord the Lord Advocate and to your Lordships, I believe that the Government have a fiduciary responsibility in respect of the sale of this business. I believe that the government amendments already materially change the nature of the business that was originally offered. That being the case, I can only invite the Government to reconsider their position on tendering. It was a mistake to go out to tender even before the Bill came to your Lordships' House. In my view it is a mistake to continue the process now that the Bill is leaving your Lordships' House.
I have referred the noble and learned Lord to the National Audit Office. I am sure that the National Audit Office will wish to examine the matter very carefully. I hope that it will feel able to consider carefully the terms on which the Government are privatising the business. The National Audit Office will have to think very carefully about whether the Government have performed their fiduciary responsibilities under this Bill.
I have taken up enough of your Lordships' time and I apologise. I said at the beginning that I had a great deal to say on the subject. I still believe that this is a bad Bill and that it is a pathetic little thing. The only courtesy that I can pay to the noble and learned Lord the Lord Advocate—which I do with great sincerity—is that he has persisted in defending this pathetic little thing to the best of his considerable ability. I am most grateful for the courtesy that he and the noble Lord, Lord Henley, have shown to the Opposition Front Bench in our debates.
3.32 p.m.
Lord Ezra: My Lords, the noble and learned Lord will recall that when this Bill was debated at Second Reading on 11th June virtually everyone who spoke, apart from the noble and learned Lord himself, was critical of the Bill. Serious apprehensions were expressed about the Bill. Those on all sides of the House who spoke represented exporters or those concerned with export promotion and knew what they were talking about. Many of the doubts expressed then still persist.
The importance of this Bill is that the Insurance Services Group provides insurance services for £13 billion worth of British exports—10 per cent. of our total exports. It is a very material factor in our export business. There is still a feeling, even after the amendments to which the noble and learned Lord referred, that British exporters will be disadvantaged
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as a result of the changes proposed. Whereas they were fairly secure in the knowledge of the basis on which they would obtain short-term insurance, now that that is moving to the private sector, and particularly likely to be moving to a firm which is involved in assisting exporters in another, competitor country, that certainty will no longer exist.
It is extremely surprising that the Government, having said that they supported the recommendations contained in the Kemp Report of 1989 following its thoroughgoing review of all the activities of export credit, should have ignored the report's main recommendation that a period of at least five years should be allowed before private capital was introduced into the Insurance Services Group. Had the Government pursued such a course very few of us would have objected. We would have said, "Let's have a look at it, over a long period, and we shall see whether or not what the Government now propose is desirable". The Government resisted that. For reasons which never became clear, they were determined to rush into this. They have done so in a way which has provoked a good deal of apprehension and anxiety.
I share the view of the noble Lord, Lord Williams, that the undertaking which was put out to tender initially is no longer the same undertaking as a result of the revisions which the Government have since introduced into the Bill. That matter also needs to be looked at again.
The Government will have one final opportunity to listen to those, both in this House and in another place, who retain serious reservations about this proposition. The best thing that the Government could do when the Bill goes to another place is to say that they will have another look at it.
3.36 p.m.
Lord Fraser of Carmyllie: My Lords, perhaps I may respond briefly to the two contributions to this short Third Reading debate. At Committee stage we spent some considerable time considering the phrase in Clause 1 of the Bill relating to "facilitating" supplies. The noble Lord is still concerned that the word "encouraging" was taken out of the Bill. I hope that the noble Lord and those who are concerned about exports will appreciate that the words "encouraging exports" were replaced with "facilitating supplies" because, legally, the original phrase was considered too restrictive. There was no intention whatever to put out a signal that this Government did not encourage exports.
The position of NCM was also raised, and its desire to make a profit. Indeed it does, and it is to be welcomed that the company adopts such an approach. The noble Lord suggested a number of undesirable means by which it might achieve that objective. I remind the noble Lord of what I said in my opening speech. One important factor in the insurance market at present is that a number of exporters wish to have a package whereby they can combine their export insurance business with domestic business. Under statute ECGD in its present form cannot do that. NCM will be able to do so.

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Turning to the question of reinsurance, the private reinsurance market has, contrary to what seems to be understood, received ISG reinsurance proposals very willingly and positively. There is no reason to believe that that will change. I repeat that the Government's power to undertake reinsurance of various kinds for ISG is not time limited.
Finally, the noble Lord returned to what he believes to be an important matter; namely, that given the changes introduced into the Bill with the amendments, the matter should go out for retendering. I stress again that the advice received from all the Government's advisers, is that that is not necessary or desirable. I also stress that none of the companies on the shortlist which the Government approached has made any approach to the Government to suggest that they wish the tendering process to be reopened.
With those few remarks I commend the Bill to the House.
On Question, Bill read a third time.
Lord Fraser of Carmyllie: My Lords, I beg to move that this Bill do now pass.
Moved, That the Bill do now pass.—(Lord Fraser of Carmyllie.)
On Question, Bill passed and returned to the Commons with amendments.

Social Security Benefits Up-rating
3.40 p.m.
The Parliamentary Under-Secretary of State, Department of Social Security (Lord Henley): My Lords, with the leave of the House, I shall now repeat a Statement being made in another place by my right honourable friend the Secretary of State for Social Security on social security benefits up-rating. The Statement is as follows:
"With permission, Mr. Speaker, I wish to make a Statement about the up-rating of social security benefits. This will take place for most benefits, as is now the normal practice, in the first full week of the tax year—that is, the week beginning 6th April. The statutory instruments to implement my proposals, applying to both Great Britain and Northern Ireland, will in due course be laid before both Houses for debate, and a full schedule of the new benefit rules is being placed in the Vote Office.
"I will as usual deal first with the main national insurance benefits, including in particular the retirement pension which now goes to some 10 million people. The basis for the up-rating will be the latest available information about the increase in the retail prices index over the past year; that is to say, the rise of 4.1 per cent. in the 12 months to September.
"Our firm and continuing commitment is to increase the pension fully in line with prices. Next April, therefore, the basic pension will go up by £2.15 a week for a single person—from £52.00 to £54.15—and by £3.45 a week for a couple—from £83.25 to £86.70. This will increase expenditure on retirement pensions by around a billion pounds.
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"Public service pensions will also be increased across the board by 4.1 per cent., as will war widows' pensions and war disablement pensions. And I am glad to be able to tell the House on behalf of my right honourable friend the Secretary of State for Defence that the special Ministry of Defence payment to the pre-1973 war widows will similarly go up from £44.36 to £46.18 a week. This special payment will of course remain tax-free and continue to be disregarded in calculating entitlement to income-related benefits.
"All other national insurance benefits will be increased by 4.1 per cent.; for example, taking unemployment benefit for a single person from £41.40 to £43.10, and from £66.95 to £69.70 for a couple. Maternity allowance and lower rate statutory maternity pay, both of which were increased in real terms in the last up-rating, will be increased from £40.60 to £42.25 and £44.50 to £46.30 respectively.
"National insurance sickness benefit will go from £39.60 to £41.20 for a single person and from £64.10 to £66.70 for a couple. As the House knows, however, most short-term sickness is of course now covered by statutory sick pay administered by employers, in which a number of changes were made last year. The new arrangements, including the special provisions for small employers, appear to be working well, and I do not propose to disturb them except to increase the lower rate of SSP, which goes to employees currently earning between £52 and £185 per week. This will be increased by the RPI, from £43.50 to £45.30. The higher rate, which goes to the better paid employees of whom the great majority are in any case covered by occupational sick pay schemes, will remain at £52.50, since I judge that the cash required to increase it can more sensibly be used to improve the position of sick and disabled people in other ways.
"I turn next to the income-related benefits—income support, housing benefit and community charge benefit. By convention, since the main housing costs of income support claimants are met separately and directly, these benefits have been up-rated by an index which seeks to exclude such costs.
"As the House is aware, since these benefits were up-rated last year there has been a £140 reduction in the community charge, which in turn has meant a reduction of £28—over 50 pence a week—in the amount which those on income support are expected to meet from what was included in their benefit for this purpose. There is therefore a strong case for adjusting benefit rates accordingly to produce an expenditure saving of £200 million. I do not propose to do that.
"I have, however, concluded that it would be right in these circumstances to align the calculation of what is called the Rossi index more exactly than at present with the items whose costs people are expected to meet from their benefit. This entails including within it not only 20 per cent. of community charge but also certain miscellaneous housing costs, and water rates, which have not

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previously been covered in the calculation. This will put the index on a more logical basis for the future—and indeed the inclusion of water rates responds directly to a number of representations that we have received from welfare rights bodies and others.
"The result is to produce an up-rating index of 7 per cent.; nearly 3 per cent. higher than the full RPI. Other things being equal, that would entail a small reduction in the cost of the up-rating, by comparison with the use of the previous less comprehensive calculation. But that will not in fact happen because I propose to devote rather more than the sum involved to an additional increase in the income support premiums for pensioners who are disabled or who are over 80.
"These premiums will be increased, over and above the 7 per cent., by £1 a week for a single pensioner and £1.50 for a couple, contributing to overall increases in income support for this group of £5.10 a week, from £58.10 to £63.20 for the single person and of £7.70 a week, from £88.45 to £96.15 for the couple. The cost will be £60 million.
''Nearly 600,000 pensioners will gain to the full extent through income support, and over 400,000 through increases in housing benefit and community charge benefit. It will thus build further on the series of measures we have taken in recent years to give extra help to the less well-off pensioners, and especially those who are older, which have already increased the pensioner premiums by some £300 million in real terms in the past two years.
"All other income support rates will go up by 7 per cent. Thus, benefit for a single person over 25 will go from £39.65 to £42.45; for a couple with two children aged 10 and 12 from £104.55 to £111.85; and for a pensioner couple aged under 74 years from £83.15 to £88.95.
"Before leaving the income-related benefits, there are three further issues to which I should refer. The first concerns what are called the non-dependant deductions in housing benefit and income support for housing costs—that is to say, the contribution expected from the income of a non-dependant, living in the household of a claimant, in calculating the householder's benefit. Here I have received representations that these deductions, however reasonable in concept, are at too high a level for those on lower incomes.
"I shall therefore shortly be consulting the Social Security Advisory Committee and the local authority associations on a proposed restructuring of the deductions from next April. Its effect would be to reduce the contribution expected from anyone whose income is below £130 a week—including a reduction of over a quarter, from £5.70 to £4, in that applying to a non-dependant who is not in full-time work or whose income is below £65—but to expect a somewhat larger contribution than at present—£18 instead of £13.50—from those in full-time work with incomes above £130 a week.
"While giving what I believe will be widely seen as a fairer and more sensible structure, and once again helping the least well-off, these proposals
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would reduce benefit expenditure by about £50 million. This, however, helps me to make much more substantial increases than would otherwise have been possible in the second area on which I need to touch—the income support limits for residential care and nursing homes.
"Unlike other income support rates, these do include provision for housing costs. But I intend to make increases significantly greater than inflation, raising support in this field by nearly £200 million, or some £80 million more than would come from simply up-rating the limits in line with the retail prices index.
"After the very large increases made last year in the limits for nursing homes I have concluded, in the light of the available evidence and the representations made to me, that the right course is a general increase in virtually all the limits of £15 a week, thus giving a proportionately larger increase this year to people in residential care homes. And for the residential care limits in two categories—those for the very dependent elderly and for the mentally-handicapped—who between them cover almost 40 per cent. of all residential care home cases I propose an increase of £20.
"In only one case do I propose an increase below £15, which is in respect of the limit sometimes known as the terminal illness limit for nursing homes. Originally intended principally to give additional help to hospices, it has not proved very effective for that purpose, since many hospices do not make charges and there is therefore no basis on which their patients can claim the special rates of income support. As a basis for distinguishing between nursing homes it has become increasingly artificial and difficult to operate. I therefore think it right to make only a £5 increase in this limit, thus narrowing the gap between it and other nursing home limits, and to steer additional help to hospices in two other ways.
"One is to make changes in the rules for attendance allowance, and from next April also the new disability living allowance, which will give over £2 million of additional benefit to people in voluntary hospices. The other is to make available from the social security budget a further £1 million towards the direct funding of hospices as part of the Government's commitment to increase their contribution to the movement. This sum will be made available through the Department of Health. I believe these moves will be widely welcomed.
"With the one exception to which I have referred, all limits will increase by over 5 per cent., with the limit for the very dependent elderly in residential care homes going up by around 10 per cent., making a total increase in this important category, covering around a third of all elderly people in residential care homes, of 32 per cent. in three years. The Greater London additions for both residential and nursing homes will also be increased to £25 and £35 a week respectively.
"Finally, in relation to the income-related benefits, I should tell the House that the additional resources for the Social Fund which my right

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honourable friend the Minister of State announced in August, increasing this year's grants budget by some £10 million and the loans budget by some £30 million, will be fully carried through into provision for 1992–93, when the budget for the two elements together will be almost £300 million—30 per cent. higher than the budget initially made available in 1991–92. This is of course in addition to the greatly improved arrangements for cold weather payments, which are outside the budget and where, should the need arise, payments will now be made automatically and some 400,000 more people than previously would be eligible for payments.
"I turn now to families with children. As I said in my Statement this time last year, child benefit is and will remain a strong element in our policies for family support. That has been underlined by the further increase which has taken place this month, announced by my right honourable friend the Chancellor in his Budget, together with the undertaking that the benefit would in future be increased in line with prices.
"Having reviewed the benefit levels in accordance with my statutory duty, I have decided that the right course for next April is to increase each of the rates which have just come into payment by the full 4.1 per cent. RPI increase for the whole year to September, even though they will have been at their present level for only six months. This will raise the payment for the eldest eligible child by 40p. to £9.65 and the rate for other children by 30p. to £7.80. One-parent benefit will also rise, by 25p. to £5.85 per week.
"At the same time we shall continue with our policies to give greater help to low-income families with children, including not least those in work whose earnings are modest. This too has been underlined by the increases in income support and family credit made in parallel with this month's child benefit increase. The relevant benefit rates, including the family premium and the age-related amounts for children, will all be increased in April by 7 per cent.
"On the latest figures, family credit is now going to a record 356,000 families, 30,000 more than a year earlier, at an average level of over £30 a week. This gathering success will be further reinforced next April by reducing from 24 to 16 the number of hours of work needed to qualify, which we expect to enable another 30,000 families to benefit immediately and a further 35,000 in due course. I shall shortly be consulting the Social Security Advisory Committee on proposals designed to ensure a smooth transition to these new arrangements and more generally to improve the speed and accuracy with which claims are processed.
"While these changes will help families of all kinds, they are likely to be of particular help to lone parents who wish to work, who already account for over one third of those helped by family credit. We have already improved the earnings disregard in housing benefit and community charge benefit; and the introduction of the £15 maintenance disregard
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in these benefits next April will mean that lone parents receiving maintenance will still be better off in work on family credit with earnings up to £50 below what they would need at present.
"The changes in family credit, together with this new maintenance disregard, will increase expenditure next year by some £70 million. This will mean that since 1988 we have made available some £600 million extra in real terms through the income related benefits to improving the position of less well off families with children.
"I come now to benefits for sick and disabled people, to whose needs we have consistently sought to give special attention both in promoting and improving existing benefits and in developing new ones. All the main disability benefits will go up by the 4.1 per cent. increase in the RPI, thus raising invalidity benefit in line with the retirement pension and both severe disablement allowance and invalid care allowance from £31.25 to £32.55. The invalidity allowances payable with invalidity benefit, and since December 1990 the similar additions payable with severe disablement allowance, will also be appropriately increased.
"The main disability premiums in income support, including the greatly enhanced premium for disabled children introduced 18 months ago, will of course rise by 7 per cent., so that, for example, the benefit for a family with a disabled child of 12 will increase from £107.60 to £115.10 a week.
"Apart from the strategic improvement in benefits for disabled people, to which I shall come in a moment, I have a number of detailed changes to make which will be of significant benefit to those affected. The residence qualifications for severe disablement allowance will be brought into line with those for comparable benefits, making it easier for people coming or returning to this country to qualify. Families with children under 16 who receive social security help with care costs will when the child has to go into hospital keep that help for up to 12 weeks instead of four. Also the earnings limit for invalid care allowance will be further increased from £30 to £40.
"A number of possibilities for simplification of the war pensions scheme are currently under discussion with representative bodies in a joint effort to improve the working of the scheme. While I do not intend to make decisions on most of the issues involved until those discussions have been concluded, I have decided to add the war pensioners dependency allowance into the basic war pension for all war disablement pensioners, which is not only a helpful simplification but will give small gains to some 50,000 people. This group of small improvements involves a total additional cost of about £4.5 million.
"I am also able to inform the House of our plans for further substantial increases in resources for the independent living fund which is providing assistance to over 10,000 severely disabled people. The provision for next year will rise by some 40 per cent., adding more than £20 million to this year's

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level of £54 million. This will ensure that the fund continues to play an important role in helping people with disabilities to live independently in the community in the run-up to the full implementation of community care.
"Although not strictly an up-rating matter, I should also take this opportunity to tell the House, following consultation with the Social Security Advisory Committee, that I am today laying a revised regulation to re-establish the original policy intention underlying the income support severe disability premium, whose purpose is to give extra help to severely disabled people living independently of their families but which has in some cases been extended well beyond that by the creation of artificial tenancy arrangements within one household. While accepting that the regulation re-establishes the clear policy intention when the premium was introduced, the committee has asked that steps should be taken to ensure that no disabled person should lose an already established entitlement. I gladly accept that. Appropriate protection will be provided in those cases at an additional cost of £5 million compared with the proposal originally referred to the committee.
"From next April, mobility allowance and attendance allowance for those under 65 will be replaced by the new single extra costs benefit—disability living allowance (DLA). Those entitled will be automatically transferred to the new benefit and the relevant rates will be set at 4.1 per cent. above those of the existing allowances. Thus, the higher mobility component of DLA will be £30.30 —£1.20 above the current mobility allowance—and the two upper rates of the care component will be set at £43.35 and £28.98—£1.70 and £1.15 respectively above the current attendance allowance rates. Attendance allowance itself will be similarly increased for those over 65, for whom it continues.
"At the same time two new tiers of DLA will be introduced, giving extra help with care or mobility costs—or both—for the first time to some 300,000 people for whom the existing benefits do not cater. Among the gainers will be 10,000 severely mentally handicapped people with serious behavioural problems, who cannot at present get help with their mobility costs—and who will qualify for the top rate of the mobility component.
"These new DLA lower rates will be set not at the £10 per week on which discussion of the new structure was based, but at £11.55—in effect, applying both this year's up-rating and last year's to the original figure. And of course for those on the lowest incomes receipt of even one of the lower rates of DLA will bring entitlement to the disability premium in the income related benefits—so those on income support will be nearly £30 a week better off.
"We shall also in April introduce the new disability working allowance, helping up to 50,000 disabled people who wish to work, but have limited earning capacity, by enabling them to top up those earnings with benefit. The rates governing its
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assessment are set out in the schedule to my Statement. They will mean, for example, that a single person would be able to earn as much as nearly £100 a week, while still being entitled to some disability working allowance—and with it the disability premium in housing and community charge benefit—together with the reassurance which disabled people have been seeking of a much extended linking period back to their old incapacity benefit should they be unable to continue working.
"These new disability benefits mark a further important stage in a programme which, in the past two years, has already included real increases in the disability premiums, both for adults and children, the introduction of a carer's premium and of additional payments with severe disablement allowance, the extension of mobility allowance to the deaf-blind, and the extension of attendance allowance both to severely disabled babies and to the terminally ill.
"Overall, by 1993–94, the better part of a million disabled people will be gaining from this programme, either through real increases in existing benefits or entitlement to new ones, to a total of some £300 million. With earlier changes and the massive expansion which has taken place in the coverage of mobility allowance, attendance allowance and invalid care allowance, it will mean that next year expenditure on benefits for disabled people and carers will be no less than two and a half times greater than in 1979.
"Mr. Speaker, despite the difficult circumstances, we have been able to commit ourselves to the up-rating I have outlined today, at a cost of over £3 billion. We have honoured and confirmed our pledge to retirement pensioners. We are doing more for those who are older and least well off, more for families with children, and more for disabled people. Those are our priorities, and I believe they will be widely endorsed".
My Lords, that concludes the Statement.
4.3 p.m.
Lord Carter: My Lords, the House will be grateful to the Minister for repeating the Statement made in another place. It is a complicated Statement containing a mass of figures. There should be a better way of dealing with it than responding with about 30 minutes' notice. I received the Statement at, I think, 20 minutes past three. That is surprising since the press and television were clearly briefed for Sunday's and Monday's newspapers and television bulletins. We welcome the increases in benefits laid out in the Statement. I am sure that those who depend on social security benefits will wish that there were an election every year.
On a general note, a number of increases are correctly quoted as being in line with inflation. That should be the appropriate level of inflation for the claimant group concerned. As we all know, if we continue to increase benefits in line with inflation rather than in line with average earnings, it means that the incomes of social security claimants will automatically fall further behind the incomes of those

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in work. That is demonstrated by the fact that income support is now worth less in relation to average wages than at any time since 1948.
To increase retirement pensions in line with an RPI of 4.1 per cent. is not good news for pensioners. The headline RPI has fallen because of the welcome fall in mortgage rates but very few pensioners benefit from that. The increase for pensioners' RPI should be about 5.7 per cent. The increase in the poorest pensioners' RPI is of the order of 7.2 per cent. rather than 4.1 per cent. Is the increase over and above the RPI—the 7 per cent.—restricted to disabled pensioners and those over 80? Perhaps the Minister will answer that question when he responds.
If the Government had not broken the link with earnings, as they did, the single person's pension would now be £64.85 instead of £52 and a couple would receive £103.75 instead of £83.25. As we know, the Labour Party is pledged to increase both the single person's and married couple's pensions and to restore the link between pensions and earnings.
The increase in child benefit is welcome. There is a genuine difference of opinion between the Government and the Labour Party on this. We still believe that it is wrong to target the bulk of the increase on the first child, as the Government have done. The freezing of child benefit for four years means that with regard to the second and subsequent child parents are still receiving about £2 a week less than they would have received if child benefit had not been frozen.
I refer again to the increase in benefit for the over 80s. That is welcome but puzzling. Only this year the Prime Minister, Mr. Major, said that that was a badly targeted benefit. I presume that the Government have been able to overcome their earlier reluctance to increase benefits. Perhaps the Minister will explain the reason for that change of heart in this last Session of Parliament.
The increase in the lower rate of the DLA to £11.55 from the original figure of £10 a week that was first mooted is welcomed by all sides. We were expecting the Government to do that and we are not disappointed. However, as the Minister knows, there is a real problem with the new disability working allowance. It is hard in the time available to tease out the answer from the Statement. Thresholds for earnings have been set in such a way, and the benefit so heavily means tested, that some recipients could have an effective marginal tax rate of 96p in the pound. Does the Minister agree with that calculation, or do the figures in the Statement alter that alarming state of affairs?
The increase of £15 in the residential care grant is also welcome. However, we know that it still leaves many elderly people with a large gap to fill. The Minister will be aware that only last week Price Waterhouse—the Government's advisers in the matter—calculated that the shortfall was still about £37 to £72 a week depending on the nature of the care. How are elderly people who face such a shortfall supposed to manage with an increase of £15 a week?
Perhaps I may refer to specific points raised in the
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Statement. I shall refer to the paragraph numbers as there are no page numbers. Paragraph 6 refers to the changes in the statutory sick pay and the freezing of the higher rate of SSP. That seems to be a version of the two-card trick. Last year a large number of people were removed from the higher rate. This year those who have left have had the rate frozen. Does the Minister agree that that is correct?
I have already asked the question on paragraph 11. Will the Minister confirm that the increase in pensions over and above the 7 per cent. is for disabled pensioners and the over-80s only? I believe that that is what the Statement provides.
With regard to the latter part of paragraph 16, what is the effect of the larger contribution for the non-dependants from £18 instead of £13.50 from those in full-time work with incomes above £130 a week? I ask that because in the next paragraph the Government state that such proposals will reduce benefit expenditure by about £50 million.
Paragraph 21 relates to the £5 increase in residential and care grants for the terminally ill. How does that saving compare with the increased funding of £3 million referred to in paragraph 22? Is there a net saving or a net increase?
Lord Henley: My Lords, perhaps I may intervene. Will the noble Lord indicate which paragraph he refers to?
Lord Carter: My Lords, I refer to paragraphs 21 and 22. I have to do so because there are no page numbers. Paragraphs 21 and 22 relate to the increase in the residential care grant. Those in hospices have been limited to an increase of £5 a week. There is obviously a saving. How does the saving compare with the £3 million extra funding for hospices which is referred to in the next paragraph?
We know that the Government have done nothing to deal with the problems of the Social Fund which we discussed only last week. How does the total increase of £40 million in grants and the loans budget compare with the inflation effect on the total budget of the Social Fund? Will the total budget increase during the year be more, or less, than the rate of inflation?
Those are the points that I have been able to tease out in the short time available. As always, items which are left out of Statements provoke the most questions. There is still nothing to help with the problems of 16 to 17 year-olds that we have debated many times. There remains the requirement for 20 per cent. of the poll tax to be paid by people receiving benefit, although they will receive a 100 per cent. rebate for the council tax when it is introduced. Why is there that distinction? There is nothing in the Statement to help the homeless youngsters in Nottingham who were reported in yesterday's Observer as starving. Sometimes they have to live without food for several days and when they do eat they spend only £1 to £2 per day on food.
In the final paragraph of the Statement the Minister gave the global increase in the budget. As he often quotes the Government's total spending on social security can he say how much is due to the increased expenditure on unemployment benefit, how much is

