Lords Sitting of 14 December 1992

Preamble
The House met at half-past two of the clock: The LORD CHANCELLOR on the Woolsack.
Prayers—Read by the Lord Bishop of Guildford.

Unemployment
Lord Stoddart of Swindon Lord Stoddart of Swindon asked Her Majesty's Government:
What were the numbers and percentages (on the same statistical basis) of people unemployed in June 1975 and October 1992.
The Parliamentary Under-Secretary of State, Department of Employment (Viscount Ullswater): My Lords, on the consistent, seasonally-adjusted basis the numbers of claimant unemployed people in the United Kingdom were 780,700, or 3.0 per cent. of the workforce, in June 1975 and 2,867,600, or 10.1 per cent. of the workforce, in October 1992.
Lord Stoddart of Swindon: My Lords, does the Minister agree that those are amazing figures? Unemployment is now four times higher than it was at the time of the Referendum in June 1975. We were then told by the Government and by business that there would be mass unemployment if we did not agree to remain in the EC, but we now find that we have mass unemployment because we did agree. Is it not a fact that closer economic and monetary union, complete with the Maastricht Treaty, will mean even higher unemployment if this Government and this country are foolish enough to accede to that?
Viscount Ullswater: My Lords, the noble Lord made one or two suppositions which he would have difficulty in proving. Unemployment is increasing in most EC countries; it is a problem in the EC as well as in the wider world. Furthermore, unemployment is increasing among the G7 nations. It is reported to be at record levels in France, where it is higher than in the United Kingdom, as it is in Spain, Ireland, Australia and Canada. In 1991 economic growth in the OECD countries as a whole was the slowest since 1982. That indicates the difficulties faced by most of the industrialised world.
Lord Dormand of Easington: My Lords, is it correct that there have been no fewer than 29 changes in assessing the number of unemployed? Perhaps the Minister will correct me if I am wrong. In those circumstances, what would be the present figure of unemployment if the statistical basis used in 1975 were used today?
Viscount Ullswater: My Lords, the consistent, seasonally-adjusted unemployment series gives a comparable assessment of trends over time. That is the importance of that assessment. Adjustments have
386
been made, as is the case with any set of figures during a long period of time, and it is not possible to make the prediction for which the noble Lord asks.
Lord Dean of Beswick: My Lords, in a national sense are not the most damning figures those relating to loss of skilled jobs in the manufacturing sector, which has also lost hundreds of thousands of training jobs and apprenticeships within its factories? How does the Minister expect the country to take advantage of the green shoots, which we are constantly told are appearing but which no one can find? How do the Government expect us to take advantage of any upswing in our traditional industries when they have almost disappeared?
Viscount Ullswater: My Lords, the long-term decline in manufacturing employment reflects a structural change in the economy. Lower employment in manufacturing has been mirrored and surpassed by increases in services employment. That has been a common trend in almost all the industrialised countries. Perhaps the noble Lord forgets that more than 600,000 jobs in manufacturing were lost during five years when his party was last in power.
Lord Ashley of Stoke: My Lords, is the Minister aware that the level of employment is becoming horrifying and destructive? Does he agree that it is wrong to blame unemployment on Europe because the blame lies entirely with the misguided and misconceived policies of the Government?
Viscount Ullswater: My Lords, no, I do not agree with the noble Lord at all. I fully recognise the difficulties and anxieties which unemployment brings to individuals and to their families. That is why the Government are so determined to provide the most effective help through the unemployment service and the TECs to assist those who find themselves unemployed. I do not believe that it is correct or right to blame this Government for the level of unemployment. It is not within their power to monitor and to keep world conditions under control.
Baroness Turner of Camden: My Lords, is the Minister aware that unemployment is still increasing and that organisations such as the Building Employers Confederation expect that worsening situation to continue, despite the Chancellor's Autumn Statement? If that is true in relation to the building industry, which could act as an engine for ending the recession, how are we to get out of the present situation?
Viscount Ullswater: My Lords, I believe that the Autumn Statement gives a great deal of assistance in showing how we should get ourselves out of the present situation. It is right to say that unemployment is a lagging indicator. The noble Baroness suggests that some jobs are yet to be lost in industry, and I agree with that. However, I believe that the economy is set fair for recovery.
Lord Wallace of Coslany: My Lords, is the noble Viscount aware that behind the bald exchange of figures, misery and degradation are suffered by

387
thousands of ordinary, decent people? That is the basis of unemployment—the personal misery and degradation involved.
Viscount Ullswater: My Lords, yes, I agree with the noble Lord. That is why my right honourable friend the Secretary of State announced a new package of measures in the Autumn Statement which next year will help an extra half a million people in their search for work. The flows out of unemployment are at very high levels at present. Last month over 450,000 people left unemployment.
Lord Jay: My Lords, if government policies have nothing to do with unemployment, why did the Government claim credit when the numbers of unemployed were falling?
Viscount Ullswater: My Lords, I do not believe that to be a situation which the Government have under their control. Industry creates employment. A lack of confidence at present and in the future means the loss of jobs.
Lord Monkswell: My Lords, do the Government agree that the figures given by the noble Viscount reflect the period of Keynesian economic policy which was in place from the 1940s to the mid-1970s and the monetarist economic policies which have been in place since the mid-1970s to the present date? Are the Government happy with the current results of their monetarist economic policy, or are they prepared to change it?
Viscount Ullswater: My Lords, the Government have set themselves a task to improve the economy and to reduce unemployment. That is what they are settled on. That policy has at least beaten inflation, which is now at its lowest level for some six years; namely, 3 per cent. Interest rates are now down to 7 per cent. A window of opportunity has been created by the devaluation of our currency. We must make certain that the manufacturing industry, which the noble Lord's party takes so much time in promoting, takes advantage of that. It must remain competitive and produce quality goods which people want at a price that they can afford.
The Countess of Mar: My Lords, does the noble Viscount accept that a sound manufacturing base is necessary in order to support the service industry? What is he doing to ensure that new manufacturing industries come to the fore and are encouraged?
Viscount Ullswater: My Lords, the manufacturing industry, about which we hear so much, produces the same percentage of GDP as it has done over the past 10 years. However, the growth of jobs has been in the service industry and that is where there will be a growth of jobs in the next decade.

International Atomic Energy Agency
2.47 p.m.
Lord Jenkins of Putney Lord Jenkins of Putney asked Her Majesty's Government:
Why they dismissed a statement by the International Atomic Energy Agency as "an expression of a viewpoint" (H.L. Deb., 23rd November 1992, col. 789).
The Parliamentary Under-Secretary of State, Department of Trade and Industry (Baroness Denton of Wakefield): My Lords, the words which the noble Lord described on 23rd November as a statement by the International Atomic Energy Agency were in fact personal comments made at an industrial meeting in Japan by Mr. Dircks, the agency's deputy director general for administration. The words were quoted out of context.
Lord Jenkins of Putney: My Lords, is the noble Baroness aware that she makes a noble attempt to extract herself from a quite impossible situation? Is the noble Baroness not aware that this is a matter of international concern? There is a surplus of plutonium for which no commercial use is available. There is great anxiety about this matter throughout the country. The Government are developing a reprocessing plant at Thorp. Will the noble Baroness say whether the Government will reconsider their position? In the meantime, will they arrest or halt the idea of further increasing the surplus of plutonium by increasing the recycling process at Thorp?
Baroness Denton of Wakefield: My Lords, I shall attempt to cover the numerous questions raised by the noble Lord. First, I have always felt that sharing the facts was not a means of extricating oneself from a difficult situation. Secondly, reprocessing does not create plutonium; it recovers the material in a form which can be, and increasingly is, recycled to generate electricity. That means that this country has an energy resource. I suggest that the noble Lord confuses real anxiety with statements that people are anxious by groups opposed to nuclear power.
The Earl of Halsbury: My Lords, can the Minister say whether the international agency has any executive or legislative authority? Can its pronun-ciamentos be anything other than its own point of view?
Baroness Denton of Wakefield: My Lords, I am happy to tell the noble Earl that, when statements are made by executives of the agency, they are personal remarks and are identified as such. We are of course indebted to the agency for the management of some of the safeguard regulations.
Lord Stoddart of Swindon: My Lords, I wonder whether the noble Baroness can help me. I had always understood—perhaps I was wrong—that one of the reasons for building Thorp was that plutonium extracting would be used in fast breeder reactors. As fast breeder reactors are no longer viable and the British Government have withdrawn their support,

389
will there be an excess of plutonium which will prove difficult to store? If so, should not the Government be seriously considering what my noble friend said?
Baroness Denton of Wakefield: My Lords, your Lordships will appreciate that it gives me great pleasure to help the noble Lord, Lord Stoddart. First, the United Kingdom is not turning its back on the fast reactor, having spent £4 billion on it over the past 40 years. We have a validated design which can be developed commercially if and when it becomes economically viable. Plutonium can be used to generate electricity in ordinary reactors. Perhaps I can point out that, of the secure orders for £9 billion held by Thorp, over half are from overseas.
Lord Monkswell: My Lords, if fast breeder reactors become commercially viable, will not the whole economics of the coal industry be transformed and make that method of power generation even more viable? Thus the nuclear industry would effectively cease to be viable.
Baroness Denton of Wakefield: My Lords, your Lordships have heard me say time and again recently that no remark I make at the Box should prejudice the coal review. The noble Lord was asking a hypothetical question.
Lord Peston: My Lords, the noble Baroness said that the statement by Mr. Dircks was personal and out of context. However, does she agree that even if that were so it would not make the statement wrong? It could still be a perfectly correct statement. The statement was that the excess of recycled plutonium poses a major political and security problem worldwide. The noble Baroness offered to help my noble friend Lord Stoddart of Swindon; perhaps she could extend the hand of friendship to me. Is the view of Her Majesty's Government that the statement is true or false? In other words, does the excess of recycled plutonium pose a major political and security problem worldwide? It is important to know.
Baroness Denton of Wakefield: My Lords, I am sure that the noble Lord, Lord Peston, will agree that, whether one is storing safely and securely under international safeguards 30 tonnes or 40 tonnes of plutonium, the issues are the same. For the benefit of your Lordships, Mr. Dircks drew attention to the fact that the demand for plutonium is lower than expected. Separation of the plutonium is temporarily running ahead of its use. He suggested that it may be helpful to hold discussions regarding the possibility of international participation in managing the stocks.
Lord Jenkins of Putney: My Lords, I am glad that the noble Baroness is showing signs of understanding the problem. Is she aware that international concern on the matter is growing? As there is no feasible commercial use for plutonium, the question of what grade is concerned when the separation takes place is secondary. We are embarked on a process with France which is internationally regarded with anxiety. Will the noble Baroness take the issue back to her colleagues in government and ask them to look at the whole question again?
Baroness Denton of Wakefield: My Lords, I am sorry if I confused the noble Lord. I am totally in support of the Thorp reprocessing plant and its ability to earn overseas income. I suggest that the noble Lord discusses the matter with the Opposition spokesman on energy in another place, who made it clear to the unions represented at Sellafield that the Labour Party supports Thorp.

Bracken: Control Measures
2.56 p.m.
Lord Campbell of Croy Lord Campbell of Croy asked Her Majesty's Government:
Whether they are continuing to give financial support to the experiment of reducing the expanding nuisance of bracken by the use of selected species of imported caterpillar, subject to ecological vigilance and control.
The Parliamentary Secretary, Ministry of Agriculture, Fisheries and Food (Earl Howe): No, my Lords. We recently reviewed our bracken research programme and received research proposals from six groups, including one which involved caterpillars. We decided, however, to aid a different project related to the rehabilitation of bracken-infested land which will be undertaken by the Institute of Terrestrial Ecology at Monks Wood and the University of Liverpool.
Lord Campbell of Croy: My Lords, I thank my noble friend for his reply. As the successful experiment in this country is almost complete, do the Government recognise the immense benefit to be gained from ridding much of the countryside of envelopment by bracken which displaces other plant life and reduces wildlife?
Earl Howe: My Lords, to date the work in that area suggests that caterpillars would weaken rather than kill bracken. Moreover, the further research proposal we received includes near market work with herbicide manufacturers on integrating biological control with the use of herbicides. It is not government policy to fund quasi-commercial work of that kind.
Lord John-Mackie: My Lords, would it not be better to spray the bracken immediately? Should we find enough caterpillars to eat it, we shall have to spray them later on.
Earl Howe: My Lords, the difficulty with chemical treatment is that it is expensive; it needs repeated application to be effective and there are problems of spray drift.
Lord Carter: My Lords, does the Minister agree that generally control through the use of predators has considerable ecological advantages compared with other methods of control? Can the Minister say how much agricultural research effort goes into control by the use of predators compared with research into the effectiveness of chemical pesticides?
Earl Howe: Yes, my Lords. MAFF, the Forestry Commission and the AFRC are spending around £3 million this year on research into biological control of

391
pests and disease affecting agriculture and forestry in the UK. That includes work to enhance the activities of beneficial insects such as predatory ground beetles, parasitic wasps and other natural enemies. The research forms part of a much larger programme of integrated pest control which aims to reduce dependence on pesticides in farming and forestry.
Lord Campbell of Croy: My Lords, is my noble friend aware of the achievement of the Forestry Commission in introducing a certain beetle into this country without ill effects which feeds upon an enemy of certain coniferous trees? One result which your Lordships will appreciate at this time of the year is that there can be no shortage of Christmas trees.
Earl Howe: My Lords, I was aware of that. Work by the Forestry Commission to control the great spruce bark beetle has shown that biological control can work but, if I may say so, it is a matter of horses for courses. Just because one insect works on one problem, does not mean that another insect will be the best approach on another.

President-elect Clinton
3 p.m.
Lord Clinton-Davis Lord Clinton-Davis asked Her Majesty's Government:
Whether they have apologised to President-elect Clinton for the searches made by the Home Office to try to corroborate allegations made by his political opponents during the American Presidential election that he had applied for British citizenship to avoid the US service draft.
The Minister of State, Home Office (Earl Ferrers): My Lords, the allegation which is contained in the noble Lord's Question is a gross distortion of the facts. My right honourable friend the Prime Minister has told the President-elect of his regret at some of the press reports.
Lord Clinton-Davis: Will the noble Earl indicate why, if no misunderstanding has arisen, the Home Secretary has in fact changed the procedures in relation to matters affecting press inquiries of this kind? If a misunderstanding has arisen, is it not appropriate that that situation should be made very clear not only to the House but to the country?
Earl Ferrers: My Lords, my right honourable friend has not changed the procedures. He said that the guidance would be looked at before the next occasion. What happened on this occasion was that the press office was telephoned and asked a question. It said that it did not discuss or divulge other people's applications. In order to check the accuracy, it ensured that there was no such application from President-elect Clinton. That was done in order to prevent other stupid stories running. It gave an off-the-record briefing, which was perfectly acceptable and appropriate, to the effect that there was nothing in
392
the story. The Home Office press office was trying to be helpful to the press. It shows how being helpful sometimes does not work.
Lord Gridley: My Lords, does my noble friend agree that the manner in which the Question has been framed by the noble Lord, Lord Clinton-Davis, implies that Her Majesty's Government have committed an offence and that that is quite unjustified? Does my noble friend further agree that what we expect to hear during Questions in your Lordships' House are requests for information and not allegations that the Government may have done wrong?
Earl Ferrers: My Lords, I agree with my noble friend. I believe that the implication contained in the Question is that the Government have done wrong. I can only repeat that they have not done wrong. The press offices of all government departments periodically receive inquiries and they have to reply in the best way that they can. In order to double check—in the same way as noble Lords or Ministers have to be briefed before answering a slightly untoward question —the press office briefs itself about some untoward question which may be put to it. That was the right thing to do. In this case the information was given off the record, which was the correct action.
Lord Monkswell: My Lords, are the Government actually telling us that if an organ of the United States Government seeks information about one of their citizens, the only avenue to obtain such information from the British Government is to contact the press office of the relevant government organ? I find that very curious and difficult to believe. Can the Government give some explanation of that apparent implication they are trying to project?
Earl Ferrers: My Lords, the press offices of all government departments are open for questions from members of the press and there is nothing unusual in that. On this occasion, and for reasons best known to themselves, the press contacted the press office of the Home Office. A correct answer was given: it does not divulge the facts of other people's affairs. After that reply was given a check was made as to who the applicants were at the time of President-elect Clinton's purported application. The information subsequently given out was that there was nothing in the story whatever. That was supposed to be a helpful remark in order to prevent the press from running stupid stories.
Lord Marlesford: My Lords, does my noble friend agree with me that it is in the interests of the whole country that the special relationship between the United Kingdom and the United States should continue to flourish under the new administration? Does he find it a little curious, as I do, that the noble Lord, Lord Clinton-Davis, should have sought to hype up a very minor matter which has already been exhaustively dealt with in another place and that this interchange has added absolutely nothing because nothing needed to be added?
Earl Ferrers: My Lords, I entirely agree with my noble friend. I find the Question tabled by the noble Lord, Lord Clinton-Davis, quite extraordinary. Apparently, he just reads the newspapers and believes everything said in them. If this exchange has done anything it may have shown your Lordships and the noble Lord, Lord Clinton-Davis, that there was nothing in this matter at all.

Business
3.4 p.m.
Lord Hesketh: My Lords, at a convenient moment after 3.30 p.m. my noble friend the Leader of the House will, with the leave of the House, repeat a Statement that is to be made in another place on the Edinburgh Summit.

Alliance & Leicester (Girobank) Bill
Read a second time, and committed to a Select Committee.

Croydon Tramlink Bill [H.L.]
The Chairman of Committees (Lord Ampthill): My Lords, I beg to move the Motion standing in my name on the Order Paper.
The House may care for some explanation. One of the issues before the Select Committee is how much noise and disruption would result from the proposed tramway if it were to be built and operated. The Select Committee has already paid a visit to the site of the proposed works in and around Croydon and has seen the distances between the tracks of the proposed tramway and neighbouring homes and buildings. But it is difficult to judge what tram noise may affect local residents until the trams are up and running. In order to save days of abstract argument in committee about noise, the committee decided that it would be valuable to visit a modern, operating tramway system. Three such systems exist close to London in terms of journey time. These are in Manchester, Amsterdam and Nantes. Nantes has been chosen as most suitable because tram vehicles running there resemble most closely those which are likely to be introduced into Croydon, should the Bill be given Royal Assent.
To ensure fair play, the Select Committee will be accompanied by three representatives of the promoters and three representatives of the petitioners against the Bill. The promoters will pay the cost of the visit.
I realise that the coincidence of this visit with the approach of Christmas could give rise to notions that the Select Committee may be tempted to take advantage of the visit for gastronomic research. The House will be reassured or saddened to know that the committee will be flying from Biggin Hill aerodrome and that luncheon will be taken in the tram depot.
Moved, That the Select Committee on the Bill have leave to visit Nantes, France, in connection with its consideration of the Bill.—(The Chairman of Committees.)
Lord Stoddart of Swindon: My Lords, did I understand the noble Lord to say that the total cost of the visit will be paid by the promoters or will Parliament pay for the cost of the Parliamentarians?
The Chairman of Committees: My Lords, the total cost will be paid by the promoters.
Lord Cockfield: My Lords, is it really right that the cost of such an expedition should be paid by a party to the proposals?
The Chairman of Committees: My Lords, I do not know why not. It is they who wish to have the Bill. They have to pay an enormous number of other costs as well. It is only right that this cost should he borne by them.
Lord Clinton-Davis: My Lords, are there any precedents for that?
Lord Cocks of Hartcliffe: My Lords, when the Committee which sat to consider the Felixstowe Dock and Harbour Bill visited the site at Felixstowe, is the noble Lord aware that we were given lunch (I would not say that we were entertained) in the canteen there at the cost of the promoters? However, they particularly pointed out to us the very frugal nature of the meal in order that no such consideration, such as that which has been raised by the noble Lord, Lord Cockfield, could be considered.
The Chairman of Committees: My Lords, this is very rare. We cannot find a precedent for a Select Committee considering a Bill in connection with a matter within the United Kingdom which requires to go abroad. That is why the Motion is before the House. Of course, it is quite normal for visits to be made throughout the United Kingdom. I appreciate the contribution made by the noble Lord, Lord Cocks of Hartcliffe.
On Question, Motion agreed to.