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due to an increase in the number of claimants for all benefits and how much is due to an increase in benefits in real terms over and above inflation? In other words, how much true new money is there in the increases about which we have heard?
There is one welcome feature of this year's Statement. It is certainly the last in this Parliament and equally certainly the next Statement will be made by a Labour Government.
Earl Russell: My Lords, when one considers the Statement in the present circumstances it deserves the verdict of Sir Alan Herbert, Bishop of Ipswich: "Well, it could have been worse". In a larger context I cannot help Feeling that the Statement has fallen resoundedly between two stools. On the one hand, I do not believe that the Government are up-rating benefits by sufficient to meet real needs. On the other hand, they are spending too much money on social security to be able to exercise a proper control of public spending. My noble kinsman may feel that that is a paradoxical combination. I am sure that he has spotted the resolution. The combination of those two factors marks the failure of the economic policy of many successive Chancellors of the Exchequer.
It has been characteristic of this Government that even in boom years they have run unemployment at a much higher level than their predecessors of all parties. By "unemployment" I do not mean only registered unemployment: looking at income support figures the distinction shows. It means that social security as a percentage of government spending has continued to rise rapidly throughout this Government's period of power. The number of people dependent on social security makes it more difficult to pay adequate benefit levels to each of them. We need to be giving more money to fewer people and that means getting the country back to work.
I should like to draw my noble kinsman's attention to the recent report on benefit levels produced by the Family Welfare Association. It found, following a dietetic test carried out by the London Hospital, that 53 per cent. of the people receiving income support who visited it did not have the money to buy enough food. The association tried to work out the lowest benefit level at which such people could buy an adequate amount of food for the week. It said that the level did not square at all with what the applicants had to spend. The association also drew attention, as did the noble Baroness, Lady Faithfull, to problems of ill health among those receiving benefit. The same findings were shown in the survey carried out by the Nottingham Hostels Liaison Group referred to by the noble Lord, Lord Carter. It found problems of physical and mental ill health, epilepsy, diabetes, scurvy and chronic chest complaints.
As the noble Baroness, Lady Faithfull, said on Thursday, keeping benefits too low carries costs to other ministries. My noble kinsman rashly said that he would never be convinced by that argument. "Never" is not a political word. Benefit levels are too low, the number of people receiving benefit is too high, and more work is the only cure.
I do not believe that the Government's treatment of the pensioners is as generous as they like to make out.
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The point about the different indexes has been made by the noble Lord, Lord Carter, and I shall not elaborate. It is perfectly fair; the indexes are not disputed. However, the way that the issue has been worked out on this occasion is unfortunate. Among pensioners there will be a real sense that it is inequitable. I do not envy the Government the task of explaining on the doorsteps why the situation is otherwise. The increases in pensions fall well short of those which the Liberal Democrats would have proposed; that is, £5 for single persons and £8 for married couples. Does my noble kinsman believe that the figures that he has given for the cost of these increases may be affected during the year by legislation to implement the Barber judgment, or does he believe that in that respect we are running before we can walk?
I deeply regret the failure to remove the 20 per cent. requirement for the community charge. I also regret, as does the noble Lord, Lord Carter, the failure to increase the higher rate of statutory sick pay. I am extremely unhappy about the arrangements reducing the part-time work definition from 24 hours to 16. The problems which arise when we are dealing with family credit where we are encouraging people to go to work, which I welcome, are different from those which arise when we are dealing with unemployment benefit where we risk discouraging people from going to work, which I do not welcome. I was delighted to hear that those problems were being referred to the Social Security Advisory Committee. Can my noble kinsman give me a hint of the timetable for that? It is a matter to which Members of this House ought to give their attention at some time and it would be easier with the Social Security Advisory Committee's report in front of us.
There are also a number of aspects of the Statement which I warmly welcome. In particular, I am pleased to see that many of them mirror changes that have been argued for by Members of this House, some of whom are in the Chamber today. In that context I thank my noble kinsman for being prepared to pass on arguments from Members of this House. It appears sometimes to be to good effect.
First, I mention the noble Baroness, Lady Faithfull, in the context of child benefit. I should have liked to see further increases above the rate of inflation in family premium on income support and child credit in family credit. On that matter I speak for my party. I welcome the inclusion of water costs in the Rossi index. That is a small concession to representations in which I joined last Thursday when I spoke on behalf of my party. I welcome the concession to the over-eighties. I also welcome the proposal to review the system of non-dependent deductions which needs a great deal of thought. I hope that my noble kinsman and his right honourable friends will take the opportunity to look at the inclusion of prisoners in those for whom there are non-dependent deductions. The logic of that has not escaped the notice of this House. I hope that the department may take the opportunity to do something about that.
I welcome the concession on residential homes. In that regard I pay tribute to the noble Lord, Lord

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Carter. I welcome the concession on hospices and the small mercy which we have been offered as regards the Social Fund. Having asked for that as recently as last Thursday, I must offer my thanks when it comes. How much of that will be swallowed by rising unemployment, I do not know. However, I am glad that that concession is there.
I welcome the concession on residential qualification for severe disablement allowance, which we owe largely to the efforts of the noble Lord, Lord Swinfen. I am particularly delighted by the concession on the independent living fund, for which we owe thanks to the noble Lord, Lord Henderson of Brompton.
A lot, though by no means all, of the small matters in the Statement are satisfactory. The blame for what is not satisfactory in the Statement does not rest particularly with the Secretary of State. Any Secretary of State for Social Security inevitably has to clear up the mess which has been made elsewhere. The blame for what is wrong rests fairly and squarely on successive Conservative Chancellors of the Exchequer.
Lord Henley: My Lords, a large number of points have been made and I cannot guarantee that I shall be able to answer all of them in the time available. I begin by saying to my noble kinsman that I would rather not speculate on the Barber judgment at present. We are committed to achieving equal treatment as regards pensions and in particular to achieving equalisation of the state pension age. However, it would be wrong to make decisions in advance of Barber and in advance of the discussions which we intend to initiate, as my noble kinsman will know as a result of the Statement made by my right honourable friend the Secretary of State last summer.
My noble kinsman asked also about referrals to the Social Security Advisory Committee, items on family credit and the timetable. Referrals will be made as quickly as possible so that the committee has sufficient time to consider and, more importantly, to consult others if it is felt necessary.
The noble Lord, Lord Carter, objected to the fact that he received his copy of the Statement rather late. I apologise for that. However, I assure the noble Lord that there was no prior briefing to the press as to the contents of the Statement. The noble Lord knows that must be true because most of the press reports were somewhat inaccurate. If the noble Lord had based his remarks on reports he read in the press he would have been fairly wide of the mark. I suspect that one reason why the noble Lord was wide of the mark was because he asked me about the new £1/£1.50 increase for the enhanced rate of income support for pensioners—that is, for pensioners on income support—which does not abolish the 25p age addition for the over-eighties. As the noble Lord rightly said, my right honourable friend the Prime Minister said that was a badly targeted benefit. Where possible it is far better to add to the enhanced rate of income support for the older and disabled pensioner so that the benefit goes to those in need rather than adding to the 25p age addition.
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The noble Lord suggested also that we are not using the right index when we base the uprating of the retirement pension on the RPI. It was difficult to understand what the noble Lord was asking but I believe he was suggesting that we should use either the pensions prices index or Rossi. Neither the noble Lord nor his party demanded that pensions should be uprated in line with Rossi last year when that index was less than RPI. One cannot ask for Rossi this year when it was not asked for last year. In the main, over the years RPI has given better increases to pensioners than the pensioners prices index or Rossi. We believe it is correct to use the RPI again this year. It maintains our commitment to up-rating the state retirement pension in line with prices.
The noble Lord also referred to his party's commitment to restoring the link between earnings and/or prices, whichever is the higher. That is not the key to improving basic pensioner income. As I have already said, we have consistently maintained the value of retirement pensions and at the same time—and this is more important—because of our economic policies we have seen a growth in their income from all sources (and it is income from all sources which the pensioner finds relevant) of some 33 per cent. in real terms in our first eight years in power. That is an increase in real terms of 3 per cent. per year. Under the last Labour Government the total increase was 3 per cent. in their entire period in office, which is an increase of less than 0.5 per cent. in real terms. At the same time during our years in office there has been an increase in occupational income pensions of almost 100 per cent. and we have seen an increase in pensioners' saving income of 110 per cent. Under the last Labour Government, pensioners' income from savings fell.
I now turn to the question of DWA and the allegations by the noble Lord, Lord Carter, that at its highest that could amount to a marginal tax rate of 96p in the pound. It is possible that one can suffer that marginal deduction rate but that only applies when a person claiming disability working allowance is receiving also housing and community charge benefits. Otherwise, the maximum rate is 70p in the pound. I am afraid that high deduction rates are inevitable if income related benefits are to be made widely available. DWA recipients will still be better off for every extra pound earned.
I turn now to the question of income support rates for registered care and nursing homes. The noble Lord cited a report by Price Waterhouse. I do not have as much faith in that report as I had in the study which we commissioned from Price Waterhouse over a year ago. The report mentioned by the noble Lord used a much smaller sample, with those included in the sample selected by the Registered Care Homes Association rather than by Price Waterhouse. I am not sure that as much credence can be placed on that report as can be placed on our report of last year.
The noble Lord, Lord Carter, asked about the shortfall for people where the income support limits do not cover the cost of residential homes. No government can ever meet those costs in full, however high they may be set. It would be wrong to continually

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increase the fees, thereby encouraging homes to increase their charges. That would have a deleterious effect for those not on income support who have to pay fees led by our income support rates. Those rates have been increased dramatically over the past few years and I am glad that there was a partial welcome for those increases.
The noble Lord had doubts about changes to the terminally ill limit. There is no established convention for increasing those limits. I remind the noble Lord that the terminally ill limit is still to be increased, albeit by a lower figure than the others. An increase of £5 still involves a substantial increase in costs.
On non-dependant deductions and the increases for those with incomes over £130, a claimant with a single non-dependant with income over £130 will see a decrease in benefit of £4.50 per week from our increases in these rates. That will be mitigated by increases in the applicable amounts. For those on incomes below £65 the decrease will be only £4; for those with incomes between £65 to £99 the decrease will be £8; and for those with incomes of £100 to £129 it will, be £12. Therefore, there is certainly an increase for claimants with non-dependants living with them.
In passing, perhaps I may answer the question of my noble kinsman Lord Russell. It is intended that we shall be able to make adjustments for those who are non-dependants but who are temporarily absent in legal custody. The intention is that in hospital cases, where the absence is more than six weeks, the non-dependant deductions will not apply.
The noble Lord, Lord Carter, asked how much of the £3 billion quoted resulted from higher unemployment claimant numbers, and so on. That figure relates to the costs of giving benefit increases compared with retaining the existing rates. The noble Lord is right to draw attention to other factors which affect the total level of expenditure. But the noble Lord must wait for the Autumn Statement of my right honourable friend the Chancellor to hear of the new planning total for social security.
A considerable amount of new money is entering the benefit system in the proposals that I have been able to repeat on behalf of my right honourable friend; for example, £57 million for pensioners on the higher pensioner premium—the £1 and £1.50 I mentioned. There is £2.2 million for attendance allowances and hospices; the grant I mentioned of £1 million from the Department of Health; and the increase in the budgets for the Social Fund of £67 million. The cost of relaxation of the SDA residence test is £1.1 million. There are further changes in the increased budget of the independent living fund of over £20 million. SDP transitional protection is £5.4 million. The add-in costs of registered care and nursing homes—increases above RPI—are £80 million. On top of all that, various measures were announced in the past which will come into effect next year; for example, the introduction of disability living allowances (first year costs only) of £120 million, £15 maintenance disregard, which I mentioned, totalling £20 million and a reduction in the hours rule in family credit totalling £49 million.
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Those are real increases and noble Lords should welcome the increases we have been able to announce that are specifically targeted at the elderly pensioner, the less well-off elderly pensioner, families and the disabled.
4.32 p.m.
Lord Boyd-Carpenter: My Lords, perhaps I may first thank my noble friend for reading a long and complex Statement to your Lordships. It is a Statement which is of more importance to more people in this country than any other Statement that is made in the course of the year. In that respect I am reminded that I should perhaps declare a modest interest.
I am glad that my noble friend and his right honourable friend stuck to the RPI as the guideline. There is always a temptation to follow other guidelines. However, there is a great deal to be said for continuing consistency in deciding the guideline to be adopted. The RPI is the best tried and all-round most sensible method of deciding what increases should be made generally across the board. I am glad that the Government stuck to that.
I was glad also to see that the Statement emphasised what is being done for the disabled in a number of ways. The needs of the disabled, taken as a whole, are probably more real and certainly more unpleasant than that for the great majority of beneficiaries under the scheme. The concentration by the Government, generally speaking, on the disabled appears to me to be a thoroughly humane and sensible way of administering the vast apparatus of the scheme.
I must express one small disappointment on which I ask my noble friend to comment. I was sorry that the opportunity was not taken to increase the pensions of the pre-1973 war widows to bring them into line with the pensions of the post-1973 war widows. In general, a pre-1973 war widow is likely to be older than a post-1973 war widow and therefore her needs likely to be the greater. In any event, to stick to an arbitrary date which derives simply from a decision of the Ministry of Defence to make improved provision for the services is a mistake. I had hoped that on this occasion, when the whole system was being reviewed, a decision would be taken to equalize—that is, to bring up to the post-1973 widow's standard—the payment made to the pre-1973 war widows. They are now a decreasing number and will of course decrease further over the years. In adopting that line the Government would be taking on not an increasing but a decreasing liability—a liability which would ease the conscience of many people in this country who feel strongly for those who lost their husbands in its service.
Lord Henley: My Lords, I thank my noble friend for his observations. I am grateful for his remarks on our use of the RPI as an index and particularly grateful for his comments on our policies for the long-term sick and disabled. As I said in the Statement, in real terms we are spending 2.5 times more on the long-term sick and disabled and their

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carers than was the case in 1979. On occasions the noble Lord, Lord Carter, has said that that was the result of more people being in receipt of benefits, but even the noble Lord would not descend to arguing that it was the result of 12 years of a Conservative Government. It is the result of our reaching far more people with our policies for the disabled.
On the question of war widows, also raised by my noble friend last year, I believe he forgets that two pensions are involved. One pension is paid by the Department of Social Security to all war widows irrespective of when the husband died. That is the same for all of them, though there are some age additions. In 1973 the Ministry of Defence introduced an attributable service scheme which, in a sense, is an occupational scheme and varies according to the rank and length of service of the individual soldier who died and whose wife is left a widow. When the problem arose we responded to the needs of pre-1973 war widows who were left out of the occupational scheme, but it was always realised that it would not be possible simply to copy that scheme retrospectively for all war widows.
The solution that we hit upon—I believe it to be the right one—was welcomed by most people at the time. It involved a special payment of £40 per year which would be disregarded in relation to income-related benefits and totally untaxed. We have continued to up-rate that payment in line with the RPI. However, it will not be possible to replicate the Armed Forces attributable service scheme in a retrospective manner for pre-1973 war widows.
Baroness Phillips: My Lords, perhaps I can ask the Minister why the over-eighties still receive only 25p extra? I had the privilege of introducing that figure 26 years ago. In 1965 25p meant a good deal more than it does today.
I am not in the least grateful to the Minister for giving that long Statement. It is a disgraceful habit that has been introduced in this House. How can one take in all those figures? There should be a proper debate and the subject should be properly introduced. I hope that the Government will not continue with that practice until the next general election.
Lord Henley: My Lords, I assure the noble Baroness that there will be an opportunity for proper debate when the various regulations and orders are placed before both Houses. The noble Baroness will be aware that in the past we have always had a debate on the up-rating regulations, of which there are a number.
The noble Baroness referred to the 25p age addition paid to all pensioners over 80. The noble Baroness is quite right to say that it was introduced a number of years ago and it has not been up-rated by any government since then. We have always taken the view that it is far better to try to add to the income-related benefits for the older and poorer pensioner rather than make a special addition across the board to all pensioners, which would not make the best use of available resources. It is far better to make an
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addition, as we have been able to, over and above the 7 per cent.—an addition of £1 or £1.50 depending upon marital status—to less well-off pensioners.
Baroness Faithfull: My Lords, I support my noble friend Lord Boyd-Carpenter in saying that the country will welcome this Statement. I shall not go into details but we welcome the change of attitude and mind of the Government in considering those in trouble and in need in this country.
Perhaps I may ask my noble friend three questions. I suggest that he does not answer them now but asks his right honourable friend the Minister to write to me. I refer, first, to the concession on residential homes. I realise that for the country to meet the full cost of nursing and residential homes would be very expensive. However, I think there are certain cases which need special consideration—the very elderly who are suffering from Alzheimer's disease, where there is no accommodation for them and where it is almost impossible for families to look after them. Perhaps my noble friend the Minister will ask his right honourable friend the Secretary of State whether concessions can be made in special cases, where a family has no money. Secondly, will my noble friend ask his right honourable friend to reconsider the question of housing benefits for students? Many students are now in great difficulties. I very much hope that he will reconsider that matter and write to me.
Thirdly, yet again I support the noble Earl, Lord Russell, on the question of 16 to 18 year-olds. I ask his right honourable friend the Minister to consider yet again those young people who need money, who are homeless and who are sleeping on the streets because they cannot find anywhere to live at a price they can afford. Because they have no address they cannot get a job and because they have no job they cannot get accommodation. I hope my noble friend will reconsider this matter, which has been put to him so many times.
On the question of child benefit, I thank the noble Earl, Lord Russell, for his comments. I should also like to add that the great fight that we have put up over child benefit was very much due to the late Lord Seebohm. I pay tribute to him for the help that he gave to me from the Cross-Benches. I do not ask my noble friend to answer those questions now but perhaps his right honourable friend will write to me.
Lord Henley: My Lords, I take note of what my noble friend said. As she requested, my right honourable friend will certainly write and answer her various questions. Perhaps I may make one or two points. As regards nursing care for the very dependent, elderly and mentally handicapped I must stress that we have increased that by some £20 this year, which is higher than the increases on the other limits.
My noble friend also asked whether we would consider a scheme whereby special cases were treated somewhat differently. I shall certainly ask my right honourable friend to look at that aspect. However, I must point out to my noble friend that expenditure in this field runs at a considerable rate. It has increased over the past 12 years from some £10 million, with just

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12,000 payments, in 1979 to over £1.5 billion in February this year; that is, catering for some 210,000 people. I accept the fact that my noble friend might nevertheless argue that it is still not meeting all needs. However, I refer back to the point I made earlier that it is impossible to go on and on increasing the limit without having somewhat strange effects on the pricing of many of these homes.
I note the points made by my noble friend about housing benefits for students and I shall certainly pass those on. Again, I note what my noble friend had to say about income support for 16 and 17 year-olds. That is a matter we debated last July. I repeat what I said then, that we do not seek and never have sought to take the cheap option of taking income support away from 16 and 17 year-olds. There is, of course, the training option; the YT guarantee. We consider that it is far better that young people between the ages of 16 and 17 should take the opportunity to remain in full-time education or take up the YT guarantee rather than introduce themselves to income support and a permanent life of dependency.

Political Union: ECC Report
4.45 p.m.
Lord Oliver of Aylmerton Lord Oliver of Aylmerton rose to move, That this House takes note of the report of the European Communities Committee on Political Union: Law-Making Powers and Procedures (17th Report, HL Paper 80).
The noble and learned Lord said: My Lords, in introducing to the House the report which is the subject matter of the Motion standing in my name on the Order Paper, I should like to begin by thanking the members of Sub-Committee E who prepared the report and the witnesses who so freely gave of their time and expertise in helping the committee. I would also like to say a preliminary word about the purpose of the, report. It may have come as something of a surprise to some or all of your Lordships, as it certainly did to some members of the Select Committee, that the sub-committee should have undertaken to consider and report on certain aspects of proposals which are still under active negotiation between Her Majesty's Government and the governments of the other member states of the Community and which concern the terms of a treaty proposed to be entered into.
The negotiation of and entry into international treaties is the prerogative of the Crown. While Parliament may criticise, approve, disapprove or endorse and ratify what has been done, it is no part of the parliamentary function in our Constitution to participate in negotiations which are normally conducted on a diplomatic level away from the glare of publicity.
What prompted the sub-committee in this instance to undertake a task which might be thought perhaps to be unconventional, and which certainly was not without its critics, was the unusual manner in which the preparations for the inter-governmental conference were made. The open submission of a working
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draft of the actual terms of a proposed treaty to general public discussion by the publication of the Luxembourg Presidency text, both in its original and its amended form, created a situation for which, so far as I am aware, there was no readily available precedent.
A year ago the European Communities Committee reported upon the implications for the United Kingdom of proposals for economic, monetary and political union. It is certainly no part of the purpose of the present report—and I do want to emphasise this—to question, amend or detract from any of the conclusions in that earlier report. However, the text, if agreed in anything approaching the form in which it was proposed, would not only confer upon the Community a much wider power to legislate than at present exists but would confer upon the European Parliament equal rights with the Council in important areas of legislation, and would introduce new procedures for co-decision and give new powers to the Council both in foreign and security policy matters and in relation to co-operation in home affairs and judicial matters, so that the powers would then be lost to national legislatures. We felt that all this raised issues of such legal significance that the committee ought to consider and report upon them.
That was not, I stress, for the purpose of influencing negotiations, but simply to ensure that the implications of the proposals and the legal and practical consequences should be fully appreciated well before the debate which would ordinarily take place only after negotiations had been concluded and Parliament was asked to ratify what has been done. After some informal consultation with United Kingdom Ministers, therefore, it was considered that the legal issues did indeed call for inquiry and report.
I hope that what I have said adequately explains the genesis and purpose of the report and that I can turn to a summary of the contents. There was, of course, a time in the recent past when it seemed that the effect of other and even more controversial proposals of the Netherlands presidency might have the effect of rendering the report of purely academic interest, but those proposals having now, as I understand it, been decisively rejected as an acceptable basis for negotiation, we are back to the revised working draft proposed in June of this year by the Luxembourg presidency. In preparing what I have to say to your Lordships, I have tried to summarise the report as shortly as is consistent with intelligibility. It has not been easy and if I run a few minutes over what might be considered to be the normally expected time in an opening speech of this nature, I must ask your Lordships' indulgence.
I have already largely anticipated what is said at greater length in Part 1 of the report which contains the introduction and incorporates reverentially what I hope readers of the report will find very useful material in appendices 3 and 4. The former contains a comparative analysis of the text set against the recommendations in earlier reports of the committee, which indicates that a good many of the recommendations have in fact been reflected in the text, while the

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latter consists of what I hope will be a useful exegesis of the role of the United Kingdom Parliament in relation to the conclusion of treaties.
Part 2 is concerned with definitions. The role played by semantics in both domestic and international misunderstandings is not always appreciated although it became perhaps more widely understood with the publication, many years ago now, of Ogden and Richards' work on the Meaning of Meaning. The report uses three key terms, widely used—and frequently misused—in press reports and in political speeches. It is crucial to an intelligent understanding of the report that those who write and those who read should use the words in the same sense. "Subsidiarity" is a word which seems to mean different things to different people. A small section of the report —paragraphs 90 to 92—is devoted to it. But there are two other expressions which are frequently employed in argument with a more or less emotive appeal. Those are "sovereignty" and "federalism". Part 2 of the report is devoted to clarifying, at any rate so far as is possible, the senses in which those words are used in the argument and in the conclusions.
Our concern in preparing the report has been primarily with proposed alterations in the balance of power between the Council and the European Parliament and between the Community and its member states. Those, we felt, raised important matters of policy and principle to which the attention of the House should be drawn. The report concentrates on the legal and practical implications of particular areas of the revised text. Those are, first, the proposals for what is called "co-decision" in law-making procedures; secondly, the introduction of the principle of subsidiarity as a substantive obligation in the exercise of powers; thirdly, the proposed extensions of Community competence; fourthly, the proposed extensions of the power to adopt legislation by qualified majority voting; and fifthly and finally, the future structure of the Community, in particular, common foreign and security policy and co-operation on home affairs and judicial matters.
As regards the first of these, co-decision, the report contains a discrete section—Part 3—devoted to summarising the existing law-making procedures of the Community and describing the role of the European Parliament in Council legislation. The Parliament has for some time regarded that role as being too restricted, and by a resolution passed in July of last year it sought to introduce a procedure for co-decision for certain classes of Community legislation. What has now emerged in the Luxembourg text is a new draft Article 189A. It purports to create a new category of law called a "Community law" in addition to the existing measures of regulation, directive, and decision. This is envisaged as applying to "important matters", whatever that may mean, as having general application and as either binding directly on member states or as binding as to the result to be achieved and to be implemented by national legislatures. Page 14 of the report sets out in diagrammatic form the complicated stages through which such legislation is envisaged as proceeding.
I do not intend to take up your Lordships' time by going through this in detail. The convoluted nature of it can be seen at a glance. The salient feature is that if, at the end of all, the Council and the Parliament fail to agree—and neither of them is supreme—the legislation simply falls to the ground. One cannot help feeling that that result at the conclusion of a laborious and tedious procedure would leave the members of both bodies sharing the frustration experienced by the daughters of Danaus as they filled their bottomless buckets; but at least they had done something to deserve it.
What was urged in favour of what might be thought to be a cumbersome and inconclusive proceeding was, first, that it draws a needed distinction between primary legislation and implementing measures more properly the province of the Commission; and, secondly, that it increases the democratic accountability of the Community legislative process. The committee did not feel that either argument carried any real weight and concluded that the whole concept of co-decision is inherently unsound. We concluded that the real object of the exercise was to increase the legislative power of the European Parliament. That is a perfectly proper and understandable objective, but we did not feel that it could be satisfactorily effected by a procedure under which nobody has a decisive say, which can only lead in the end to conflicts between the Council and Parliament, which involves substantial delays in introducing what may be critically important legislation and which is likely to lead to more and more compromise texts or deliberately ambiguous provisions resulting in more and more litigation before an already overburdened European Court.
As regards democratic accountability, the members of the Council are, of course, accountable to their own governments and thus to their national parliaments. The members of the Parliament are, of course, democratically elected, although accountable only in the sense that they must ultimately submit themselves for re-election. The Commission, however, is its own master and the committee would certainly favour a procedure for scrutiny so that proposals for legislation delegated to the Commission would be laid before the Parliament, as suggested in paragraph 154 of the earlier report on economic, monetary and political union, and the formalisation also of the existing practice under which the Parliament can call upon the Commission to initiate legislative proposals. The latter is in fact proposed in the new Article 137A of the Luxembourg draft. This is an area which really does deserve some attention. As matters stand the Community is swamped with a mass of regulatory material churned out by industrious bureaucrats in Brussels without anyone having a real opportunity to scrutinise it or question its effect before it comes into operation.
The committee also draws attention to the urgent need for the provision of stable and efficient working conditions for the Parliament and the agreement between member states on a site for a single seat for the Parliament where members can have access to the parliamentary staff, to its files and to other

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institutions. The present situation in which the Parliament has no permanent pillow upon which to lay its head is both unworthy and absurd.
However, it was our conclusion that there is no need for a radical restructuring of legal procedures, although we have ventured to call attention to the need for the introduction of procedures for making minor amendments to existing legislation and the need for consolidated code to replace the almost impenetrable proliferation of individual measures. We also wholeheartedly welcome the power which draft Article 171 proposes to confer on the European Court to impose penalty payments on those member states which fail timeously to comply with directives and previous judgments of the court. Your Lordships will be aware that the United Kingdom has an excellent record in this regard, but that does not apply to all member states.
I turn now to subsidiarity. There is an important point here which is more than merely semantic. To some people the word means that organs at the highest level should do only those things that they can do better than organs at a lower level; to others it means that organs at the lower level should do only those things which they can do better than organs at a higher level. The Luxembourg text seeks to include in the treaty a specific provision that the Community shall take action in accordance with the principle of subsidiarity. In the committee's view, this would open up a limitless vista of disputes about whether particular Community measures were or were not authorised. But how does one decide whether one organ or another can do something better? It would also provide a fertile ground for the creation of new legislative powers in the Council by enabling it to act in any case where it thought that it could do so more effectively than member states acting separately.
In the committee's view, subsidiarity, however construed, is properly no more than a political principle. It is certainly right that it should permeate Community activity. However, in our view it would be quite inappropriate that its application should constitute a positive legal requirement to be determined judicially. In effect, that would be to hand over t3 the European Court an important aspect of the legislative function. So the committee remained even more strongly than before of the view expressed in the earlier report on monetary and political union that, if there is to be any reference in the treaty to the principle of subsidiarity, it should not be expressed in the legislative provisions or substantive articles but rather stated as an objective only in the preamble.
As regards the extensions of Community competence which are proposed in the draft, these broadly divide into two categories. First, there are those areas —such as environment, energy research and consumer protection—where the Community competence has already been expanded in reliance upon Articles 100, 100A and 235 of the treaty—articles upon the use of which the committee has traditionally kept, and still keeps, a carefully watchful eye. We have all been very much aware of what has been styled the "creeping competence" of the Community in matters formerly consicered to be in the exclusive domain of domestic
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legislatures. However, the committee's view here is that the precise specification of such areas in the treaty is not only unobjectionable but actually would be useful as regards defining more precisely the objects and limits of Community action.
The other category consists of matters such as transport safety, workers' rights, health and safety at work, co-ordination of rules on animal experiments and human health protection which may be described as "borderline". Here again, if these are acceptable to all member states, the committee sees the minor delimitation of boundaries as unobjectionable. In general, for instance, the committee welcomes the proposals for Community co-operation in education and cultural matters. Similarly, the proposed rights for "Union Citizens" in Articles A to E (on page 42 of Appendix 3) do not intrude upon member states' nationality legislation and should, in the committee's view, be broadly acceptable.
The proposals for measures within the specified areas of Community competence to be adopted by qualified majority voting are, however, rather more controversial. These will be found on pages 45 to 47 of Appendix 3 to the report. The qualified majority voting procedure is a useful one, both where there is a need for a large number of decisions in a limited time and where there is a clear and overriding Community objective which ought not to be impeded by a single dissentient voice. Beyond this, however, it is the committee's view that it is likely to lead to unsatisfactory legislation because it accelerates the process unduly and limits the possibilities both of injecting alternative views and of resolving differences by negotiation from equal bargaining positions. The committee is particularly concerned that it may lead to the more frequent adoption by the Commission of a practice—which has sometimes been adopted in the past and against which we have protested on several occasions—of adopting so tight a timetable that proper scrutiny by national parliaments simply becomes impracticable. In place of this suggestion, we should like to see a systematic analysis of the cases where qualified majority voting is appropriate and its application in such cases through the body of legislative powers in the treaty.
Finally, paragraphs 105 to 113 deal with the proposals for the future structure of the Community. What may be thought to be the really controversial article is Article A which speaks of progression towards:
"a Union with a federal goal".
That is a phrase calculated to excite the highest suspicion; but it has to be said that the clear implication of the text is that member states remain independent sovereign states, so that any further move towards "federation" in the true sense of the word would require a new treaty providing for the Community's constitution as a federal entity. So it would be wrong, I think, to see the text as, in itself, an attempt to incorporate member states into a single federal entity or even perhaps as a significant step along that road.
However, the danger in employing expressions indicative of an ultimate objective of a truly federal

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constitution, albeit requiring a new treaty for its implementation, is that it opens the door to the suggestion that such a constitution is not merely an imaginative ideal to be contemplated as a possible future, but is a positive commitment. To that extent, as it seems to me at any rate, one is entitled to say very firmly, "That wasn't part of the deal" or, if one is classically inclined, "non haec in foedera veni".
Although the draft text leaves the member states with the essential liberty of action in international affairs appropriate to truly sovereign states, it will, if adopted, undoubtedly impose upon member states a substantially stronger obligation to seek to conform to a common position than is the case under the European Political Co-operation as formalised in the Single European Act. Nevertheless, any legal obligation to conform to a joint line of action would be one arising under international law only and not —this is the critical point—one enforceable through the juridical organs of the Community.
Therefore, the committee was satisfied in the end of the correctness of the view of the Foreign and Commonwealth Office that the draft, although very much open to improvement, is compatible with the retention by member states of their sovereign status in international affairs. If adopted, the provisions are likely to lead to an increase in the external competence of the Community, assuming always the willingness of member states to formulate a joint line of action. But that is a prerequisite and the competence will flow from it as a matter of evolution. The committee favoured that evolutionary approach. I should perhaps mention that this was one of the principal departures proposed by the rejected Netherlands draft which proposed that foreign policy be fully integrated and brought within the Community competence, giving jurisdiction to the European Court,
"over the legality of the application of procedures for deciding upon joint action."
As regards co-operation in home affairs and judicial co-operation, the committee broadly welcomed that but felt that co-operation on matters such as asylum, visa and immigration policy should remain on an inter-governmental basis and not be brought within full Community competence.
I have—I fear at some length—endeavoured to summarise the main points covered by the report in a way which will, I hope, demonstrate to your Lordships why the committee has been concerned at proposals involving a substantial shift in the balance of power both between the Council and the Parliament and between the Community and its member states. Its view is best summarised in the last sentence of paragraph 134 of the report:
"A shift in the existing balance of power should take place only following an informed debate as to the probable consequences and not in pursuit of some imagined destiny."
It is the committee's hope that the report has made and will make a positive and useful contribution to that debate and it is in that light that I commend it to your Lordships. I beg to move.
Moved, That this House takes note of the report of the European Communities Committee on Political Union: Law-Making Powers and Procedures (17th Report, HL Paper 80) —(Lord Oliver of Aylmerton.)
5.10 p.m.
Lord Boyd-Carpenter: My Lords, your Lordships are greatly indebted to the noble and learned Lord, Lord Oliver of Aylmerton, for that most admirable and intensely interesting summary of the committee's report. We are equally indebted to the Select Committee itself for the enormous amount of work that it has put into dealing with those complicated and potentially important issues. The noble and learned Lord said that it was unusual for the committee to go into matters which were not yet formalised and which were still under discussion. I am glad that the committee so decided, because part of the difficulty for many of us in dealing with such matters is that their very complexity and elaboration means that unless one spends a great deal of time studying them one is incapable of forming sensible opinions upon issues which, for better or worse, will affect our country's future in considerable degree.
I feel that your Lordships' House, and the country, is indebted to the Select Committee. I shall later suggest further bases upon which that gratitude could be further earned. The noble and learned Lord explained how the Select Committee went to work. He succeeded in greatly clarifying the issues involved. It is gratifying to those of us who, like myself, favour your Lordships' House in its present form and composition, that it is a Select Committee of this House, rather than of another place, which has done this remarkable work. I doubt whether a House differently constituted could have produced a Select Committee able to devote so much time and intellectual authority to discussion of such issues. It reflects to the credit of your Lordships' House—I stress in its present form —that we should have this report.
There are one or two issues that I should like to raise with which I hope the noble and learned Lord will deal when he replies. He dealt first—it arises at paragraph 130 of the committee's conclusions—with the use of the word "federal". It is unfortunate that that word should creep into any of the provisions that we may be called upon in the future to accept. I am aware that it is possible to argue different meanings of the word "federal". There was some interesting correspondence in The Times recently on that issue, but the fact remains that if we use the word "federal" in connection with the European Community we are carrying the implication that we are creating a body which will be the superior of its constituent members, able in the ultimate to tell them what they should or should not do. For every reason, or if only for the avoidance of misunderstanding and anxiety and perhaps of international friction in the future, it would be useful if the word "federal" could be eliminated from all the documents.
I do not believe that in this country the great majority of our people wish to enter a federal Europe. I believe that there are some European countries that would like that idea. They are entitled to their

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opinions; but unless and until people in this country make it clear that they are prepared to contemplate entering a federal set up, with all its implications of the superiority of the federal authority over the national one, it would be much wiser to keep the word "federal" firmly out of any of the documents.
Paragraph 134 of the report—again to which the noble and learned Lord referred—refers to the balance between the Community and individual states. The summary of the position, to the effect that there should be no transfer of power from national states to the Community, without a clear decision to that effect having, been adopted, is right. We are at risk—given perhaps the activities of the Brussels bureaucracy—of having, our independence gradually eroded and the Commission, in particular, and perhaps the European Parliament assuming greater authority over the affairs of this country than most of us desire to see happen.
It may well be in future years that opinions will change, but a British government can operate now only on the basis of what is prevailing opinion in this country. As I understand it, that opinion favours the closest co-operation with our European friends but does not wish to allow the rights and independence of this country to be overriden in that way.
One cannot help sometimes feeling in that context that our European friends are apt to forget that if it were not for this country and the resolute line that it took 51 years ago there would be no free Europe to be discussing such matters. The fact that in 1940 we, and we alone, stood up to Nazi Germany, when the whole of the rest of Western Europe was conquered and subservient to it, is a fact that younger generations at any rate of our European friends are apt to forget. It would perhaps do no harm on occasion to remind them that a free Europe, able to discuss these matters in freedom, able to negotiate what seems to it to be best has been possible only because this country, and this country alone, for 18 months resisted tyranny.
I turn now to another point. I expressed gratitude a moment ago to the Select Committee for the immensely valuable work it has done. I remind your Lordships that gratitude has been defined as "a lively anticipation of favours to come". I hope that the Select Committee will examine a matter that has arisen since the report was drawn up and even since it was printed. During the past few days we have had the intervention by an EC commissioner in writing to the Minister of Transport demanding, as I understand it, that seven schemes for road and rail improvements in this country should be halted because in his belief they conflicted with European standards for the environment.
Leaving aside the fact that it appears to me that Mr. Ripa di Meana has no authority whatever in the matter, it would be enormously serious if our control of our road and rail system should be eroded in this way. I speak with interest and enthusiasm because, as some of your Lordships may remember, I was at one time responsible for our roads programme. In the middle 1950s I was responsible at the time of the introduction of the motorway system. It was difficult enough, I can tell your Lordships, to secure a sensible
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degree of compromise between the need for an efficient road system and the need not to damage the environment or upset local feeling.
If a superior authority intervened and demanded that work already started should be halted, we should be in great difficulty. I do not see how the views of the EC or Mr. Ripa di Meana himself can be of binding importance. After all, in any road or rail programme one has to decide on a compromise between an efficient system of transport and the acceptable degree of damage to the countryside and in particular the amenity of life for those who live near the work. This is a difficult exercise of judgment at any time. Our present Minister of Transport is admirably handling a difficult problem at this time in connection with the seven proposals.
If one examines those proposals solely from the point of view of amenity and the environment, as Commissioner Ripa di Meana seems to, one ignores the other vitally important factor—the contribution which these developments can make to our economy. Presumably that is of no interest to the Commissioner for the Environment, but it is of considerable interest to the British Government and people, and also to your Lordships' House.
It is important to get it clear and well established that Mr. Ripa di Meana's letter to the Minister of Transport has no binding authority at all behind it and that there is no reason whatever to believe that even with the next stage in the development of the European Community we shall hand over control of our road and rail systems and their planning to the Commission. It is essentially a matter for this country alone to decide, as parallel issues are only for other members of the Community.
I suggest to the noble and learned Lord, Lord Oliver of Aylmerton, that it would be helpful if at the next round the Select Committee were to examine the issue and help your Lordships and the country by giving a clear assessment of the position, the rights and wrongs of the matter and suggestions for the line we should take.
This debate is very important indeed. I know that a number of your Lordships will have serious contributions to make. I believe that we are greatly assisted by the Select Committee. If I have ventured to suggest any further employment for it, I hope that the committee will take it as a compliment rather than insulting interference.
5.25 p.m.
Lord Jay: My Lords, I fully agree with the noble Lord that this is an excellent analytical report, all the more so for being unconventional. The House should be grateful for it. However, by implication it perhaps underrates the extent to which all the legal and bureaucratic devices are a vehicle for the long-term aim of turning the European Community into a centralised super-state. I emphatically agree with the committee's view that a transfer of power from the EC Council to the Strasbourg Parliament would not make the Community any more democratic. In paragraphs

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78 to 80, the report rightly states that members of the EC Council are ultimately accountable to their national parliaments.
After the UK originally joined the EC in 1973, some of us in the other place laboured long and hard in the scrutiny committee and elsewhere to establish the principle that in all major EC legislation Parliament must have effective control over what Ministers do and how they vote in the Council. We have made some progress, but in my view not enough, even yet, in the other House. In this House, everyone agrees that the Select Committee on the European Communities has carried out invaluable work in scrutinising the legislative proposals so that they can be sensibly debated, as I hope we are doing now.
Transfer of power from the Council to the Strasbourg Parliament would not be democratic for the following reasons. The basic, root principle of democratic government is surely this: that people must not be bound and coerced by laws which they have had no share, however indirect, in making. Of course our own representative Parliament is indirect and imperfect, but those of us here who have spent some years in the other place know, to their cost, that contact with and pressure from their constituents of a pressing, variegated and persistent kind is a reality. It is not just a constitutional myth. A parliament in Strasbourg whose members have half a million or more constituents would be only a ghost of representation as we know it.
The popular political feeling everywhere today, especially in Europe, is for more closeness and not more remoteness between the government and the governed. After all, that is the argument for having local government. It is also why most of the Soviet Union and Eastern Europe have revolted against blind, remote control from Moscow by rulers who had no real contact with the people whom they purported to rule.
Indeed, today from the Baltic states to the Ukraine, from Poland to Croatia and beyond people are calling for closer and not more remote government control. It is a rather strange irony that at this moment, when the demand everywhere is for closer and more democratic government, the Brussels machine should appear all the time to be seeking to drag us into what can only really be called an out-dated system of bureaucratic centralism. As has been mentioned, Brussels is even now trying to intrude into the controversy over the Winchester by-pass. That hardly seems to be in accordance with the principle of subsidiarity, however one interprets that.
As the report rightly points out, the proposals for more authority for the Strasbourg Parliament are intended not really to improve methods of government but rather to increase the power of the centre. For these cogent reasons the British Government should, in my view, resist any further transfer of legislative or other power away from the British Parliament and electorate.
However, there is another pressing reason for that policy, which is that every further twist of the legislative and official network shackling EC member
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states to the centre will make it harder for the emerging Eastern European countries—and indeed the EFTA countries—to join the EC. After all the upheavals and the struggles for freedom they have experienced during the past two years, those countries will hardly want to reshackle themselves once again. What is needed in the real Europe today is a much wider, looser and more liberal Community embracing all these countries with free trade between them. However, the countries concerned should be able to make their own decisions on internal affairs. The Community should embrace any country that is genuinely democratic and wishes to join it. That is what the British Government should aim for as long as Britain is a member of the Community.
The EC has indeed no right to shut out the Eastern European countries and to continue, as is now the case, to impose tariffs, restrictions and other measures on their goods. Those countries are often far poorer and needier than the states within the EC. Far from uniting Europe the exclusion of those countries from the EC would divide Europe with a new legalistic curtain. Unfortunately a looser, more liberal, decentralised Community is not what M. Delors and his colleagues seem anxious to establish as their long-term goal. M. Delors was reported last week as saying that the long-term aim is a new European superpower.
In the 1950s M. Monnet and M. Spaak admitted quite candidly that the economic aspects of the Treaty of Rome were only a cloak to conceal the fact that the real aim was to supersede national independence in Europe altogether. The long-term objective was to rival the Soviet Union and the United States as superpowers.
The mainspring of French policy today in all this is to tie down a resurgent Germany by legalistic ties. Frankly in French policy there lurks an ominous streak of anti-Americanism which can be dangerous. That is one reason why there is now an emerging impulse for the EC to indulge in security and defence policies. The urge to create a second and rival United States is potentially dangerous. It can damage NATO and it can discourage American co-operation with Europe. That co-operation has, after all, guaranteed peace over the past 45 years. I hope the Government will firmly resist any more intrusion by Brussels into security or defence matters under the guise of WEU or anything else. Certainly I hope the Government will resist any plans to place UK Armed Forces outside the control of the British Government.
Meanwhile if Britain wishes to remain still an independent country, we should remember that it is not just parliamentary sovereignty that is at stake but the sovereignty of the electorate. After all, Parliament derives its legitimacy only from its claim to be representative. For that reason—and because few other countries can make drastic changes in their constitutions without some special procedure involving the electorate—I believe Parliament has no right to endorse any treaty emerging from Maastricht which alters our constitution substantially until the electorate has been specifically consulted. The noble and learned Lord rightly called for an informed

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debate. I think the electorate and Parliament should join in that informed debate, particularly if the treaty contains provisions which would dishonour the pledges given to the electorate in the 1975 referendum.
5.35 p.m.
Lord Wilberforce: My Lords, following on what was said by the noble Lord, Lord Boyd-Carpenter, I too am glad that this House has decided to debate this report We in this House are particularly well equipped to consider all aspects of Euro law-making. We have among our body a number of Members of the European Commission. We also have former Members of the European Parliament, two of whom were Members of Sub-Committee E. I am glad to note that they will speak this evening. We also have among our body a former president of the European Court of Luxembourg. Shortly we shall have two former members of that court among us when Sir Gordon Slynn joins us.
We are considering a single process which starts with a decision to legislate on some area of Community competence, continues with the drafting of legislation and debate upon it, and ends, one hopes, with enforcement. That is a general process which in the end has to be commended to public opinion. The report which the sub-committee has produced—I had the honour to participate in it—deals with the whole of the process.
As regards the decision-making process, I am particularly happy to agree with the conclusion suggested by the report against co-decision. One has only to look at the chart on page 14 of the report to realise that co-decision would introduce a process of absolutely unbearable complication. The existing process is shown on page 13. That process is elaborate enough, but it is well established and seems to work. It can sensibly be improved without impairing its essential character. Moreover, I am convinced that Article: 189, which is the key article defining the types of European legislation, should not be replaced or even supplemented by a new article defining something called a Community law. Article 189, as interpreted and somewhat expanded by the European Court of Justice—one may frankly admit that that is the case—is the whole foundation of the legal structure of the Community.
Article 189 contains two letters "i" and "n", making the word "in". The word "in" appears in relation to the phrase "in all member states". Mr. Philip Allott of Trinity College, Cambridge, has said that that phrase has changed the course of European history, having terminated the supremacy under the constitution of national parliaments.
The previous Netherland proposals, which introduced other proposals, have, I am glad to see, been omitted from the June draft with, however, a suggestion that they might be revived in 1996. I am sure that we should oppose a change in the existing article, either now or then.
I should like to comment briefly on three further points. First, there is the question of enforcement. As my noble and learned friend has said, there are different standards throughout the Community
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between those who, like the United Kingdom, are meticulous in carrying out Community legislation or directives and others who take a more relaxed attitude. Whether the divide is a north-south divide or a divide between the Protestant and Roman Catholic ethos I do not know, but it certainly exists in a very intense form. It may have a serious effect on our competitive power if it remains.
The report addresses the issue in paragraph 121, and the Luxembourg proposal does so in Article 171. So far I support the recommendations. There should be a mechanism of fines by the European Court. However, I doubt whether it is enough to require a decision by the Commission to prosecute followed by a decision of a busy court to impose the fine. The occasional sledgehammer may not be enough to overcome what is a pervasive practice. While I welcome the UK proposal for a resounding declaration to be made by member states underlining the importance of implementing Community directives, I doubt whether that will penetrate far into the minds of French farmers or the more lawless elements in Sicily or Greece.
Fines and a declaration are all very well as far as they go, but we may have to contemplate a separate compliance agency within the Community, with its own staff and with a specific duty continuously to monitor observance of Community legislation, to influence public opinion in member states and to change the ethos from a comfortable disregard of EC regulations to one of reasonable compliance to a common standard, which will not be possible overnight but must be done.
My second point relates to home affairs and judicial co-operation, which is dealt with in paragraphs 111 to 113—somewhat skeletally and even blandly. That is not the fault of the sub-committee. There was little time to prepare our supplementary report and we could make conclusions only on the basis of the evidence that we had heard. The so-called third pillar ("pillars" have entered into the jargon) may be becoming of importance. People in this country and in other countries are sensitive about their criminal and civil law. From another angle, co-operation or harmonisation in suitable cases ought to extend beyond the EC mechanism. There are the sensitive areas of asylum, immigration, border control and others. On that point I agree with the Foreign Office evidence that most of those matters would best be dealt with by co-operation outside the European Community mechanism, either by administrative co-operation or by negotiation of conventions.
I see particular objection to the suggestion that those should be the subject of European Community legislation, with implementation regulated by qualified majority voting. I also very much doubt the expediency of automatically entrusting jurisdiction over these matters, either by way of interpretation or enforcement, to the European Court of Justice. In some cases that may be acceptable and useful; in others, especially where the subject matter may extend beyond the European Community, it may not be so. I made that point a few months ago in discussions about international contracts.