Pension Funds: ECC Report
3.9 p.m.
Baroness Lockwood Baroness Lockwood rose to move, That this House takes note of the report of the European Communities Committee on Pension Funds [4th Report, HL Paper 15].
The noble Baroness said: My Lords, the subject of this report is a proposed Council directive on the freedom of management and investment of funds held by institutions for retirement provision. In this country we are more accustomed to referring to such institutions as pensions funds and that is the term that I shall use. Pension funds are of great social and economic importance and the sums involved are stupendous. In its recent report on the operation of pension funds, the Social Security Committee of another place observed that pension funds are,
"by far and away the most important holder",
of shares quoted on the Stock Exchange, holding as they do,
"almost one-third of all quoted shares",
and that in 1989 the market value of their holdings in United Kingdom securities amounted to some £165

395
billion. In a speech delivered on 2nd July 1990, foreshadowing the present proposed directive, Sir Leon Brittan drew some international comparisons. He said:
"In the Netherlands, pension fund and life insurance assets represent more than the entire Gross Domestic Product. This is true in the United Kingdom too, and others are not far behind. In most Member States, pension fund and life insurance assets far exceed stock market capitalisation".
Against this background it is easy to see why the European Commission was anxious to ensure that the freedom of capital movement, a prime Community objective, should be confirmed as applicable to pension funds. Hence, this draft directive which is designed to ensure that the Community's internal market operates fully in the field of pensions investment.
As can be seen from the report now before your Lordships' House, the directive was the subject of a short inquiry by the Select Committee's Sub-Committee C—that is, the Social and Consumer Affairs Sub-Committee. The committee also had before it a discussion paper on supplementary social security schemes published by the Commission in July 1991. This discussion paper envisaged cross-border membership of pension schemes. Cross-border membership of pension schemes raises complex fiscal issues, accentuated (as the evidence in the report shows) by member states having such diverse provisions. Consequently, because of its complexity, cross-border membership was not included in the current directive which is much more limited in its scope. Nevertheless, the subject was commented on in much of the evidence, and further moves in this direction are expected.
The directive—which, together with the evidence received on it, is published in the committee's report —addresses two related issues. In the first place, it is concerned with the removal of any national barriers which would prevent pension scheme administrators in one member state from employing an investment manager established and duly authorised in another member state, or which would limit the investment of a pension fund's assets to securities of the member state concerned. Secondly, the directive lays down certain principles which, on grounds of prudence, should be observed throughout the Community in the conduct of pensions investment. These so-called "prudential provisions" are accompanied by requirements designed to prevent member states from using prudential provisions in their own legislation to make pensions investment a captive market for their own government securities or for shares denominated in their own currency.
Although the draft directive itself attracted little public notice in this country, there were two issues much in the public eye which had a direct bearing on it and which were reflected in some of the evidence we received. The first was the issue of subsidiarity. Subsidiarity is bound to figure nowadays in discussion of any proposal for a new directive. Indeed, it sometimes seems to me that, although the underlying issue is undoubtedly crucial, the word "subsidiarity" itself has been rescued from well-merited obscurity in
396
the belief that it can be waved as a magic wand to dispel all unease about the constitutional relationship between member states and Community institutions. Be that as it may, after considering the matter carefully the committee was satisfied that the draft directive was acceptable from the subsidiarity standpoint in that its central purpose of safeguarding cross-border freedom of services and of capital movement for pensions funds could not, in practice, be achieved by national legislation alone.
The directive's provisions are minimal. As we point out at paragraph 12 on page 8 of the report, it will be for member states to apply detailed rules, provided that they are consistent with the principles laid down by this directive, which, in turn, reflects the principles already contained in the Third Life Insurance Framework Directive. The Commission's proposals do not affect the way in which pension fund managers reach their decisions. However, to underline and ensure this, in paragraphs 58 and 73 of the report the committee recommends an extension to Article 4(1). While we recognised the danger that confusion could result from introducing European law into the field of pensions investment, we decided that the advantages of the directive easily outweighed its disadvantages and that it deserved a warm welcome. This was also the general sense of the evidence we collected.
At the time of our inquiry, a great deal of public attention was focused on the report into pension funds produced by the House of Commons Select Committee on Social Security, to which I referred earlier, and in particular on that committee's investigation into allegations of fraud affecting the pensions funds of Mirror Group Newspapers and the Maxwell Communication Corporation. Our own inquiry in no way duplicated that of the House of Commons Select Committee. Indeed, we delayed the commencement of our inquiry to ensure that. Nevertheless, we kept in mind throughout the need to ensure that, apart from constraints essential to the single European market, there should be no interference with the power of member states to use their own legislation to protect their pension scheme members against malpractice in the running of their schemes. As regards United Kingdom law, your Lordships will, I am sure, share our concern, as indicated in paragraph 60 on page 18 of the report, that careful consideration should continue to be given to the questions that were raised in the report that was produced by the Social Security Select Committee in another place.
The draft directive on which we reported is not yet in its final form and continues to be considered by the relevant Community authorities. So as to bring our own views to bear well before the Council of Ministers could reach agreement on a text, a letter (dated 11th March) was sent to the Secretary of State for Social Security by my noble friend Lady Serota, outlining our interim conclusions. This letter is reproduced at Appendix 3 to our report.
We are grateful to the Government for their detailed written response to the report, which has been made available to your Lordships for the debate today. I am delighted to see from that response that,

397
to a very large extent, the Government are willing to endorse the committee's conclusions, and, in particular, that, despite the difficulties, the Government recognise the importance of working towards freedom of cross-border membership of pension schemes. I hope that, in replying to the debate, the Minister will be able to tell us how far consideration of this directive has now been taken by the Council of Ministers, and what prospects there now are of a directive designed to facilitate cross-border membership of pension schemes being brought forward.
As chairman of Sub-Committee C, I should like to thank the witnesses, including the very well informed and co-operative witness from the European Commission, for giving us so much help in understanding the purpose and likely effect of the directive. I should also like to offer my sincere thanks to the members of Sub-Committee C for the patient and objective way in which they tackled this highly technical subject. In particular, I should like to thank the Clerk to the committee, Mr. John Ingram, for his untiring efforts, and Sir Alec Atkinson, our specialist adviser, for his skill in steering us through this very complex maze. I beg to move.
Moved, That this House takes note of the report of the European Communities Committee on Pension Funds [4th Report, HL Paper 15].—(Baroness Lockwood.)
3.21 p.m.
Lord Brain: My Lords, as perhaps the only person batting for the committee in addition to our noble chairman, it is one of those occasions when I hope I can be brief. The noble Baroness, Lady Lockwood, has explained comprehensively and clearly the background to our conclusions and the way in which we worked on the investigation. The Government's reply, when it arrived, largely agreed with the points we made. Although I shall be picking up one or two small points, their reservations seem to be more on emphasis or feasibility than on substance, and they indicate a flexibility which I suspect will be used in future negotiations.
As the noble Baroness said, the directive is really a financial one. It has social implications but its structure is a financial one. It aims to ensure the free movement of capital and financial services throughout the Community. Because each of the 12 member states has a different structure for funding pensions, the only way that the Commission could set about this directive was by using subsidiarity and allowing each state to develop the best way of making investment more flexible and allowing their tax systems to work as they have done in the past. This objective is recognised as being achieved in the directive. The problems that have arisen about cross-border pension funds arise from all these differences. I hope that this is a first step in a long road towards cross-border pensions. It will take time, despite the encouragement of the multi-nationals towards this end.
A pension is a form of deferred income or salary but it is, as the noble Baroness has said, a very significant item of cash flow into investment and, later,
398
out of investment. It needs to be managed in a way that gives confidence to the person earning the pension and the person who is going to receive the pension. The Government Actuary, who was a very helpful witness, spelt this out clearly in his evidence.
The main concern of the committee is in the drafting of Article 4. We have set out a number of points that we think need to be looked at. The Government have accepted one that should be brought in from the preamble. In paragraph 27 of their reply, they take issue with the committee's view that the general principles of prudential investment laid down in Article 4 can be applied consistently across the Community. They have doubts as to whether this is a feasible point. I think that it is, provided one does not define what one means by "prudent". I shall come back to this point in a moment. I am sure that, if a case goes before a court, the lawyers and the judges will have a good definition as to what is prudent within that particular country. I would hope that it is purely a negotiating stance by the Government when they say that they do not wish to become too involved in prudence. I think that the point needs to be looked at.
In paragraph 30 the Government say that they do not accept that one should spell out in detail what "prudent" means. I shall give the House an example. Suppose someone says that it is only prudent to invest in fixed assets. How would one invest in Scottish Hydro or British Gas, whose main assets are either water or gas? That would provide a lawyer's delight. One should leave in the word "prudent" and take care that one gets prudent investment by prudent trustees who will be seeking prudent advice from actuaries and financial advisers. Let it be remembered that a pension fund is an ongoing thing. It is prudent to review progress and to decide that the Ming vase which, as a Coal Board pension fund manager, one bought some years ago has appreciated to the likely maximum. One makes a capital gain and, provided the market has not gone down significantly, as has happened at the moment, one releases one's capital. The same applies to property. "Prudence" is the key word to this directive.
I hope that the directive will now encourage the cash flow from pension contributions to be invested broadly across the industries throughout the Community where it will give good returns. I hope that subsidiarity, which will control it at local level, will mean that it does not have to be invested in so much fixed interest in a particular currency or anything like that. I believe that the Government accept this and I look forward to hearing their reply to the debate.
3.28 p.m.
Lord Rochester: My Lords, like the noble Lord, Lord Brain, I had the pleasure of being a member of the sub-committee which produced this report under the chairmanship of the noble Baroness, Lady Lockwood. Since her period in that office will end very soon, perhaps I may take this opportunity to thank her warmly for the way in which she has presided over our deliberations.

399
The noble Baroness introduced the report so effectively that my remarks will be very brief. A further reason for brevity is that, as is evidenced by the reply to the report which the Parliamentary Under-Secretary has already given, it may be regarded as a relatively uncontroversial document. Indeed, I recall wondering when we discussed the committee's final recommendation whether it was really necessary to make the report to the House for debate rather than simply for information. In the end our general feeling was that there should be the short debate that we are now having. For my part I wish simply to highlight two or three points.
First, I subscribe fully to the basic objective of the European Commission in putting forward the directive that barriers to cross-border investment and management of pension fund assets should be removed in keeping with the aim of introducing a comprehensive single market in financial services as soon as possible.
I am also in full support of the conclusions contained in paragraph 74 of the report: that, apart from the constraints essential to the operation of a single market, there should be no interference with the power of member states to use their own legislation to protect pension fund members against bad practices in the management of their schemes. As the noble Baroness said, at the same time the committee recommended that in the United Kingdom such matters should be examined carefully in the light of the report of the Social Security Select Committee of another place on the operation of pension funds, following the Maxwell debacle. The Government have set up a pension law committee to review the framework of law and regulation within which pension schemes should operate, and we must now await its recommendations.
I was surprised that in its evidence to us the CBI suggested that the directive should be shelved until consideration had been given to the findings not just of the inquiry recommended by the Select Committee of the other place, but of a working party which the CBI itself was setting up. In my view it would be altogether wrong if, while those disparate deliberations were proceeding, pension fund trustees, administrators and members were to be denied the benefits of the liberalising measures envisaged in the directive.
I am glad to endorse paragraph 54 of the report which welcomes the Commission's proposals to draft a directive to facilitate cross-border membership of pension schemes. I hope that the Commission and the Government will do all in their power to surmount the obstacles that will need to be overcome before that proposal can be implemented, for the prize of so doing will be of great benefit to the increasing numbers of employers who will in future be doing business across borders.
I should like to draw attention to Article 4(2) of the directive. It debars member states from requiring pension funds to invest in particular categories of asset, but does not debar them from limiting the extent to which fund managers can invest in specific kinds of
400
assets such as equities. I support the recommendation that that article should be extended to rule out restrictive national laws of that kind. As the noble Baroness said, such limitations could have the effect of compelling scheme managers to invest only in assets upon which no limitations have been placed such as gilt-edged securities in the country concerned. That is the present position in Germany.
I share the view that that restriction would run counter to the spirit of the directive, and its wider application would adversely affect the investment performance of pension funds generally. It is important that managers of those funds in the United Kingdom and elsewhere in the Community should be left free to determine where to invest the assets of their schemes and in what proportions those assets should be placed in particular forms of investments.
Lastly, I wish to refer to Article 5 of the directive which requires member states to implement the provisions needed to comply with its provisions not later than 31st December 1992; that is, in only a fortnight's time. Such a timetable is clearly impracticable. That is why the report recommends that the article should be revised and the timing of the directive's introduction should be co-ordinated with that of the three connected commercial directives. I should be grateful if the Minister would let us know what is the Government's latest prediction as to the date when it will be possible for the pension fund directive, first, to be adopted, and, subsequently, to be implemented.
3.35 p.m.
Baroness Turner of Camden: My Lords, I should like to take the opportunity from the Front Bench to commend the report produced by the Select Committee (of which I was also a member) and to thank my noble friend Lady Lockwood for the manner in which she chaired the committee's proceedings.
The subject is of course a somewhat specialist and technical one; but I venture to suggest that it is not very controversial, at least not so far as concerns the UK. The Commission's proposal stems from its belief that the establishment of the single market will encourage the development of trans-national companies. In consequence, many companies will employ staff resident in more than one member state. There will be an increasingly mobile workforce. Thus, many employees, when they reach pensionable age, will have worked in more than one member state. As has been said, ultimately that may lead to cross-border membership of pension schemes and arrangements whereby there will be one cross-border pension provider for each trans-national company. That is some way off, for reasons which have been referred to by other noble Lords.
Nearly all the witnesses who came before the committee expressed an interest in the development of cross-border membership. As the report indicates, many of them considered the present proposal a paving measure towards it. Various possibilities were indicated: for example, there could be a European pension fund statute. There was also a suggestion that

401
cross-border membership could be restricted to mobile workers. That clearly has major difficulties. Indeed, the whole matter of cross border membership is fraught with problems since pension provision has proceeded at a different pace and on a different basis in the various member states, and there are also taxation problems.
As the report indicates, the committee considered all those matters and decided that it should limit its investigation to the terms of the draft directive itself. The directive's stated aim is to facilitate the freedom of pension funds to invest their assets where they deem appropriate, and to appoint investment managers as they choose. I should like to state the principles to be adopted because they are important; and, moreover, they are already applicable mainly in the UK. They are as follows: to ensure that assets are invested in a manner appropriate to the nature and duration of liabilities and level of funding, taking account of requirements of security, quality, liquidity and profitability of the pension fund's total portfolio. Secondly, to ensure sufficient diversity of asset investment. Finally, to ensure that self-investment is restricted to a prudent level. They are all ways in which prudent investment is currently looked at within the UK.
As my noble friend said, we had the problem during the investigation that it coincided with public anxiety about the fate of pensioners in the Maxwell schemes. The Social Security Select Committee in another place had been carrying out its investigation, and the Government announced the establishment of the Goode Committee to review the framework of law and regulation within which occupational pension schemes operate. It was scarcely surprising therefore that that matter should figure in the submissions some respondents made to the committee. As the noble Lord, Lord Rochester, has said, the CBI, in particular, felt that consideration of the directives should be suspended while consideration was being given to the report of the Social Security Select Committee. I am glad to say that the Select Committee did not agree to that proposal (neither, incidentally, did the TUC) so the committee proceeded with its examination of witnesses.
The committee was glad that the Commission apparently intends to follow up the directive with another to facilitate cross-border membership. However, the difficulties should not be underestimated. Not all member states have systems of private pension provision based upon funding as we have in the UK. We have developed a framework of law to accommodate this which, while it certainly has its flaws—as has been demonstrated in the Maxwell case —nevertheless has ensured the growth of private occupational pensions in this country which, generally speaking, have served scheme members extremely well. No doubt there will be further refinements and improvements, particularly in the area of the security of members' benefits and expectations, as a result of the Goode Committee Report, when it finally appears.
However, the committee was convinced that matters relating to pension fund security, member participation in the running of schemes, duties of
402
trustees, protection against possible fraud, and so on, should remain within the domain of national legislation. Indeed, the directive does not envisage that this should not be so.
As has already been stated, the committee noted the importance of the principle of subsidiarity and did not want to see a build up of pensions law within the Community which could further complicate what is already a complex area.
The committee came to the view—I think correctly —that the objectives of the present directive could not be achieved by national law alone, since it relates to cross-border freedom of services and capital movement. In general, the respondents who gave evidence to the committee were in agreement with the aims of the directive. Furthermore, they indicated that this directive—limited, as it is, solely to investment of scheme assets—would not add significantly to the complexity of running a UK-based pension scheme. Other member states may have more difficulty in accommodating the directive than the UK, since in some states there are restrictions already as to the manner in which pension funds can be invested.
One of the possibilities raised with the committee was that employers might be tempted to switch from funded schemes to "pay-as-you-go" schemes. Everyone thought that would be a retrograde step. However, the general view of respondents seemed to be that that was not likely to happen.
Trust law has often been blamed for some of the problems that have arisen in recent years, notably in the Maxwell affair; but there is little wrong with the principles upon which trust law is based, since these are intended to ensure a separation of pension fund assets from those of the employer and thus to provide greater security for the pension scheme members.
It has generally been regarded as good practice that the trustees of a scheme should be representative of the members of it. Personally, I should like to see legislation requiring at least one half of the trustees to be elected from the workforce covered by the scheme, with arrangements made for them to be properly trained in order that they may effectively carry out their duties. More openness in the conduct and management of schemes is surely desirable. Had this been the situation in the past, some of the problems we have seen might not have occurred.
This is an issue we shall doubtless need to confront when we come to consider cross-border membership and a later directive designed to facilitate it. Arrangements would need to be made at European level for proper involvement and participation of scheme membership. However, we are not asked to deal with these issues at the moment.
We believe that the directive should be warmly welcomed. We see no problems for the UK pensions industry which, generally speaking, is in favour of freedom of investment as being in the best interests of scheme members, subject to the sensible safeguards indicated in the directive.
As has already been said, the committee believes that there should be some exceptions for unfunded schemes set up by employers for small numbers of higher paid employees, for example, and for small

403
self-administered schemes. It also believes that the timetable for the directive should be revised, for quite obviously it will not now be practicable to comply with it before 31st December 1992.
Thus, we on these Benches support both the directive and the report and await with interest the statement the Minister is to make this afternoon.

European Council, 11th–12th December
3.44 p.m.
The Lord Privy Seal (Lord Wakeham): My Lords, with the leave of the House, I shall now repeat a Statement made in another place by my right honourable friend the Prime Minister on the Edinburgh European Council on 11th and 12th December. The Statement is as follows:
"With permission, Madam Speaker, I shall make a Statement about the European Council in Edinburgh on 11th and 12th December. My right honourable friends, the Foreign Secretary, the Chancellor of the Exchequer and I represented the United Kingdom.
"Let me first pay a warm tribute to the City of Edinburgh for their welcome, their first-rate organisation and the good-humoured way in which they accepted the necessary disruption of hosting such a big event.
"On the agenda of the European Council were a series of interlocking issues: the economic situation in the Community and our proposed strategy for growth and jobs; the need to find a solution for Denmark's problems following her first referendum; the financing of the Community until the end of the century; the need to remove the block on the opening of enlargement negotiations with Sweden, Finland and Austria; the issues of subsidiarity and openness; the long-standing issue of the site of a number of Community institutions. Beyond the Community, there were pressing issues to discuss on Macedonia and on Yugoslavia more generally.
"We reached the following agreements. First, the European Council agreed on the growth initiative put forward by my right honourable friend the Chancellor of the Exchequer. The Community is on target to complete the single market (the world's largest free trade area) by the end of the British Presidency. We are continuing to work for an early GATT settlement. And—in line with our own deregulation initiative—there was agreement on the need to reduce Community burdens on business.
"The European Council agreed to establish a new lending facility within the European Investment Bank to finance infrastructure projects throughout the Community, especially in the fields of transport, energy and telecommunications. This investment will be worth up to £7 billion over the next two years. The council also agreed to set up a new European investment fund to guarantee loans for investment in trans-European networks and to
404
small and medium sized enterprises. These guarantees can support projects worth up to £17 billion.
"Additionally, member states agreed, following the pattern of our own Autumn Statement, to give priority to capital spending and encourage private investment; to keep the public sector wage bill under tight control; to cut subsidies and increase competition. We have all agreed to pursue the prudent policies that will control inflation and create the conditions for lower interest rates across Europe.
"Overall, the initiative proposed by my right honourable friend could support up to £24 billion worth of projects. It will help to boost confidence, support new investment, and encourage business to create jobs throughout the Community.
"Secondly, we agreed a solution to the issues raised by the Danish Government following their referendum. The solution is binding in international law. It does not in any way change the Maastricht Treaty or require a new round of ratifications in member states. It provides an interpretation of the Treaty which Prime Minister Schlüter believes will enable him to hold a second referendum in Denmark in the spring. It has been welcomed by all seven parties who drafted the original Danish document.
"Thirdly, we have achieved an agreement which freezes Community spending until 1995. Until then there will be no increase in the expenditure ceiling. Thereafter, it allows a gradual increase up to 1999. The overall increase is far smaller over seven years than the increase agreed over five years in 1988. It is less than half that originally proposed by the Commission. Moreover, the special rebate for Britain (which brings back about £2 billion a year to this country) is unchanged and is now guaranteed for the rest of the century. Even then, it could not be changed without our agreement.
"Fourthly, negotiations for entry into the Community will start straightaway with Sweden, Finland and Austria, with Norway to follow shortly afterwards. Work will also start to prepare the Visegrad countries of eastern Europe for EC membership, an aim endorsed by the council for the first time. This is a breakthrough in the attitude of our partners and prepares the way for a a far wider Community stretching across eastern Europe.
"Fifthly, the council agreed a package of measures to reverse centralisation. The Edinburgh statement makes it clear that national decisions should be the rule and Brussels action the exception. The Commission also produced two lists of measures: first, proposals which fail the subsidiarity test and will be dropped or changed; secondly, a list of Community laws which the Commission believes must be simplified or abolished. Further proposals for reducing the burden of legislation will follow.
"Sixthly, as we said we would do at Birmingham, we have put together a package of measures to open up the Community to scrutiny by the people of Europe. The Commission will consult more widely