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I am glad to see that in Articles B and C the June draft omits some of the more troublesome proposals contained in the April draft. However, they may be revived and this area needs to be watched carefully and taken seriously.
Finally, I should like to say a word on subsidiarity, which one cannot keep out of any debate. I was in favour of the line taken in the report that subsidiarity should be regarded as an underlying political principle rather than be stated in a prescriptive text which could then be justiciable in the European Court of Justice. However, like others who have spoken, I am alarmed by the reported proposals from Brussels relating to certain current projects in the United Kingdom concerning the environment—motorways and the Channel Tunnel. I agree entirely with the noble Lord, Lord Jay, that here, if anywhere, subsidiarity ought to have full effect, particularly since subsidiarity was introduced into the treaty mechanism in the Single European Act precisely in relation to environmental matters, and we are now concerned with environmental matters. If those particular proposals proceed I should be inclined to change my mind and let the European Court of Justice decide whether or not they or other similar proposals respect the principle of subsidiarity. Perhaps we are unduly alarmist; we must hope that we are.
With those brief comments I express my sense of privilege at having been able to work under the brilliant chairmanship of my noble and learned friend and having taken part in the preparation of the report.
5.46 p.m.
Lord Beloff: My Lords, in adding my thanks to the chairman of the sub-committee which prepared this admirable report I have to point out that I am the third successive Fellow of All Souls to take part in the debate. For that reason I do not propose to argue with my two predecessors, both of whom are senior to me. However, I wish to draw on experience of the college which is different from theirs because it is part of its functions as a teaching and research body. I have spent a great number of years, until my retirement, studying federalism, teaching about federalism and writing about federalism. For that reason I find some of the arguments about the European Community—and they arose while I was a member of Sub-Committee E—a little remote from the reality.
After watching the evolution of the Commission and of the Community, I am inclined to think that it might have been better to have a genuinely federal structure in Europe as there is in the United States, Switzerland, Canada or Australia. Then there would at least have been a democratic legitimacy for all the various levels of government. As the noble Lord, Lord Jay, mentioned, the Community has contrived to get round the problem that no one wanted a federal structure by creating a set of institutions designed, and exploited, to create a centralised form of government without democratic controls.
It is, after all, a part of human nature. If one appoints a number of distinguished persons who may have held high office in their countries or who hope to
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hold high office in the future and tells them that they are Commissioners for Europe, is it likely that they will remain content with the original competence which they have been assigned and will not try by every legitimate means to extend their competence? It would be curious if they did not.
Furthermore, because the activities of the Commission are in a broad sense what we would call legislative—one could come to whether those forms of legislation are appropriate, but let us assume that the activities are legislative—you must then have—this is where the parallel with the federation comes in—interpretation by a court. It seems to me, without any disrespect to learned men from this and other countries who have served on that court, that the jurisprudence of the European Court is different in its nature and in the way that it is carried through from the jurisprudence of the courts with which we are familiar, including your Lordships' House in its appellate capacity. That is to say—this point is freely admitted by members of the court in lectures, debates and discussions—that they look not merely at the text before them and consider whether it corresponds to a power actually conferred upon the Community, but they look at it also in the light of the way in which their decision will assist in the growth of Community powers.
There has therefore been—I am no lawyer; I shall give one simple example—a blurring by the court of the distinction between a directive and a regulation and a gradual assumption of the view that a directive, which was supposed to be something for individual governments wholly to carry out into their national law, already has some direct effect on not only the governments but the citizens of member countries. It is as a result of that that we had the imbroglio with Mr. di Meana to which reference has been made. There are therefore two powerful instruments of centralisation.
Against that, we are told that the democratic deficit must be made up by the European Parliament. If I have any quarrel—and it is the mildest of quarrels —with the report of the Select Committee, it is that, although it points out the weaknesses of that parliament, it does not quite sufficiently point out the way in which, because of those weaknesses, it is wholly disqualified from acting in a serious capacity as giving democratic legitimacy to the activities of the Community.
What would be said of the United Nations if it had not been given a building of its own in New York but told that it could use the City Hall whenever Mayor Dinkins and his associates did not happen to need it? What would be said of the United Nations if it was told that there was no room in the building for its archives or its staff and that they could not be accommodated in New York, but that room could be found for them in Atlanta, Georgia? Finally, what would be said of the United Nations if it was told that its committees would have to meet alternately in Cincinnati and Louisville? We see at once if we look at that parallel—you could take a similar parallel from our own Government if our Parliament sat in York and its committees in Derby or wherever—that the

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European Parliament is an expensive farce. Only Aristophanes could do justice to that peripatetic service.
But why is that so? As we know, the European Parliament has tried to fix its location. The French Government, who are the main source of inspiration and the driving force in the Community and have been so ever since Jean Monnet and Schuman, will not sacrifice having an important institution in Strasbourg. Strasbourg has always been a problem for the French ever since Louis XIV grabbed it in the 17th century. They can make the citizens happy by having the European Parliament there. On the other hand, it is quite understandable that the citizens of Brussels—a city in which nothing important had happened before except for a ball on the eve of Waterloo—want to have as much as they can in that city. As for Luxembourg—or, as one might call it, the Ruritania of Western Europe—no one could be surprised that it gets what it can.
You therefore have a parliament that is in effect non-existent. Quite apart from the point about representing constituencies of half a million, attendance there is spasmodic; it has no inner structure for developing policy; it has no leader of the house and no leader of the opposition; and it is not a serious legislative body.
We must therefore face the fact that we are being asked, and will be asked at Maastricht and have been asked n the Luxembourg document and in the Dutch document, to hand over further powers to institutions which, apart from the Council of Ministers, have no democratic legitimacy. How can the Council of Ministers and the busy colleagues of the noble Earl —not only those in the Foreign and Commonwealth Office but the Prime Minister himself and the various government departments—act as a legislature in addition to carrying out their primary responsibilities for administering the affairs of this country?
We do not realise the extent of the talk about federalism—I agree with my noble friend Lord Boyd-Carpenter; I do not want the word "federal" there either—but we have given away a great deal already. I now regret that when I was a member of Sub-Committee E—and from what I said it can be seen why I have never been asked to serve on it again —I was not sufficiently forthright in pointing out that the so- called Single European Act, with its majority voting, was yet another breach in our affairs.
There is a great deal of talk about sovereignty. One is very much mocked if one talks about sovereignty. I am not worried about sovereignty. It is an abstraction in the same way as subsidiarity. What is important is whether the citizens of an individual country are getting what they have the right to expect from the government whom they elect and the taxes that they pay.
I do not know how many noble Lords were in the House at Question Time last Tuesday. I know that my noble friend Lord Harmar-Nicholls was there because he raised the point. We were then told that, because of a European Community directive, the British Government were unable to pass legislation which would force manufacturers of motor cars to
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incorporate safety devices. We were told by the Minister who answered the Question for the Government that we could not have more safety, as it were, in our cars than was generally acceptable across the length and breadth of the Community. I have no doubt that this will be argued for elsewhere on the grounds of the freedom of trade, level playing fields and all the rest, but it comes to this: if someone steals a car—and there have been many sad cases of that recently—he may destroy property and, alas, as we have seen, he may destroy life—his own life or the lives of other citizens whom he happens to run down when propelling a motor car which he is unable fully to control.
Going back again to when I taught a little political philosophy, I would have thought that the first business of a government is the life and property of their citizens. It is difficult to see how we can worry about entering a federal system when in so many ways we already admit that our Government have sacrificed their primary role of protecting our lives and property. Therefore I believe that when the crunch comes—though it may deal with matters upon which perhaps other noble Lords may touch, apart from questions of aligning policies in foreign and defence affairs—we have to decide whether we want to be part of a federal structure or would rather find some way to retain our ability to deal with the problems which our own society asks us as a legislature to tackle.
6 p.m.
Lord Bruce of Donington: My Lords, I rise with some trepidation to express agreement —possibly for the first time—with both the noble Lords, Lord Boyd-Carpenter and Lord Beloff, at the same time. From my point of view that is even more poignant, since in my few remarks I shall seek to extricate Her Majesty's Government from their present difficulties, which is a rather unusual role for me to play. Before doing so, I should like to express my pleasure at having been able to serve as a part-time member of Sub-Committee E under the chairmanship of the noble and learned Lord, Lord Oliver of Aylmerton.
I welcome the report because it gives the House an opportunity to consider these vital matters and help formulate judgment upon them before the Government arrive at any decision in Maastricht. I must immediately say that I was a little surprised that the report spent so much time in justifying the previous decisions reached by the Select Committee. It seemed to me that in reproducing the Luxembourg text and alongside it the opinions of previous sessions of the sub-committee, there was an assumption that the Select Committee on the European Communities must have some kind of sequential history. I do not believe that that is the right way to proceed. Every committee, whose members change from time to time, should have the opportunity in the light of changing circumstances to reach its own conclusions, whatever its predecessors may have decided. Having said that, I found the report most valuable and the evidence and deliberations most helpful.
I must protect the Council of Ministers. It is responsible because it is the only final authority which,

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as the noble Lord, Lord Beloff, said, with legitimacy makes various changes to the treaty. There were the Hanover and Strasbourg meetings and the Dublin inter-governmental conference; now there is Maastricht. Each of those inter-governmental conferences resulted in amendments to the treaty, each time, oddly enough, giving more powers to the Commission.
I must absolve the Council of Ministers and therefore Her Majesty's Government from any real responsibility for that because within the terms of the treaty the Council can act only on proposals coming from the Commission. It has no independent right of action at all. So the Council of Ministers is all in a tizzy about what to do at Maastricht on the basis of a series—a whole cascade—of proposals that have proceeded from time to time from the Commission.
As it is described in its recent booklet, the Commission has been the real driving force behind the whole thing. First, one finds that these proposals originated not in the Council. The members of the Council, representing their own countries, have had no electoral pressure from below—or even representations from their own Members of Parliament—to bring forward these alleged improvements to treaties. They have come entirely from the Commission. True enough, they have been amended in consultation if they have sometimes been outrageous. But such is the origin and that is their main characteristic. On examination each new amendment to the treaty—as, for example, the Single European Act—is found always to have some "whereas" at the beginning or some proviso that may be quoted in the next step forward that the Commission desires to be made.
The final common characteristic is that in no case prior to amendment to the Treaty of Rome has there been consultation with the public or the agreement of Parliament. In every case the people have been presented with what has already been accomplished —a fait accompli—and Parliament has been invited to ratify a treaty that has already been agreed in its name by the Government without any kind of consent beforehand.
So the Commission is the driving force. Indeed, over the years that is what the Commission has been doing. I do not wish to minimise the activities of the Commission although, in his last speech to the European Parliament the noble Lord, Lord Jenkins of Hillhead (Mr. Roy Jenkins as he then was), somewhat summarily described the attitude of the Commission in administering the EC as running the Common Market and a few peripherals. I should not wish to go so far.
The Commission has been responsible for bringing forward proposals on harmonisation. There was a disastrous proposal about the standardisation of the sausage, a little later a ripple (shall I say?) over the standardisation of ice-cream and last week a terrific argument about the colour of tomato paste and what shade of red should ultimately be decided for circulation within the Community. Those may appear to be frivolous matters, which they truly are. But progress has been made in the harmonisation of
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company law; and measures have been taken and much time spent in apportioning the contributions that the Community receives from member states and reallocating them in the form of regional aid or as part of the Social Fund. I have no doubt that those have been admirable opportunities which have occupied a good deal of time. They have also occupied a good deal of paper. Your Lordships will be interested to know that in 1990 no fewer than 539 directives, regulations and directions were issued to the parliaments of the various member states. They were literally submerged, as are the sub-committees from time to time, under a deluge of paper.
Those are all admirable activities. However, unfortunately proper accounts were not kept. If the Commission wish to do something constructive at present in the best traditions of Government and Opposition, it could account for the money that it has received and spent. Year after year it is criticised by the Court of Auditors. Year after year it ignores such criticism. Even last year it still could not produce satisfactory accounts for the Community as a whole.
What has been the principal activity of the commissioners? It has been to increase their own powers. That has been the main drive behind all the activities of the Commission. In this House we are familiar with the best practices as exemplified in the series, "Yes, Minister". It is very easily accomplished. The Commission issues its various proposals to the Council. There is a sea of them. At the same time it issues them to the COREPER, the Committee of Permanent Representatives which sits permanently in Brussels. It meets on an informal basis not only together but with members of the Commission. It is COREPER's duty to prepare for the next Council meeting and, if possible, to arrive at a consensus. That it invariably does. Therefore when the Council members meet, whether it be ECOFIN, or whatever, there is a ready made series of proposals to which their consent is invited and which has already been agreed by all the principal civil servants involved in the Commission, COREPER and the Council secretariat. We reach a situation where the civil servants run the show.
I could not agree more with the noble Lord, Lord Beloff. Every member of the Council has his own ministerial responsibilities at home. Sometimes they are very onerous. Over the past few weeks we have seen how zealously ordinary Ministers behave in the conduct of their departments. It is common knowledge that when Ministers attend the Council meetings the first time they look at their papers is on the plane. They cannot possibly assimilate the detail that has already been worked out in COREPER. That is why we are now progressively becoming ruled by an unelected bureaucracy.
I have no particular comment to offer on individual members of the Commission. I am well aware that the European Parliament has the right to dismiss the lot of them. That is a very illusory power because that would make no difference to the function of the Commission. There are 23 directorates in the European Commission each headed by a civil servant. Quite a number of them would probably welcome the

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departure of the Commission members, who very often commit them to matters with which they may not be, entirely in agreement. That constitutes the drive towards rule by bureaucracy.
We have to make up our minds whether we should go further along that road. There are some who complain that unless we do, unless we are zealous Europeans, we shall be catching the second-class train, or that we shall be part of a two-tier Europe. Most of the people who talk in such terms have a vested interest in the further extension of economic monetary union and of political union. The large City interests, in particular banks and financial institutions, and large corporate bodies would love it. They can move anywhere they wish in Europe. They can do exactly as they wish and will not be subject to any particular democratic control. Of course they say that otherwise we should be in a two-tier Europe.
I venture to think that that is bordering on nonsense. There is already a two-tier Europe. For example, there is a group of states which obeys European law and carries it out to the letter. The leader of that group is the British Government. There are others who do not give a hang for such law, in particular Italy, at the bottom end, with several gradations in between. There is already a two-tier Europe.
Even in financial terms there is a two-tier Europe. There are those who pay into the Community funds and those who take. Britain and Germany are among those who provide the money for the remainder to take. They are in the second class, but they have been giving first-class service. Could we therefore have a little less of this two-tier myth that somehow if we do not put ourselves under the control of the bureaucracy, if we do not concur with the increase in their powers over democratically elected governments, we shall be inferior citizens? I do not believe that that is right.
I wish to get the Government off the hook if I can. The Government have divisions in their own party; indeed we have in ours. But the noble Lord is a Member of the Government and it is the Government to which I wish to address myself. Is there any real reason why the Government should compromise at Maastricht on any of their principles for the sake of being known as, or thought to be, good Europeans? It is quite ridiculous. If the Government have principles, and I presume they have—I feel very charitable today towards the Government—why do they not stand up for them? Why do they not decline to enter into any fight? Why do they not say, for example, that they will not submit to any control of their expenditure, or their fiscal or budgetary policy by the European Community? We have always understood in the popular press, and, yea, even unto The Times, that the Government were quite adamant that they would not surrender any financial control over their own finances. We have been told that repeatedly.
I have a specific question to ask the noble Lord. For greater convenience I gave him notice of it before the debate. I observed that it was stated in the Telegraph—which does not originate in Walworth Road—on 9th July:
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"Mr. Lamont … yesterday agreed to submit Budget plans for taxation and expenditure to an annual EC 'star chamber' of Finance Ministers responsible for bringing the 12 disparate national economies into line".
That sounds suspiciously like a surrender of budgetary authority. Even more recent is an article in the Financial Times of 8th October. It is stated that at a prior meeting:
"EC ministers discussed the degree of budget discipline needed to bolster a single currency. … On the table were … A ratio of national debt to GDP of not more than 60 per cent. An annual budget deficit amounting to more than 3 per cent. of GDP. An annual budget deficit exceeding its capital investment".
The concluding paragraph of the article stated:
"None the less, Mr. Lamont's active participation in the debate led Mr. Christophersen",
who is the budget commissioner,
"to comment that 'the British are clearly in their minds deep in the final stages of Emu".
I do not believe everything that I read in the press, although from time to time I incline towards the Telegraph and The Times. I shall be glad to have the Government's specific undertaking that under no account will they surrender any governmental exercise of budgetary powers, subject to the approval of their own Parliament.
I am well aware that what I have said today may be regarded by some as being old hat or by others as being the noble Lord in his usual robust manner. That is the expression normally used to avoid making any specific comment about anything that I say. However, I hope that today the noble Earl will take the matter seriously because the electorate most certainly will. There is nothing wrong in believing that democracy in one's own country is most important and that national identity and national power means something. That is the case in particular when one bears in mind not only what was said by the noble Lord, Lord Boyd-Carpenter, about the war but also the fact that we in the United Kingdom, whatever the imperfections, have a long history of active democracy among our people. Most of the continental countries' experience of democracy in its modern form is limited to about 40 years. We have a right to ask the Government to speak and act for Britain before anything else.
6.23 p.m.
Lord Monson: My Lords, I too wish to thank my noble and learned friend Lord Oliver for the clarity with which he introduced this excellent report. I apologise for the fact that I shall deal only with a few selected features. Although I was certain that, as always, the report would be well written and well presented, I confess that I began to read it with a heavy heart. On past precedent I expected that the general thrust would be in favour of acquiescence in, even if not necessarily enthusiasm for, still further erosions of the right of national self-determination, subject only to minor reservation about means rather than ends.
It was a gratifying surprise to find myself in broad agreement with almost every speech made today. It was also a gratifying surprise to detect in the report signs at least of seeming consensus—if not quite of actual Euro-scepticism—that things are moving too fast and, above all, too far. My final feeling was one

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of slight dejection because, albeit in strict accordance with its brief, the committee confined itself to questions of how, when and, occasionally, if. Now that the framework for the single market is firmly in place—that is, the single market from which we may expect economic benefits to flow to all consumers throughout the Community, even if not to the extent that the optimists imagine—the most important question is no longer how, when or even if. The most important question is: why? Why is it automatically assumed by so many people that the curious and ill-defined goal—that is, ever-closer unity—is self-evidently desirable? What is so desirable about unity, fusion, conformity, harmonisation for the sake of harmonisation? In what way do those goals accord with human nature as we know it? In what way do they contribute to the sum of human happiness, to the limited extent that government actions have any influence in that sphere? What is wrong with nations, whether acting individually or through the agency of a supra-national organisation such as the EC, following the old injunction, "Mind your own business", as every well brought-up adult has been taught?
One would have thought that the old maxim, "Live and let live", within the minimum requirements of a just and democratic society, is far more compatible with the traditions of a liberal democratic western civilisation than is an artificial and doctrinaire unity. An artificial unity certainly does not prevent conflict, as I am sure the noble Lord, Lord Beloff, will confirm. Perhaps one may—perhaps paradoxically given its provenance—repeat Chairman Mao's exhortation, "Let a thousand flowers bloom".
I do not extol variety simply for the sake of variety as a counter slogan to calls for harmonisation for the sake of harmonisation. The argument goes far deeper than that. In a thoughtful and powerful article in The Times on 3rd October Dr. Conor Cruise O'Brien pointed out:
"nationalism goes back to the roots of our Judaeo-Hellenic civilisation".
He went on to point out that when members of a nation begin to feel that they are being pushed around by foreigners the result will not be harmony, friendship or tolerance but rather xenophobia.
The Government have promised that the word "federalism" will be resisted to the last. With respect to the noble Lord, Lord Boyd-Carpenter, the British people are not interested in words but in deeds. As was pointed out by the Institute of Directors in its evidence to the committee (page 42), European federalism has already taken root whether officially described as such or not. The Institute of Directors expresses fears that:
"a federal structure could degenerate into a unitary European state".
I must tell the institute that in far too many respects such degeneration has already occurred.
It has never been explained satisfactorily why a Labour Government of the late 1970s effectively gave Greece, Denmark, Spain and other countries, whose shores are hundreds of miles from our own, control over the purity of our drinking water; especially since not one Greek, Dane or Spaniard in ten thousand
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gives a damn about the quality of our drinking water. As usual a handful of zealous ideologues in Brussels pulled the strings. What in essence has resulted from the acceptance of that directive is that the British people have been ordered to spend their own money, whether through higher taxation or higher water rates and charges, to improve the quality of their water by people who have no personal interest in the matter whatever. According to public opinion polls members of the general public approve of that because, naive and gullible as they are, they fondly imagine that the EC is paying for the improvements out of its own capacious pockets. Little do they realise that they will have to pay the extremely hefty bills.
But since May 1979 the record of the Conservatives has been far worse. Why have they condoned interference by the Community in such purely domestic matters as the hygiene of food sold only within the United Kingdom, the weights and measures of food and drink sold only in the United Kingdom, the shooting of magpies and similar pests, road safety, the size, shape and layout of new taxis, the type of paint to be applied to the exterior of historic houses? We now hear that the Germans intend to prevent us from adopting Sunday trading. Above all, why do the Government condone interference in our domestic planning decisions? As has already been mentioned, albeit after the stable door is well and truly closed, the Prime Minister has rightly been complaining vigorously in Harare. This interference may cause delays which could cost the people of this country millions of pounds.
In answer to that rhetorical question it seems to me that the inescapable reality is that there are large numbers of zealots on the Continent who sincerely subscribe to the view that Britain belongs just as much to the French, Germans and Spaniards as to the British. In fairness they also believe that Germany belongs as much to the British, French and Spaniards as it does to the Germans, and so on. They are fully entitled to that view; but the overwhelming majority of people in this country totally reject it, and I hope the Government will make that clear without equivocation to the Continentals who take that line.
In many respects the proud historic nations of western Europe now have less control over their domestic affairs than do Alberta, Tasmania, Idaho or Rhode Island. That is why I submit that the EC is already going far beyond mere federalism and is rushing towards a centralised unitary state, even if the outward trappings of ostensible national independence remain in place for the time being.
From that it follows that the Select Committee must be on dangerous ground when it urges the Government to yield to the Community over what the committee describes at para. 97 of its report as "minor delimitation of boundaries", for the appetite of zealous ideologues grows with the feeding. Far from the EC's powers being extended, those national governments which value their traditions and independence—and we accept that many countries on the Continent do not take a particular pride in their independence, particularly those which are 19th