405
before making proposals. This will include the publication of green papers to allow an input by member states before formal proposals come forward.
"Seventhly, on the sites of institutions, we have signed a decision confirming the sites and working arrangements for all the main Community institutions. This settles a problem that has bedevilled the Community for over 30 years. The number of Members of the European Parliament increases by 49 to 567, to reflect in particular the growth in the population of Germany from 61 million to nearly 80 million following unification. Under this arrangement Britain, France and Italy will each have six more Members of the European Parliament. Weighted voting in the Council of Ministers remains unchanged with Britain, France, Italy and Germany retaining 10 votes each.
"We needed to solve all these issues if the Community was to regain its confidence. But these were far from the only issues on our minds. Macedonia could be a tinder-box for a wider Balkan conflict. At this meeting we were able to agree to unblock European Community and international economic assistance to Macedonia, which will help provide stability. We unreservedly backed the UN's plan to put a battalion of soldiers in Macedonia to monitor the peace there. We gave our support to putting a similar UN monitoring force in Kosovo. In Bosnia, we have called for the Security Council to examine systematically the operation of the no fly zone. We believe the first step should be for the UN to draw up a report on violations of the zone.
"Madam Speaker, I believe the majority of people in this country want us to make a success of our membership of the European Community. That is not a matter of idealism, it is a matter of hard-headed self-interest. Anyone who looks objectively at what has been agreed under the British Presidency, and at this European Council in particular, can take pride in Britain's achievement.
"The Community has reached decisions on issues which many thought were insoluble. It has come together again as 12 member states with a common purpose. It has solved many of its own most intractable problems. It has prepared the way for enlargement. It has made itself more responsive to public opinion. It is tackling the most urgent problems within our own continent. It has taken concerted action which will offer hope for growth and employment.
"These are all substantial results—good for the European Community as a whole and good for this country—and I commend the outcome unreservedly to the House".
My Lords, that concludes the Statement.
3.53 p.m.
Lord Richard: My Lords, we are grateful to the noble Lord the Leader of the House for repeating the Statement made by his right honourable friend the Prime Minister in another place. It was an important weekend and it is an important Statement. It should
406
be considered carefully by this House. Of course, we welcome parts of the communiqué. For example, we believe it highly desirable that an attempt should have been made to enable the Danish people to express their view in a further referendum. To that end the agreement on the Danish position is, as I say, to be welcomed. But I ask the noble Lord what the Government now see as the linkage between the Danish vote and the future development of the Community as regards Britain.
Can it be right, as the Foreign Secretary seems to have said yesterday, that if Denmark again voted "no" we would have nothing further to do with any alternative Maastricht arrangements, even if the other 10—if I understood what was said correctly—proposed to go ahead and implement them? Can that really be right or sensible? Is that indeed what the Government are saying about the Danish second referendum? If that is the position, it would seem to me we would gain the worst of all possible worlds. We would gain the world of isolation as the other 10 carry on and we would gain impotence as being totally unable to influence what was then going to be done.
It may be that the Foreign Secretary, perhaps incautiously, said something that perhaps he should not have said. However, if that is the Government's position it is important that the House should be told that clearly today so that we can judge the rest of the Statement against that. What is the relationship now between the Danish referendum and the passage of the Maastricht Bill through Parliament? If, perchance, the Danish referendum were to be held in advance of May —say, in March or April—would that mean a corresponding acceleration of the parliamentary timetable?
However, as regards Denmark, with the qualification I have just expressed, I think one can say "so far so good". But the Statement also adds:
"The solution is binding in international law".
How is that to be? As I understand the position, it is said that the Danish parts of the communiqué, in the agreement that has been reached by the European Council, does not affect the provisions of the treaty. How is it to be enforceable in international law? How, indeed, is it to be justiciable?
I turn now to another point in the communiqué: the decision on the opening of negotiations with some of the EFTA countries. We welcome that. It is timely and sensible. It is right that the Community, after spending so much time in contemplating its own navel, should now perhaps again be turning outwards and looking at some of the greater problems that face the world. I also welcome what has been said about the countries of Eastern Europe. They have been waiting for a signal and I think it is right that that signal should now be given.
The Statement mentions GATT. I would say to the noble Lord that what the communiqué actually says about GATT is, to put it mildly, somewhat vague. There is a slightly ominous last sentence in the communiqué which states that any agreement in relation to the GATT must be judged as a whole. That is, of course, true. But that is either a platitude, in which case it did not need saying, or it means

407
something, in which case it is important that we know what it means. Was the French opposition to the agricultural agreement persisted in at Edinburgh when GATT was discussed, or was it modified? It would be useful for the House to be informed.
I also welcome the words on Yugoslavia. It is sensible to attempt to agree a joint position. It is right that we should condemn the atrocious behaviour of some members of the Serbian forces in Bosnia.
Having welcomed parts of the communiqué, and parts of the agreement, I now touch on some matters to which I am not so welcoming. As regards subsidiarity, of course it is desirable that subsidiarity should be redefined, clarified and fined down so that we all know what it means. I read the document with great interest, particularly in the light of the recent comments of the noble Baroness, Lady Chalker. She has told me two or three times in the past few weeks that the sections on subsidiarity should be justiciable. I am not quite sure how they will be justiciable. As far as I can see from a brief reading of the communiqué, the section on subsidiarity amounts to a declaration as to how the Council will behave in the future and how the Commission will view its task in the future. I should be grateful for some clarification from the noble Lord as to how those sections on subsidiarity will be justiciable. I also note with a slightly ironic smile that if one looks at the sections of the communiqué on this matter one finds a statement which is of interest, certainly to me.
I now turn to the only mention, as far as I can tell, of social policy in the whole document. It states:
"the Commission considers that the group of directives based on Article 118a of the Treaty is too recent to warrant re-examination. Instead its priority"—
that is, the priority of the Commission—
"will be to supplement them [the recent directives] by implementing all the provisions of the Charter of the Fundamental Social Rights of Workers".
I am delighted to see that provision in the document. I hope that the Government, by agreeing on that inclusion in the document and also by accepting the general thrust of what the Commission has said about subsidiarity, have given a sign that their previous quite absurd opposition to the Social Charter in any shape or form is beginning to weaken. It goes on to say:
"However, early steps will have to be taken to simplify and codify the body of older regulations on the free movement of workers".
Will the Government be participating in those discussions on communications from the Commission on those important items? Or is that part of the opt-out and therefore Britain will not participate but will allow the other 11 countries to come to a decision? I should be grateful for further clarification on that point.
Finally, people will judge the summit and the Statement on their relevance to their problems. The main problems which many people in Europe now face in increasing numbers are those of unemployment and job opportunities. On that score the communiqué fails. A growth rate of 1 per cent. is forecast for next year and unemployment is forecast to rise above 11 per cent. Against that background, where is the
408
programme for the revival of economic growth and the stimulation of employment? It is not there. I should be grateful if the noble Lord would tell the House whether the figures mentioned relate to new money on the table or whether it is to be merely increased credits from the European Investment Bank? I think that it is the latter rather than the former. We are told that an increase of credits of the order of £6 billion somehow or other could have the effect of supporting £24 billion in new investment. Presumably that will come mainly from the private sector. In terms of producing a programme to combat the major problems facing the countries of the European Community at present—namely, unemployment and job opportunities—the summit has failed.
Having made the journey once a month for four years, it is a matter of some personal regret that the Government seem to have caved in to the French demand that the site of the European Parliament should be permanently in Strasbourg. It makes no sense for people to be shuttling up and down the Belgium-Luxemburg-France corridor and I am sorry that the Government agreed to it.
I give the Statement a partial welcome, but on the main issue facing Europe I am afraid that the summit did not do what it should have done.
Lord Jenkins of Hillhead: My Lords, I, too, thank the noble Lord the Leader of the House for having repeated the Statement. It is a considerable relief that this meeting of the European Council has gone as well as it has. The Prime Minister is to be congratulated on his part in securing that result, as are the other European leaders, and most notably Chancellor Kohl. The Prime Minister carried the responsibility of the chairmanship and he appears to be at his best in a gathering of that dimension. That is a national asset at a time when we do not have many national assets.
However, I hope that, in the absence of a pending election, the Prime Minister will spare us, as he has in the Statement, any such triumphalist note as he mistakenly struck after Maastricht. This is not, and it was not then, game set and match. However, it does offer an opportunity to stop the rot in Europe. It solves a number of problems which have existed for some time. I hope that it will encourage the Government to proceed with the ratification of the treaty.
Like the noble Lord, Lord Richard, I must also raise the remarks made yesterday by the Foreign Secretary, which I find mystifying. They were uncharacteristically gratuitous. The prospect of a favourable result to a second Danish referendum now seems reasonably good but no one can be certain. However, it is certainly not necessary for the Foreign Secretary to announce in advance that we would stand aside from anything which the other 10 members did were those circumstances to arise. I should like the noble Lord the Lord Privy Seal to tell us how that could be reconciled with the concluding part of the Prime Minister's Statement this afternoon about Britain's hard-headed interests. I am not sure why he had to dismiss idealism: a little idealism, accompanied by hard-headed realism, often does no harm.

409
I should like to hear the Lord Privy Seal explain how that can be reconciled with the concluding part of the Statement or with the policy of "Britain at the heart of Europe". Is it not putting the whole future orientation of this country at the mercy of what could be another narrow Danish vote? I should be grateful if the noble Lord could give some reassurance. It is not necessary to cross a bridge, particularly in the wrong direction, long before one comes to it.
In conclusion, I say to the noble Lord the Lord Privy Seal that if the Government, together with their partners, could build on the cautious steps taken towards a concerted policy for European recovery and economic growth I believe that that would do more than anything else to improve the popular climate in which the Government seek to pursue their European policy.
Lord Wakeham: My Lords, I thank both the noble Lord, Lord Richard, for welcoming parts of the Statement and the noble Lord, Lord Jenkins of Hillhead, for welcoming most of the Statement. I shall do my best to answer the questions which both noble Lords raised.
I shall deal first with the position with regard to Denmark. The noble Lord, Lord Jenkins, said that it is not necessary to cross bridges before we come to them, particularly if we cross them in the wrong direction. I shall certainly take his advice. My understanding of the position is that we are confident that the Danes will ratify the treaty and that the referendum will be resolved satisfactorily. Of course that is a matter for them, but the Danish Government and the opposition parties in Denmark all support the deal which was concluded at Edinburgh.
My right honourable friend the Foreign Secretary made the point that it is highly desirable that the EC moves forward as 12 members. I believe that the noble Lords, Lord Jenkins and Lord Richard, will agree that that is highly desirable and that the Maastricht Treaty cannot proceed unless all members ratify it. We are confident that the Danes will do so and also that we shall. I do not believe that I can pursue that matter further.
So far as concerns the timing of the passage of the Bill in another place, I do not believe that what happened at Edinburgh necessarily alters the position. The Prime Minister has made it abundantly clear that these matters have to proceed at a measured pace, and they will proceed at a measured pace. We are anxious for the Bill to go through, subject to proper consultations and discussions within another place before it comes to this House, where it will again be subject to scrutiny.
The arrangements which were entered into in respect of Denmark are legally binding decisions which give the Danes assurances on matters which were raised in their referendum. They are interpretations of the treaty, and as part of a legally binding agreement they would be justiciable in the European Court of Justice.
On the question of enlargement, the noble Lord, Lord Richard, mentioned what I believe to be one of the most significant matters in the Statement; namely, that the European Council agreed for the first time
410
that negotiations will begin on membership for Poland and Hungary. That is a policy which was first talked of by my noble friend Lady Thatcher some time ago. The fact that that has been taken on board by the European Council is an extremely welcome development.
With regard to GATT, it is tremendously important that a settlement is reached. The position did not change particularly at the Edinburgh Summit. The next stage of the negotiations is the discussions at Geneva which will take place very shortly. We are most anxious to achieve a satisfactory solution there.
With regard to subsidiarity the position is quite clear. Clear guidelines were agreed at Edinburgh about the application of the "subsidiarity" test. There will be rigorous new criteria that the Community will act only where member states agree that it should do so. As M. Delors says, national powers are the rule; Community action is the exception. I believe that that indicates a change in Commission psychology and demonstrates that progress has been made, but when the agreement is finally signed that and the Danish question will be justiciable before the international court.
As to social policy, I think that the noble Lord, Lord Richard, was a touch unfair in his comments particularly in relation to the United Kingdom's record in that regard. According to the latest Commission report the United Kingdom is the only member state to have implemented all 22 Community social measures. Twenty-five of the 40 measures tabled under the Social Action Programme have been agreed, including measures on health and safety, free movement of labour, training practices, equal opportunities and employee rights. The United Kingdom has not blocked a single proposal under that programme. The United Kingdom supports the concept of a social dimension to the Community but believes very strongly that subsidiarity must be respected and has a prime role in the diversity of member states. Social policy must be designed to help not damage employment. The United Kingdom will continue to oppose measures which go against that criterion, but our record is a very good one.
With regard to the free movement of persons, the European Council noted that member states had indicated their intention to take various measures to lighten the controls on EC nationals at national borders, but the treaty did not affect our ability to impose immigration controls on third country nationals.
If I may say so, the noble Lord, Lord Richard, seemed to depart from the usual moderate way in which he put points. To dismiss a new European growth initiative to encourage £25 billion worth of extra investment over the next few years as something of no great account seems to me to be not very reasonable. There are a number of elements, many of which mirror United Kingdom Government policy as set out in the Autumn Statement. It is a 10-point strategy, the main point of which is a new lending facility within the European Investment Bank to finance projects. It will be able to lend up to 75 per cent. of the value of projects instead of the normal 50

411
per cent. There will be extra investment of about £6 billion; a new European fund for investment in trans-European networks to guarantee loans particularly for small and medium-sized businesses; and additional resources for investment in transport energy, particularly in the poorer regions of the Community. I would have thought that that was a very significant move in the right direction to bring back economic growth and jobs within the Community.
4.15 p.m.
Lord Boyd-Carpenter: My Lords, according to press reports, in order to secure the agreement of the Spanish representatives it was necessary to increase certain Community expenditures. I ask my noble friend to confirm whether or not that is so. If it is the case, perhaps he will tell us the sum of money involved.
Lord Wakeham: My Lords, my noble friend is absolutely right. The Community budget is to be held at its present level of 1.2 per cent. of own resources for the next two years. There will then be a modest rise to 1.27 per cent. in 1999. That has to be compared with the Commission's original suggestion of 1.37 per cent. in 1997. The increase in 1999 will represent a sum equal to 0.1 per cent. of total public expenditure.
Lord Mackie of Benshie: My Lords, I would like to ask the Minister to touch a little more on the very important subject of Bosnia.
Lord Stoddart of Swindon: My Lords, I should like to speak from this side of the House.
Noble Lords: Order!
Lord Wakeham: My Lords, perhaps the noble Lord, Lord Mackie of Benshie, may be permitted to finish his question and then the noble Lord, Lord Stoddart, can speak next.
Lord Mackie of Benshie: My Lords, perhaps I may ask the noble Lord to expand on the information about Bosnia. I understand from the Financial Times that the systematic rape of Moslem women in Bosnia has been condemned. The Summit Statement of these great men says that they will ask the United Nations to draw up a report on the situation. Surely something more was said; surely a signal that the Western Union were prepared to use force to enforce the no-fly zone could have been sent. Up to now the Serbs have been encouraged by the lack of action. Reports like this —that the United Nations should be urged to draw up a report—must surely result in more atrocities by the Serbs in Bosnia.
Lord Wakeham: My Lords, I seek to explain to the noble Lord what I understand to have been agreed at Edinburgh as far as Yugoslavia is concerned. There was a declaration that made clear that the primary responsibility for the war rested with the Serbs, the particular victims being Bosnian Moslems. There was a declaration that favoured the creation of safe havens for Bosnian Moslems. The United Nations Security
412
Council was urged to reconsider the use of all reasonable means to enforce a no-fly zone over Bosnia and to set up a special monitoring team to investigate allegations of rape of Moslem women. Whilst sanctions are having an economic effect, that has not been translated into a political effect, and it has been made clear that we shall work to strengthen the application of those sanctions.
Lord Cockfield: My Lords—
Lord Stoddart of Swindon: My Lords, I give way to the other side. I simply want fairness.
Lord Wakeham: My Lords, I did say to the noble Lord that he should come in next.
Lord Cockfield: My Lords, I was specifically giving way.
Lord Wakeham: My Lords, the noble Lord with his normal courtesy will do that. The noble Lord, Lord Stoddart, should now ask his question.
Lord Stoddart of Swindon: My Lords, I shall certainly do that. I was merely seeking to ensure that fairness prevailed on all sides. It was our turn next, then it might have been the turn of the Liberals and then the turn of the Conservatives. Since my point has been acceded to, I will get on with it in my own good time.
The noble Lord the Leader of the House said that it was in Britain's best interests to be a member of the Community. I ask whether at some time we could have a cost-benefit analysis of our membership of the EC, especially bearing in mind that unemployment has quadrupled since we have been in it. I also ask whether the Danish opt-out is for all time or whether it is limited to four years after which time it will be reconsidered. As the Prime Minister said that he got the best deal at Maastricht, perhaps I may ask why the United Kingdom cannot now have the same deal as Denmark, particularly in relation to foreign affairs and citizenship. Thirdly, how much additional money shall we have to pay, not in percentage terms but in pounds shillings and pence?
Noble Lords: Oh!
Lord Stoddart of Swindon: All right, my Lords, pounds and pence—I am sorry that we cannot use shillings and pence; it is a great shame.
Will the noble Lord tell us the amount in figures that we shall be paying additionally in two years' time and from then henceforth?
Lord Wakeham: My Lords, the noble Lord used his opportunity well. He asked a number of questions; I am not sure that I can answer them all completely, but I shall write to him if I have missed any.
The important points in relation to the arrangements for Denmark cover the EMU, citizenship, defence, co-operation, injustice, home affairs and other issues. Those arrangements relate to Denmark and to Danish circumstances. The best deal was negotiated for the United Kingdom at Maastricht. We do not require special arrangements. We are a leading and founder member of the Western European Union;

413
the Danes are not and do not propose to join it. The agreements, which will be legally binding and, therefore, justiciable, will be reviewed in 1996.
The position in regard to future financing is as I have stated. It concerns percentages of GNP and therefore it is not possible to give an exact answer because it depends upon the increase in GNP. My understanding is that it could amount to a sum of approximately £200 million in 1999. That represents an increase in Community spending from which we will receive some benefit not the least of which is that if the Community is more prosperous, then the prospects of exports for British industry, and therefore the prospects for British jobs, will be increased.
Lord Cockfield: My Lords, ought not our first reaction be to congratulate the Prime Minister upon having rescued not only the British Presidency but the European Community as a whole against very considerable odds in a situation of great difficulty and danger?
I should, however, like to say that, although the pudding has been mixed at Edinburgh, the proof will only come in the eating, and the pudding will not be eaten for another six months. Therefore, we need to be constantly vigilant.
I should like to put to my noble friend on the Front Bench what may appear to be a technical point, but one which has considerable implications. He referred to the European Community as "the world's largest free trade area". The European Community has never been only a free trade area. It started life as a customs union. The effect of the single market programme was to take it forward a substantial step towards being an economic union. That is an important point because, as the noble Lord, Lord Stoddart of Swindon, has argued on many occasions, it is important that people should understand precisely what has happened. We must be quite clear about this matter.
I greatly welcome the decision to press ahead with the negotiations for Community membership with the EFTA countries or those that have already applied for membership. I ask whether there is a real danger that the Edinburgh Summit has beatified, if not sanctified, the concept of a two-tier Europe, with Denmark having placed itself very firmly in a second tier and our own country being very close to assuming leadership of the second tier? If that danger exists, we ought to be very well aware of it because the implications for this country and particularly for the City of London are very serious.
Lord Wakeham: My Lords, I should like to thank my noble friend for his warm support of what the Prime Minister has achieved at Edinburgh. I take note of his warning that the proof of the pudding is in the eating. However, progress must continue and the good intentions and agreements at Edinburgh are not the only matters that have to be dealt with. We must continue to make progress.
I am sure that my noble friend, in view of his very great contribution in an earlier incarnation, takes particular pleasure in the fact that we have reached a
414
point where it is possible to say that we have completed the single market on time. That is a very great achievement.
I listened with obvious attention to the remarks of my noble friend. However, I do not believe that it would be a reasonable interpretation of what happened at Edinburgh to state that a two-speed Europe is emerging—though I know that my noble friend did not actually say that. The necessary agreements were achieved at Edinburgh in order to keep the Twelve together so that the Maastricht Treaty can be ratified throughout Europe, which is a very important matter.
Lord Kennet: My Lords, would it be in order to congratulate the noble Lord the Leader of the House on drawing his colleague, the Foreign Secretary, some distance back across that bridge? I will not go so far as to congratulate him on eating any words, but perhaps he has gone some distance back. I have a question about that bridge. It is not a tricky question; it is a matter of fact. Is any precedent known for making an important government decision in this country subject to the decision at referendum of the people of another country? That accusation is constantly thrown at the British Government by President Mitterrand, and I think that there is some force in it.
Lord Wakeham: My Lords, the noble Lord has asked me what he states is not a trick question. They are the ones that over the years I have learned to treat with a great deal of caution.
Every treaty ratification is, in a sense, dependent upon other governments, other parties and other parliaments in other countries. A treaty that has to be ratified will not come into force unless it is ratified by all the signatory countries. To state that we believe that the Maastricht treaty will now be ratified by all the countries in Europe is to recognise that it is absolutely necessary for them all to ratify it in order for the Maastricht Treaty to be agreed.
Lord Monson: My Lords, would the noble Lord the Leader of the House agree that the much-trumpeted advent of the principle of subsidiarity has turned out to be something of a damp squib? Instead of a hundred or more laws and regulations which should never have been taken from them in the first place being returned to the competence of national parliaments, we are left with a mere 20, most of which cover minor matters.
Is the noble Lord aware that Herr Manfred Brunner, who was formerly Chief of Cabinet for the EC Commissioner, Martin Bangemann, and who was sacked three months ago for speaking his mind, is convinced, according to European Network News,
"that a solution to the so-called Danish problem without a real renegotiation will only be a treatment of symptoms. The fundamental failure of the Maastricht treaty will show up in other fields. The solution to the problems is a new treaty—not exceptions."
Lord Wakeham: My Lords, the noble Lord puts forward his point of view, and I do not believe it to be totally right. He is a bit unfair on subsidiarity. I direct his attention to Annex 2 to Part A of the conclusions

415
of the summit. There are several pages of what has been agreed, and the proposals that have been withdrawn are very widespread indeed. A number of proposals are not being proceeded with. There is another set of proposals which tends to go into excessive detail in relation to the objectives pursued. Just to take one thing that comes to mind, on the environment the Commission intends to simplify, consolidate and update existing texts, particularly those on air and water, and to take due knowledge of technical progress into account. We made significant moves forward on subsidiarity, and I do not believe that it can be dismissed as anything other than that.
Lord Renton: My Lords, perhaps I may assure my noble friend that in Huntingdon we shall be even more proud of our local Member than we have always been. On subsidiarity, can my noble friend assure us that the guidelines will have as great a legal effect as Article 3(b) of the original treaty, which left a good deal to be desired?
Lord Wakeham: My Lords, I am no lawyer so I cannot give my noble friend an answer with the precision that his question entitles him to expect. My understanding is that there will be rigorous new criteria and that the Community will act only where member states agree that it should. The presumption will be that national powers will be the rule and the Community will be the exception, and that that will be justiciable. I think that that is as far as I can go, but it is a significant move forward.
Lord Bruce of Donington: My Lords, the noble Lord has drawn the attention of the House to the subsidiarity parts of the communiqué. Will he confirm that these items that are supposed to be justiciable occupy some 12 pages, with a further six added to the end by way of an appendix, and that new kinds of definitions come into it at the request of the Commission, including the new agreement for proportionality and intensity?
Will the noble Lord also confirm that the Commission's proposals to reconsider its attitude towards subsidiarity, particularly with regard to current proposals, has resulted in the following minnows being offered to the Community: some three proposals are proposed to be withdrawn; some consideration is being given to the possible withdrawal of 11; and a further three will be under review? That is the sum total of the Commission's review of subsidiarity, which in point of fact was claimed by the Prime Minister, when he returned from Maastricht, as being the essential part of game, set and match.
Is the noble Lord aware that the conclusions of the presidency on the proceedings incorporated in the 100-page document bear no relevance whatever to the needs of the Community's population as a whole, with 70 million unemployed, and widespread recession and distress throughout the Community? Would it not be better to call the existing proposals "much ado about nothing" by saying of them that never in the recorded history of man has there been so great a unanimity in favour of so great a vacuum?
Lord Wakeham: My Lords, in all honesty it might have been factually correct that three proposals have been withdrawn, but here is the Commission considering withdrawing a whole series of proposals. It is saying that it plans to revise a number of them, so that general principles are established which are to be given more detailed form by member states. There is a whole area of other activities that it believes it needs to scrutinise as part of its programme in 1993.
Finally, following consultation with interested parties, the document says that the Commission intends to abandon certain initiatives that have been planned. It will not, for instance, be going ahead with proposals on harmonisation of vehicle number plates, about which I am sure the noble Lord will be pleased, or the regulation of gambling, about which I am not sure he approves or not. I understand the noble Lord's enthusiasm in these matters but I believe that he should have given at least a modest amount of encouragement to what was done at Edinburgh, which I would have thought he would have been pleased with.
Several noble Lords: My Lords,—
Lord Wakeham: My Lords, 20 minutes has gone, and I think we must move on.