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century creations—should start claiming back their rights, certainly in those matters which have no cross-border implications.
Apart from securing a reasonably level playing field for the single market—it is quite unnecessary for the playing, field to be as flat as a championship billiard table—what are the legitimate, as opposed to bogus, concerns of the Community as a whole? I submit that they are relatively few in number: pollution of the seas and the oceans; large scale pollution of the air; drug smuggling; terrorism; large scale Mafia-type organised crime; mass immigration and asylum seeking; serious contagious diseases, which nowadays are mainly diseases of animals—foot and mouth, rabies and so on—because apart from tropical diseases most human contagious diseases have disappeared; and cross-border consumer protection in, for example, timeshare and the peddling of other dubious investments. Almost everything else should revert to the competence of national parliaments. There is no case for giving the Community the right to dictate matters in the fields of health, education, research and development, tourism or "culture", whatever the latter may mean in this context.
Unless and until purely internal matters revert to national parliaments, there should be no question of extending the fields in which qualified majority voting in the Council of Ministers can be exercised, particularly as the ostensible safeguard of requiring a 71 per cent. vote in favour before change can be effected is not quite the safeguard it seems.
Because of the weighting in favour of the smaller countries, a situation could arise in which—and I use pre-Gelman unification figures—the vital interests of 119 mil ion people (in other words, 37 per cent. of the Community's population) can be outvoted by the representatives of the other 63 per cent.
It may be said that that imbalance is not totally unfair. That may be so though I would argue otherwise. But it must surely be agreed that there is an unfair imbalance in the European Parliament. As I have said on previous occasions, in the European Parliament Britain can be outvoted on a matter affecting its vital interests by a coalition of other countries whose total populations are less than 53 per cent. of ours. Therefore, there is no case for any extension of the parliament's legislative powers until that is rectified. I am glad to see that at page 46 of the evidence Mr. Alan Tyrell wholeheartedly agrees with me on that point.
As regards the parliament's powers of scrutiny, there may well be a good case for widening those powers, but not in the field of initiating or vetoing legislation.
Looking at the visible balance of trade figures, it is obvious that the United Kingdom holds most of the cards at Maastricht. The pro-federalist countries need us far mare than we need them. Therefore, I agree with the noble Lord, Lord Bruce of Donington, that the Prime Minister should politely but firmly make it clear at Maastricht to the pro-federalists and the secret enthusiasts for a unitary super-state that we decline to hand over any more of our powers to the EC; but that subject 10 the single market proceeding to plan, there
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is no objection at all to those countries which lack pride in their own statehood—for example, 80 per cent. of Italians despise their own government and would much rather be ruled from Brussels than from Rome—forming a closer association or amalgamating with one another, provided that those of us, which would include the United Kingdom, France (whatever the French may say at present) Denmark, Portugal and probably Spain, who are proud of our nationhood, are permitted to retain it unsullied. Mr. Norman Tebbit made an interesting suggestion on those lines in the Sunday Telegraph two or three weeks ago.
I conclude by referring to a remarkable article in the Independent on October 14th by the noble Lord, Lord Rees-Mogg, who I am sorry is not here this evening. I do not believe that anyone would claim that the noble Lord, Lord Rees-Mogg, still less the Independent, is in any way anti-European, either in the correct sense or the more restricted incorrect sense used by pro-federalists. What did the noble Lord write? Among other things, he wrote:
"A Brussels-based federation would … resemble a tall ship with too much sail and too little ballast, a candidate for capsizing. Only if the European system is built on loyalties that already exist will the system be stable. President de Gaulle was right. The concept of l'Europe des patries is not just preferable; it is the only viable concept".
He went on to say:
"The good Europeans now are those who want to build a European Community of independent nations, as broad as possible in terms of its membership, defined only by European culture and open in its trade with the rest of the world".
To that, one can only utter a heartfelt "hear, hear".
6.38 p.m.
Baroness Elles: My Lords, I thank the noble and learned Lord, Lord Oliver of Aylmerton, for his chairmanship and helpful introduction to this report. I should also like to associate myself with the thanks for the invaluable work of the legal adviser and clerks to the committee who enabled the report to be produced in such an excellent manner. It has clearly aroused a great deal of discussion this evening.
It has been a difficult operation to carry out this report because, in the first place, as the noble and learned Lord pointed out, it is not usual for parliaments to discuss documents which are part of the negotiations for a treaty. It was, so to speak, by default that the Luxembourg version of the treaty was let loose on the European Parliament. It gradually found its way to the Select Committee in the House of Lords which enabled it to be seen and members of the Select Committee on the European Communities to realise that Sub-Committee E would have a real task in being able to give an opinion on the legal effects of the draft as it stood.
The operation was further complicated by the fact that there were two versions. There was the version in April—the Luxembourg draft treaty—and a further version which appeared in June. That was at the time when Sub-Committee E was drawing its conclusions to an end. Consequently, it has not been easy for the sub-committee to draw up such a report. I repeat, therefore, that I am extremely grateful for the help we received from the clerks and the legal advisers to

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enable such a comprehensive report to be produced. I pause to add that there was a slight fear when the Dutch presidency produced a third version. There was general relief when that third version was withdrawn and is no longer the subject of discussion.
Underlying the texts which we have had before us there appear to be at least two main causes of tension. First, the three institutions involved in the Community law-making process—the Council, the Commission and the European Parliament—are all worried. The Council is anxious to retain its existing powers and the other two seek to increase their powers.
A second cause for tension derives from the conflict between those who seek, eventually if not now, a federal solution to the European Community and those who wish to retain such powers as remain to member states. Many noble Lords emphasised how far down the road the member states have gone. A large majority in the European Parliament support the federal goal—I add that I was not one of those when I was a member—and consequently favour the Commission as the eventual government in a federal structure, with the European Parliament and Council as a bicameral legislative body. It is therefore not surprising to note the tendency in the draft treaty to seek to give further decision-making powers to the Commission and increase the role of the European Parliament in the legislative process. That underlines the direction towards a federal system as originally envisaged in the structure of the Community.
The view of the Committee, which I fully share, is that it is more appropriate to consider the law-making process on its merits, to examine whether it conforms with democratic principles of openness and consultation, than to seek a determined conclusion on the future shape of the European Community. One of the difficulties is that one feels rather like the person who was asked the way to Connemara who replied, "Of course, if I was going there I wouldn't start from here". That applies to many of the problems with which we are faced in analysing the law-making process in the Community and its results.
In parenthesis, for those who are afraid of a federal solution it should be observed, as was touched on by the noble Lord, Lord Monson, that some aspects of European Community law remove the law-making powers from member states on a number of issues that are not within the law-making competence of the federal government in relation to individual states in the United States; the recent second banking directive, rights and establishment of lawyers and a common base for VAT are a few examples.
I should like to comment on two or three specific issues discussed in the report without going through the whole of it. An analysis of the provisions of the draft text on co-decision shows that the consultation procedure thereby introduced would unnecessarily delay the legislative process. Should there fail to be agreement, the proposed legislation would fall, as has already been pointed out. The European Parliament would again be granted merely a negative power, whereas the co-operation procedure which was
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introduced in the Single European Act in July 1987 has worked rather better than was originally envisaged or as many people feared. The European Parliament made a positive contribution to European Community law to the extent that 45 per cent. of amendments were accepted—these figures are up to December 1990—on first reading by the Council of Ministers and 25 per cent. on second reading. Although that is quantitative and not qualitative, it gives an impression of the contribution that the European Parliament can make to the law-making process.
I was saddened to hear the somewhat derogatory remarks of my noble friend Lord Beloff, who does not seem to be aware of the valuable work that the European Parliament is able to do from time to time. Whether the representatives from the United Kingdom step on a plane to Strasbourg or Brussels does not make much difference. They do so in order to represent the interests of the United Kingdom, whichever party they come from.
I should like to make a point in view of the kind of remarks aroused by the European Parliament. The representatives spend at least 120 nights outside the United Kingdom on duties designed to enable them to look after not only the interests of the country but also their electorate. As in the United States where there are large numbers of electors within a constituency, it is possible to receive a considerable number of letters from one's electorate, as I know myself having been a member of the European Parliament. For example, I was away for one week and on my return to the United Kingdom found 400 letters on my table regarding the culling of baby seals. That may not appear to be an important matter to many people but it was obviously important to my electorate. That meant 400 replies to explain why I did not vote in the way they wanted and involved a considerable amount of work. It is the duty of a MEP, as it is the duty of a Member of Parliament, to answer all letters from his electorate. That is sometimes not made known to the public in general and I take the opportunity of saying that we should be grateful to those members from this country who attend the European Parliament. Perhaps, without being too chauvinistic, I can repeat comments from other member states: that it is the British representatives of both parties who are the best attenders and contributors to the work of the parliament.
Having said that, it appears to be a question of extending the co-operation procedure to a greater number of areas where the European Parliament was formerly only consulted; in other words, though amendments were tabled to proposals, they were often ignored. That opens up the involvement of the European Parliament in some areas where there is not even consultation. Extension of the powers of the European Parliament to the granting of the assent procedure in all cases of international agreements, or perhaps as a modified version for minor agreements, would remove the valid objection to the present situation of the provisions of Article 113 of the treaty dealing with external commercial policy. That is an important policy both in relation to the Community as

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a whole and to the United Kingdom, particularly where there is no democratic consultation. Therefore, if the parliament was seized of the matter at least both the issues and the subject matter and conclusions of the treaty would be made known to people who may be affected by the legislation before it came into force.
I am happy to find myself in agreement with the noble Lord, Lord Monson, which may surprise him. I quote again from page 46 of the written evidence. I entirely agree also with the conclusions of my former colleague of the European Parliament, Alan Tyrell, when he said,
"the European Parliament, though steadily growing in weight and responsibility, is not yet ready to take sole legislative authority".
There are various reasons for that—the volatile attendance at committees, the volatile attendance in the plenary sessions and, above all, the fact that there is not yet a single seat. That is not the fault of the parliament; it has been pressing for many years for a single seat. It is governments which have not been able to come to a unanimous decision in accordance with the treaty. However, the parliament is seizing the matter and taking it into its own hands. It is hoped that there will be meetings in Brussels in a building near to the parliament which will be able to provide for plenary sessions.
The current legislative process to be extended in accordance with the draft treaty provisions gives considerable powers to the Commission in the drafting and adoption of secondary legislation, much of which goes completely unscrutinised by any democratic process except by government officials. Although government officials may come to a conclusion in the advisory committees, the Commission does not have to take the opinion of the advisory committees though there may be a majority of members against the proposal.
The proposed extension of competences to the Community raises the fundamental question of adequate scrutiny as well as the removal of further areas of competence from national parliaments. As the economies of the Twelve become more closely integrated it is almost inevitable that new legislation will be required at Community level. But that should be at the unanimous request of the member states. The present definition contained in the draft treaty, which has been referred to by many noble Lords, on the application of the principle of subsidiarity, would have a contrary effect; a place which gives the originating power to the Community.
It is suggested that some form of wording should be contained in the preamble along the lines of the 10th amendment of the United States' constitution which states:
"Powers not delegated to the United States by Constitul ion, nor prohibited by it to the State are reserved to the States".
Something along those lines should be included in a draft treaty which is adopted at Maastricht. If it should be agreed that further competences should be allocated to the Community and that the practice of qualified majority vote be increased there will be further justification for the accusation of a democratic deficit in the law-making process, because the
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Minister, while he has lost the vote cannot be fully accountable to the Parliament even though he may have represented his country at that vote. It will be essential for new and efficient structures, or an adaptation of existing structures, to be established between relevant committees of national parliaments and the European Parliament both to allow full discussion of legislative proposals and for the public, above all, to be able to be aware of future legislation and the shape it is taking in the process of being adopted.
From my own experiences as a former Member of the European Parliament I know that is one of the areas where an enormous number of questions were asked, particularly by industry, business, and by manufacturers. The question was constantly put: "What is going to happen with this directive?". Everything was kept secret, apart for a short period during which it appeared before the European Parliament. But even while we were discussing papers in the European Parliament we knew full well that there were Government officials in the process of coreper who were making their own negotiations and arrangements. It was very difficult as an elected member of a parliament, whichever view one takes of that parliament, if you are not able to say what is happening on a particular draft directive or regulation because so much of the practice of the Community takes place in private and in secret.
That is one of the reasons why the Commission, which after all is the drafter of legislation as well as being a guardian of the implementation and enforcement of the laws of the European Community, has become the focus of lobbying on an ever-increasing scale. The Commission itself is comprised of very able, efficient and competent officials. The Commission has an extremely open process and the officials are very willing to give information. But it is not the role of an non-elected body to be lobbied in order to take sides or to take views on draft legislation.
It is clear that my noble friend the Minister will probably be unable to give detailed replies to the kind of comments we have been making today since the Government are in the process of negotiating on behalf of this country at Maastricht. However, I am sure that my noble friend Lord Caithness will take very great care to study what has been said today. I conclude by wishing the Government well in the negotiations and in bringing them to a satisfactory conclusion for the United Kingdom.
6.56 p.m.
Lord Stoddart of Swindon: My Lords, this has been an interesting and well-informed debate and somewhat surprising in that support for a point of view which I have held for a long while has come from some unexpected quarters. The noble and learned Lord, Lord Oliver, need not apologise for discussing this matter in his committee and for bringing forward its recommendations. In fact, the committee has done us a service; indeed, it was fortunate to have been able to do this service and bring out the full implications of what is proposed for the summit at Maastricht.

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I should like to thank the sub-committee for its report, especially where it expresses opposition to measures which would stimulate the present regime of creeping federalism to a full-blown rush towards western European super-statism. I particularly welcome the recommendation against the proposal for co-decision between the Council and the European Parliament not only because, as the Select Committee envisages, it would lead to disputes between the two bodies but, more importantly, because it would give a huge boost to the powers and importance of the European Parliament and a reduction, therefore, in the powers and influence of the national parliaments with a consequent boost to the creation of a centrally controlled super-state.
I very much regret the credence given by the Select Committee to the concept of union citizenship. Again, this lends support to those who wish to see individual states subsumed into a western European state. The very idea of being a citizen of Europe—a continent —appalls me. Can one imagine a Japanese person, an Indian person, or a Pakistan person agreeing to become a citizen of Asia? I was born a citizen of the United Kingdom and that is how I want to die, whenever that may be. I do not want to be a citizen of a continent. I want to be a citizen of a nation of which I am proud. So I am sorry that credence should have been given to the idea of substituting the nationality of a person to some "being" on a large continent.
I should say that I also fundamentally disagree with the committee in its support for the proposal to give the European Court the power to fine member states. How will that work? It would be unprecedented in history that a state a nation—could be fined by some outside body or some internal body, for that matter. Who is going to enforce the fine? How is it to be collected if the state says it is not going to pay? Are we going to have the new European army marching through the tunnel to arrest the Prime Minister or the Queen? How is it possible to impose such a fine on a state or nation? Let us suppose that Parliament—which I presume will still raise the money—says, "We are not going to pay the fine". Will all 650 Members of the House of Commons be arrested? Of course not. It is absurd that this should even be suggested and I sincerely hope that it will not be proceeded with.
The Select Committee's overall view seems to be that the extension of Community competence is acceptable provided its achievement is by evolutionary means. That seems to me to mean that everything is acceptable, including the sacrifice of control by Britain over economic and monetary policy, taxation, defence, and foreign affairs, provided it does not come about too soon. I disagree profoundly with that. I believe that it is fundamentally wrong in that it would tend to conceal from the people the full extent of their loss of the capacity to govern themselves in the future. That approach plays into the hands of the Euro-federalist fanatics since it has been their policy all along to conceal their real objectives behind a wall of untruth and misinformation and to obtain their objectives by concealment and stealth.
It happened in 1972, during the passage through
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both Houses of the European Communities Act, when Parliament and the country were assured that there was no possibility of a loss of sovereignty and certainly no possibility of the formation of a federal state or anything like it. Again, in 1985 we were assured when the Single European Act was going through both Houses of Parliament that union did not mean union. My noble friend Lord Bruce of Donington and I opposed the Bill from the Opposition Front Bench. My noble friend will know as well as I do that time and again we were told that the preamble to the Single European Act did not really mean what it said and that union did not actually mean union. But now we find that it really did mean union.
My noble friend Lord Bruce and I warned of the dangers of the Single European Act. Those warnings were reinforced by the powerful and expert voice of the noble and learned Lord, Lord Denning, by the noble Lords, Lord Moran and Lord Monson, and indeed by other noble Lords. We tried, because we wanted to be helpful, to warn the then Prime Minister, Mrs. Thatcher, of the decision-making she was surrendering to the EC. However, in spite of that and in the face of the fine fight put up by a handful of Conservative and Labour MPs who had the guts, commitment and intelligence to acquaint themselves with the full implications of the provisions of the Act, it was forced through the House of Commons, despite the opposition of the official Opposition, on a guillotine, just as was its predecessor, the European Communities Act 1972. Thus, the people had no say and these wide-ranging and important Acts were forced through without proper discussion by Parliament or anyone else.
It seems that we are in the apology-making season. However, if Mrs. Thatcher has any apology to make, it ought not to be to some snivelling TV tycoon because he did not get his franchise, but to this Parliament and the people for her failure to understand the real implications of the Single European Act and for turning a deaf ear to all the warnings issued to her that she was leading the country further down the federalist path. However, it is interesting that in paragraph 93 of its report the Select Committee, with hindsight, now agrees that Article 100A is being used too widely. In fact it is being misused. It is a great pity that many people did not understand that right at the beginning. I must not be too hard on Mrs. Thatcher.
Lord Monkswell: Why not, my Lords?
Lord Stoddart of Swindon: My Lords, I shall tell the House why not. A year ago the poor lady was stabbed in the back by the Tory Party and only last week she was stabbed in the back by a TV tycoon to whom she had written a letter of solace. I do not think that we should be too hard on her. She has had a bad time just lately. In any event she has repented. She now understands what the whole thing is all about. I hope that she will now assist in the battles ahead to prevent any further erosion of British sovereignty.
Lord Bruce of Donington: My Lords, I am grateful to my noble friend for allowing me to intervene. Does he also recall that during the proceedings in this House on the Single European Act we were repeatedly assured from the Government Front Bench that the right of veto by the United Kingdom would remain untouched?
Lord Stoddart of Swindon: Yes, indeed, we were, but we know that the Ministers did not understand the implications of the Act. I feel quite sure that they were not seeking to mislead the House and therefore we must assume that they did not understand that the British veto was being removed. That was most unfortunate.
We must not overlook the fact that Ministers and their civil servants often give away powers by their own edict. They make agreements in secret but, unfortunately, those agreements sometimes come back to haunt them. One such haunting occurred last week, on an issue referred to by the noble Lord, Lord Boyd-Carpenter. The Environment Commissioner told Her Majesty's Government to halt work on seven important projects which have absolutely nothing to do with the EC. How on earth can this commissioner pretend that the redevelopment of King's Cross station or the extension of the M.3 have a real EC interest?
I find it most offensive that some Italian bureaucrat should seek to issue instructions to a properly and democratically elected British Government that they should stop work on projects which are vital for Britain's well-being and which have been through all the democratic procedures laid down by our planning laws. If Signor Carlo Ripa Di Meana is so concerned with matters environmental, perhaps he can turn his attention to Italy, where his fellow countrymen slaughter millions of birds every year and, indeed, seem to have a policy of shooting anything that moves to satisly their bloodthirsty hunting appetites.
I have already said that the Select Committee concedes too much to the federalists and that it has too easily accepted that further amendments to the treaty are necessary. There has certainly been no call from the people or Parliament for any such revisions. All the pressure is coming from our so-called partners who, I am afraid, so often sound more like our enemies than our friends and seem to enjoy embarrassing the British whenever the opportunity arises. The evidence of the frenetic desire of other member states to gallop towards federal union was contained in the Dutch proposals which were published after the committee reported. Apparently they have now toned down their demands but the very fact that those extreme proposals saw the light of day shows that some countries of the EC want to go in for the formation of a West European state, come what may.
The proposals that are to be discussed at Maastricht will be very far reaching indeed. They will probably be a precursor to even more erosion of our sovereignty. The people of this country will not have been consulted in any way. We are told that referenda are alien to our constitutional process and that the best place for these matters to be discussed and
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decided is in Parliament itself. But, unfortunately, experience thus far has shown that the decisions are taken not on the basis of freedom but of whipped votes on a guillotine Motion. Therefore, it is essential that at this point Members of Parliament of all political parties, and indeed of none, should combine to ensure that before further erosions of our sovereignty are embarked upon the people of this country are consulted in a wide, properly conducted, fair and properly financed referendum. That is the only legitimacy that can be given to any further loss of our self-governing powers. I sincerely hope that the Government will consider the matter and reconsider their opposition to such a referendum.
7.11 p.m.
Lord Harmar-Nicholls: My Lords, I was surprised to learn from the noble and learned Lord, Lord Oliver, that it was unusual to have this sort of debate on a report while negotiations were still taking place. That was something I did not know. Therefore, if by accident we are doing so now, I hope that, by accident, we have started what will become the usual case in the future. If Members of either House can make any contribution in terms of letting the Government know what is the general feeling through their contact with constituencies, that ought to be put into use before the negotiations have been completed. That is what is happening today. As I said, I was surprised to learn that it was not usual, but I hope that we are treading on a path which will become normal procedure in the future.
The noble Lord, Lord Stoddart of Swindon, finished his speech by making a great appeal for a referendum. To me it was always nonsense that when we had a referendum on the Common Market it took place after we had signed up and joined and when there was nothing anyone could do about it. It seemed to me to be a complete waste of effort, other than to give a sort of smokescreen of legitimacy to what the Government had done when they perhaps had doubts as to whether or not they were representing the real views of the people.
The noble Lord, Lord Jay, and I battled hard for many years, long before any signatures were given. We pointed out the weaknesses as we saw them in the Treaty of Rome. They were pretty obvious, but many of them, especially those concerning the common agricultural policy, have come home to roost. What a pity that that warning was not taken fully into account before the signing and the referendum on that occasion. It was very important. Some of us felt strongly as to whether we should proceed with the Treaty of Rome long before it reached the signing stage.
I was normally ambitious and had taken some trouble to become a parliamentary candidate. This happened in 1938. I fought several elections to be elected in 1950. To my joy and, I suppose, to my satisfaction I had only been in the other place for four years when I was made a junior Minister. Despite all that effort I resigned from that office because I thought that the issues which would flow from the Treaty of Rome were dangerous enough and big

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enough for me to do so—whatever my personal ambitions might have been. I believe that a debate such as this, trying to make a contribution before the document is signed, sealed and delivered, is a sensible way of dealing with important matters.
The report of the noble and learned Lord, Lord Oliver, is the best to have come from Sub-Committee E in terms of facing up to the facts as the majority of people see them. I hope that the Government will pay a great deal of attention to it and will base any negotiations on the knowledge which the report provides.
However, having said that, the noble and learned Lord said, in terms of the negotiations and the future, that provided we are bargaining from equal bargaining positions he could see some hope that we could perhaps, even now, arrive at a point which would be beneficial to Europe and to this country. I am only concerned about it being for the benefit of this country. There are many issues on the table regarding problems surrounding the EC where I can see that, if one looked at it as a theory, what is being suggested would be good for Europe. However, when I look at it again and discover that being good for Europe will mean that it will be pretty detrimental, in my view, to Britain, I do not think that that is something about which we should start cheering.
If we can get to a point where we have a settled line which is fair and in the interests of Britain as well as Europe, then we can go ahead. We have not yet reached that position. I do not think that it is possible to achieve equal bargaining positions with the European Twelve as it now is.
Having opposed the Treaty of Rome and having been very critical of many parts of it after it had been signed, I thought that if one wished to be so critical one had better find out what it was all about, or at least as much as one could. Therefore, although I had had my fill of having to fight elections, I put myself forward and was elected to the European Parliament.
The message I bring back from that parliament is one of which I hope the Government will take heed and which I believe to be very well based. The reason we must not go further along the road now being set out (and the reason I support the noble Lord, Lord Monson, in what he said about us having gone too far too fast) is that the one ingredient essential for the theory of the EC to work and which is absolutely vital is not there: the affinity between the 12 nations does not exist. There is a definite, deeply felt difference which has nothing to do with logic or with many of the theories which were put forward and argued in the report. But it is vital if the EC as we see it is to be capable of replacing to any great extent the job that our present home Parliament carries out.
I believe that we were misled—partly deliberately —in those years by people who were what the noble Lord, Lord Bruce of Donington, called "European fanatics". In order to get the legislation through they said things and promised things that gave assurance to people who had not dug as deeply as some of us had tried to do.
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The question just put during the intervention of the noble Lord, Lord Bruce of Donington, is relevant: why have we allowed the power of the veto to be removed? When we were offering sound criticisms about the dangers which would flow from the theory put in front of us, we were told, "We've got the veto. It is there. It can't happen. We don't want it to". But we have moved away from that. All down the line we have seen that the safeguards which we were told were there and which, therefore, made nonsense of some of our criticisms have been allowed to be removed. They are there no longer.
The Government will be going into important, detailed negotiations in Maastricht. We know that they have reached a certain point. The only thing we can do today is to hope that they will take into account the overriding feeling that has been expressed during this short debate. I have heard no enthusiasm at all for moving further along the road which removes the power from the Westminster Parliament to somewhere else. There has been no sign of it. That fact ought to be taken into account.
We must also be careful that we are not being outmanoeuvred. This game of national, and certainly international, politics is surrounded by manoeuvres.
We must bring home the message that there is no question of federation being included in any of the decisions that are taken. We must be certain that although the word may not be included neither is its meaning. One of Europe's top legal experts has been charged with a nearly impossible task: the elimination of the dreaded word "federation" from the new Common Market treaty. He has allowed himself to be quoted. He refuses to have his name mentioned but he has not denied the quotation:
"If at the end of the negotiations on political union, it is quite clear that the word federal is not acceptable to some delegations, we have to think of ways of improving the text MPs have this feeling of belonging to a sovereign body which is threatened by the powers of the Community … Britain genuinely was sovereign until so recently … If 'federal' is to be excised, something equally ambitious must be found in its place".
It is not good enough to remove the word but to retain the intention which it contained.
I give my noble friend another warning to pass on. It may sound cynical and melodramatic, but I wonder how genuine is the Dutch proposal and its withdrawal. I wonder whether it was ever believed that the Dutch proposal, with its federalist approach, would be accepted. In the event it was turned down by 10 votes to two. Your Lordships may call me cynical but one is aware that similar things happened in regard to matters of equal importance. They resulted in war. I wonder whether the Dutch proposal was included to make the Luxemburg proposal, upon which they had to fall back, appear more respectable. It is rather like the chap who put his foot out of the warm bed so as to have the joy of feeling the warmth when he brought it back in again.
Those who believe in federation—there are some who do and they are entitled to—are likely to gain if that happens. We talk about sovereignty, but many people have never had a parliament with the