Pension Funds: ECC Report
4.35 p.m.
Debate resumed.
The Parliamentary Under-Secretary of State, Department of Social Security (Lord Henley): My Lords, while not leaving the subject of Europe I draw the thoughts of the House back to pension funds and the pension funds directive. I begin by paying tribute to the noble Baroness, Lady Lockwood, and to members of her sub-committee for their careful and detailed examination and consideration of the proposal for a pension funds directive and for the clear and concise manner in which they produced their report. I also say to the noble Lord, Lord Rochester, how important it is to have a debate on this report of the committee. I hope that the debate will show that Her Majesty's Government, the committee and, for that matter, all Members of the House are in great agreement. I also join the committee in welcoming the draft directive.
The directive forms part of a package of liberalising measures to achieve a single market in financial services. Its objective is the removal, subject to prudential safeguards, of national barriers to the investment and management of pension fund assets. It is significant that in implementing this objective the effect on existing United Kingdom pensions legislation and practice will not be large.
Unlike several of our Community partners, we do not generally specify the location or category of investment in which pension schemes must invest their assets, nor do we require those assets to be managed by a UK fund manager. Those who wish to invest abroad, or to use the services of a non-UK fund manager, will already be doing so. That is not always

417
the case elsewhere. Some states have little occupational pension cover. In others, pensions may be provided directly from the assets of the company, without an intervening pension fund, and therefore there are no fund assets to be managed or invested. France operates a pay-as-you-go system, compulsory for all employers and employees, with assets sufficient to meet only the following year's benefit liabilities. Such assets are of course within the scope of the directive.
States which do have funded pension arrangements may currently lay down strict rules on where, and in what type of investment vehicle, pension fund assets are to be invested, specifying limits for each type of investment. They may also restrict fund management to institutions established in the state. The directive will have a major impact on them.
The Government, like your Lordships' committee, look forward to the removal of such restrictions, thereby enabling pension fund administrators in all member states to choose where to invest and whom to employ to manage fund assets. Some of these newly-liberated assets may be invested in London, and pension funds elsewhere in Europe may use the new opportunities to employ UK fund managers.
There is, however, a need for certain restrictions on the freedom which the directive opens up. We accept that pension scheme trustees should be able to use as fund managers only those who have been authorised in their home state to operate in this field. It would be unacceptable for UK pensioners and scheme members to have their pension fund assets managed by someone unable to satisfy the authorities in his home state that he was capable and suitable to do so.
We also see a need for general principles as to prudential investment practice. The noble Lord, Lord Brain, spoke about Article 4, which deals with the general principles of prudential investment. The directive makes provision for general prudential investment principles to take account of insolvency insurance and government guarantees. As the level of each of these varies from one state to another it would be difficult to impose a common application to the different schemes of all states, and that is why the Government have considered that this implementation would be difficult.
I am pleased to note too that the committee disapproved of any suggestion that national legislation should cease to be the basis for determining how national pension arrangements should operate. Adoption of the directive should not interfere with the right of member states to continue to lay down their own rules on pension scheme operation.
Many of your Lordships will know that amendments to the directive recently suggested by members of the European Parliament would impose Europe-wide rules on how pension schemes operate. We cannot accept that the directive should encompass such proposals. Apart from the obvious breach of the principle of subsidiarity, the introduction of such rules for the whole of Europe would run counter to the very reason why national pensions arrangements have developed as they have; that is, to meet the particular needs of employers and employees in each state in the light of that state's tax and social security legislation.
418
As was suggested by the noble Lord, Lord Brain, it would be as inappropriate to impose on British pension schemes constraints designed to deal with the peculiarities of French or German pension arrangements as it would be to impose on Spanish or Greek schemes restrictions to meet the distinctive characteristics of ours.
The House is aware that my right honourable friend the Secretary of State appointed the Pension Law Review Committee, under the chairmanship of Professor Roy Goode, to undertake a review of the framework of law and regulation within which occupational pension schemes operate in the United Kingdom. We are not prepared to see pre-empted the detailed examination which Professor Goode's committee is undertaking. I am glad to see that the committee shares the Government's view and also feels that consideration of the directive should not be delayed pending the report by Professor Goode and his committee, as was suggested by the CBI. The two issues are distinct and should remain so.
Before turning to particular provisions in the directive, I should like to refer briefly to what is left out. The Commission's original discussion paper proposed cross-border freedom, not only of fund management and investment but also of fund membership. That would have permitted a company with operations in more than one member state to establish a single pension fund into which contributions and from which benefits would be paid in respect of employees wherever in the Community they were employed. It was omitted from the directive because of difficulties, not least in the tax and social security fields, which needed to be resolved before it could be adopted.
The Government have already expressed support for the principle of freedom of cross-border membership. The Commission, rightly in our view, believed, however, that it would be preferable to achieve the adoption of the comparatively more straightforward cross-border freedoms in this directive before embarking on a far more complex excursion into cross-border membership. Your Lordships' committee welcomed the Commission's intention to put forward further proposals in this field in due course.
Indeed, as your Lordships will know, the Commission has produced a discussion document to promote debate on the possibility of workers posted by their employers to work in another member state. The Commission suggests that such workers should be allowed to remain in their home state pension scheme. The Government are considering the proposals in the paper and will be responding in the new year. The Government will support the Commission in principle in proposals to deal not only with the posted workers but also with locally-recruited employees. As the noble Baroness, Lady Lockwood, pointed out, there are a number of difficulties to be overcome, particularly in the tax field.
In the light of the Commission communication on supplementary social security schemes, the Government tabled a draft resolution calling on member states to implement measures to remove

419
obstacles to the mobility of workers and on the Commission to report what action had already been taken by member states and to consider whether further action was required. My department, the Department of Social Security, worked hard to achieve agreement to the proposal. However, I regret to say that it could not be accepted by all member states at the meeting of the Social Affairs Council on 3rd December. The draft resolution has therefore been referred back to officials to see whether a compromise agreement can be achieved. I assure the House that we shall continue to work towards adoption of the draft resolution.
I turn to two particular issues raised in the committee's report. The first is the restrictions on self-investment and the second is currency matching. The Government support the principle of restricting the level of self-investment by a pension fund. We introduced regulations for this purpose in March this year. If a pension fund holds too high a proportion of its assets in the sponsoring employer, failure of the company or a drop in its share price means a drop in the value of the pension fund at a time when the employer is not in a position to make good the deficit.
When introducing those regulations we realised that there needed to be exceptions. In particular, the owners of small businesses who are members of small self-administered schemes, conscious of the risk they run, use their own but not their employees' pension rights as capital for investment. To impose on them the normal restrictions on self-investment would create substantial difficulties for their businesses which would need to obtain their working capital elsewhere. We also recognised the need for transitional arrangements for existing self-investment.
Small self-administered schemes and others have sought comparable derogations from the directive, as did your Lordships' committee. I can confirm that we are seeking a derogation from the self-investment restrictions in the directive similar to that in our own regulations.
I turn to currency matching. The directive would permit member states to continue to require pension funds to hold up to 60 per cent. or 80 per cent. of their assets in the currency in which the liabilities arise. We have no such requirement in the UK nor do we consider such a requirement necessary or compatible with the liberalisation which the directive seeks to achieve. I am glad to be able to draw upon the committee's support in seeking its removal. However, several member states who do not agree with us are unlikely to look favourably at the suggestion.
I believe all noble Lords will agree that adoption of the directive will benefit both pensioners and the pensions and financial services sector not only in the UK but throughout the Community. I am glad to have the support of the committee and of the House for the Government's position. During our presidency we have taken the directive forward in a Council working group. In reply to the noble Lord, Lord Rochester, we look forward to its adoption by the Council of Ministers next year with, we hope, implementation by the end of 1994.
4.47 p.m.
Baroness Lockwood: My Lords, I thank all noble Lords who have taken part in the debate. I also thank the Minister for the sympathetic way in which he received the report; it was confirmation of an earlier written reply. I congratulate him on bringing the House back to the micro-issues of the Community as opposed to the more macro-issues which we were discussing arising from the Edinburgh conference. I had hoped that we would conclude our debate before discussing the Statement.
As the Minister indicated, there is little difference between the committee and the Government. However, the debate has been important because it has given members of the committee and the Minister an opportunity to draw out many of the issues contained in the directive. I said at the outset today that the issue was technical, and that was underlined by the contributions that followed. Nevertheless, it is an important matter. As life expectancy increases, as more and more citizens become members of pension schemes, and as workers become more and more mobile throughout the Community, the framework which this directive provides will be important to their personal lives. Therefore, although the report is technical, I hope that it will be widely used in the Community and in this country in particular.
On Question, Motion agreed to.

Banking Coordination (Second Council Directive) Regulations 1992
4.50 p.m.
Lord Henley Lord Henley rose to move, That the draft regulations laid before the House on 17th November be approved [12th Report from the Joint Committee].
The noble Lord said: My Lords, continuing our European and single market theme, the regulations we are debating today bring into effect the Second Banking Directive, which is the key banking measure in the single market programme, and which will bring a fundamental change in the system for authorising and supervising banks and building societies operating throughout the Community.
The Second Banking Directive builds on the foundations established by a series of Community directives setting common minimum standards by which all EC supervisors will be bound in supervising their banks. These directives open the way for a framework where each member state will recognise the banking authorisations granted in the others. EC banks, and certain of their subsidiaries, can now benefit from a common banking "passport" which enables them to conduct a wide range of banking and financial services throughout the Community, on the basis of the authorisation obtained in their home member state.
All this means that there will be a major rationalisation of supervisory responsibilities within the Community, with home states taking on

421
responsibility for supervising the activities that their banks carry on under their passport throughout the Community.
The role of the "host state" is correspondingly reduced. But host states retain a general duty to co-operate closely with home supervisors, and have specific responsibilities in certain areas such as the supervision of liquidity. The host state also retains the right to act in emergencies to prevent an incoming institution from making any further transactions, and host states can continue to apply to incoming institutions the consumer protection and conduct of business rules which they have adopted in the interests of the general good. Depositors and investors with UK branches of EC institutions operating here under the passport will continue to be protected by UK depositor and investor protection schemes. This will continue to be the position until and unless there is agreement within the EC on common minimum standards of deposit and investor protection, which would enable protection to be moved on to a home state basis.
The single market in banking clearly offers great competitive opportunities for banks and building societies. But consumers also stand to gain from the new regime. The prospect of greater competition from elsewhere in the Community may be no bad thing in terms of keeping banks on their toes. If customers are not getting the choice and competition they expect from their domestic banks, the Second Banking Directive should make it easier for banks from another member state to enter the fray and try to do better.
Turning to the regulations themselves, and looking first at the operation of the passport in the UK, institutions which operate here on a passport basis are given the name "European institutions". The activities for which the passport may be granted are listed in Schedule I to these regulations. They start with the familiar banking activities of taking deposits and lending, but include also a variety of activities regulated under the Financial Services Act, the Consumer Credit Act, and—in one small respect—the Insurance Companies Act.
The regulations set out in detail the powers the UK supervisors will be able to exercise as host states. Responsibilities for co-operating with home supervisors will be shared between the Bank of England and the Financial Services Act supervisors, and the Director General of Fair Trading, in his Consumer Credit Act role. All those authorities are provided with powers of restriction and prohibition over European institutions within the area of their respective responsibilities.
The provisions of the regulations dealing with UK institutions mirror the procedures for incoming institutions as regards the procedures for obtaining the passport. However, for our own institutions we also need to implement the few changes required by the directive in terms of the general framework for authorising and supervising all credit institutions. For example, the directive requires us to introduce new trigger levels of shareholding at which the UK supervisors must be informed of the controller's
422
identity, and must be satisfied of his fitness and properness. Also new minimum capital levels have to be introduced for both banks and building societies.
These regulations also make the provision that is necessary to implement the EC Second Consolidated Supervision Directive. The purpose of that directive is to extend the range of circumstances in which supervision of a credit institution has to be conducted on a "consolidated" basis. Consolidated supervision means, in this context, that supervisors have to be satisfied about the solvency of the credit institution not only in its own right, but also taken together with other credit institutions or financial businesses elsewhere in the same group structure.
The bulk of the Second Consolidated Supervision Directive will be implemented through prudential notes, to be issued shortly, but these regulations provide the investigation powers that are necessary for other EC supervisors whose exercise of consolidated supervision requires them to investigate entities in the UK.
These regulations give effect to two directives which provide a welcome and sensible rationalisation of supervisory responsibilities. At the same time they enhance the competitive opportunities open to one of Britain's key export-earning industries and offering the prospect of greater competition and choice for consumers throughout the Community. For all those reasons, I believe that the new framework represents the right way ahead in this important area and I commend the regulations to the House.
Moved, That the draft regulations laid before the House on 17th November be approved [12th Report from the Joint Committee].—(Lord Henley).
Lord Desai: My Lords, on this side of the House we welcome the directive. As the single market is about to commence on 1st January, it is clear that we need regulations to look after the interests of consumers as well as investors.
The strategy adopted in the directive is more or less to take as adequate the member states' regulations on credit institutions and to hope that some form of co-ordination and consolidated supervision will take care of the problems. One must say that that is not the most satisfactory strategy. Therefore, we must think of the directive as a transition to a better state in which there will be more harmonisation and standardisation of the practices of credit institutions and the rules to which they are subject.
For the time being, the problem will remain that the different regulations adopted by different member states still allow for some shopping around for someone who wishes to find the weakest regulatory base at which to start his credit institution. Therefore, from that point of view what one may call the BCCI problem has not quite gone away. It will still be possible to look for the weakest link in the chain.
There is a related problem. As the BCCI case showed, the problem for the Bank of England was not so much that BCCI was a Luxembourg institution operating here but given the powers of the Bank of England, the dangers were not foreseen —or if they were foreseen, they were not acted upon. In the light of this directive and what has been learnt from the

423
BCCI case, do the Government intend to amend and strengthen our present legislation as regards banking supervision?
Secondly, we must see that the same problem will extend to self-regulating financial institutions. Our regulations are stronger in many cases than those of other European countries; and of course we welcome that. Indeed, if we are to gain our new share of financial services business throughout the Community, it will be necessary that we should impress people everywhere that we have a strong regulatory framework. In that respect, I should like to know whether there are any further plans to correct the weaknesses that have already been discovered in the present self-regulatory framework. Do the Government have any plans to bring forward any overarching regulations which will have teeth?
On the problem of consumer protection, referred to by the noble Lord, I welcome the directive. However, as was mentioned by the Member in another place from Edinburgh Central, how is a consumer to know what is the home base of a particular credit institution with which he or she deals? Would it not be better for clear signs to be given such as, "BCCI Luxembourg" or "BCCI France Ltd."? That would tell customers in a simple way which country was the home base of the credit institution and act as a warning symbol of problems that may arise.
Finally, I notice that the investment services directive has been delayed; and that is to be regretted. It would have been better if the banking directive had come in at the same time as the investment services directive. I understand that there is to be a delay of three years. I gather that certain European institutions which are in investment services can arrive here through the passport system and have a three-year lead time. Our own industry is subject to much sterner regulations. Does the Minister think that may disadvantage British firms in that sector? If so, what do the Government intend to do about it?
5 p.m.
Lord Cockfield: My Lords, I do not in any way oppose the regulations. Indeed, as I was responsible for originally launching the matter, I can hardly be expected to do so. However, the BCCI case raises important issues and in some ways underlines certain anxieties that we felt at the time when the directive was originally drafted.
The matter was considered by Lord Justice Bingham in his inquiry of the BCCI case. I gave evidence to him, as is recorded in the appendix to the report. Lord Justice Bingham made certain recommendations, and the Commission put forward certain proposals. However, at this stage I go no further than to ask whether the proposals put forward by Lord Justice Bingham—which go further than those made by the Commission—go far enough.
The essential problem is that we are relying upon not only our own prudential supervision, which in our usual national way we regard as being beyond reproach, but we are also relying upon the prudential supervision exercised in 11 other member states. The
424
issue involved is not essentially one of harmonisation, as the noble Lord, Lord Desai, suggested. Indeed, the whole drive of the initiative and the other matters with which I dealt in the single market programme was to get away from harmonisation. We were laying down the essential requirements only at Community level.
The real issue is whether the essential requirements are sufficiently adequate. I know that sounds somewhat legalistic, but it is important to be clear as to what it is we are doing. I am not suggesting harmonisation. I am asking whether we are satisfied that the prudential requirements and the requirements for supervision as laid down in the second directive are adequate or whether they need reinforcing not only as suggested by Lord Justice Bingham, but possibly also a little further than that.
Lord Henley: My Lords, perhaps I may briefly respond to the comments made by my noble friend Lord Cockfield and the noble Lord, Lord Desai. Both the noble Lord, Lord Desai, and my noble friend are concerned that there is a need for tightening, in the light of BCCI and the comments made by Lord Justice Bingham (or the Master of the Rolls as he now is) in the report. Perhaps I may make a few comments on what the report says.
Lord Justice Bingham made it clear that nothing in that case called into question the new framework. His recommendation concerned points of detail that need to be looked at in order to ensure that all the lessons of the case are taken forward. First, he emphasised the importance of the principle that a bank's head office —the location of its mind management—should be in the same place as its registered office. The recital to the second banking directive makes clear that member states must require that. It is a principle which the Banks and Building Societies Commission will be applying in authorising and supervising UK incorporated institutions. However, Sir Thomas said that it would be more satisfactory if the principle were to appear in substantive articles of the second banking directive. The Government agree.
Secondly, Lord Justice Bingham recommended that added force be given to the principle currently reflected in the recital of the second consolidated supervision directive: that all supervisors should have powers to refuse authorisation or to withdraw it once given where banking groups are structured in such a way as to frustrate effective consolidated supervision. Both those potential changes to Community legislation have already been discussed in outline at ECOFIN on 23rd November and received a broad welcome. The Commission has undertaken to bring forward specific proposals with all possible speed.
Thirdly, Lord Justice Bingham said that the Community needs to look again at the issue of supervisory confidentiality and specifically at the exceptions to it—so called "gateways"—which enable supervisors to communicate as they need to with others engaged in regulating different aspects of the bank concerned or the banking and financial system more generally. Lord Justice Bingham highlighted the issue of exchanges of information between Community supervisors and those in third countries.

425
I know that the Commission is keen to look at what can be done to facilitate co-operation and exchanges of information in that area.
The fourth recommendation on the EC framework was that there should be agreement as soon as possible on the Community directive on deposit protection, putting it on a home state basis to parallel supervision. The Government fully support that principle and a draft of such directive is currently being discussed. A considerable degree of progress has been made under the United Kingdom presidency and we hope to see more progress made in the future.
The noble Lord, Lord Desai, asked what plans we had to amend banking legislation. I believe we made it clear in response to the Bingham Report that we would introduce legislation on two matters. First, we would place a duty on auditors to report to the bank information relevant to their supervisory task. Secondly, we would give the Bank explicit powers to deal with banks with unsupervisable structures. Whether we go on to greater reform in that field—the noble Lord recognised that we have a relatively good framework for supervision of our structures—I can only repeat what was said by my honourable friend the Economic Secretary in another place. He talked of seeing no advantage in embarking on a hasty and wholesale reform of supervision of financial services. It would be foolhardy to embark on such a course without due consideration and consultation.
The noble Lord asked also about the investment services directive. We should have liked, and the Commission originally intended, the investment services directive to come into force at the same time as the banking directive to give investment firms the passport at the same time as banks. However, we saw no benefit in agreeing an early investment services directive which would restrict activities and damage markets. The United Kingdom and her allies were right to hold out for the liberalising directive which was agreed at the meeting of EC finance Ministers on 23rd November. My understanding is that the investment services directive will come into force on 1st January 1996. While we might have preferred an earlier date, that is realistic since implementation of the rules will require a great deal of work by both the United Kingdom and the other EC regulators and firms.
I hope that I have dealt with the points which have been raised by both noble Lords. Again, I commend these regulations to the House.
On Question, Motion agreed to.

Education Support Grants Regulations 1992
5.10 p.m.
The Minister of State, Department of Education (Baroness Blatch)The Minister of State, Department of Education (Baroness Blatch) rose to move, That the draft regulations laid before the House on 24th November be approved [13th Report from the Joint Committee].
The noble Baroness said: My Lords, these draft regulations consolidate, with amendments, the Education Support Grant Regulations 1990 as
426
amended by the Education Support Grant (Amendment) Regulations 1991. Their main purpose is to allow for the new grant purposes that we want to introduce in the 1993–94 programme of grants for education support and training. All grants supported by ESG have to be specified in the schedule to the regulations, which lists the purposes for which ESG grant may be paid. These regulations add our new grants to that schedule.
The draft regulations also provide for two technical changes in respect of the timing of grant payments to local education authorities. First, in England grant may be claimed by LEAs and paid to them each term. But in Wales, also covered by the regulations, grant is currently claimed and paid quarterly. The effect of the draft regulations is that in future grant in Wales will also be claimed and paid on a termly basis. This will bring arrangements in Wales into line with those operating in England.
Secondly, the current regulations permit LEAs to make a claim for their estimated expenditure up to the financial year end so that most grant can be paid within the financial year to which it relates. Estimated claims are currently required to be submitted by 15th March. The draft regulations will advance that deadline slightly to 5th March to give greater certainty that grant claims can be processed and paid within the financial year.
Finally, the draft regulations remove from the schedule to regulations certain purposes for which grant is no longer payable and amend items in the schedule to reflect either the changed nature of grants or that they will be payable only in England or in Wales.
Let me now outline how we will use the regulations in 1993–94 in England. We intend to introduce into the programme for England two new areas of support to which we attach particular priority. The first new grant will support imaginative pilot schemes designed to tackle truancy. Promoting regular school attendance must be a top priority for all concerned with education. Truancy undermines the educational process and can be the first step towards a life of crime.
This new grant is designed to identify and disseminate good practice in promoting regular patterns of attendance and to concentrate effort in those LEAs where the problems of absenteeism or post-registration truancy are most severe. It will support £10 million of spending in 1993–94. LEAs may, for example, wish to experiment with registration procedures including more frequent registration in schools where post-registration truancy is a problem, possibly using new technology. We are also looking for action to counter bullying since that can often lead otherwise studious children to commit truancy.
The second new grant in England will support a youth action scheme aimed at 13 to 17 year-olds on housing estates. The scheme will channel young peoples' energies away from destructive and anti-community activities. They will be able to participate in challenging activities designed to develop their self-esteem and sense of responsibility to themselves

427
and the wider community. Grant will be available to support some £3.2 million of expenditure on the scheme.
Those are the new grants we intend to introduce in 1993–94. Let me now detail how they fit into the programme as a whole. ESGs and the LEA training grants scheme have been brought together in a combined programme of grants for education support and training, or GEST. While the administration of the two grants is co-ordinated as much as possible, they continue to be paid under their respective statutes.
We announced our proposals for the size and shape of the 1993–94 GEST programme in May. We plan grant support on total spending by LEAs of £320 million in England. The bulk of spending will be supported at a grant rate of 60 per cent. of spending. Grant of £195 million is available to support the total spending of £320 million.
In August we issued a circular to LEAs inviting them to submit bids for the GEST programme in 1993–94. LEAs returned their bids at the end of October. We are currently considering them with a view to deciding the final allocation of the programme. We hope to announce allocations to LEAs very shortly, subject to your Lordships' approval of these draft regulations.
As in previous years, we have decided that our main priority for the 1993–94 GEST programme is to help schools and LEAs to implement the education reforms. So, of the £320 million total programme, over £250 million, or almost 80 per cent. of it, is directly related to those reforms.
The circular for 1993–94 encouraged LEAs to involve schools closely in implementing projects and asked that LEAs should, wherever possible, devolve earmarked sums to schools for them to spend within the terms of the grants and their LMS schemes. For two grants—one supporting school management and the other supporting the basic curriculum and assessment —devolution of GEST funds to schools is an explicit criterion for receiving grant. These grants will support £114 million of spending in schools, which will be in addition to schools' LMS delegated budgets.
Schools will be able to decide the precise deployment of funds according to their particular priorities. They will choose the most appropriate balance between management training for teaching and administrative staff, training of school governors, and supporting administrative costs. They will also decide whether to use GEST funds for the curriculum and assessment to purchase books and equipment or to provide in-service training of teachers.
The 1993–94 programme includes almost £70 million for purposes which, although not directly related to the education reforms, are also high government priorities. I have already described the new grants for reducing truancy and for the youth action scheme. There will also be increased support for measures to raise standards in selected inner city schools facing particularly severe problems: £10 million will be available to continue support for
428
projects now under way and to extend support to other schools. The programme will also support initial teacher training, including for articled and licensed teacher routes; training to teach children with special educational needs; and the introduction of vocational qualifications in schools.
I said that we have also taken the opportunity in preparing the regulations to remove from the schedule certain items for which grant is no longer payable. GEST grants are payable only to LEAs. So a number of items relating to further education are being removed because from 1993–94 funding for them will become the responsibility of the new further education funding councils.
Most GEST grants are intended to be for a limited period only, to support new developments or meet new, particular demands. There are several projects which have now run their course and for which specific grant support will cease at the end of 1992–93. LEAs and schools will, as is only proper, then be free to decide the levels at which they wish to continue support.
So far I have concentrated on the GEST programme in England. In Wales, too, ESGs are being supported in 1993–94 and governed by these regulations. The programme in Wales will support expenditure of some £25 million in 1993–94. The purposes to be supported broadly match those in England, although they are organised differently in Wales. In terms of content, one main difference is that, as in previous years, support in Wales will be available for Welsh in the national curriculum. Some £3 million will be supported in 1993–94 for that purpose.
I indicated at the beginning of my speech that the regulations also introduce two new grant purposes in Wales. The first is to support new projects in support of the Secretary of State for Wales' initiative on primary school teaching methods. Support for £80,000 will be available in 1993–94 to help schools respond to guidance to be issued by the curriculum council for Wales following the review of primary school teaching methods and classroom organisation.
The second new grant in Wales will be to encourage the integration of children with special educational needs into mainstream settings. The Welsh Office will be looking for evidence of an innovative approach and for projects involving the active participation of parents. Grants will support £200,000 in 1993–94.
In conclusion, perhaps I may outline just three examples of the many developments which have been assisted by grant support. With support from the ESG grants for local management of schools, almost 90 per cent. of primary schools, all secondary schools and some 45 per cent. of special schools will have been equipped with management information systems by April 1993. Some 30,000 school administrative staff will have been trained in their use. As part of GEST support for the introduction of the national curriculum, some 15,000 teachers have attended GEST-funded training courses to enhance their subject knowledge in mathematics and science. Grant will in 1993–94 be extended to cover also courses in geography, history and technology. In 1992–93 alone, grant is supporting the specialist training of over 500

429
new teachers of pupils with special educational needs and the training of more than 2,100 teachers to provide special educational needs back-up to teachers in ordinary schools.
The regulations now before the House will allow us to continue funding important and beneficial developments such as these and to extend our programme of education reforms to raise standards in new areas. I commend them to your Lordships.
Moved, That the draft regulations laid before the House on 24th November be approved [13th Report from the Joint Committee].—[Baroness Blotch.]
5.21 p.m.
Lord Ponsonby of Shulbrede: My Lords, I should like to thank the Minister for her statement. I have several questions arising out of the schedule of the draft regulations. First, it is worth noting that this is possibly the last time that there will be a guaranteed debate on the educational support grant. Clause 236 of the Education Bill currently before Parliament will simplify the arrangements for specific grants, but will also remove the requirement for an affirmative order to make changes to the regulations.
On the matter of health education, it is proposed to withdraw the special support for local education authorities outside Wales. This grant was introduced about seven years ago to improve health education in schools. While the increase in AIDS has not been of the scale first feared, AIDS, drug abuse and other health matters continue to be scourges in our country and we should not give up any opportunity to combat them. The Government should not shrink from providing special support to the LEAs to make this provision.
Perhaps I may now turn to in-service training. The Government say that this responsibility has been devolved to the schools, but would the Minister agree that some courses are better provided by the LEAs themselves? I am thinking particularly of essential courses to be provided across the board, such as those relating to aspects of the Children Act, about which the Government are so proud.
Turning now to grant-maintained schools, we know that there has been a reduction in the size of the GEST (grants for education support and training) programme. Although a shortfall would have occurred due to the removal of further education from local government in April 1993, it would appear that the reduction due to the creation of grant-maintained schools is some £37 million. This is over 10 per cent. of the GEST programme, although the number of grant-maintained schools is only 2 per cent. of the GEST programme. Can the Minister confirm my interpretation of these figures, and can she comment on their fairness? Can the Minister also say whether there is any provision for transferring money into the general expenditure under GEST for LEA schools if the take-up of grant-maintained status is not as high as the Government anticipated?
Moving to the subject of special educational provision, is there not an argument that ring-fencing is the only sure way to safeguard this valuable work? The vital work of educational psychologists, to which
430
I should like to pay tribute, is under threat due to a lack of money for statementing children. Further, will the Minister say whether there will be any additional provision so that the work of the educational psychologists in integrating children with special educational needs into schools can be continued across the whole country? Finally on the subject of educational provision, what steps have been taken to safeguard the training of teachers for special needs teaching now that this item is no longer to be ring-fenced?
I should like to touch briefly on the enforcement of the 1984 Act. I understand that there is a provision in the Act that LEAs which do not use the money allocated to them in a fit manner can be asked to return that money. Can the Minister tell me whether those powers have ever been used?
Finally, I close by heartily welcoming the crime and truancy prevention programmes which have been introduced. I hope that these programmes will have every success in preventing children from going off the rails. We approve the regulations.
5.25 p.m.
Lord Ritchie of Dundee: My Lords, from these Benches I should like to thank the Minister for her explanation of the new regulations, and to offer my congratulations to the new Front-Bench speaker on the Labour Benches.
I have received from the Minister a list of the sums of money which have been set aside for grants for 1993–94. My first question is in connection with that. I may be being unduly stupid over this, but I have had some difficulty in matching some of the grants offered with the schedule of purposes in the regulations. Perhaps I can give just one example. Mentioned among the sums that will be available for grants are "national curriculum assessments". That is fine, but I cannot see "national curriculum assessments" mentioned in the schedule. Perhaps the Minister will be kind enough to explain this to me when she replies.
More generally speaking, these excellent ideas come and go. I have seen many during the years that I have been speaking from these Benches. Can we know a little more about how they progress and, in particular, about why some of them disappear? I refer especially to health education, which was also mentioned from the Labour Front Bench. It seems to me that health education is about as important a subject as there could be, so why are only the Welsh to be educated in health matters from now on and why has England disappeared from the provision? I notice also that only young Welsh pupils will be taught social responsibility from now on. Of course, that is over-simplifying the matter—grants will be available for initiatives relating to the teaching of social responsibility only in Wales.
In 1990—two years ago—one of the projects mentioned was the training of teachers to improve pupils' use and understanding of the English language. Why did that disappear? I feel that as this is public money which is being devoted to—indeed, invested in—educational purposes, we should know

431
more about the return on it. How successful have these projects been? What has the take-up been? Has there been any discernible improvement in these areas?
Of course, we enormously applaud the initiative to improve the provision for pupils with behavioural problems, but that leads me to another question in relation to the grants being offered. I cannot see on the list of grants any specific items providing money for this very important purpose. The department has issued a discussion paper recently on the subject of exclusions. I must confess to your Lordships that, although I have read what the schools Minister has said about it, I have not yet read the paper itself. However, this seems to me to be a matter of the utmost importance. I know from bitter experience what it is like to have in a school an adolescent whose behaviour is intolerable. I know that one adolescent can disrupt an entire school to an incredible extent. It is extremely unlikely that, as the schools Minister said in this connection, many schools can be excluding pupils for trifling reasons. There is also the question of what happens to children who are excluded. I know that that is a concern of the Government, and it seems to me also to be a matter of the highest importance.
I also greatly applaud the attempt and intention to improve attendance, to raise standards in urban areas and to take action such as the Minister described to protect young people against criminal involvement. This is a vicious spiral, as I am sure all noble Lords will agree. A child's destiny is largely determined by his home circumstances. A bad, broken or deserted home is likely to produce behavioural problems at school, truancy and low standards and poor achievement at school. Bad behaviour at school, low standards and truancy interact with each other and are likely to drive children towards criminal involvement. Anything that can be done to improve that situation is of the utmost importance. It is better to spend millions of pounds on tackling the problem than to spend millions of pounds on building more prisons. I once again thank the noble Baroness. I would be grateful for anything she can tell me in reply to my questions.
5.30 p.m.
Baroness Blatch: My Lords, perhaps I may, first, say how pleased we are to welcome the noble Lord, Lord Ponsonby, to the Dispatch Box for the first time. He performed much more competently than I did on my first appearance. It is a very nerve racking experience. I know that he is a formidable opponent in these matters and I am sure that I speak for the whole House when I say that we hope to see him on many future occasions.
This has been a useful debate. I believe that there is a wide measure of support for some of the measures, which are designed, first, to get children into school and, secondly, when they are in school, to do something about modifying their behaviour. Individual opinions of priorities will of course vary and the programme cannot cover every conceivable purpose. But I think we all agree that the GEST
432
programme continues to provide key support to ensure that the education service can respond to changing needs and can raise standards.
Perhaps I may now refer to some of the points that were made during the course of the debate. The noble Lord, Lord Ponsonby, mentioned his concern about the removal of the affirmative resolution in the future. Since their introduction in 1985, ESGs have become a normal—and I believe accepted—feature of education funding. They cover only a very small proportion of the £17 billion spending on education. It therefore seems reasonable for regulations to be subject to normal resolution procedures, as is already the case with the training grants side of GEST.
The noble Lords, Lord Ponsonby and Lord Ritchie, asked about health education. Much has changed since 1990–91, and even more since the original drugs education initiative started in 1986–87. In particular, the national curriculum incorporates aspects of health education into the statutory curriculum. I hope that I will gain the support of the noble Lord, Lord Ritchie, when I say that that is where the real education input needs to take place —in the national curriculum—so that the dangers and the information about lifestyle can be dealt with. The National Curriculum Council has issued detailed guidance, which I know has been helpful to schools, to help them plan comprehensive programmes of health education for all pupils aged five to 16. The decision to end the grant for preventive health education was not taken lightly. We recognise the concerns expressed, but it is important to balance those concerns against a range of other considerations. It must also be said that local authorities knew that that grant support was time limited.
Perhaps I may move on to the size of the GEST programme. It was rightly recognised by the noble Lord, Lord Ponsonby, that the change in size of the GEST programme between the two years reflects LEAs' reduced role in further education and in schools' inspection. It also reflects the expected growth in the number of grant maintained schools. Even in the few short weeks since we announced the global sum for GEST programmes, the number of grant maintained schools has risen quite dramatically. The number is now up to 356 from 217 in April. Another 119 have successfully balloted to become grant maintained and I know that there were around 100 ballots last month and 100 in the month before. Therefore the prediction that we may reach 1,500 by April 1994 still stands. I cannot say in advance of reaching that figure whether money would be referred back, but there is always a consideration about any money that becomes available in any budget heading as to where it should be reallocated. The noble Lord's views are certainly noted on that point.
Grant maintained schools are not eligible for GEST, which is legally payable only to LEAs, but instead receive funding for similar purposes through a special purpose grant. That point was noted by the noble Lord, Lord Ponsonby. I was asked about training for special educational special needs and why we are no longer ring-fencing the grant. The department has recently completed a thorough review

433
of special educational needs training. One of the main conclusions of the review was to combine previously separate grants into a single grant; and to increase this to cover all special educational needs categories. The GEST programme in England will support £10 million of expenditure on training for special needs in 1993–94, compared with just over £7 million in 1992–93. The increase in GEST funding should ensure that there is sufficient funding available to support the majority of training requirements. Local education authorities will now be in a position to determine exactly which areas of special educational needs training are required in their areas and to obtain grant support to facilitate that training.
On the devolution of grants to schools, the grants which must be devolved to schools represent £114 million of the total 1993–94 GEST programme of £320 million. We recognise, just as the noble Lord, Lord Ponsonby, recognised, that it would not be appropriate to devolve all of those moneys to schools. It is a question of balance in allowing schools to be masters of what they believe to be their own needs and to balance that with what is properly and appropriately dealt with at LEA level.
I was asked about the implications for education of the local authority finance settlement. The 1993–94 local authority grant settlement includes a share for education of £16.854 billion of the total standard spending allowed for local authorities in England. Allowing for changes of function, next year's figure represents an increase of £427 million, which is 2.6 per cent., compared with this year. The GEST fund is a very small proportion of the whole.
The noble Lord, Lord Ritchie, asked about the whereabouts of the national curriculum assessment in the schedule of grants. It is under item 9 in the schedule relating to the basic curriculum. Much of the work to do with supporting the national curriculum is subsumed in that global amount. If the noble Lord is worried about any specific part in that, perhaps he will write to me with his specific questions. I shall then be more than pleased to discuss them with the noble Lord or to write to him.
I was asked why grants come and go. Again, it is a question of changing priorities. It is for the Government to determine where they believe the next priority to lie, as indeed with truancy, which is looming large as a problem, the difficulty of some behavioural problems and the problems of inner cities. Therefore priorities from one year to another do change. The grants have never been intended to provide permanent support for any purpose, however worthy. Grants do not generally stay in the programme for more than five years and some are much shorter than that. It is right that authorities should eventually have to take their own decisions about how they wish to proceed with projects and what level of funding they wish to devote to them from their own resources.
Perhaps I may draw on my own personal experience when I was with a local authority. I used to make absolutely certain that any claim on support funding from national government which was time limited was thought through in terms of how the
434
money was to be used. I made certain, right from the outset of accepting a grant, that thought was given as to what to do when the grants stopped. In other words, that was built into the planned use of those moneys.
The regulations now before us will allow the continued funding of important and beneficial developments such as these, and extend our programme of education reforms to raise standards in new areas. I commend them to the House.
On Question, Motion agreed to.

Transport and Works (Description of Works Interfering with Navigation) Order 1992
—Motion for Withdrawal
5.40 p.m.
Lord Moran Lord Moran rose to move, That this House invites Her Majesty's Government to withdraw the Transport and Works (Description of Works Interfering with Navigation) Order 1992, laid before the House on 9th November, and to lay before the House another draft order with barrages removed from the scope of the order.
The noble Lord said: My Lords, I have put down the Motion because if the order being moved by the noble Earl, Lord Caithness, were to be approved by the House as it stands, it would mean, as I understand it, that Parliament would no longer be able to consider most estuarial and river barrage proposals. That is open to serious objection. I am interested in barrages in the commonly understood definition of that term —that is, impounding dams built right across rivers or estuaries—not the other structures listed in the order such as embankments or breakwaters.
The Transport and Works Bill was considered by your Lordships' House in the spring, three days before Dissolution. At that time, I imagine the political parties had other things on their minds. The Bill passed its Second Reading and all remaining stages on one day, 13th March. It seemed a relatively harmless measure, meeting the anxieties in both Houses about the proliferation of Private Bills and dealing apparently only with matters such as railways, trams, trolley systems and inland waterways. There was no mention of barrages in the Bill. No one said a word about barrages when the Bill went through Parliament.
Now we have before us an order with the forbidding title of Transport and Works (Description of Works Interfering with Navigation) Order 1992, which, if passed, would apply the provisions of the Transport and Works Act to barrages and some other works such as bridges, piers, cables and pipelines. It is proposed that it should come into force in 18 days' time on 1st January, 1993. Its main effect will be to make it possible for any promoter to seek an order for a barrage from the appropriate Secretary of State, without, as now, coming to Parliament.
If such an order were to be granted, we and the other place would no longer be able to consider