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sovereignty that our Parliament has enjoyed which has been built up over the centuries. That is why we are sometimes looked upon as the odd man out.
Let us consider what was said about the single currency. I was looking at this matter the other day and I found it interesting. Belgium said, "Oh yes, we believe in it". Denmark said, "Yes, but you have to be tough about the convergence criteria". Germany said, "Yes, put be tough on the convergence criteria". Greece said, "Yes, but little hope of joining this century". Spain said, "Yes, but we want more cohesion money". They want the cash. Ireland says the same, "Yes, but we want cohesion money". That is not a level playing field.
Ireland provides a good example. I am fond of Ireland. I have friends with businesses there. Ireland is being financed by European money to an unbelievable level. When the principle of a single currency is brought up Ireland says, "Yes, we will have that, provided we receive the cohesion money that makes it worth while". I am not making those points out of cynicism but out of a true belief. It is because I believe that we have moved away from the principles to which we said we would stick when we first joined the Community that we must give the Government, and in particular the Prime Minister, who will be the main negotiator, the message that we expect him to stand by what he has said. He has spoken clearly. He must not be beguiled by the reaction to what he said about style. People were always unfair when they spoke about Mrs. Thatcher's megaphone diplomacy. She was supposed to have spoken truculently. It was not how she said it but what she said that mattered.
We have a new Prime Minister who recognised that megaphone diplomacy had become unpopular, effective though the arguments behind it were. He should not be led astray by having his back slapped for having adopted a more persuasive attitude. He is thought to be a kind chap, a good fellow, who is interested in cricket and therefore works only in accordance with the highest principles. We want him to be tough, whether he talks loudly or softly, when he is looking after this country's interests.
I ask that the message given by my noble friend Lord Whitelaw last Wednesday during the defence debate is taken into account when this matter is considered. I use his words:
"There is therefore time for reflection by the Government. I hope, therefore, that there will not blow up … an obstinate determination to cling to the present plans whatever the changes i n circumstances."—[Official Report, 16/10/91; col. 1130.]
He finished by saying that he hoped that the opportunity would be taken to change the plans if there was good reason to do so. Previous plans have not passed the test. We were promised an economic partnership, and all sorts of extreme political manoeuvres which would rob Britain of its independence have been foisted upon us. I hope that that fact is recognised and that my noble friend's words will be taken into account and acted upon by the Government at Maastricht.
7.28 p.m.
Lord Monkswell: My Lords, I am sorry that I was not present at the start of the debate. I had intended to take part but, having arrived late, I thought that I would not bother as there seemed to be enough people speaking. However, having listened to a few speakers I felt compelled to contribute. First, I thank the committee for producing an interesting and useful report. I was asked a couple of years ago whether I was for or against Europe. I replied that that was an irrelevant question; that it was not a question of whether I was for or against Europe but rather whether we should work with the people of Europe to develop democracy and to achieve positive results. That is one of the main reasons why I am contributing to the debate.
Let me give two practical examples of how we can work together. First, there is water, which was mentioned by the noble Lord, Lord Monson. I was curious as to why he was against European standards of clean water. It seems to me that we all hope that the water which we are given to drink and the water which we bathe in when we go to the seaside is clean. Whoever draws up the standards and however they are extended across nations and continents, we hope that the standards will be high.
Lord Monson: My Lords, the noble Lord asked me a question so perhaps I may reply. At any time during the past 50 years the British people, if they had so chosen, could have voted in a government who had promised to spend more taxpayers' or water rate payers' money on cleaner water. The fact that they did not choose to vote in such a government indicates that they are quite happy with the situation.
Lord Monkswell: My Lords, I take the noble Lord's point, although I am not sure I agree with it.
The noble Lord asked why the people of Greece should be interested in the standard of British water. One reason I can think of is that there is far more travel across Europe now than in the past. People who live in Greece or Denmark can quite easily visit this country and vice versa. When we travel in Europe we hope that the tap water we drink is of a high quality. We have a vested interest right across Europe in high standards. I hope that there will be common standards of, dare I say it, environmental quality for water, air and other things.
Having agreed that that is a desirable aim because of the movement of people, one is faced with the ultimate decision on how to arrive at common standards and how they should be implemented. It seems to me logical, partly because we are used to it and accept it as good, to devise democratic mechanisms whereby we can agree among ourselves on the standards we wish to see and implement enforcement regimes which are common under a democratic procedure. I put it to your Lordships that that is what we are trying to do with the evolving political structures of Europe.
Another useful example is ice-cream; interestingly, it has been in the news recently. I gather that during the war the production of ice-cream was banned so for

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a number of years people had no experience of it. When production resumed it was not real ice-cream but a mass produced product which did not include much cream because there was not much around just after the war. The product was sold as ice-cream and people became used to it.
Then a young research chemist devised the injection of air into ice-cream and we had plastic ice-cream filled with air. It is unfortunate that children have grown up over the past few years without the opportunity of consuming real ice-cream. They have been given an adulterated product that has been messed about. It is interesting that it was Margaret Thatcher who was involved in blowing air into ice-cream. She was responsible not only for reducing the amount of ice-cream that children enjoy but reducing the amount of milk they were given in schools. That seems to run right through her history. If the EC can bring in standards so that British children are given proper, decent, wholesome ice-cream, three cheers for the European Community.
As concerns democracy, I agree that we do not need a federal state to achieve that. But all we have at the moment, as I see it, is the European Community and we have to consider how to develop it in a democratic way. One or two people have a curious attitude to democracy. The noble Lord, Lord Beloff, was not sure whether he wanted us to talk about "citizens" or "subjects".
Lord Beloff: My Lords, if the noble Lord comes in late and takes up time when we are waiting to hear the official responses of the political parties he might at least refer correctly to what was said. I never mentioned "citizens" or "subjects" in my speech, as he will see if he reads Hansard tomorrow. He ought not to behave in this way but let us get on with the serious debate in which we were engaged.
Lord Monkswell: My Lords, I apologise to the noble Lord but I was here for his speech and thought I heard him hesitate in mentioning "citizens" and "subjects". But I shall take his word for it and read Hansard tomorrow. The point I was trying to make is this. My concept of democracy is the ability of people to work together—not one group of people telling another what to do.
Another issue raised is where the European Parliament should meet. That is an interesting point. We need to bear in mind that over the past few years the European Community has grown. With the changes that have taken place in central and Eastern Europe, there is every likelihood of the European Community growing even more. I wonder whether we should think of alternative sites for meetings of the European Parliament. Strasbourg or Brussels could be too far to the west if we consider central and Eastern Europe being included within a wider European Community. We may have to think in terms of Warsaw or Budapest as the natural seat of the European Parliament. I hesitate to mention Berlin; there has been one attempt this century to use that city and no one found it satisfactory so the idea was abandoned.
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Finally, I am concerned about concentration on the nation state as the sole expression of democracy. We do ourselves a disservice and we do the strength of our own local democracy, local government, a disservice by that. We must be more relaxed when we think in terms of democracy. We need local and national institutions of democracy; we need continental systems of democracy. Eventually I hope that we could aspire to a world system of democracy which would make the world a better place. That is why I hope that we shall make progress in building on the admittedly imperfect democratic mechanisms within the European Community. We should aim to make them better and not argue that we should do away with them altogether.
7.40 p.m.
Baroness Robson of Kiddington: My Lords, I had the privilege of being a Member of the sub-committee that produced this report. As most noble Lords have done, I too wish to thank the noble and learned Lord, Lord Oliver of Aylmerton, for chairing the sub-committee. I join the noble Baroness, Lady Elles, in thanking our legal adviser for his role in producing the report with such enormous speed and so efficiently.
Many noble Lords have said that it is unusual to study proposals which have not yet been formalised or decided upon. It has become apparent during this afternoon that there is tremendous concern about these proposals among Members of your Lordships' House. That concern has been shown by the number of speakers who have taken part in this debate on a Monday afternoon the day before Prorogation.
Before I highlight a number of areas in the report, I must refer to the fact that the noble Lord, Lord Boyd-Carpenter, said that the concept of Europe only became possible as a result of Britain's action in the war. I agree 100 per cent. with that statement. I was not born in this country and I learnt more about Britain in the period during the war than I have ever learnt since. I remember vividly travelling from Tring to work in the Ministry of Information in 1940, the day after France fell. I entered the train compartment to find the usual five or six people I travelled with. Not being a British person I was deeply depressed at the state of affairs that then persisted and I wondered what would happen. The other people in the compartment said, "Thank God we are on our own. We now know what we can do". I felt enormous admiration for the British resilience and for their belief in themselves.
I feel it is a pity that, having led Europe back to freedom during the war, we opted out once the war ended. We did not attend the Messina Conference and we did not think it was worth while taking part in discussions aimed at achieving an ever closer union in Europe. That thinking applied to both political parties after the war. It is a pity that we did not maintain that wartime spirit.
The noble Lord, Lord Stoddart of Swindon, has said that he values his UK citizenship, as we all do. The noble Lord said he did not want to be a citizen of Europe and that he was born a UK citizen and wished

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to remain that way. I agree with that sentiment. I was not born a UK citizen but I have been one since 1940. I want to remain a UK citizen. However, people who are born in Scotland, Wales or Ireland will declare that they are Scottish, Welsh or Irish respectively as well as being UK citizens. I claim that we can be UK citizens and also citizens of the European Community. The Name analogy applies in both cases.
Lord Stoddart of Swindon: My Lords, I simply do not agree with that sentiment because Scotland and Wales have been nations in their own right for a long period of time. The point I was making is that nationhood makes a person feel that he belongs somewhere, whereas a continent does not convey that feeling of belonging. That is the point I was making. I am happy to be a citizen of Europe in the wider sense and I want more co-operation with Europe. However, I hoc e the noble Baroness now understands how I feel about being a United Kingdom citizen.
Baroness Robson of Kiddington: My Lords, I feel the same way about being a United Kingdom citizen, but that does not prevent me from also wanting to belong to a greater Europe. The report considers the most important aspect of the matters raised by the Luxemburg document concerning co-decision between the European Parliament and the Council. The proposal is based on the assumption that the European Parliament is more democratic than the Council. I do not believe that that is the case. Apart from the lack of transparency of the Council's deliberations—that situation could be improved upon and does not have to remain the way it is—both the Council and the European Parliament are democratically legitimate bodies. The co-operation procedure introduced in the Single European Act has enabled bodies monitoring and seeking to influence Community legislation to make their views known not only to Ministers but to others exercising legislative powers.
The proposal for co-decision between the Council and the Parliament, with neither party having the final say, would undoubtedly lead to prolonged wrangles and often to a state of affairs where no decision is taken. It is possible that the most desirable legislation would not be implemented because of lack of agreement. How many organisations where co-decision is involved have no final arbiter? We cannot accept, therefore, the co-decision proposal.
It is a pity that this proposal appeared so quickly after, mother change to the system—the introduction of the co-operation procedure. That procedure has only been functioning for four years and it needs to run for a longer period before it can be fully assessed. Another problem to be confronted is that of the working conditions in the European Parliament. That matter was mentioned by the noble Baroness, Lady Elles, and deserves the most urgent attention of member states. The European Parliament must be empowered to make its own decisions on that matter before we even consider giving it new powers or procedures.
The sub-committee received evidence from Mr. Alan Tyrell, who said,
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"Parliament is in no position to carry the responsibility for legislation whilst it is segregated from its staff, its files and the other Institutions, and only has the use of its rented building one week in four".
He pleads for the European Parliament to be able,
"to decide where it should meet and where its secretariat should be located".
That problem is not new and has been raised year in and year out. The working conditions of the parliament is one of the most important matters that must be decided at Maastricht.
A further matter of great importance to all the countries in the European Community concerns the principle of subsidiarity. The noble and learned Lord, Lord Oliver of Aylmerton, has recounted how the sub-committee came to the conclusion that subsidiarity as a principle should be added to the objectives in the preamble to the EC treaty. It should be the guiding principle in all legislation and the principle should be based on an understanding that Community action should be taken only when it is necessary to achieve a specific objective. It is essential that subsidiarity remains a political principle which should influence all the legislative processes in the Community. The responsibility for the definition of subsidiarity should lie with legislators and not with judges.
The next item is the extension of qualified majority voting. It is agreed that that is necessary when a large number of decisions have to be implemented within a limited time. It is being used to complete the internal market. In the case of financial decisions such as the budget, the CAP and commercial policy, qualified majority voting has been used and agreed upon. However, we must guard against further extension of qualified majority voting in case it comes to be used purely to speed up decisions. It can often prevent true criticism being voiced and the resolution of differences between nations.
Qualified majority voting should not be used solely as a process for speeding up decisions where there are major differences within the Community. If used in that way it can disregard the democratic process. Although qualified majority voting has its place, it is essential that it is not extended in such a way as to remove the possibility of questioning and in some cases slowing down decision-making where that might be necessary to enable people and nations to think carefully about the next step towards closer unity.
I have listened to all the speeches that have been made—except for one when I disappeared for a few moments. As a dedicated European, but not so dedicated that I cannot see the pitfalls, I have been saddened by the number of speeches which were not in favour of the Community. There appeared to be a feeling in the House that we have got into this situation, we have agreed to certain things but we do not want to go any further. As a European I feel that if we went into Europe purely for economic advantage and for no other reason we should not have done so. I hope that the impression that I gained is not representative of this House.
7.54 p.m.
Lord Cledwyn of Penrhos: My Lords, the Select Committee on the European Communities has, under the chairmanship of my noble friend Lady Serota and her predecessors, produced many important reports since it was first established some years ago. Those reports are appreciated both in this country and abroad.
The report we are debating today is of truly critical significance because it deals with the development of the democratic process in the Community, with the powers of the European Parliament, the Council and the Commission and their relationship with national parliaments, including our own. It goes to the heart of the problem which many people in this country are discussing; namely, the extent to which the powers of our own Parliament will be affected if the proposals currently under discussion are passed and implemented.
This excellent report, for which we are much indebted to the noble and learned Lord, Lord Oliver, and the noble Lords who sat with him on the committee, recognises and analyses that in paragraph 12. It also helps us to clarify our minds about the structure and powers of the European Community at a crucial moment in its development. For that reason it is immensely valuable to all of us and especially to the Government.
In the impressive speeches we have heard in this debate—and I tend to agree with the noble Baroness that there was some lack of balance—noble Lords have dealt with the main issues in the report. My comments will therefore be brief, bearing in mind also the debate which is to follow.
The House will recall that we had a debate nearly 12 months ago, on 22nd November 1990, upon the report of the committee under the chairmanship of the noble Lord, Lord Aldington. At that time, as my noble friend Lord Stoddart has reminded us, Mrs. Thatcher had just resigned as Prime Minister and Mr. John Major had assumed the office. Noble Lords will recall that Mrs. Thatcher held and still holds very firm views on the amount of power which Britain should concede. I remember that she argued very strongly that monetary union in the form of a single currency would detract substantially from the sovereignty of this country. That caused a division in the Government at that time and a great deal of debate. It would be helpful if the noble Earl, Lord Caithness, would explain the Government's present attitude when he winds up the debate.
The report deals very sensibly with the issue of co-decision and concludes that the concept as between the Council of Ministers and the European Parliament is "inherently unsound". In referring to that issue the noble and learned Lord summarised the report cogently and clearly in his excellent speech. We are grateful to him for that.
The report argues that the concept contains a fundamental flaw because if the Council and the Parliament disagree on a text neither has the last word. There could thus be endless argument between them and that is clearly undesirable. We know what happens when this House and the other place are in
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disagreement. In the past that has had profound constitutional consequences. That must be avoided at all costs in the development of the European Parliament and the Council.
We—the Labour Party as a whole—think that there is a strong case for giving the European Parliament powers to initiate legislation and for it to have some form of co-decision with the Council. That would obviously need further thought but it is worthy of consideration and I should value the noble Earl's reaction.
Further, on the important question of subsidiarity, which has been mentioned in most speeches, we note that in paragraphs 90 to 92 the report favours including the principle in the preamble to the treaty only. Here again is a strong argument for at least stating the principle formally in the treaty with clear references to the areas in which it should apply. There is, of course, the question of finding a clear definition of subsidiarity, and I should appreciate the noble Earl's views. The report gives a good definition of subsidiarity and I shall be grateful if the noble Earl will tell us whether the Government accept that interpretation on that important point. Otherwise we could well find ourselves in very deep water, as the noble and learned Lord has indicated.
The area of which the House will wish to take special note is the possible extension of EC competence. That is dealt with on page 21 and in Articles 2 and 3 of the treaty on the union. That also deserves our very careful attention, as the noble and learned Lord suggested in his speech. We must understand that conferring important new tasks upon the Community would remove legislative power from this Parliament and others. The new tasks are listed in paragraph 58 of the report. Noble Lords will have noted that they are extensive and of central importance, including energy, the environment, consumer protection, economic and monetary union, and so on.
Noble Lords have referred to an area which needs to be handled very carefully, as the European environment commissioner's letter to the Secretary of State for Transport, Mr. Malcolm Rifkind, last week illustrates. Noble Lords have referred to that point. The commissioner alleged that Britain had violated an EC law requiring detailed environmental assessment of construction projects. A number of roads, including the Twyford Down scheme, are objected to as well as projects such as a soft drink manufacturing plant in Northampton.
Those matters must be clarified carefully not only in the interests of Parliament but in the interests of the people of this country. I am worried about those matters. We have noted the criticism in some quarters and I hope that the Minister will let us know the Government's views and what action they propose to take. I should also be grateful if he would tell us precisely how the procedures work. Do inspectors from Brussels investigate every project in detail, and are there discussions between them, the construction companies, local authorities and Government representatives which give an early indication that objections will follow?

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As the House knows, we on this side are not averse to amending existing co-operation procedures to include, for example, social matters, but we recognise the real difficulties that will inevitably arise when clashes occur between the actions of the British Government and the Commission. However, it must be said that Britain has a good record when it comes to observing European Community directives and laws including environmental directives. This cannot, regrettably, be said of other countries. The Commissioner, Signor di Meana, could have handled the matter rather more carefully against that background.
Perhaps I may now turn to the future framework of the treaty, bearing in mind that the implication of the draft political union treaty is that the member states remain independent and sovereign. This again is a sensitive area and is dealt with on pages 33 and 34 of the report. Any further moves towards the diminution of independence or sovereignty and towards federation would, as I understand it, require another treaty.
Much confusion, irritation and argument has arisen over the past few years because of a failure to agree upon the meaning of certain crucial words; for example, sovereignty and subsidiarity are two that I mentioned earlier. Federalism is another, as the noble Lord, Lord Boyd-Carpenter, said. The noble and learned Lord, Lord Oliver of Aylmerton, and his colleagues have been helpful in seeking to define those words, as in the case of federalism on page 9 of their report. As they say—this point is of interest—some countries in the Community would regard Britain as a federation if there was devolution to Scotland and Wales, whereas constitutionalists in this country would not go so far. Incidentally, we should ponder carefully the interesting and thoughtful remarks of the noble Lord, Lord Beloff, on federalism and the weaknesses of certain aspects of Community administration as he sees it at present.
Common foreign and defence policy is another area where clarity of definition is essential, as otherwise we may find ourselves at odds with France and Germany. All of us in this House agree that a policy of "Europe goes it alone regardless of NATO" is not acceptable. France can contemplate that without difficulty because France is not a member of NATO, but this country's long and close association with the United States makes it unthinkable that we could sever or wantonly damage that relationship. Let me put it plainly, as did the noble Lord, Lord Boyd-Carpenter: if it w, Tire not for the United States as our ally, there might well have been no democracy and no individual freedom in Europe or Asia during the past 45 years. I say that with the utmost respect to all our partners in the Community.
Of course, there have been profound changes in Europe and NATO must adapt to that, and Europe, for its part, must assume more responsibility for its own defences. However, uncertainties in the world make it essential that there should be a close relationship between the two, based properly on the Western European Union, and that there should be open and public debate on this matter. That has been lacking over the last two years or so.
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Finally, the report could not appear at a more convenient moment as the 12 European Community leaders prepare for the Maastricht summit. They have a huge task before them. The reaction to the Dutch draft treaty on political union showed that. I wish the Prime Minister well in his task and I hope that he will take this report, well-thumbed, with him to Maastricht. There is a change in Government attitudes. That is indeed necessary because it would be fatal if Britain became marginalised in relation to decision-making in Europe. On the other hand, the implications and complexity of the work that lies ahead calls for a measured approach and a willingness to listen to Parliament and to the people of this country. This valuable report assists us in that direction.
8.5 p.m.
The Minister of State, Foreign and Commonwealth Office (The Earl of Caithness): My Lords, this has been, as one would have expected of such a subject at such a time, a most stimulating debate. That is partly due to the range of views expressed and the cogency, clarity and commitment with which noble Lords on all sides of the House have made their case. But it is also due, despite the difficulties mentioned by my noble friend Lady Elles, to the quality of the report before us from the Select Committee on the European Communities. I too should like to thank the noble and learned Lord, Lord Oliver of Aylmerton, and the members of the Committee for the excellent work that they have done. I can assure the House that my right honourable friends the Prime Minister and the Secretary of State will read today's debate with care and interest.
This report on law-making procedures is only the latest in a series of valuable and informative documents produced by the Committee spanning the Community's development through the Single European Act and beyond. Their report on political union and economic and monetary union published in October last year was a particularly valuable and timely introduction to the negotiations then about to commence, even though the Government did not agree with all the report's conclusions.
This latest report comes at an equally critical moment and belies its limiting subtitle in the depth and scope of its analysis of the political union debate. It is a most valuable contribution to the debate, clearly argued and thankfully lacking in the emotive responses which have in the past tended to make discussion more rather than less difficult. I particularly welcome the clear exposition of the notions of sovereignty and federalism which preface the body of the report. I agree with my noble friend Lord Boyd-Carpenter that the word "federalism" is inappropriate in an international treaty. That point was echoed by a number of your Lordships. I only hope that such clear-minded, objective thinking will also inform debate elsewhere.
The range and depth of our debate today, and even more so of the negotiations between member states in the IGC, show that there is still a great deal to resolve and time to reflect before a treaty acceptable to all can

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be agreed at the Maastricht European Council in December. We want an agreement, and believe it is in Britain's and Europe's interests to achieve one; but not on any terms. No doubt some members states wish to move towards federation, as my noble friend Lord Harmar-Nicholls suggests, but I must tell my noble friend that the Community will march in step or not at all. The Prime Minister will simply not sign a treaty which he does not feel he can commend to Parliament. Our partners should have no illusions about that. Of course, we are negotiating constructively, but the detail matters.
There is a daunting agenda of substantial problems which we have yet to resolve. They include: powers of the European Parliament, both legislative and non-legislative; extensions of Community competence, whether extension of existing practice, or bringing substantial new policy areas within the treaty; whether or not to extend the use of qualified majority voting and, if so, in which areas; a major debate about the extent to which the Community should legislate on social policy; how to give effect to the principle of subsidiarity, which all agree should in principle apply to Community activity; how to make the Community institutions more effective and efficient, and to strengthen the rule of law; and, how to involve national parliaments more closely in the work of the Community—a substantial agenda in a short period of time.
The Committee's report, while focusing on the concept of co-decision and the law-making procedures of the Community, also offers views on all these difficult and contentious issues. Your Lordships have likewise raised these central points during the course of our debate, and I should like to respond to some of the questions asked.
The noble Lord, Lord Jay, referred to the existence of a democratic deficit in the Community. The committee's report rehearses succinctly the argument that legislation enacted as a result of a decision taken in the Council by qualified majority voting lacks democratic legitimacy, which should be restored by incorporating a greater role for the European Parliament into such decision-making. The noble Lord will be pleased to hear that we remain unconvinced by that argument.
The use of qualified majority voting in the council cannot blithely be equated with the loss of democratic legitimacy. National parliaments exert considerable influence on the debate leading to qualified majority voting decisions, and whatever the voting arrangements, decisions taken by representatives of 12 member states will inevitably involve compromises, great and small.
While on the point of qualified majority voting, I am reminded that the noble Lord, Lord Monson, spoke on what he considered the detrimental influence of other countries' views on the United Kingdom as a result of qualified majority voting. Yet he did not balance that with the influence of the United Kingdom on other countries. Perhaps the single market, which
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is of such benefit to us, is the best example of something which would not have been agreed without qualified majority voting.
My noble friend Lady Elles raised the special case of a supposed democratic deficit in trade matters under the treaty, Article 113. I cannot accept her view. As she will know, the Article 113 committee appointed by the Council of Ministers maintains a very close watch on progress in negotiating the international trade agreements to which she referred. As the noble Lord, Lord Jay, and the noble Baroness, Lady Robson, remarked, the democratic legitimacy of the Community rests on both the Council and the European Parliament, on the responsibility of members of the Council to national parliaments and on the directly elected representative character of the European Parliament. In our view, both those expressions should be reinforced and the links between them strengthened.
There is a tendency in discussing the role of the European Parliament to dwell exclusively on its powers to legislate. But, as we know, that is not the only role of the European Parliament or indeed of any other parliament. In the IGC we have suggested ways in which the European Parliament can play a greater role in scrutinising the activity of the Commission in two important areas. The noble Lord, Lord Bruce of Donington, will be pleased to know that ensuring financial probity is one of the areas in which we seek to strengthen the powers of Parliament to scrutinise the Commission. The other area which will commend itself to the noble and learned Lord, Lord Wilberforce, will be monitoring the way in which the Community's commitments are honoured throughout the member states—something that is lacking at the moment. Those are important tasks which the European Parliament could perform more effectively, although I listened with care to the case made by the noble and learned Lord for a separate compliance agency.
There are a number of other less headline-grabbing proposals for enhancing the European Parliament's role in the non-legislative sphere, which we can support. Taken together, those measures add up to a significant enhancement of the powers and responsibilities of the European Parliament. They are not powers for taking decisions or for making laws and may therefore disappoint European parliamentarians; but they are the meat and drink of parliamentary government, the checks and balances on policy makers and policy implementers which are at the heart of any democratic system. They are the foundation on which Westminster has been built.
Let me now turn to the legislative powers of the European Parliament, which are the focus of the committee's wide-ranging report and our debate today. In the heat of a complex negotiation which I hope is now nearing its conclusion, it is easy to lose the necessary sense of perspective. Let us be clear that, despite the strongly argued case of my noble friend Lord Beloff for the parliament being no more than a figment of our imagination, the European Parliament has developed gradually over the years to play an ever more important role in Community affairs.