435
barrage proposals unless, under Section 9 of the Act, the Secretary of State were to form the opinion that the project was of national significance, in which case he could not make an order without obtaining the approval of both Houses of Parliament on a Motion to approve the project in principle. I shall say a word about that in a moment.
In anticipation of the order, the promoters of the second River Usk Barrage Bill, which was given a Second Reading under Standing Order No. 54 following a 24–24 vote in this House on 13th July, decided to withdraw their Bill which, indeed, seemed unlikely to survive all its stages in your Lordships' House. The leader of Newport Borough Council, Mr. Harry Jones, has written to me saying:
"Recently, the Council was informed of the Government's firm intention to extend the scope of the Transport and Works Act 1992 to apply to river barrages. This new procedure will be beneficial in a number of ways … the public inquiry system is fairer for local people, who will find it easier, more informal and less expensive to attend".
Mr. Jones clearly thinks that the Usk barrage proposal stands a substantially better chance of being approved under the arrangements the Government now propose than if it were to be scrutinised by both Houses in their respective Select Committees. I dare say that he is right.
Why should not we be content with what is now proposed? First, we should raise an eyebrow at the way this important legislation has been handled. To slip through the original Bill on the eve of a general election when no one was paying much attention, and then to invite the House to approve, just before the Christmas Recess, an order which substantially extends the scope of the Act, does not seem to me the best way to proceed. If the Government wanted the Act to cover barrages, why did not they include them in its scope so that those in either House—there are a good number—who are interested in barrages, either as supporters or critics of them, could have had a proper discussion of the issues and, if necessary, put down amendments to the Bill? I do not believe that the House has had a proper opportunity to consider the proposed changes in procedure relating to barrages.
But the main reason why I have put down the Motion is that it seems to me clear that the construction of barrages, in practice, raises all kinds of problems upon which I believe your Lordships ought to have a say. If the effects of barrages were to be of purely local significance, I should see little objection to what the Government propose. But barrages may, and do, involve issues transcending local considerations and ought to receive parliamentary scrutiny.
Let me give one or two examples. The Cardiff Bay Barrage Bill to which your Lordships gave a Second Reading on 16th November involves, as was made clear, the principle of whether it is right or consistent with the Government's environmental policies to destroy an SSSI. It also involves a possible breach of the Community's birds directive and the implications of a judgment by the European Court of Justice, matters that are to be pursued in Brussels. Again, an aspect affecting Cardiff Bay and other barrage proposals is the Community's waste water directive,
436
and the description under it of sensitive areas requiring additional treatment of discharges, which may be extremely costly. That aspect was referred to in relation to Cardiff Bay by the noble Viscount, Lord St Davids, when he spoke in the House on 16th November (col. 483.). It is obviously of much more than local significance.
Inland fisheries are a matter of obvious national importance, and Parliament has given the NRA statutory responsibility to maintain, improve and develop them. But barrages inevitably have an adverse effect on fisheries. Fish passes can be included in barrages but they are not always fully effective—even at Pitlochry a good many salmon turn back and never return—and they have other disadvantages. At the new Swansea barrage on the River Tawe a seal has taken up station at the entrance to the fish pass. Its interest is not, I think, purely academic.
In the two barrage proposals we have most recently considered in the House, I referred on Second Reading of the Cardiff Bay Barrage Bill to an expert view that, despite all the measures which are planned, numbers of salmon and sea trout entering the Taff may fall by a third or more, and about the proposed Usk barrage, that the NRA continues to have serious concerns about the damage the proposal may do to the aquatic environment, and in particular to fish stocks and fisheries. Damage to inland fisheries is, in my view, a question that goes much wider than purely local interests.
I should at this point say something about Section 9 of the Act which deals with projects of national significance. In the first place, it is entirely up to the Secretary of State concerned to decide when a proposal is of national significance. If he decides that it is not, there is nothing we can do about it, even if his decision were to appear to us unreasonable. But let us suppose that in a particular case—for example, the proposed Severn barrage —he does decide that it is of national significance. In that event, as I understand it, we could discuss only the approval of the project in principle. We could not, I believe, consider in depth or in detail the economic or environmental aspects of the project. But it is just those aspects that I believe we would want to examine. For example, I happen to be interested in fisheries. I believe that present plans for the Severn barrage would require incoming salmon to pass through the generating turbines; but, to the best of my belief, scientists have so far found no way in which a yard-long fish, swimming strongly against the flow but being sucked slowly back through the turbine, could avoid being cut up by the rotary turbine blades. So there could be 100 per cent. mortality and the runs of salmon in three famous rivers—the Severn, the Wye and the Usk—could be wiped out. Yet under the proposed procedure we would have, it seems, virtually no chance of going into such matters. All that we could talk about would be the general principle of the project. I cannot believe that those in the House who are interested in fisheries would be happy about that.
I greatly fear that the inclusion of barrages in the order would lead to many more proposals being approved, even though they may do serious damage to

437
the environment, to our estuaries, to migrating birds and migrating fish. Barrages, many of them proposed for purely cosmetic reasons, have unfortunately become the fashion, and every town at the mouth of a river seems to want one. Local public inquiries in the town where a barrage is proposed will inevitably be subject to organised local pressures, and in Wales, the fact that the Secretary of State is himself promoting a barrage in Cardiff may make it a little difficult for him to resist the many proposals for barrages on other rivers in Wales; for example, on the Loughor and the Conwy.
Parliament has in recent years lost many of its powers, mostly in fields like sea fisheries, trade and agriculture where responsibility has been assumed by the European Community. In this instance, a substantial shift of responsibility from the legislature to the Executive is being proposed which your Lordships may think is not right. In this area, I believe that Parliament has acted responsibly and conscientiously. One has only to look at the considerable time spent in both Houses examining all aspects of the Cardiff Bay proposal—a process that wilt continue in the new year.
Lord Callaghan of Cardiff: My Lords, will the noble Lord allow me to intervene? He keeps referring to the Cardiff Bay proposal, as an illustration I take it. I believe that nothing in this order would stop the present progress of the Cardiff Bay Barrage Bill, as agreed on Second Reading.
Lord Moran: My Lords, I am sure that the noble Lord is right. It is my understanding that the Bill will proceed, having had its Second Reading, to a Select Committee and that it will then return for the Committee stage in this House. The reason I mentioned Cardiff Bay is that it is an example of what may happen and demonstrates the general point that I am trying to make.
For all those reasons, I suggest that it is wrong in principle that barrages, which are concrete walls across estuaries and rivers, blocking their flow to the sea and raising substantial environmental and fisheries problems, should be removed from the scrutiny of Parliament where they can be thoroughly and carefully examined from a wider as well as a local point of view.
We should remember that barrage proposals are effectively irreversible. Once built, it is almost inconceivable that they should be demolished. I do not know whether many noble Lords share my view that rivers are a valuable part of our natural heritage. They have been sadly damaged by pollution, abstraction and canalisation. Now there is the proliferation of barrages. I reflect sadly on the words of the poet Swinburne:
"That even the weariest river
Winds somewhere safe to sea".
That was true in his day, but not in ours. I believe that this House ought to continue to keep an eye on what is being proposed on so many of our rivers. The Government's Motion is for an affirmative resolution and it is the normal practice of this House not to oppose such motions. But I am advised that it is in
438
order for us to invite the Government to modify their proposals and that is what my Motion seeks to do. I hope very much that the Government will accept it. If they are reluctant to do so, I hope that other noble Lords who have put down their names to speak will join me in questioning whether the order, in its present form, is appropriate. I beg to move.
Moved, That this House invites Her Majesty's Government to withdraw the Transport and Works (Description of Works Interfering with Navigation) Order 1992, laid before the House on 9th November, and to lay before the House another draft order with barrages removed from the scope of the order.—(Lord Moran.)
5.53 p.m.
Lord Renton: My Lords, I am sure that your Lordships will agree that the noble Lord, Lord Moran, has done us valuable service in raising this matter. I agree with the view that he has taken and the request which he made towards the end of his speech to the Government.
As I understand it, the order is not technically ultra vires, but it is nearly so because in my opinion it goes much wider than was contemplated or could have been contemplated within the wording of the power given in the statute. If we consider it in detail—which I shall not invite your Lordships to do, except for one point—we find that it goes very wide indeed. A list is given in paragraph 2 of the numerous kinds of works which would be dealt with under the order by ministerial action instead of by Private Bill and we can see how wide the order goes.
That raises the whole question of the suitability of ministerial orders for deciding big, complicated and frequently controversial matters involving works in our country. Generally, they are works carried out by public authorities; but frequently the orders relate to works carried out by private companies, and so on; and even more so since privatisation.
The question is whether it is better to have the procedure of the Secretary of State appointing an inspector to hold a public inquiry perhaps lasting a day or two—very often somewhat superficial within my own professional experience —or whether it is better to have the thorough examination under our Private Bill procedure with a committee appointed by one or other of the Houses of Parliament. Therefore, Parliament controls those important matters in our somewhat overcrowded country in which we are all anxious about the environment and in which the flow of rivers, with the variations in our climate, is a matter of prime importance.
I must remind your Lordships that the whole of our railway system and all our canals were built under powers given by Parliament in private Acts of Parliament. They were not built under powers given by ministerial orders. I should have thought it better for us to keep it like that.
The noble Lord, Lord Moran, mentioned the current Private Bill, and the noble Lord, Lord Callaghan, interrupted him. Obviously this order could not retrospectively affect the process of a current Private Bill. I am glad about that because at

439
the moment a Private Bill called the London Docklands Railway (Lewisham) Bill—very close to London—involves the diversion of the River Ravensbourne in controversial circumstances. A committee of your Lordships' House has considered it for some time in great detail and the Bill is now awaiting Third Reading. It was promoted by London Transport, and the National Rivers Authority naturally put in an objection. The committee considered it carefully and has written several clauses into the Bill which will help up to a point. However, there is still the question as to whether the undertaking offered at one stage but no longer on offer, should nevertheless be observed. That matter may come up at Third Reading.
We can reassure ourselves that all Bills in progress will be subject to the Private Bill procedure. But this order has tremendous implications for the future. It could mean that public authorities especially, with the connivance of a Secretary of State, could decide to duck the Private Bill procedure of Parliament and get the whole process through within the bureaucratic machine. That does not appeal to me with matters of great public and environmental importance and anxiety.
Therefore, I consider that we should ask my noble friend Lord Caithness, when he replies to the debate, to say that he will take the order away or at least consult the Secretary of State about taking it away, consider it in the light of the debate and bear in mind that the Act under which the order was made went through swiftly. As I understand it, the power given to make the order went through on the nod.
With those facts in mind, I should have thought that we are now at a moment of decision which in years to come might be regretted. We are extending a present system. We are attempting to extinguish another system which has worked well whereby Parliament has the last word. Admittedly, we have only this week for the order to come into operation, if it is to come into operation by 1st January. But rather than losing those few days, I would have thought it is far better for the Government to lose the whole of a month until we reassemble on 18th January and perhaps come back with a modification of this order, or perhaps withdraw it altogether after further reflection in the light of the debate. I hope that my noble friend will take this matter very seriously.
6.1 p.m.
Baroness White: My Lords, I join with the noble Lord, Lord Renton, in congratulating the noble Lord, Lord Moran, for drawing this matter to the attention of the House. Until I tried to read through the 50 pages of the Transport and Works Act I had no idea of the extent to which these provisions would be applied. I wish to make only a few remarks as I am not a lawyer. I am sure that, not necessarily Members of this House but lawyers outwith the House in due course would benefit considerably from the com-plexities of what at first glance might appear to be a relatively simple proposition. However, it is not simple.
440
At first I felt sympathetic to the thought that, by passing the Transport and Works Act, this House would be relieved of having to examine in depth, in a Select Committee, proposals in Private Bills covering the matters dealt with in the Act. Local people would also be saved much time, trouble and expense by not having to come to London or to engage legal counsel. But having now tried to make sense of the order before us, in relation to the Act, I am inclined to think, with the noble Lord, Lord Renton, that a House of Lords committee might have had its advantages. The breadth of discretion afforded to the Secretary of State in applying the Transport and Works Act is quite staggering. Unless they have read the Act, which is an onerous exercise, I believe noble Lords will not grasp the difficulties which I foresee, and which the noble Lord, Lord Renton, has emphasised.
My particular concern, and the matter raised by the noble Lord, Lord Moran, that of barrages, is confined to the Severn Estuary and sites on other rivers flowing into Welsh coastal waters. I assume that I am right in supposing that the operative Secretary of State will be the Secretary of State for Wales and not any other Minister. Barrages on rivers flowing into the Severn are of course subject to a tidal range which is among the highest in the world. They are not just minor experiments. I am concerned that any proposal touching the construction of such a barrage should at the very least be subject to a full local public inquiry. Such a proposal should never be subject to a discussion held behind closed doors. That could be done under the terms of this Act, as far as I can understand them.
Other rivers than those that flow into the Severn may also be subject to environmental hazards and should be fully examined in public. Without assurances that that will be forthcoming, it would be dangerous to accept the inclusion of the term "barrage" in the order which is before us. Various other lesser structures might be dealt with without a fully public hearing but not a barrage on a tidal estuary, wherever that occurs. As the noble Lord, Lord Moran, remarked, it might be argued that such areas are clearly of national importance under Section 9 of the Act. I am not convinced that that would be acceptable and in any case it is discretionary, as is so much of this Act.
The Secretary of State for Wales has so many conflicting duties and responsibilities that it would be safer to remove barrages in tidal waters from the order itself. Some other collective noun might be found for the lesser structures concerned, although I have not myself thought of one. For those reasons, without going further into the matter, I support the proposal of the noble Lord, Lord Moran, although I do not necessarily agree with all the arguments he may have put forward.
6.6 p.m.
Lord McNair: My Lords, I am in something of a quandary as I rise to speak to this Motion. What I feel is wrong with the order really reflects what I feel is wrong with the Transport and Works Act itself. Other speakers have referred to the rapid passage of that Act

441
through your Lordships' House shortly before the election. I realise that the Minister will hasten to remind me that it was agreed through the usual channels not to have the usual lapse of time between stages because of the election. But I believe that we should have made more of this at the time, especially coming as it did so soon after the Third Reading of the rather unfortunate Private Bill from British Waterways.
In order to shed a little light on the principles which underlie the Motion and the Act, perhaps your Lordships might like to reflect on the wide range and depth of concerns expressed in this House during the passage of the British Waterways Bill. It seems to me that the Transport and Works Act has more far-reaching implications for many situations that impinge strongly in various ways on our national life and on our natural and man-made heritage than some of us realised at the time. It is my fervent wish and hope that something can be done in the near future to make the situations—including the barrages if this order goes through—which the Transport and Works Act addresses much more accessible to democratic influence.
In particular, under Section 11(1) the Secretary of State "may" instruct a local public inquiry or a more limited hearing. Under which circumstances would the Secretary of State instruct such a public inquiry or hearing to be held? Again, proposals which are of "national significance", as described in Section 9(1), may be referred to Parliament. What criteria would be used to determine "national significance"? I realise that not all barrages fall into that category although some of course do. I repeat that I remain most unhappy with the Transport and Works Act and hope that it will be amended appropriately before too much time has elapsed.
Turning to the Motion in the name of the noble Lord, Lord Moran, I understand that the Royal Society for the Protection of Birds actually takes a contrary view to that of the noble Lord. It feels that it would be better for barrage schemes to remain within the Act, even with its imperfections, than to take their chance with the Private Bill procedure fraught—as the RSPB sees it—as that procedure is in another place, with the complications thrust upon it by attempts to manipulate the parliamentary timetable.
I am between the devil and the deep on this issue and my way out is simply to press the Minister to give the House a clear definition of the criteria used in the three situations to which I referred earlier. I shall wait to hear what the Minister says before deciding on the merits of this Motion.
6.9 p.m.
Lord Campbell of Alloway: My Lords, this order, if approved, could prove to be the first toll of the death knell of the Private Bill procedure for works of national importance of this order of general impact. It is a total departure from established practice. It sets a wholly wrong precedent.
The Long Title of the Act refers to tramways, trolley vehicles, guided transport—whatever that is —inland waterways and works interfering with
442
navigation. Who on earth could have known or suspected that we would be concerned with barrages, as ordinarily understood by all of us? No one. Not one word, I am informed, was said in either House about barrages. The matter was never under discussion.
That is an odd kettle of fish for a start. The Long Title of the Bill was not properly discussed or debated in either House of Parliament. There is then an implementing order which involves the say-so of the Secretary of State who, by executive decision, has some control over matters of such importance. In my book it is wholly unacceptable, and I have so informed my noble friend the Minister.
The rules of procedure of your Lordships' House —which have yet to find their way into the red Companion to the Standing Orders—render this Motion divisible. It is my hope that no such Division will ensue and that my noble friend the Minister will take this matter back for further consideration in the light of what has been said in your Lordships' House so that the order may be reintroduced in a form which is broadly acceptable to your Lordships.
That is not an idle request. These debates on affirmative resolutions on secondary legislation in your Lordships' House are no charade for rubber stamping. Indeed, as certain noble Lords may remember, before the revised rules of procedure, which are not yet in the Companion, were adopted, when my noble friend Lord Whitelaw was Leader of the House on a certain occasion he took great trouble to ensure that the course that I propose to my noble friend the Minister here and now was followed. It was followed. Eventually an amended order was returned to your Lordships' House, albeit with the delay envisaged by my noble friend Lord Renton of a month or two. That was acceptable to the House, and that was that.
One has to consider the technical aspect because this is a technical Act. A barrage, as defined by paragraph 3(1) of the implementing order as referred to in paragraph 2(a), falls within Section 3(1) (b) of the Act in respect of which an application has to be made under Section 6(1) of the Act, to which Section 9(1) of the Act should apply. But does it? As has been mentioned, it is dependent upon the say-so of the Secretary of State. Why does the Secretary of State have the say-so in a matter such as this? That is a novel departure. It sets a totally new precedent. It is, in the lawyers' sense, an evil precedent.
It is not to the point to suggest that, when an order is made or refused under Section 13, the matter is governed by Section 9(4) of the Act so that it has to be referred by the Minister to Parliament—but only after a morass of procedure has been followed under Sections 10 to 14. That is a totally dotty form of legislation. It is not appropriate to the subject in hand.
Why are the Government doing this? The answer is that the legislation was pushed through in a hurry. Nobody knew what they were really doing. They were certainly not concerned with barrages. Then, because barrages were creating a problem and one Bill went through while another was withdrawn, it was thought

443
that this would be a useful way to deal with the subject, which is of great national importance for the future.
The order seeks to implement Section 4 of the Act. In that section the description of the works for the purposes of Section 3 is left open for implementation by statutory instrument. It has been said already, but it is worth repeating, that a project for the construction of a barrage across an estuary or a gulf is a matter of national interest which far transcends purely local considerations. Properly, according to tradition and the way in which we have ordered our affairs for many years, it demands the attention of Parliament. It is not a proper matter for any form of delegated legislation. It does not properly lie within the remit of the Executive.
I shall cut out some of my speech, which was too long anyway. In practical terms, if this Motion were to be carried on a Division my noble friend the Minister may feel inhibited from moving his Motion for approval. Be that as it may, surely it is preferable that we should all proceed in the same spirit of consensus as I remember to have been the case under the aegis of my noble friend Lord Whitelaw. My noble friend should take the matter back for further consideration, having regard to the constitutional questions which have been raised by my noble friend Lord Renton and which I have sought to support in my own way, lest once again in a hurry, because Christmas is coming, a wrong precedent may be set. It does not matter if a precedent is set in a hurry if it is right, but if it is wrong it is still a precedent.
Such is the spirit in which I support the Motion. I congratulate the noble Lord, Lord Moran, upon bringing this important matter to the attention of the House. However, I shall not go into the Lobby if there is a Division: I believe that this is a matter for consensus.
6.20 p.m.
Lord Callaghan of Cardiff: My Lords, when the noble Lord, Lord Moran, spoke on the Cardiff Bay Barrage Bill almost for the first time he and I found ourselves in some disagreement. This evening I wish to echo the noble Lord, Lord Campbell of Alloway. He has done a great service in bringing this matter before the House so that further thought can be given to it. I had not read the Bill either, although I attempted to do so through the good offices of my noble friend Lady White. However, I did not get much further than the Long Title. I hazard the guess that these provisions were an afterthought. I have been in Government now and again (though not for many years) and I have seen this kind of thing before. The Long Title is about matters relating to or ancillary to the construction or operation of railways, tramways, trolley vehicle systems and other guided transport systems. At the bottom there is one line which says:
"to amend certain enactments relating to harbours; and for connected purposes".
I believe that it was one of those Bills that had been stuck in a departmental pigeonhole for a long time and it was decided that something had to be done
444
about tramways, trolley vehicles and railways. Many other noble Lords will share my suspicions that, having got those provisions drafted, a bright spark in another part of the Department of Transport said, "We have a Bill coming up. What a splendid opportunity to get those few clauses about harbours out of the way as well. We will never get a Bill on harbours on its own; let us stick them on the end of the railway Bill". I would be willing to bet a modest sum that that was how the clauses came to be there.
I believe that the Minister has to make a jolly good case this afternoon if he is to carry us with him. He must answer the specific point made by my noble friend Lady White. She cast some doubts on the possibility of a public inquiry being held, saying that in certain circumstances perhaps the Minister would have the power not even to hold a public inquiry in some of these cases. If she is right in that, this would be an absolute monstrosity to inflict upon the House. I cannot imagine that even the Ministry of Transport could have gone as far as that. But the Minister really must tell us that the Bill does not provide, as she herself believes, for that particular proposal.
I should like to say to the noble Lords, Lord Campbell and Lord Renton, that I am no lover of Private Bills. I saw how Cardiff was put through the wringer under the Private Bill procedure when we dealt with the Cardiff Bay Barrage Bill. It occurred to me that there were better ways of handling such proposals. They cost a lot of money, take up a lot of time and produce no result. I rather agree with the noble Lord, Lord Moran, that perhaps there is a case for looking at the procedure again despite all the rules and regulations of this House—even though it might deprive us of some of our prerogatives.
With respect to another place, I do not believe that the Private Bill procedure applying to the Cardiff Bay Barrage Bill could be regarded as the most expeditious and efficient way of dealing with grievances against the Bill. That was what we were concerned with. A good deal of procedure appeared to be taken up by other matters entirely. I do not argue that there is a case for retaining in this House the Private Bill procedure for all these issues. I believe that the Minister has to make a case that cannot be contradicted that, if that procedure is adopted, the Act does not provide for some bureaucratic procedure to be followed—which I believe were the words of my noble friend—under which perhaps even the possibility of a public inquiry cannot be considered. Like other noble Lords, my vote will await a satisfactory answer from the Minister. I believe that the noble Lord, Lord Moran, has a case when he complains about the procedure that has been followed and the way in which this Act has been passed. I believe that all of us need to scrutinise very carefully what the Minister has to say before we can give it assent.
6.23 p.m.
Lord Bridges: My Lords, I should briefly like to intervene in support of the Motion introduced by my noble friend Lord Moran. On the face of it the draft order looks like a piece of bureaucratic tidying up; but the more one examines it, the more far-reaching it