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The Single European Act of 1987 substantially increased its role, notably in the legislative sphere, with the introduction of the co-operation procedure. We tend to agree with the feelings of the committee that the co-operation procedure itself is only now bedding down into the structure of the Community and we wonder whether we or the parliament are ready for a further step change in its legislative role so soon after the last one. In practice the parliament already has considerable influence over Community legislation in many fields.
The noble Lord, Lord Cledwyn of Penrhos, stated that his party's policy was to give the right to the European Parliament to introduce legislation. We do not go that far but we do not rule out some change in the arrangements for the European Parliament's involvement in legislation. However, we wish to avoid too great a shift in the institutional balance at a time when the Community needs to be strong, stable and ready to face the challenges elsewhere in Europe. We believe that that is a view shared by the committee. Indeed the committee concluded, as the noble and learned Lord, Lord Oliver of Aylmerton, reminded us earlier, that the concept of co-decision between the Council and the European Parliament is inherently unsound.
My noble friend Lady Elles endorsed the point made by the committee that instead of co-decision it favours extending the involvement of the European Parliament in Community law-making through further extension of the co-operation procedure. We recognise the force of that argument. The cooperaijon procedure was introduced under the Single European Act in association with qualified majority voting for measures designed to implement the single market. To extend the use of the co-operation procedure to other areas where qualified majority voting applies, on the face of things would be less of an upheaval in present procedures than the introduction of substantial new powers.
However, that is not a positive argument in its favour. There are large areas of decision-making by qualified majority voting where it would be impractical to employ the co-operation procedure. I think n particular of the many measures taken under the common agricultural policy where the involvement of the European Parliament would inevitably cause delay. Therefore we are not convinced that any significant areas exist in which it would be beneficial now to extend the co-operation procedure.
A number of noble Lords raised the matter of national parliamentary scrutiny. In the United Kingdom all Commission proposals are subjected to parliamentary scrutiny. That is true of a number of other member states, notably Denmark, but by no means all. While we do not suggest that all member states should adopt procedures identical to our own, we consider it desirable that national parliaments should be involved in the scrutiny of Commission proposals in all member states. Those who complain of a democratic deficit in the Community might usefully examine their own procedures and fill the gaps that in some cases exist closer to home.
In recent months we have heard much about the
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structure of any union. The noble and learned Lord, Lord Oliver of Aylmerton, spent some time on this matter earlier in our debate. This is not a theological discussion. It is a very real question about the extent of Community competence. The debate is between those who want all common activities of the 12 to come within a unitary structure, that is, under the Treaty of Rome, and those who wish to maintain distinct areas of co-operation outside the treaty. Some have likened the latter approach to the architecture of the temple with its separate pillars of co-operation holding up an overarching pediment: the European Council. Others see all co-operation falling under the Treaty of Rome: branches of the co-operation growing from the same trunk, if one likes. That would effectively make all co-operation between member states justifiable with a greater role for the European Court of Justice and the European Parliament.
That is unacceptable and I know that the noble Lord, Lord Stoddart of Swindon, will support us on that. It was the approach adopted in the recent Netherlands presidency draft text tabled in the IGC in September and subsequently withdrawn. We and others argued instead for an approach with some areas under the Treaty of Rome but maintaining common foreign and security policy and interior and justice co-operation outside the treaty and outside Community competence on an inter-governmental basis. That follows the Single European Act structure and maintains the diversity of forms of European co-operation. We do not agree that co-operation on an inter-governmental basis rather than under the Treaty of Rome is any the less European for that.
The Presidency's draft text of 18th June, on which basis negotiations are now proceeding, follows the pillared approach, which is good. But it also contains references in the sections on CFSP and interior/justice co-operation which link them to the Treaty of Rome. These blur the distinction we wish to maintain and, in our view, carry the danger of extending Community competence, Community rules and ECJ jurisdiction into these areas, in spite of our desire to exclude them. That desire is reflected in the conclusions of the Luxembourg European Council which agreed that there should be,
"procedures appropriate to the requirements of the various spheres of action".
We wish to see those procedures kept distinct.
The key underlying issue—and I stress that—is one of Community competence. It is that which we have to get right, among other issues, if the Government are going to be able to commend a final treaty to the House.
I mentioned two areas which we wish to maintain on an inter-governmental basis. One is the nexus of interior and justice matters with cross-border implications which need to be tackled at the European Council: immigration, asylum, police co-operation and combating international crime and the drugs trade. These are areas where clearly a greater degree of co-operation across Europe would be helpful. We want that as much as others do. But to attempt to

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squeeze that co-operation too into the Community competence would not in our view be acceptable at this stage of the Community's development.
I would advance similar arguments with regard to the policies of our European partners in the foreign policy and security fields. Like the committee and like a number of noble Lords, we find difficulty with the concept of a CFSP within Community competence. We want a stronger CFSP and have made proposals to bring that about. However—and the noble Lord, Lord Bruce of Donington, can be reassured—we will not accept a CFSP which falls within Community competence. Foreign policy must remain a subject for inter-governmental co-operation. We see no argument for extending the role of the Commission or the European Parliament in this field. Nor should the European Court of Justice have jurisdiction in the CFSP.
It is clearly right that we should make Europe a greater force in world affairs for the promotion of the values that we share together with our partners. It would be wrong if the effect of the procedures and obligations we devise is to slow down our decision making and create disunity among us. That is why in the debate on the CFSP we have consistently made the case for retaining consensus as the basis for decision making. Most recently it has proved its worth in our common approach to events in the Soviet Union and Yugoslavia. Introducing mechanisms such as majority voting would weaken, rather than strengthen, Europe's voice. Where a common will exists, so will a common policy. There is no substitute for that.
The noble Lord, Lord Cledwyn of Penrhos asked specifically about the question of subsidiarity. If—and indeed it is a big "if"—a satisfactory definition can be obtained, it should be in the treaty text itself. We like the definition in the report. We have to get others to agree to that too.
The noble Lord, Lord Bruce of Donington, specifically asked about the question of economic and monetary union. I can reaffirm to him, as I have done before when wearing a different hat, that the IGC is not negotiating on whether the Community should adopt a single currency now. Any decision will be a long way down that road. Our participation in the negotiations has been and will continue to be constructive. We have put forward our own ideas and views throughout in order to help ensure that whatever emerges is workable. But we have made it clear that the United Kingdom cannot accept a treaty which binds us to move to a single currency without a separate decision by the United Kingdom Parliament and the Government.
My noble friend Lord Boyd-Carpenter first raised the question of Commissioner Ripa de Meana's Article 169 letter, as did other noble Lords. I know the commissioner well from my time as a Minister with responsibility for the environment. I emphasised to him then as I emphasise to him today that the UK is second to none in the thoroughness with which we consider the effects of major projects. We wholly reject the Commission's implication that the United
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Kingdom is failing to consider environmental matters. Indeed my right honourable friend the Prime Minister today said that it was an astonishing intervention.
The noble Lord, Lord Stoddart of Swindon, raised the question of a referendum before Parliament made up its mind on the matters of the IGC. We do not think that a referendum is either necessary or appropriate. As the noble Lord will recall, the 1975 referendum on Europe was a political expedient by the then Labour Government. It is not a precedent that we find attractive. Any treaty on European union which may be agreed at Maastricht will indeed cover a host of issues rather than a single issue. That is a major factor to be borne in mind. In that case it is surely the job of Parliament to weigh those matters and to decide.
Those are the views which inform our settled policy. The Community is not, and cannot be, a static organisation. Its very nature as a uniquely close alliance between 12 member states means that the Community must be a flexible and adaptable association if it is to flourish in a changing world. The prospect of further enlargement will place additional strain on the Community's ability to adapt. In reply to the noble Lord, Lord Jay, we wholeheartedly support such enlargement of the Community to include other states which wish to join, which meet the economic and political criteria, and which can take on all the responsibility of EC membership. Adapt and develop the Community must, and the outcome of the IGC in December will mark an important new stage in that development. However, I agree with the noble and learned Lord, Lord Oliver of Aylmerton, and the committee that we must beware that the Community's reach does not exceed its grasp. Nobody will thank us for devising and erecting a shining new Community machine only to discover afterwards that the machinery simply does not work. Our vision, as I have described, must be tempered with pragmatism.
Some will argue that our views make us appear reluctant to change. Some would even say that it makes us reluctant Europeans. They are wrong, my Lords. That is not the case. We are deeply committed to British membership of the Community and will work, as we have done in the past, to ensure that the Community brings benefits to all. We do not think that those benefits will derive from realising a federal vision, from filling an imaginary democratic deficit, or from pandering to selective interest groups in individual member states.
What will help is that the Community emerges from this latest round of internal examination more efficient and more effective in what it does, and with the Twelve wholeheartedly committed both to widening and deepening their range of co-operation in practical ways that will benefit all Europeans.
8.28 p.m.
Lord Oliver of Aylmerton: My Lords, in replying to this interesting and instructive debate I first thank noble Lords not only for taking part in it but for their kindness in the compliments that they paid to Sub-Committee E, which are deserved, and to me personally, which are not. I am sure that the noble

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Lord, Lord Bruce of Donington, will have demonstrated to the House that the committee is not composed 100 per cent. of those devoted slavishly to the institutions of the Community.
I am grateful, as will be the committee, to those noble Lords who have spoken not only for their interesting and in some cases controversial views but for demonstrating in the most practical and convincing manner that the report has succeeded in contributing to the debate by stimulating discussion. That it has done so successfully is due not primarily to the efforts of the committee or its chairman but, as the noble Baronesses, Lady Elles and Lady Robson, so rightly said, to the untiring efforts and constant guidance and hard work of our legal adviser and staff. They produced the first draft at very short notice and guided our wandering footsteps—sometimes wandering in different directions—throughout.
I do not wish to take up time by traversing ground that has already been gone over. Nor would it be appropriate for me to expand upon the reasons for the conclusions in the report. The report stands on its own base, warts and all. In this debate it has provided an opportunity for second, and sometimes perhaps better, thoughts, as in the case of my noble and learned friend Lord Wilberforce in relation to the status of the principle of subsidiarity in the treaty.
I hope that I shall not be considered to be discourteous if I do not reply to all the issues raised. However, out of courtesy I must refer to three specific points made by the noble Lord, Lord Boyd-Carpenter, for whose remarks I am grateful. He referred to the word "federal" in paragraph 130. I agree with his comments. The danger of using such language might be that it is thought to create a commitment. The United Kingdom should not be criticised as being a dinosaur if it regarded that with suspicion. I also agree with the noble Lord's comments on paragraph 134. The Select Committee was conscious of the danger of a creeping transfer of power from the states to the Community. There are two ways in which that can be combatted—the first by definition and the second by uncertainty. The committee considered that that definition was the better way.
The noble Lord asked for an assurance that the committee would look into the action of the European Commissioner in writing to challenge on environmental grounds the proposals relating to rail and road systems. My days as chairman of Sub-Committee E are strictly numbered and I can give no assurance. However, I can assure the noble Lord that at present Sub-Committee F is inquiring into the implementation of environmental measures. It began last week with evidence from the head of the directorate.
I note the points raised by the noble Lord, Lord Stoddart of Swindon, but mention only two. First, united union citizenship is no more than a label. It does not detract from national citizenship but it confers certain privileges as set out on page 42 of the report. Secondly, the noble Lord mentioned the suggested power of the European Court to impose financial penalties. I follow what he said but I do not believe that the committee envisaged the departure of
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the members of the offending government to some European gaol. The plain fact is that the unevenness of the implementation of measures by different member states within the Community creates problems. That can and does lead to unfairness in trading conditions between member states. I am the first to accept the fact that there may be more than one way to counteract such problems, including the suggestion made by the noble and learned Lord, Lord Wilberforce, of the establishment of an enforcement agency. It is clear that something must be done to counter deliberate and continued breaches of the obligations of the treaty.
In answer to the noble Lord, Lord HarmarNicholls, I say that the unusual aspect is not that the general nature of international proposals should be made the subject matter of debate but that there should be submitted to parliamentary and public scrutiny the actual text of the treaty under discussion.
I have taken up enough of your Lordships' time. I conclude by expressing my satisfaction and that of the Select Committee that the report has prompted the expression of so many stimulating views. If it had done no more it would have succeeded in its purpose. I ask the House not necessarily to accept it, not necessarily to agree with it but, as the Motion asks, to take note of it.
On Question, Motion agreed to.

Food Protection (Emergency Prohibitions) (Paralytic Shellfish Poisoning) (No. 12) Order 1991
8.34 p.m.
The Parliamentary Under-Secretary of State, Scottish Office (Lord Strathclyde)The Parliamentary Under-Secretary of State, Scottish Office (Lord Strathclyde) rose to move, That the order laid before the House on 13th September be approved [28th Report from the Joint Committee].
The noble Lord said: My Lords, the No. 12 order before the House today bans fishing for velvet and green crabs in areas of water around the Orkney Islands. The decision to make this order was based on test results from our PSP monitoring regime which were over the 400 unit, internationally agreed, action level. Our aim in making the ban is to ensure effective protection of the public from PSP toxin with the minimum disruption of the shellfish market. I should like to assure your Lordships that the order will remain in force only for as long as is necessary and no longer. As with previous orders, it will be revoked as soon as the results of continued sampling indicate that the toxin has subsided to a safe level. I beg to move.
Moved, That the order laid before the House on 13th September be approved [28th Report from the Joint Committee] —(Lord Strathclyde.)
Lord Carmichael of Kelvingrove: My Lords, I am grateful to the Minister for his remarks and for his explanatory notes on the order. This is the third order that has been made recently on the subject and I shall refer to what I said in earlier discussions. I wish to make two points. The first relates to the commercial gathering of the shellfish. One assumes that

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commercial traders will be aware of the borders and will be conscious of the fact that they must not damage their businesses by stupidly trying to gather the shellfish under such conditions. However, I am more anxious about causal visitors who may pick up such shellfish. I should like to be reassured that notices and posters will be displayed widely in the area. Perhaps it may be possible to display maps in, say, local post offices. The casual visitors to the Orkneys who go down to the shore and see the wonderful expanse of water will think that because it is so clean it is bound to be all right. They do not know the meaning of latitude 59 degrees 25 minutes north and longitude 3 degrees 33 minutes west. Therefore, it will be helpful if a rough map can be displayed in addition to signposting.
I was pleased to hear the Minister say that there will be no delay in revoking the order when the area is declared to be clear after suitable tests and sampling. Is the situation helped by the onset of winter. It may appear to a layman that the problem is more likely to arise during the summer. Can the Minister say whether it is unusual to see such prevalent diseases during the winter? If he cannot answer today I shall be grateful if he will write to me.
Lord Strathclyde: My Lords, the noble Lord, Lord Carmichael of Kelvingrove, raised a number of important points. Perhaps I may deal first with commercial fishermen. When an order is made they are told immediately by the fishery protection officers and advisers from my department, the Department of Fisheries in Scotland. Maps are issued with the original order showing a brief outline of the area. In order to stop the casual beach walker who might be interested in eating a velvet crab or bivalve mollusc, warning posts are displayed on the beaches ensuring that such people understand the risks involved. In addition, warnings are broadcast on local radio stations and appear in local newspapers and the national press. The noble Lord will be pleased to hear that we have no indication of trouble being caused to the casual eater of an infected bivalve mollusc or crab.
The noble Lord also asked about the seasonal aspect of the problem. We understand that the toxin begins to grow in the spring when it goes through the bivalve molluscs. It goes down to the velvet and green crabs towards the end of the year. As we are nearing the end of October we believe that the problem will cease to exist during the coming weeks.
Lord Williams of Elvel: My Lords, before the noble Lord sits down, perhaps I may ask him this question. Does the notice specifically refer to the bivalve crab?
Lord Strathclyde: My Lords, the notice specifically refers to the creature which it affects. If it is bivalve molluscs, those are laid out in terms of mussels, cockles, scallops, queens and so on. If it is just crabs, then just crabs are mentioned.
On Question, Motion agreed to.

Hallmarking
8.40 p.m.
Baroness Gardner of Parkes Baroness Gardner of Parkes rose to ask Her Majesty's Government what action they are taking to ensure that the high standards of the British hallmarking system will be maintained after 1992.
The noble Baroness said: My Lords, I am pleased to have the opportunity of raising this matter this evening. I wish to thank those noble Lords who have put down their names to speak in the debate. I know that they all have great knowledge of the subject and I am grateful to them.
A hallmark is defined in the dictionary as a mark used at Goldsmith's Hall and by UK assay offices for marking the standard of gold, silver and platinum. To most of your Lordships hallmarks will be so familiar that no further explanation is necessary. However, many people do not know exactly what a hallmark is, and what its value is. For that reason, I shall briefly describe how it comes to appear on, for example, a silver trophy. Be it a school cup, an award for the local flower show or the prize trophy for a horseracing classic, it goes through the same process of independent assessment. The cup is made and submitted to the assay office for testing. The definition in the dictionary for assay is, "trial of metal or ore for quality". A scraping of the metal is taken and submitted to chemical analysis. Although technological progress continues to improve the system, hallmarking has been in existence for nearly 700 years. Methods of assaying have stood the test of time.
For the mark to be placed on, for example, a silver cup, that cup must be proven by assay to be of the required standard. The marks identify the metal used —for example, the lion for sterling silver—the manufacturer by his mark, the assay office and an initial to indicate the year of the mark. Each assay office has its own mark: the London leopard; the Birmingham anchor; the Sheffield rose; and the castle of Edinburgh. Hallmarks are fascinating in themselves because they give an accurate record of the age of any piece and add special value to antique silver.
Most importantly, they protect the purchaser and ensure that the purchaser is purchasing the quality of metal for which he is paying. Hallmarking is probably the oldest form of consumer protection. It is impossible to tell from appearance what proportion there is of a precious metal in any article. Assaying is an accurate process. Hallmarking is visible confirmation of the standard. That means that the consumer has a sound basis for choice and confidence that value for money is being obtained.
The British hallmarking system is recognised and held in high esteem throughout the world. The usual standard for British silver is sterling; that is, 925 parts of silver per 1,000. Sterling is the name universally used for that grade of silver. On the Continent, 800 parts of silver per 1,000 is more usual.
Assay officers in Britain deal with about 20 million articles per year. If a gold piece is submitted claiming to be 18 carat but fails to meet the required standard, it would be stamped 14 carat, the next step down the

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scale. If it is claimed to be nine carat, that is the lowest gold standard. A failed nine carat article cannot be downgraded and is usually returned to the maker. Powers exist to destroy such a defective article but those powers are hardly ever used. The piece may still be sold in the United Kingdom but not as gold. That is the important point for the consumer. If it is not marked, then it is not gold or silver by UK standards. There are some rare antique exceptions.
A league table is published by the Hallmarking Council. In 1990 Italy was top of the league with the highest number of items rejected—18,196. Items were either rejected or marked at a lower standard. Thailand follows with a figure of 2,883; and then follow Hong Kong, the United States and Israel in that order. Although the Italian number seems high, the percentage of rejections scarcely differs from the others named, as Italy produces so much more. All manufacturers are having about 1 per cent. rejected.
Let us stop a moment to think. Those items are failing to reach a standard now at a time when the makers and importers know that standards must be met. What would it be like if everyone knew that standards were unimportant? It would be possible to call anything gold and get away with it.
Outside Knightsbridge tube station today—and I regularly see this sharp practice—salesmen are selling a "real" gold, as they call it, pair of earrings, bracelet and necklace, all for £10. Of course that is illegal trading and anyone who buys those items believing them to be real gold is foolish. There are always many customers. By the time the thin piece of gold plate wears through to show the base metal underneath and the metal goes green against one's skin, there is no hope of any comeback. However, at least the financial loss is not great.
On a "Watchdog" programme on television recently a woman had paid £200 in Greece for a gold chain which was stamped 14-carat gold. It was found to be a thin piece of gold plate on a base metal. When the matter was looked into further it was found that that was one of many chains, and an £800,000 fraud was involved.
Instead of losing merely £10, how much worse is it if the buyer has paid a high price from what appears to be a reputable shop? The shop obtains its stock from a dishonest maker or importer which the shop had trusted to provide the genuine article. By the time the customer discovers the defective quality and has returned to the shop, the supplier of the goods may have made his pile and vanished.
An independent assay office with hallmarking prior to sale gives assurance to both retailer and customer. Recently Sweden has introduced a two-tier system with some articles being marked and some not. There has been quite a rise in the number of offences under trading standards law.
The situation of hallmarking in terms of the European Commission is far from clear. Is it the Commission's intention to issue a directive on the marking of precious metal? I hope that Her Majesty's Government will press it to do so in order to protect our consumers.
There are international standards. The International Standards Organisation—ISO—has a standard No. ISO 9202 which is recognised world wide as a standard for precious metal alloys. Those ISO 9202 standards would be acceptable to the UK if taken as a CEN norm. CEN is Le Comité Européen de Normalisation. That is important because initials are always so confusing.
ISO standard No. 9202 covers a range of grades including 800 and 835 silver which at present is not recognised in this country. The United Kingdom would need to recognise those as silver but there would be a mark to show the content. Therefore, it would be quite clear that sterling is 925 or has the lion mark but the 800 silver would be marked 800.
I point out that the ISO standard not only confirms the level of precious metal but plays a valuable protective role in that the inclusion in an alloy of noxious metals is not permitted. That can, particularly in the case of jewellery, produce an adverse reaction on the wearer.
I understand that in Germany a White Paper has been produced prior to consideration of a new law of compulsory hallmarking. Six EC countries already practise compulsory hallmarking the UK, France, Netherlands, Ireland, Portugal and Spain. Voluntary hallmarking exists in Belgium and Denmark. Not all of those countries use the same standards of metal, and that is where the ISO 9202 would be important as being universally acceptable.
The second essential is to establish recognised laboratory standards for testing. The UK system of an independent assay office is long established and reliable. On the Continent some manufacturers may be large enough to have their own laboratories capable of carrying out tests. They would need to be large and successful firms as extensive scientific facilities are required. However, it is necessary also that there should be an independent check on such laboratories. It is essential to avoid any system which would allow some "fly-by-night" maker or importer to stamp goods to suit themselves and then sell such goods as genuine.
Standards EN 29000, BS 5750 and ISO 9000 all exist and are all equivalents one of the other. They could cover the organisations undertaking the testing. The figures relate to the procedures for assessing the efficiency and effectiveness of the testing laboratories.
As your Lordships will be aware, I have had a long-standing interest in consumer affairs and I piloted a small Bill through the House. I was therefore pleased to see that the Consumers' Association carried out a survey in 1990 in which 59 per cent. of those questioned considered the UK hallmarking system to be "very important". The Consumer Associations' considered opinion is:
"the most stringent requirements should be applied to precious metals, not least because they are products where consumers are generally unable to judge for themselves the quality and value of the goods they are seeking to purchase. Moreover, any variance in fineness from the stamp or mark will significantly affect the value of the product".
Article 100a obliges the Commission to incorporate a high level of protection into any proposal that it tables on consumer protection issues. That would