445
appears to be. The first question I ask myself is: what is the extent of water to be covered by the order? The order does not define that area but the explanatory note contains a definition with the following words:
"works which interfere with rights of navigation in waters within or adjacent to England and Wales up to the seaward limits of the territorial sea".
That seems to me to cover a very large area of different kinds of water. At one end of the scale one has estuaries, many of them important ones for the purposes of navigation. In most cases they are governed by separate Acts of Parliament. It is not clear to me what effect this order would have if it were used on the rights of navigation in such estuaries. There are three extremely dense pages of print in Schedule 3 of the original Act which may or may not bear on the question. However, before we come to a conclusion on the order I think it is important that we know what the effect will be upon rights enjoyed under such Acts permitting navigation in estuaries.
At the other end of the scale, one has small, navigable fresh water rivers where one is concerned more with the rights of individual users for navigation or for fisheries and with the riparian rights of owners. It would be of interest to know whether the noble Earl could tell us how those would be affected by the order. In between those two extremes there is a multitude of rivers and estuaries. I live in a village in East Anglia which is one of those places. The village was a medieval port. The port has now silted up. However, one of our prize possessions is a charter given to us by Henry III. He had a castle in the parish and wished the burghers to be on his side. In that charter he formally conveyed the rights of several fisheries on the adjoining river. It seems to me it is possible for the Secretary of State to utilise the powers given to him under the order to annul that charter given to us by the King. That is another doubt one has about the way in which the order may be used. Therefore, it raises significant questions about the way in which it may be exercised to affect rights under existing statutes. It will be helpful to have some clarification on the point from the noble Earl when he comes to reply.
6.28 p.m.
Lord Clinton-Davis: My Lords, perhaps I may make clear from the outset that apparently my name was not on the original list, but that has been duly amended.
If I may say so, I believe that a very powerful case has been argued tonight on all sides of the House. It is my belief that potent issues have been raised. The most desirable course would be for the Minister to say to your Lordships tonight that in the light of the observations, he would wish to reflect further upon the matter with his right honourable friend the Secretary of State. I think we could ask for little more than that. I hope that he will be forthcoming in that regard.
So far as concerns the background to the matter, noble Lords who have spoken have said quite rightly that a very truncated procedure was adopted. It took place on the Friday before the House was prorogued. The Minister was anxious to get the Bill; indeed, he even gave us two amendments. My noble friend Lady White and I were accorded that at least.
446
In the course of my remarks on that occasion, I warned noble Lords that to adopt such a procedure could lead to difficulties. By and large, we supported the Bill, which had received very considerable scrutiny in another place, and the dilemma that we faced was whether we would keep the Bill or whether we would lose it, which we were not happy about. It was an uneasy dilemma. We may not have resolved it in the correct way, but that is the fault of all of us.
There is a very real danger that legislation, particularly if it is of a technical nature such as this, when it is enacted in haste, can cause Parliament and litigants to repent at leisure and sometimes at very considerable cost. This situation could be such a case.
I raised the question of national significance in the debate on Friday 13th March. (Col. 1524 of Hansard).
Time will tell whether the procedures that were introduced by the Act to replace Private Bills will work. The Minister must take very strong account of sensitivity on the part of the Government in recognising the apprehensions that the new system invokes. There should not be only formal consultations where it is appropriate to have consultations because that is an essential ingredient of the operation; but the Minister should adopt a very liberal view about the need to conduct local inquiries in the light of the legislation—because he has the power to do so. It would be a nefarious practice to cut out all kinds of invigilation. I am not happy about relying on the Minister's fiat. We cannot go behind the legislation except to ask the Minister to ensure that when he discusses matters with his right honourable friend a liberal view is taken about the possibilities of local inquiries where they exist.
I am sure that noble Lords will agree that the worries that were expressed by the noble Lord, Lord Moran, were expressed ably. I had some doubts about the procedure that he invoked; but that point is by the way.
The noble Lord argues that it is wrong to include barrages in the order since they may extend to interests that are far wider than local concerns. The noble Lord is right when he states that serious environmental interests are involved.
Consequently, I should like to ask the Minister some specific questions, particularly in relation to the subject of national significance. If the Secretary of State were to consider that a proposed barrage scheme was wholly or partly of national significance, then he could invoke Section 9. However, the question is, what does national significance mean? Does it mean significance to the United Kingdom as a whole? Does it mean significance to a very wide area? For example, the Principality in this case. Does it mean a substantial part of a wide area like the Principality? Even if the Government considered that the criterion for the application of Section 9 was significant to the United Kingdom, how does the Minister construe the words, "wholly or in part"?
Is it the Government's view that the Minister's decisions in that respect are subject to judicial review? I hope that the Minister will say that it is the Government's belief that any discretion to enable a local inquiry to take place will be exercised liberally.

447
I agreed with my noble friend Lord Callaghan when he cast doubts about the Private Bill procedure. It is extremely cumbersome and expensive; and can, for those reasons, be extremely unfair.
A second reason why it is wrong to talk about barrages generally is that not all barrages would fall within the kinds of considerations that noble Lords have referred to during the course of the debate: some will and some will not. In the circumstances, it is for the noble Lord to respond to the points that have been made as affirmatively and positively as possible.
Two questions have been raised by the Royal Society for the Protection of Birds, which it is appropriate for the Minister to address. In what circumstances will English Nature and other statutory conservation agencies be consulted about a proposal that is promoted under the new procedures? Will the statutory conservation agencies be consulted in every case or only in those cases that are deemed to be of national significance?
The noble Lord, Lord Moran, was entitled to articulate the point of view that he did, and did so well, and we await with interest what the Minister has to say.
6.39 p.m.
The Minister of State, Department of Transport (The Earl of Caithness): My Lords, this has been a most useful discussion. It would be helpful to the House if I spoke to both of the Transport and Works orders. I shall explain why we need the orders and then respond to points made by noble Lords, in particular those of the noble Lord, Lord Moran, concerning the Transport and Works (Description of Works Interfering with Navigation) Order.
Lord Clinton-Davis: My Lords, it would be easier if we were to debate the specific Motion that the noble Lord, Lord Moran, moved rather than to discuss another order which I specifically have not addressed this evening.
Lord Campbell of Alloway: My Lords, if I may address the Minister, would it not be more helpful to debate the Motion now on its merits?
The Earl of Caithness: My Lords, I am only too happy to fit in with the wishes of the House. The orders relate to the same principle and I am very happy to follow that procedure.
There were two thoughts in my mind as I listened to noble Lords. First, I thought that we were having a Second Reading debate on the Transport and Works Act; secondly, I noted the specific reference to barrages.
My noble friends Lord Renton and Lord Campbell of Alloway had much to say about the first issue. My noble friend Lord Renton challenged the basis of the Transport and Works Act 1992 and my noble friend Lord Campbell of Alloway stated that it was the death knell of the Private Bill procedure. I was surprised that my noble friends, who follow such matters with great
448
care, did not tell your Lordships a little of the history of the Transport and Works Act. I should like to jog your Lordships' memories.
In 1988 a Joint Committee of both Houses of Parliament looked at the Private Bill procedure. It concluded that Private Bills were no longer the appropriate mechanism for authorising proposals that are essentially for works and associated land acquisition. It proposed the establishment of a non-parliamentary authorisation procedure particularly for railways, tramways and harbour measures. That report was discussed in your Lordships' House during a debate in the name of the noble Lord, Lord Bancroft. The following year, 1990, the Government issued a consultation document, to which my noble friend Lord Howe—I see that he is no longer in his place, but he was when my noble friend Lord Renton spoke—put his name. That document set out proposals for a new order-making procedure.
I refer your Lordships to Chapter VI and to the scope of the new order-making procedure where it refers in a number of paragraphs, 49 and 51 in particular, to the word "barrages". I would reply to the noble Lord, Lord Callaghan, by quoting part of Paragraph 51:
"Instead the Government considers it preferable to draft the legislation establishing the order making procedure covering rail and light rapid transit proposals in such a way that it can be extended by subordinate legislation for use to authorise other works projects such as barrages and canals which would otherwise require approval by means of a private Act of Parliament".
Although I have some sympathy with the noble Lord, Lord Callaghan, when he says that often these things are put in as an afterthought, I have to say to him on this occasion that he is wrong. The matter was carefully considered and reference was made to it in the consultation document.
A wide range of interests were consulted: we had over 106 replies. We consulted the RSPB. The National Rivers Authority, the British Marine Industries Federation, the National Federation of Fishermen's Organisations and the National Federation of Anglers received the consultation documents. From my experience as Minister for the environment and the countryside I can assure your Lordships that not one of those organisations is shy in coming forward when it has a point of view to put. But none responded.
The National Federation of Anglers also received copies of the application rules and the draft guidance on the order-making procedure. The federation did not respond to either. Although the noble Lord, Lord Moran, waxed lyrical about the question of fish, it surprises me that the noble Lord takes one view and the National Federation of Anglers takes a different view or does not share the same concerns.
The overall response to the consultation paper was broadly to welcome the principle of replacing the Private Bill procedure with an order-making system, which was seen as more accessible and more open. These proposals were embodied in Part I of the Transport and Works Bill.
My noble friend Lord Campbell of Alloway said that it came as a complete surprise to find barrages in

449
the order. But they were mentioned in Committee in the Commons. They appeared in the Notes on Clauses when the Bill was presented to your Lordships, and it was made clear that the Act would extend through the power in Section 4 to works interfering with navigation, including barrages.
Lord Clinton-Davis: My Lords, would the noble Earl give way? He refers to Notes on Clauses. It is not within my recollection that those Notes on Clauses were made available on that occasion. I could be wrong and I stand to be corrected, but I do not think so.
The Earl of Caithness: My Lords, my advice is that they were made available, and also that copies were in the Library and, for all I know, are probably still in the Library. As your Lordships will know, and as the noble Lord, Lord Clinton-Davis, reminded us, the Transport and Works Act was approved with a large measure of cross-party support in both Houses. Indeed the noble Lord, Lord McNair, supported it, as did the noble Lord, Lord Clinton-Davis. Naturally, they raised specific points of detail, but the Bill that did away with the Private Bill procedure, which is anathema to my noble friends, was given a large measure of support across the House. I therefore have difficulty in responding to my noble friend, given the full history of the case before us.
The new procedures are being brought into force on 1st January. A promoter will apply, with a draft order, to the relevant Secretary of State. Publicity must be given. Objections can he made. The Secretary of State will consider the proposals, generally after holding a public inquiry. Where appropriate the Secretary of State will make the necessary order which will authorise the land acquisition and the works. Where the Secretary of State considers the scheme to be of national significance, the proposals will be considered by both Houses at an early stage. The scheme will go on for further consideration only —and I stress that word—if both Houses approve a suitable resolution.
Part I of the Act provides that the system can be used for authorising orders relating to railways, tramways, trolley vehicles and inland waterways. The Act also provides for the Secretary of State by order to prescribe descriptions of works which interfere with navigation and modes of guided transport. Once prescribed by order, the new procedures will then apply to works of these kinds. The two orders before the House have this purpose. They give practical effect to the intention in the Transport and Works Act to deal with such matters under the new procedures.
The Description of Works Interfering with Navigation Order prescribes, at Article 2, 10 classes of works which may interfere with navigation. The scope of the classes is more fully set out in the interpretation at Article 3. We consulted widely about the content of this draft order and the draft reflects the responses.
The noble Lord, Lord Moran, has explained why he wants this order withdrawn and a fresh one substituted, excluding the description "barrages". I must begin by saying that I share his view about the need for the most careful examination of proposals for works which could have significant environmental
450
consequences and which might interfere with water supplies or with migrating fish. But I believe that the best way of ensuring that full and open consideration is given to such proposals is by putting them through the procedures rather than by excluding them from this order.
The noble Lord has shown today, and in earlier debates on the proposed barrages on the River Usk and in Cardiff Bay, his belief that proposals should be fully thought through. Again, I agree with him. But I also notice that on those very Bills the noble Lord seemed to question whether the Private Bill procedure was the right procedure. The noble Lord, on the Cardiff Bay Barrage Bill, referred somewhat critically to what he considered the lack of scrutiny of the second Private Bill by the Select Committee. During the debate on the River Usk Barrage Bill on 13th March last year he made reference to the large sums of money that petitioners had to find to brief counsel to appear before the committee. The procedure that we are now proposing with a public inquiry serves the interests of the noble Lord better than the Private Bill procedure, where he quite rightly has drawn attention to some defects.
Under the new procedures a promoter is required to pre-notify—that is, to inform prior to making an application—a host of relevant bodies. The bodies are set out in Schedule 2 to the Transport and Works (Applications and Objections Procedure) Rules 1992 which are to come into force on 1st January.
The promoter has to serve such notice, for example, for works affecting foreshore, on the Crown Estate Commissioners, the National Rivers Authority, the Ministry of Agriculture, Fisheries and Food in England or the Secretary of State in Wales, and on the Duchies of Cornwall and Lancaster. For works affecting a river, he has to serve notice on the National Rivers Authority. For works causing or likely to cause an obstruction to the passage of fish, he has to serve notice on the Ministry of Agriculture, Fisheries and Food or, in Wales, the Secretary of State. He is required to consult the local planning authority. He is strongly advised, in guidance to be published shortly, to consult all organisations who are likely to be interested or affected.
Then, on making his application, which must be in full (not in outline) the promoter has to copy it to a wide variety of people and inform others, including, for example, for matters affecting foreshore, river, or waterway, the Nature Conservancy Council for England, and, in Wales, the Countryside Council for Wales.
In most cases, and certainly for barrage schemes, the promoter will have to provide with his application an environment statement. That is something of which I am sure the whole House would approve. The promoter has to advertise the application and state where objections should be sent.
I turn to an issue raised by the noble Lords, Lord McNair and Lord Callaghan. A public inquiry will be held in all cases where there are more than two or three simple objections or where cross-examination is required. The order is worded in such a way as to prevent unnecessary delay where there are no

451
objections. For instance, if a statutory body wished to improve visibility at a corner requiring the compulsory purchase of three feet of land held in trust, the trust might well want a compulsory purchase order notice served on it. However, I assure your Lordships that where there is to be cross-examination or where there are more than two or three simple objections to a construction such as a major barrage, there will be a public inquiry. Where an inquiry is held objectors will be able to put their concern and objections to the inspector and the promoter will need to respond to those concerns. The inspector will report to the Secretary of State on the inquiry and make his recommendation. The Secretary of State will consider the application, the environmental statement, the objections, the report of the inquiry and the inspector's recommendation before reaching his decision.
Where the Secretary of State thinks a project is of national significance there is an important additional procedure. In such cases, the proposals must be put before both Houses on a Motion moved by a Minister. If either House rejects the Motion the proposed order will fall. There are no specific criteria for deciding what is an issue of national significance; it is a matter for the Secretary of State alone. It is envisaged that the issues will involve matters of concern to the country as a whole.
The noble Lord, Lord Moran, asked whether a project of national significance would limit the function of the House. No, the House will have full application available and will not be restricted in discussing any aspect of the proposal, whether economic, environmental or any other—
Lord Renton: My Lords, would that be on affirmative resolution and not by negative procedure?
The Earl of Caithness: My Lords, I understand that it will be put forward by the Minister on affirmative resolution in both Houses. The assent of both Houses will be required before the matter can go forward. If, for instance, this House in its wisdom decided that the matter should not go forward that will be the end of it.
Perhaps I may answer a specific point asked by the noble Lord, Lord Bridges, about the extent of the ambit of the Act over waters and legislation governing them. The new procedure can amend private or local Acts in exactly the same way as the present Private Bill procedure regarding rights over water and banks.
The procedure that I have outlined is no slipshod easy route to obtaining statutory authorisation to acquire land and to construct works. All interests are to be given full opportunity to be heard. I say to the noble Lord, Lord Moran, that the proposed procedure is the right way to ensure that the promoter consults and informs early, develops his proposal in full, carefully examines environmental effects and responds to objections before the Secretary of State (taking all these matters into account) decides the matter.
That is broadly the same procedure which extends to new roads at present. Would your Lordships be
452
consistent in trying to take out barrages; they would then be the only category of works for which a Private Bill is needed? Your Lordships would be more consistent to change the whole of the legislation relating to roads because that came before your Lordships in a Private Bill procedure. That would the the logical conclusion of what was said earlier. But it goes completely contrary to what the Committee of both Houses stated: that the Private Bill procedure ought to be changed.
I find it hard to believe that the existing Private Bill procedure is a better way of examining a barrage proposal in proper detail than the procedure which I have outlined. Indeed, I go further; if one takes out barrages one ought to take out the whole order. There is no consistency between isolating one item and the other. I have sought to explain in full detail why we believe it right that, on the basis set out by the Joint Committee of both Houses, the matter should be taken forward under the new procedure rather than the Private Bill procedure.
Lord Campbell of Alloway: My Lords, before the Minister sits down, I wish to thank him for his detailed exposition. I found his speech convincing. The fact that Notes on Clauses with reference to the barrage were available when the matter was debated changes my opinion. The Minister has made a reasonable case to my satisfaction.
Lord Renton: My Lords, I agree entirely with my noble friend Lord Campbell of Alloway.
6.55 p.m.
Lord Moran: My Lords, I am grateful to the Minister for his comments. Perhaps I may first answer his question about whether I disagree with the Private Bill procedure. I do not do so. He gave two examples and quoted what I said about the Cardiff Bay Barrage Bill. I expressed some disappointment with what our Select Committee had decided and recommended but that in no way involved questioning the whole procedure. As regards the Usk Barrage, I expressed concern about the burden on petitioners who had to go through the whole process of making petitions against two successive Bills. I thought that was hard on them but, again, I was not questioning the general procedure.
I wish to thank all noble Lords who have taken part in the debate. There were two powerful speeches from the Government Benches from the two distinguished legal luminaries. There were other distinguished speakers from all sides of the House, including the noble Lord, Lord Callaghan, the noble Baroness, Lady White, and my noble friend Lord Bridges, who expressed concern about what the Government are doing. Whether noble Lords are for or against barrages, everyone appears to believe that the powers are of great importance and significance. It seems wrong to many of us that such great and unfettered powers should be given to the Secretary of State, whoever that is, and that too much is being taken away from Parliament.
The noble Lord, Lord Callaghan, asked reasonably that the Minister should undertake to reflect on the

453
order and on what had been said in your Lordships' House. I understand, however, that the Minister does not propose to do so. In the light of that, and contrary to what I thought when I came into the Chamber, I believe it right to take the opinion of the House.
6.59 p.m.
On Question, Whether the Motion shall be agreed to?
Their Lordships divided: Contents, 20; Not-Contents, 67.

Division No. 1

CONTENTS

Beaumont of Whitley, L.

Napier and Ettrick, L.

Bridges, L. [Teller.]

Norrie, L.

Brookeborough, V.

Pender, L.

Elis-Thomas, L.

Russell, E.

Fitt, L.

Shannon, E.

Harrowby, E.

Shaughnessy, L.

Kimball, L.

Shrewsbury, E.

Lawrence, L.

White, B.

Masham of Ilton, B.

Winchilsea and Nottingham, E.

Moran, L. [Teller.]

Wise, L.

NOT-CONTENTS

Aldington, L.

Hesketh, L. [Teller.]

Astor, V.

HolmPatrick, L.

Attlee, E.

Hooper, B.

Auckland, L.

Hothfield, L.

Bellwin, L.

Howe, E.

Belstead, L.

Jeffreys, L.

Blatch, B.

Long, V.

Blyth, L.

Lucas of Chilworth, L.

Boardman, L.

Margadale, L.

Borthwick, L.

Marlesford, L.

Boyd-Carpenter, L.

Newall, L.

Brabazon of Tara, L.

Orkney, E.

Brain, L.

Orr-Ewing, L.

Cadman, L.

Oxfuird, V.

Caithness, E.

Park of Monmouth, B.

Campbell of Alloway, L.

Platt of Writtle, B.

Carnegy of Lour, B.

Rankeillour, L.

Chalker, of Wallasey, B.

Reay, L.

Colnbrook, L.

Rodger of Earlsferry, L.

Colwyn, L.

St. Davids, V.

Cross, V.

Saltoun of Abernethy, Ly.

Cumberlege, B.

Stanley of Alderley, L.

Denton of Wakefield, B.

Stewartby, L.

Elibank, L.

Strange, B.

Elles, B.

Strathclyde, L.

Elliott of Morpeth, L.

Strathmore and Kinghorne, E. [Teller.]

Elton, L.

Flather, B.

Sudeley, L.

Geddes, L.

Thomas of Gwydir, L.

Goschen, V.

Trumpington, B.

Greenway, L.

Ullswater, V.

Gridley, L.

Vaux of Harrowden, L.

Harmar-Nicholls, L.

Wade of Chorlton, L.

Henley, L.

Wakeham, L.

Resolved in the negative, and Motion disagreed to accordingly.

Transport and Works (Description of Works Interfering with Navigation) Order 1992
7.7 p.m.
The Earl of Caithness: My Lords, I beg to move. Moved, That the draft order laid before the House on 9th November be approved [10th Report from the Joint Committee].
On Question, Motion agreed to.

Transport and Works (Guided Transport Modes) Order 1992
The Earl of Caithness The Earl of Caithness rose to move, That the draft order laid before the House on 2nd November be approved [11th Report from the Joint Committee].
The noble Earl said: My Lords, this order lists eight modes of guided transport which cover every known form of guided transport system, whether operating or under development, which does not lie within the description of a railway, tramway or trolley vehicle system. The descriptions will cover guided buses and other novel forms of light rapid transport.
As with the previous order, we have consulted widely and have taken account of responses in the draft order before your Lordships. Once again, we have drawn the categories widely. If the prescribed modes prove not to cover a system to be developed in the future, it would always be possible to prescribe an additional mode, but as far as we know, the order covers existing and potential systems. I commend the order to the House.
Moved, That the draft order laid before the House on 2nd November be approved [11th Report from the Joint Committee]. —(The Earl of Caithness.)
Lord Clinton-Davis: My Lords, I thank the Minister for the brief introduction to the order which we support. My only anxiety is that all the modes prescribed in the draft order will probably require government funding to support them and I doubt whether that will be forthcoming. However, that is slightly outside the scope of the order.
On Question, Motion agreed to.