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logically seem to rule out any undermining of an effective system of consumer protection which is well established in half of the Community's member states. Protection is needed particularly in this field as consumers are not in a position to judge the quality of articles of precious metal. Special techniques are necessary to assay and consumers would be vulnerable to spurious claims of quality.
The British hallmarking system has worked well for almost 700 years. Quality is guaranteed as marked. I ask Her Majesty's Government to press the Commission to introduce a directive on the marking of precious metals based on the criteria of the UK's hallmarking system under three headings. First, all articles of precious metal should be presented for random testing to an independent EC accredited laboratory. Secondly, they should be presented prior to placement on the market. Thirdly, the articles should be stamped by the independent testing laboratory. The mark should attest to fineness, identify the manufacturer, the laboratory and the year and be recognisable throughout the Community.
8.55 p.m.
Baroness Fisher of Rednal: My Lords, I thank the noble Baroness, Lady Parkes, for introducing the debate this evening and for the competent way in which she presented the case. I declare an interest, though not a financial one. I was a warden of the Birmingham Assay Office for over 10 years and I sit on the hallmarking council.
Perhaps I can start in the same way as did the noble Baroness. Seven hundred years ago it was recognised in this country that consumers needed protection with regard to the silver and gold being manufactured at that time. Bearing in mind that in those days silver and gold were a form of currency, it was important that the currency was of the value of the precious metals contained in it. Therefore the first consumer Act placed on the statute book in the UK was a consumer protection Act connected with hallmarking.
The debate today asks Her Majesty's Government to defend our long-held precious metal safeguards. As the noble Baroness said, hallmarking in the UK is performed by the four assay offices which she mentioned. It is important to remember that the prime purpose of the Act and of the assay offices is the protection of the consumer, although coincidentally it protects members of the trade from unscrupulous competition.
The Act uses the assay office but it also uses the trading standards officers. Those officers are the enforcers of the Act and their's is a wide role. Last year 3,178 infringements of the legislation were detected and 548 instances of formal caution were issued to traders. One of the main problems is the traders that commit a technical offence by not displaying to the general public in the places where they are selling items of precious metals, the statutory notice. It should be displayed for the customers to inspect so that they can look at the hallmark. It is a
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large notice and should be easily available for all customers. In addition to those infringements three persons were imprisoned for failing to honour the Act.
All that protection for the consumer may change and the whole system is under threat due to the difficulties experienced by the Commission. It is true that the Commissioner, Herr Bangaman, is perhaps not very sympathetic to the idea of hallmarking. Hallmarking is independent testing of precious metals to decide the metal fineness. Therefore it gives a guarantee of quality. No doubt the noble Lord, Lord Cockfield, when he was Commissioner, was rather more sympathetic to the idea of hallmarking of precious metals. He asked the relevant service to study the matter and to make recommendations for a common policy on the free circulation of precious metal articles. That reported at least two years ago and the suggestions included the proposal that precious metal articles being placed on the EC market after 1992 should carry identification for metal fineness and the makers' or importers' marks.
Further, there was the Progress Report on completing the Internal Market issued by DG III in November 1988. That put greater emphasis on the consumer. Paragraph 64 states:
"Consumer protection provides an example of a policy area which will take on an enhanced importance in the completed internal market. Consumers will need to be reassured that their interests are properly represented".
That is what hallmarking is all about—the proper safeguarding of the consumer.
As I said, an international convention with seven members is already operating. The convention was originally part of EFTA. When the convention met it was in Vienna and the Vienna Convention is open to all member countries of the United Nations which agree to use agreed common standards to determine whether or not a quality guarantee mark should be applied. So it is not a difficult process to make quite sure that the customer, the purchaser, gets value for money.
As the noble Baroness said, it is impossible for lay persons to be able to test whether they have bought an item which is nine carat or 22 carat. One cannot bite and spit out such products because that is horrible. They are not products that are worn for two days and then fall in rags around you; though they can go green on the skin, as the noble Baroness said.
It is crucial that any proposals which the trade, consumers, manufacturers or the trading standards officers put forward to the Government regarding hallmarking, because they feel that deregulation will be damaging, should command the support of the Department of Trade and Industry. Its Ministers should argue the UK case more forcefully at the European Commission. There is no barrier to trade, as we often hear from those people who are not thinking of hallmarking.
The greatest number of wares that come into this country and are marked to start with but which are sent to assay offices are the chains from Italy. These are the attractive chains that one sees around the necks and wrists of young girls. Unfortunately I only have one. But one sees girls on the tube with as many as four or five chains jingling away. That is terribly

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worrying as the chains may be stolen. Most of those chains come from Italy and the importer automatically sends them for halimarking. I see thousands of them going through the Birmingham assay office so it is no barrier to trade. They still keep sending them in because traders know they can sell them once they are hallmarked.
In the United Kingdom around 30,000 people are employed in an estimated £2 billion retail trade in jewellery and around 13,000 people on the £16 million manufacturing side. On the manufacturing side, a number are small businesses. When I was a member of the other place, in my constituency in Birmingham was an area known as the jewellery district. It was in the very centre of the city. If when visiting Birmingham and the international convention centre you take a walk along the canal—an area which has been made very pleasant—you will come to the jewellery district. The district is now becoming a real tourist attraction as visitors can see manufacturers at work and the many shops and exhibitions in the area.
I feel I have to speak very strongly about this because I am a Brummie and I do not want us to lose what is a vital part of industry in the city of Birmingham and one of which we are very proud. It was Matthew Bolton who made Birmingham an area for silver when he began his silver-smithing. He appealed to the House of Lords for an assay office to be built in Birmingham because many of his wares which were travelling from Birmingham to Sheffield to be hallmarked were often either stolen for the silver content or stolen for the patterns, because his patterns were very fine.
Those people working in the jewellery district in Birmingham and in similar places throughout the country, and those who work in assay offices, make as great a contribution to the community as anyone else. We must fight for the retention of the industry. I am not saying that the British system, or the United Kingdom system, should be introduced throughout Europe. However, a compulsory system which is independent of the manufacturer is necessary. That is the important point. It requires a strategic approach to ensure that the level playing field is achieved in the interests of the consumer, consumer protection and fair competition for business. While harmonisation could be described as desirable the fear of the lowest common denominator is a very real possibility in this case.
I hope that having listened to this debate the Minister will express the Government's sincere support for the continuation of hallmarking. I finish as I began by saying that the value of compulsory hallmarking rests overwhelmingly on its function as a safeguard for the interests of the consumer. To destroy 700 years of unbroken consumer protection which compulsory hallmarking has provided is not, in my view, the answer to European unification.
9.7 p.m.
Lord Broadbridge: My Lords, in view of the complete disarray within Europe on hallmarking, this debate is timely and I thank the noble Baroness, Lady Gardner of Parkes, for introducing it. I declare an
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interest in that I am a Liveryman of the Goldsmiths Company which runs the London Assay Office, I am an amateur silversmith with my own hallmark and a collector of early English spoons.
Hallmarking has been with us in this country since 1300 when a statute passed by Edward I required that all silver articles were to be of the sterling standard, the same as the coinage, but also that they were to be assayed by the Wardens of the Goldsmiths Guild, as it then was, and marked with a leopard's head before they left the hands of the workers. Furthermore, gold articles were to be 191/5 carats. That was 691 years ago, and halimarking has continued here ever since.
As a general principle it is with some trepidation that hallowed practices should be abandoned and then surely only if they do not meet present requirements. The primary purpose of hallmarking, as we have already heard, is to protect the public. Surely the present is the very age of consumer protection, a time when labelling is every day becoming more and more informative. How perverse it would therefore be to abandon a 691 year-old practice which does just that.
Not only does it protect the public but it serves the interest of the trade since it creates a favourable image and shields the genuine manufacturer from unfair practice by less scrupulous competitors, for a hallmark is a complete fingerprint. In 1300, the place of assay mark was first made, in that case the leopard's head for London. Today we also have the anchor for Birmingham, the rose for Sheffield and the castle for Edinburgh. In 1363 makers were ordered to stamp their own distinguishing mark alongside the leopard's head. In 1478, a date letter, changed annually, was added. Finally, in 1544, a lion passant—rampant for Edinburgh—was added. Thus, in that year, 447 years ago, the four distinctive marks of the fingerprint were in place: town, maker, standard of metal and date.
I believe that there are two aspects and issues to be fought for in the continued marking of precious metals: first, what the marks are; and, secondly, who puts them on. To my mind our present system in this country is ideal. It lacks nothing and nothing could reasonably be added that would be beneficial. But a number of European countries do not mark precious metals nearly so informatively. I would argue to the Government, who I believe are sympathetic, that anything less than our present full set of four marks would be to the detriment of the protection of the public and the trade. It is one of those curious accidents of fate that a system set up as long ago as medieval times is nonetheless ideally suited to the modern requirement that a manufactured article should clearly state what it is made of, who made it and where and when. Anything less is partial and for practical purposes ranges between the flawed and the totally inadequate. I urge Her Majesty's Government to strive to continue what I have called the complete fingerprint which has historically been and continues to be the glory of English silver and gold and, more recently, platinum.
Secondly, my other concern is with who does the hallmarking. The alternatives are by an independent authority, as in this country with our four assay offices, or by the manufacturer. It is to me the

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regrettable practice in a number of EC countries that the maker also does the marking. Human nature does not change much with time, and very large sums of money are involved here. This is endorsed by the fact that today, under the Hallmarking Act, counterfeiting or transposing a mark carries a maximum penalty of 10 years' imprisonment. The penalty for infringement of the laws of halimarking has always been severe. At one period in the 18th century the death penalty could be invoked for forgery, although the pillory, with the severing of ears, was more common. That was the fate of silversmiths John Moore and Robert Thomas in the reign of the first Elizabeth. My point is that if makers have been prepared to take the risk in the past, surely in an unregulated market they will do so now in view of the financial gain involved. The noble Baroness, Lady Gardner, has already told us about Italian imports. It is independent halimarking which has found them out in the past, so what of a future without it?
Marking one's own production is to be an unregulated market in this rather special field. For example, if one of your Lordships buys a fairly heavy signet ring for £200 in the belief that it is 18 carat gold and it is in fact only 9 carat, then he has only half the gold he has expected. He has been swindled out of approximately £100 and an unscrupulous maker has pocketed that sum. But how many of us, by simple inspection, could tell 18 carat from 9 carat?
However, there are watchdogs, as some of your Lordships may feel. Yes, indeed, but first the London Assay Office alone handles some 50,000 items a day; and, secondly, such other consumer watchdogs as there are are hardly geared to the examination of precious metals, an extremely exacting art developed over centuries. For example, the laboratories of the Consumers' Association may be well equipped to investigate a tin of baked beans or the fireproofness of a sofa, but are they really likely to be prepared to equip themselves with furnaces and crucibles and, more important, the great skill needed to use them effectively? I am sure that they are not, and I mean no disrespect to them.
I deprecate maker-marking because I believe that in a real world some people are always prepared to take risks to make money at the expense of the public where large sums are involved and members of the public are unable to judge the quality of what they are being offered. That is the observed position throughout history, and surely present day o City financial pages almost daily attest to the fact that human weakness continues.
In conclusion, therefore, I also urge Her Majesty's Government to maintain our present practice of independent assay offices testing the quality of precious metals to be offered for sale rather than trusting makers to do it themselves. The latter is to offer temptation to the unscrupulous, and offering temptation is bad law. Broadly in life we hope that we get what we deserve, and unregulated marking is a recipe for temptation and swindle, albeit by the few; but a few is a few too many. We have an excellent and well-tried regulatory system. Let us stick to it.
9.15 p.m.
Lord Mulley: My Lords, I share the views of previous speakers in thanking the noble Baroness, Lady Gardner of Parkes, for raising this issue tonight. As 1992 draws nearer and the prospect of a free market in these matters is likely to come about, I believe that it is important for us to understand the issues at stake. I do not think that there is any great danger in our having to abandon our hallmarking system. Those who are battling for that have really not understood the dangers and disadvantages which we are likely to face.
Of course I fully support our system and if it could be the same in all member countries of the EC that would be perfection. Moreover, if there were an equivalent system in the other countries that would also be satisfactory. However, all the signs are pointing the other way. That is the nature of the problem. The noble Baroness told us about the countries in the EC which have similar systems to our own. She mentioned two of them which had adopted them voluntarily. However, she did not mention the four which do not have any system of independent classification or hallmarking; namely, Germany, Italy, Greece and Luxemburg. Germany and Italy in particular are substantial manufacturers of precious metals. As things stand, if we are obliged under Article 30 of the treaty to permit such items to come into the country unrestricted, the Italian necklaces to which my noble friend Lady Fisher referred would not need to be hallmarked; they could be sold as silver without that protection. Indeed, who is to say what the standard of the gold or the silver in them would be? That is the nature of the problem.
I understand that the Commissioner, Martin Bangemann, announced to the International Confederation of Jewellery, Silverware, Diamonds, Pearls and Stones in November 1990 that the Commission would not be advancing a proposal for a directive on articles of precious metals. The reason was that the Commission thought it fit to have such a directive only if there was a question regarding the safety or health of consumers. Otherwise, it was to be left to the market and to the old doctrine of caveat emptor. But, as the noble Baroness, Lady Gardner, pointed out, it is a difficult, if not impossible, matter for the ordinary customer to decide. Indeed, I think that many of the experts in the trade would be hard put to identify precisely on sight whether the amount of gold in an article was 800 or 925, which is the standard required. Under Article 30 of the treaty we would be required, without the establishment of minimum criteria, to allow the free passage of such items.
Our French friends, always ready and vigilant to maintain the interests of their people, have already refused to accept German goods on the ground that there is an inferior consumer protection system there. The Commission has taken the French Government to the European Court of Justice because they are not prepared to allow unregulated, unmarked goods into their country. The result of the crazy system that exists is that that decision is not likely to be known for at least two years. The whole question is difficult.

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As the noble Baroness said, as well as the fineness and quality of such articles, one of their characteristics is that they are readily transportable across frontiers. The hallmarks can be sent by post and put on in a third country. The goods do not need to be physically present in that first country. They can be shipped to another country and sold as German or Italian goods and so forth.
I compliment the Consumers' Association, which has been active on this matter. I am sure that the Minister will be able to answer many of my questions because I understand that on 29th May this year the Department of Trade was sent a copy of the letter that I have which raised all these points. The DG III (the direct orate concerned) has apparently said in discussion with the European Bureau of Consumer Unions that there could be some rethinking. That was way back in May. Will the Minister tell us what has been the outcome of that rethinking? Will he give us an assurance that our people in Brussels, especially the DTI man there, are keeping a close eye on what is going on in DG III and are reporting regularly on what in going on in that department? There is nothing to show that it is prepared to move. The Consumers' Association has, as the noble Baroness, Lady Gardner, said, made clear the three points which it finds the minimum acceptable. Even that will mean a complete revolution in our hallmarking system.
The Government must tell the Commission that the hallmarking system is good—something with which we all agree—and that it is what we want. There is no sign at the moment that we shall succeed. We want to know what the Government are doing in that direction. A German manufacturer went to the Dutch courts and argued that their system was a contravention of the Treaty of Rome. He received a dusty answer. When the Minister's colleague answered Questions on this subject in the summer he informed us that there was a case before the courts in this country. Will the Minister tell us whether it is continuing? I hope that the DTI will stir itself on this case, unlike many others, and keep an eye on what is happening, and that the Minister will keep the House informed.
This is a matter that is being dealt with by the Commission behind closed doors. It is not a matter that goes to the Council of Ministers. I do not believe that the European Parliament—active as it is, especially in respect of overseas visits—has concerned itself much with this issue which is of importance to consumers and the trade. I hope we can receive a positive answer tonight from the Government. To say that hallmarking is splendid is not good enough. We wish to know what they are doing to make sure that when the free market comes other people will not use Artick, 30 to put us all at a grave disadvantage.
9.25 p.m.
Lord Williams of Elvel: My Lords, the House will be grateful to the noble Baroness, Lady Gardner of Parkes, for raising this important Question. We on these Benches have little to add to what my noble
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friend Lady Fisher of Rednal said. We believe that compulsory hallmarking should be a feature of any future European arrangement.
I understand that, as my noble friend Lord Mulley said, there is legal action by a German company, Kohle, which failed in the Netherlands. Also, the Commission is taking France to the European Court on these matters. I should be grateful if the Minister could tell us exactly what is the state of those court suits. I believe that in the Netherlands the case has failed.
As the noble Baroness, Lady Gardner, remarked, Germany relies merely on mandatory marking by manufacturers and does not favour the continuation after 1992 of the British system of independent hallmarking in the precious metals which we are discussing. Britain, France, Holland, the Republic of Ireland, Portugal and Spain require compulsory independent hallmarking. In Belgium and Denmark hallmarking is voluntary; in Germany, Italy, Greece and Luxemburg only a mandatory manufacturer's mark is required. There is a clear difference between these practices.
In pursuit of trade harmonisation within the European Community, unless I am mistaken all Community countries other than Germany voted at the Dublin conference in June 1990 for a compulsory uniform system of British type hallmarking for 1992. I should be grateful if the noble Lord could confirm that my information is right.
However, then Dr. Bangemann, the vice-president of the Commission, said that there would be no directive on the subject. It was decided that the present law would continue to prevail, Britain running the risk of being taken to the European Court by foreign manufacturers of jewellery because we were imposing unfair trade barriers as a result of the failure of the Commission to implement the decision at Dublin in June 1990.
It seems to us that independent hallmarking of gold, silver and platinum, in whatever form, as my noble friend Lord Mulley said, is absolutely essential for the protection of the consumer. If there are different forms, as he suggested, then let us discuss them. However, we cannot be put at a disadvantage simply because Germany votes against us because it has different views and different manufacturing imperatives.
I believe that the Question of the noble Baroness, Lady Gardner, was directed essentially to the Government. We from the Opposition have made our point clear and I hope that the Minister will be able to give the noble Baroness and other noble Lords reassurance on the points I have raised.
9.30 p.m.
Lord Henley: My Lords, like the noble Lord, Lord Williams of Elvel, and other noble Lords I wish to thank my noble friend for raising this matter as it gives me the opportunity to reaffirm the Government's support for the British hallmarking system. I also thank my noble friend for her description of the

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process of hallmarking and for giving a history of the process. That has saved me the trouble of providing that information.
The House shows a great depth of experience and knowledge on this subject. The noble Baroness, Lady Fisher, declared her interest as a member of the Hallmarking Council. The noble Lord, Lord Broadbridge, declared his interest as a liveryman of the Worshipful Company of Goldsmiths. I believe I can say in response to the noble Lord, without pre-empting anything that the Queen's Speech may contain, that we have absolutely no plans to bring back the robust sentences that used to be meted out for fraudulent hallmarking in the past.
I shall now deal with the specific points raised by my noble friend. She asked what the Government intended to do to defend hallmarking after 1992. My noble friend Lord Astor informed the House in June, in response to a Question asked by the noble Lord, Lord Mulley, that there were at present no Community proposals to end or modify the British system of hallmarking. As the noble Lord, Lord Williams, remarked, there are no plans to introduce a Community-wide regime. I wish to reassure the House that the completion of the single European market in 1992 will not in itself have any effect on the legislation currently in force in this country and in the other member states regarding this matter. That means that all precious metal articles, including imports, will still need to be hallmarked before being put on sale, just as they do at present.
Nevertheless it is clear that agreement on a Community-wide regime for precious metals will have to be reached at some stage so that gold and silver articles accepted for sale in one member state are accepted in another. Many noble Lords are aware that the precious metals industry has been active both in this country and in Brussels in pursuit of its aim to have a harmonised Community system in precious metals established through the medium of a directive. However, the Commission has not brought forward any proposals, nor has it yet indicated that it intends to do so. It is therefore important that the Commission is made aware of the need for a system of compulsory—I stress the word "compulsory"—marking of precious metals, preferably by third parties. I believe the noble Baroness, Lady Fisher, referred to that.
The Government have strongly supported the principle of hallmarking in Community discussions when the opportunity has arisen, and will continue to do so. Moreover I urge all those who are concerned about the future of the UK system of hallmarking —that is, manufacturers, assay offices, retailers and consumer groups—also to press the case for compulsory third party marking in Brussels. However, I suspect that the Commission itself will not move in this area until the trade gets its act together. As things stand at the moment it would be almost impossible to put forward proposals that could be acceptable to all member states.
I wish to reaffirm that the Government's objective in any negotiations which may be held in the future
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within the Community will be to retain as much as possible of the UK hallmarking system. At the same time noble Lords must recognise that hallmarking is an area subject to the rules on majority voting. Therefore to achieve our objective in any Community negotiations will require extensive lobbying of the individual member states and of the European Commission.
I wish to say a few words about the White Paper from Germany that my noble friend Lady Gardner referred to. As I understand it, this was not a government White Paper but was a document produced by the trade and it has no official standing. We do not believe that the German Government are prepared to proceed with a hallmarking law at the moment.
The legal challenges in the Netherlands were referred to by the noble Lords, Lord Williams and Lord Mulley. Therefore it might be appropriate to say a little about those challenges. I understand that the German case mounted in the Netherlands by a German company, Kohle, failed. However, I understand that an appeal has been made and therefore it is not appropriate for me to say anything more about that case at this stage.
I can say that the Government will strongly defend the British hallmarking system against any challenges which are made against it in the courts, either in this country or in Europe.
In response to the Question from the noble Lord, Lord Mulley, my noble friend Lord Astor reported to this House on the application for judicial review which had been made by that same German jewellery manufacturer which challenges, among other things, the compatibility of the Hallmarking Act with Article 30 of the EC treaty. He stated that the case raised complex legal issues and the Government were considering their legal position. Those issues have yet to be resolved, but I repeat that the Government will strongly support any defence of the British hallmarking system.
I can certainly give the assurance that the noble Lord requested that the Department of Trade and Industry will, as the noble Lord, Lord Mulley, put it, stir itself on this issue.
It is not clear how Community agreement on the marking of precious metals will be brought about or the precise form that it will take. One thing is certain: the Government are in no doubt that hallmarking has served the consumer and the trade well over the seven centuries to which noble Lords have referred. It will therefore be our objective in any discussions on a harmonised Community-wide regime to retain as much as possible of the British hallmarking system. However, as I said earlier, it is a matter which is subject to the rules on majority voting and it is therefore a matter of defending our own interests.
Lord Mulley: My Lords, I am obliged to the Minister. Is it not surprising that the application for judicial review should give rise to so many complexities, and that some five months later the Government are still uncertain as to what their position is? Secondly, since the noble Lord has been good enough to refer to these matters, can he say

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whether any thought has been given to effective changes in the future in relation to items which will be alleged to have been made many years before 1992?
Lord Henley: My Lords, as I said, any legal case raises complex issues. The Government are considering their position but will mount a strong defence of the British hallmarking system, which we believe is a good system.
I hope that industry and consumer organisations will support the Government and keep stressing both in Brussels and throughout Europe the value of our hallmarking system and the need for a very strong consumer protection regime in the precious metals field.
I am grateful for the remarks made from all sides of the House. We speak with some unanimity on this matter. I hope that that will strengthen our position and indicate the unanimity of this House and the country as a whole on this issue.

Severn Bridges Bill
A Message was brought from the Commons that they have considered the Lords Message of 15th October and have made the following order—
That further proceedings on the Severn Bridges Bill shall be suspended until the next Session of Parliament;
That if a Bill is presented to this House in the next Session in the same terms as the Severn Bridges Bill at the last stage of its proceedings in this House in this Session—

(a) the Bill shall be deemed to have been read the first, second and third time; and

(b) the Standing Orders and practice of the House applicable to the Bill, so far as complied with in relation to the Bill in this Session, shall be deemed to have been complied with in relation to the Bill in the next Session:

That these Orders be Standing Orders of the House.
House adjourned at twenty-two minutes before ten o'clock.