Road Traffic Regulations Act 1984 (Amendment) Order 1993
7.12 p.m.
The Earl of Caithness The Earl of Caithness rose to move, That the draft regulations laid before the House on 23rd November be approved [13th Report from the Joint Committee,].
The noble Earl said: My Lords, the draft order before us seeks to devolve full responsibility for setting speed limits on principal roads to local traffic authorities. At present they are required to seek the consent of the Secretary of State when setting a speed limit on such a road. The order removes that requirement.
Principal roads make up about 10 per cent. of the road network and are the most important roads for which a local authority is responsible. In general they are non-Trunk A roads. Local authorities already have the freedom to set speed limits on all other local roads without requiring consent.
The proposal to alter that requirement was included in a consultation document on the revision of the guidance given to local authorities on the setting of speed limits. It was widely welcomed. Removal of the requirement for consent will reduce the amount of work for local authorities in making speed limit orders

455
and will save staff time in the department. Around 150 such orders are processed each year, adding about three months to the normal six months taken to make an order.
The original requirement for local authorities to seek that consent was intended as a means of ensuring consistency in the setting of speed limits. However, there is no control exercised over speed limits on the vast majority of local roads which comprise 86 per cent. of the network and there is no evidence that that has resulted in widespread unsuitable limits. The Government are satisfied that consistency will be maintained just as effectively in the future.
The order will enhance road safety by making it possible for local authorities to respond more quickly to a need for a change in a limit. It represents a useful deregulation which will reduce bureaucracy and make local authorities more accountable for their own decisions. They employ highway engineers of the highest calibre, expert in dealing with speed limit questions so there is no reason for local decisions to remain subject to central approval. I commend the order to the House.
Moved, That the draft regulations laid before the house on 23rd November be approved [13th Report from the Joint Committee].—(The Earl of Caithness.)
Lord Clinton-Davis: My Lords, the Minister is having rather a good night—perhaps uncharacteristically, I do not know. Again I thank him for explaining the order. One matter that causes me concern is that one cannot consider the question of speed limits as an isolated factor. Engineering considerations and so forth must also be considered. To that extent resource implications are particularly important.
PACTS—the Parliamentary Advisory Committee on Transport Safety—suggested that there is a need for £55 million by way of transport grants for local safety schemes, whereas the TSG local safety scheme's element falls short of that by around £12 million. That is a matter for concern. We shall await the situation as described in 1993–94 before coming to any firm conclusions. I merely mention that by way of caveat. Otherwise I support the Minister's proposition.
The Earl of Caithness: My Lords, I am grateful for the support of the noble Lord. I hope that he can keep it up for a further 24 hours.
On Question, Motion agreed to.

Southern Africa
7.13 p.m.
Lord St. John of Bletso Lord St. John of Bletso rose to ask Her Majesty's Government what action they are taking in conjunction with their European partners to help secure the long-term political and economic future of Southern Africa.
The noble Lord said: My Lords, I am delighted to have the opportunity of initiating today's debate focusing on what Her Majesty's Government and her European partners are doing to help secure the long-term economic and political stability of Southern
456
Africa. I preface my remarks today by expressing my sadness at the loss of the late Lord Hatch of Lusby who, as your Lordships know, was an ardent campaigner for greater democracy in South Africa for many years. While our views to the challenges and developments in the region sometimes differed, I shall miss his valuable contributions. Also, I thank those noble Lords who put down their names to speak in the debate today.
The subject of Southern Africa was last debated in your Lordships' House in July of this year, when the noble Lord, Lord Judd, called attention to the impending famine in the region. In the past, debates on South Africa invariably tended to focus on what Her Majesty's Government were doing to encourage more democracy in the country. In the light of the dramatic changes in South and Southern Africa since the end of the Cold War, I feel it is now important to focus on what Her Majesty's Government and her European partners are doing in support of the entire region.
The combined pressures of domestic and foreign political demands as well as rapidly worsening socio-economic situations have focused and forced governments throughout Africa to start introducing radical political and economic reforms. In fact, of the total 47 countries in Sub-Saharan Africa, 30 have so far legalised opposition parties since 1990. Of those, 13 had a new multi-party constitution in place by the beginning of this year.
It is against the negative background of the effects of the drought, the violence, the instability in many parts of South and Southern Africa and the resultant economic gloom, that I believe that the current trend to the establishment of multi-party democracies in the region heralds a potentially exciting new era for Southern Africa.
I wish to focus the main thrust of my speech tonight on the current situation in South Africa. Clearly, what happens in South Africa will have a profound influence on all countries in the Southern African region—Angola, Botswana, Lesotho, Malawi, Namibia, Mozambique, Swaziland, Tanzania, Zambia and Zimbabwe.
Unlike Eastern Europe, South Africa has a well established infrastructure. However, with nearly 40 per cent. unemployment—excluding the informal sector—nearly 1.3 million families homeless and almost 30 per cent. illiteracy there needs to be a massive investment both now and in the future in the social fabric of the country; that is, the people. The focus of assistance needs to be directed at education and training, housing, health care, electrification, job creation and rural reform, particularly in the agricultural sector. The former years of the apartheid era have obviously left many scars, politically, economically and socially. Certainly a key challenge for the new South Africa has and will be to engender an atmosphere of trust, negotiation and compromise, both within South Africa and in the Southern Africa region.
Despite the dramatic reform programme in February 1990 initiated by President de Klerk, and the high expectations of earlier this year, the second half

457
of 1992 has been a dismal time in South Africa. After the failure of CODESA to deliver an interim settlement, the ANC opted to embark upon a mass action campaign involving protests, demonstrations and general strikes. The violence has continued unabated and more recently has been directed at whites as soft targets. The horrific episodes of the deaths in Boiapatong in June of this year and later in Bisho in September, will always be remembered by both white and black in South Africa. Nevertheless, it is heartening that the ANC and the government in the past month laid the groundwork for restarting the stalled multi-party constitutional talks in February of next year. It is hoped that by then the Inkatha Freedom Party and other major recognised parties will agree to participate because, if there is to be any lasting negotiated settlement, it needs to incorporate all parties in the country. Against that background state President de Klerk announced on 26th November his government's timetable for further constitutional reforms leading to a fully representative government of national unity being in place by early 1994.
President de Klerk and Dr. Mandela agreed in 1990 that unless a compromise was negotiated, South Africa would be torn apart by conflict. Certainly that proposition remains true in 1992, and it seems that the principal players have reminded themselves of it. With the political negotiations now in part back on track, the challenge both for the short, medium and long term is to encourage economic growth and to curb the violence. Certainly in my opinion a lot of the violence has resulted from pure economic frustration. All major political groups in South Africa, even the South African Communist Party, are agreed that long-term stability and prosperity will depend on a mixed and growth-driven economy spearheaded by a vibrant private sector. Nationalisation and coercive redistribution of wealth have ceased to be major issues. But it remains obvious that the emancipated masses have high expectations and the new government will need to satisfy the economic and social needs of the population if they are to retain their political constituency.
South Africa would need in the region of 20 billion rand—that equates to £4 billion—of foreign capital a year to achieve a 4 per cent. economic growth rate necessary to cater for the existing workforce and those new jobseekers coming on to the market. What has become very evident is that there is unlikely to be any meaningful international inward investment unless there is both certainty on economic and political policy as well as a cessation in the violence.
It is noteworthy in that respect that despite the South African Government's past commitment to Article 2 of the United Nations charter which prohibits intervention,
"in matters which are essentially within the domestic jurisdiction of any state",
there has recently been a marked change in attitude to the positive role that the international community can play as observers and advisers in assisting the government and the ANC, not just in monitoring the violence, but also in the provision of police training,
458
accountability and management. The visit in early September this year of the European Community's troika of foreign ministers led by Foreign Secretary Douglas Hurd, was a clear example of that. Their objective was to offer practical support and ways in which the European Community could assist in defusing and reducing the violence and mistrust.
In the longer term will the Minister comment on what assistance Her Majesty's Government can give to assist all major recognised political parties in the run-up to the forthcoming elections next year in South Africa?
In the light of the stagnant economy in South Africa, can the Minister comment further on the likelihood of the new South Africa being invited to join the Lomé Convention, giving the country both greater access to foreign trading markets, but also access to direct financial and technical aid? As I understand the status quo, it appears unlikely that the new South Africa will be invited to join Lomé as that could and would threaten European Community agricultural and other trading interests and dilute the benefits currently being given to the ACP countries.
South Africa would also need to be classified as a developing country. In most cases it is currently classified as a developed country. The European Community is clearly anxious to promote regional groupings. To this end, once South Africa and its neighbours can be united in an effectively functioning southern African development community, that community will be in a far stronger position than South Africa is alone to negotiate a substantive treaty with the European Community to promote trade and encourage investment into and from the region.
Before briefly discussing the plight of the other countries in Southern Africa, I feel it noteworthy to stress the important role that the private sector in South Africa will need to play in redressing the past imbalances in South Africa, and more specifically the human resource development; namely, the peoples of South Africa. Despite a lot of scepticism by economists, I support the beneficiation projects currently being developed in South Africa which clearly are steps forward in promoting economic growth, increasing employment opportunities and certainly will result in a valuable source for foreign exchange. Essentially, by adding value to raw materials resulting in the production of stainless steel, aluminium, petrochemicals and other commodities for export and domestic use, that could substantially assist other major mineral producers in the region such as Zambia, Zimbabwe, Angola and Zaire.
Statistics on a recent briefing paper on South African-EC relations by the Brussels-based European research office show that if only 10 per cent. of chromite ore produced in South Africa was beneficiated, about 3.7 billion dollars could be earned. That is equivalent to half of the country's annual gold exports.
Although the recent drought in Southern Africa has had a disastrous effect on the region resulting in the devastation of much of the maize crops and leading to massive starvation, it has also been an important test of regional co-operation. To this end

459
South Africa has played an important role in assisting in the distribution of food aid with its sophisticated infrastructure of ports, roads and rail networks. That contribution has clearly been recognised by the neighbours of South Africa and has assisted in conjuring a more positive attitude towards regional co-operation. Can the Minister comment on the role that Her Majesty's Government have played of late in the drought relief for the region? Thankfully, with the recent heavy rains in South Africa, much of the area has had a major reprieve from the drought.
In consequence of the long and bitter conflicts in Mozambique and Angola and to a large degree as a result of the destabilising tactics of the South African Government in earlier years, the result has been the effective closure of many of the main routes to the ports in the region. One of the major challenges facing the region now that there has been a ceasefire in Mozambique, and Angola is clawing its way back to peace, will be to operate effectively the Benguela line which will be of most benefit to Zambia, and the Beira line, which will be the shortest route for Zimbabwe and Malawi imports and exports to the sea.
It has been estimated that the war-related death toll in Southern Africa, particularly in Angola and Mozambique during the 1980s, could be in excess of 1.5 million and the financial costs to the front-line states excluding Namibia has been in the region of 45 billion dollars which is double their external debt.
A natural consequence of the conflict in the region and the economic devastation it caused, was a huge rise in refugees and migrant labourers. To this end, the international community has a vital role to play in the long-term rehabilitation of the refugees.
As the subject matter of today's Unstarred Question is immense and I do not wish to detain your Lordships for longer than is necessary, I should like to pose a number of questions to the Minister in relation to the Government's role in assisting the region. First, following the peaceful removal of Mr Kaunda from office in Zambia and the restoration of a multi-party democracy, what support are Her Majesty's Government giving to President Chiluba to support his economic reform programme?
Secondly, against the poor record of human rights abuses in Malawi and Her Majesty's Government's decision to withdraw development aid to the country, are Her Majesty's Government providing any relief to the most poor and vulnerable sectors of Malawi society? Furthermore, will observers be sent to Malawi to observe the forthcoming referendum?
Thirdly, following the recent election in Angola and the more recent acceptance of the result by Mr Savimbi, what assistance are Her Majesty's Government giving to ensure that all parties abide by the Bicess Accord, and to ensure that there is an effective integration of the armed forces? Clearly, with Angola's enormous mineral and oil reserves as well as its diamonds, there is huge economic potential for the country. Do Her Majesty's Government have any programmes to assist the country in the reconstruction process? With the Zimbabwe elections scheduled for
460
1995, what assistance are Her Majesty's Government giving to the Economic Structural Adjustment Programme?
Finally, a problem that has beset much of Southern Africa of late has been that of arms smuggling. It has been estimated that there are over 2 million AK47 rifles in Mozambique. Many of these arms have crossed into South Africa and have been swapped for food and clothing. This has contributed a lot to the escalation of violence in the townships. Have the Government and their European partners considered a policy of offering 10 dollars for each AK47 rifle handed in? These arms would then be destroyed in front of those giving them up.
In conclusion, the challenges for Southern Africa are clear: the establishment of multi-party democracy coupled with good governance; the promotion of reconciliation and trust and a cessation of violence; the introduction and defence of human rights, and the promotion of economic growth, matched with political stability. 1993 will be a crucial year in the transition to democracy of South Africa, Mozambique, Angola and for much of the region. Her Majesty's Government, and in particular the Minister, have already played a vitally important role in assisting the region to achieve these objectives. I am confident of Her Majesty's Government's continued commitment and look forward to the Minister's closing speech.
7.33 p.m.
Lord Elibank: My Lords, I begin by thanking the noble Lord, Lord St. John of Bletso, for introducing this Unstarred Question and for his most interesting speech. Movement in South Africa and Southern Africa is fairly rapid and it is useful for your Lordships from time to time to have the opportunity to review matters as we go along. I associate myself with the courteous and kindly words of the noble Lord, Lord St. John, about the late Lord Hatch of Lusby. He initiated the last debate on South Africa in which I participated. We shall miss his lively and vigorous contributions on this matter, as on others.
This debate is expressly about Southern Africa, but I propose to concentrate on South Africa which is, for all practical purposes, the motor of Southern Africa. If South Africa prospers economically and socially, there is a very good chance that the other states in the region will also prosper. To the extent that South Africa falls into decline, the other states will surely suffer.
There is one aspect of the South African situation on which I should like to concentrate. I refer to the widespread expectation that, if agreement is reached between the African National Congress, other black leaders and parties and the South African Government, it will usher in a period of peace, prosperity and social harmony within the republic. I believe this to be a dangerous illusion in many ways and I propose to say why. Various problems exist today in the republic which will continue virtually unchanged upon the signing of any constitutional agreement.

461
The first of these—and the most obvious—is the racial mix. South Africa has been ruled for at least 150 years by two races—the Afrikaaners and the British. Those two races have been united only by the desire to rule the territory. They are separated by language and culture. They live together in a somewhat uneasy relationship—and this will not change. The black races, particularly the Zulus and the Nkosas, have been traditional enemies for many years. They are now infiltrated to a greater or lesser degree by the ANC and its philosophies. This will guarantee an uneasy, unstable and possibly warlike relationship between them for some time to come. The other races —the coloureds and the blacks within the semi-independent states —live in a sort of constitutional no-man's land, and it is difficult to see what the future holds for them.
The position looks unhappily very similar to what is unfolding in Yugoslavia today. Yugoslavia was a combination of races held together latterly by a strong tyrant and a tyrannical party, both of which have disappeared. Tito has died and the Communist Party has lost its power. We can see the results in the break-up of Yugoslavia—a depressing sight, which may recur on the South African scene well after an agreement has been reached. In so far as we can, we should prepare for it but, of course, we should try to avoid it.
The other problem that will last well beyond any constitutional agreement is unemployment. I do not think that even the South African Government know the extent of black unemployment. The noble Lord, Lord St. John, mentioned 40 per cent., and I have seen the figure of 7 million bandied about. Whatever the true figure, it is very large. At the moment, the unemployed are kept under control by two measures. The first is that they live within what is effectively a police state. Secondly, they are buoyed up by aspirations of the big changes that will happen when, finally, democracy is achieved—when "one man, one vote" comes in and they are governed by a black government. I am sure that as soon as that happens they will expect a dramatic improvement in their employment situation. However, it seems to me that they are highly unlikely to achieve that. The economic position of South Africa today —again, the noble Lord, Lord St. John, outlined part of it—is not really sound. The hope is that once a black government are in power international investment will follow; and so it may if there is some kind of stability and guarantee attaching to it.
The Question asks what Her Majesty's Government can do. It seems to me that the only positive thing Her Majesty's Government can do, apart from retaining a positive attitude towards South Africa, which they have done all along, is to offer some form of guarantee of investment. When any firm comes to consider investment—not only in South Africa but anywhere else—there are certain investment criteria which make an investment in place A better than in place B. On any normal investment criteria, South Africa, I suspect, is going to be a poor risk under a black government. It is there that Her Majesty's Government, not by pouring money into
462
the country but by discreetly offering guarantees to those willing to invest, could make a substantial contribution to the evolution of the new state.
The only other main point that I would wish to mention about the problems that beset the country and will continue to do so is the problem of AIDS and, associated with it, the scourge of malaria. I believe that Southern Africa is the worst afflicted, by both AIDS and resurgent malaria, of any part of the world. Unless something can be done to ameliorate the situation there the evils of which I have been talking —racial disharmony, unemployment and poor economics—will pale into insignificance besides the decline in the population and the inevitable decline, of course, in the workforce.
I would not wish to conclude on an unhappy note. I contrast what I see of the present situation in South Africa and its likely future with a visit that I paid to Zimbabwe some two years ago. As your Lordships will know, Zimbabwe has spent the past 10 years recovering from a bloody civil war, followed almost immediately by the election of a communist president and what was effectively a one-party state. A less promising beginning it would be hard to imagine. In fact, due to the civil war, it had one good consequence. A large degree of manufacturing and service self-sufficiency was built up during the struggle. That has served the country well in the past 10 years.
Despite this unhappy and unpromising start, as it certainly was, Zimbabwe has over the past 10 years, by African standards at least, prospered considerably. That is due in no small measure to the pragmatic approach of the president himself. While running the country he has contrived to let the whites enjoy a standard of living which I suspect is as good as it has ever been since the second world war; and in return they have made a notable contribution to the economy of the country. The black population, as far as I could tell from a very superficial contact with them, are perfectly happy that black power is with their government and they are content that the white population should prosper, as they seem to do.
I found the Zimbabwean man in the street—the black African—a man of surprising independence; courteous, non-aggressive and without the conventional chip on the shoulder that we would all expect in those circumstances; and certainly I would. It was a very refreshing experience to visit that country. I would say to those in South Africa who look somewhat gloomily on the racial and other problems of their country that, if they wish to see something rather more hopeful and a rather brighter prospect for the future, they should look beyond their northern boundary.
7.44 p.m.
Lord Pitt of Hampstead: My Lords, I too thank the noble Lord, Lord St. John, for introducing this debate and congratulate him on his very stimulating speech. I look forward with interest to the Minister's reply. I am also grateful to him for mentioning my noble friend, the late Lord Hatch. Certainly, Lord Hatch would have been very prominent in this debate. He was a strong opponent of apartheid. It was a question

463
of principle with him. Your Lordships may not know that he was banned from South Africa. The banning was only removed after the change in the situation. I know that the noble Lord, Lord St. John of Bletso, although he does not know that I know it, played a major part in getting that ban lifted. So what I think I will probably do is to send a copy of today's Hansard to Lady Hatch. I am sure she will be glad to read what has been said about her husband.
I am glad that the noble Lord spoke about Southern Africa but concentrated on South Africa because the truth is that Southern Africa has had a very bad time over the past 25 years. It has been a period of conflict. It started with Rhodesia and we have had the conflicts in Mozambique, Angola and Namibia. The whole area has been involved in conflict. Even what has been going on in Malawi is part of the problem that has confronted the whole area during the past two and a half decades. South Africa has been central to it. South Africa supported the rebellion in Rhodesia. It played a major part in the battle that took place in Mozambique which, as I said on a previous occasion, has put Mozambique flat on its back. It has been prominent in supporting Savimbi and in the Angolan struggle and of course it was defending its position in Namibia. Even what has happened in Malawi started because Banda and his supporters had different views on the attitude that should be adopted to South Africa. South Africa has been central to the problems of the area.
In the past couple of years we have felt that there is a new dispensation. Originally there was great hope and then we went through a period when most people were in despair. The truth of the matter—I am giving the truth as I see it—is that for the past couple of years the National Party and the ANC have been fighting the post-settlement election rather than waiting until they have the settlement. It is the fighting of that election over the past couple of years that has put South Africa in a difficult situation. Recently, there was a commitment from the ANC that the post-settlement government would be a coalition. One hopes that that commitment will make a difference. What is required is cool calm discussion and negotiation to find an agreement under which the various groups in South Africa can live together and the area thrive.
Members of the House will remember that on previous occasions I have always maintained that sanctions should have been used as a carrot as well as a stick. I am sorry that we have not used them as the carrot they could be. There is, however, still the possibility that they can be used in that way, because financial sanctions have not yet been removed, and it is the financial sanctions that South Africa would like removed. We now come to the question of what Her Majesty's Government should do. The international community should be saying to South Africa that when the South African groups—CODESA—ask for sanctions to be removed they will be removed. That would force an agreement because, in effect, all groups want the financial sanctions removed.
464
The National Party wants financial sanctions removed right away. It needs that. The ANC is hesitant about having them removed lest things return to how they were before. It fears that the whites are in a position to have the regime as it was previously. If it knows that, if the parties agree on a method of dealing with the new South Africa, financial sanctions will be removed and they can build the South Africa that they hope to have, that would be a strong incentive to reach an agreement. Although the negotiations are taking place, at the moment the objectives of the two sides are not the same. The objective of the National Party is a coalition. It aims at ensuring that, whatever happens under the new dispensation, it will be able to influence the course of events. It is negotiating with that objective in mind.
The ANC, on the other hand, aims to have a majority government in South Africa. Although it will happily have a coalition, if that is what is necessary, its aim is majority rule and so it objects to any suggestion that the agreement should be one which restricts the attainment of majority rule. It is because both parties are starting from those two different angles, and both are trying to win the election at the same time, that we have the problems that we do at the moment. The use of financial sanctions—the only ones left, because the others have been removed—as a carrot, with a firm indication that if an agreed request is made for their removal the international community will act in that way, would have a strong effect.
I hope that the Minister will tell us that she is prepared to take that point on board, because this country is in a position to make a major contribution in that respect. Britain has always been a friend of South Africa and recognised as such. Britain is a permanent member of the United Nations Security Council, a member of the EC and of the Commonwealth. Using its position in those organisations, it can get financial sanctions removed if there is an agreement. I hope the Minister will tell us that the Government also take that point on board, even though it will be the sanctions imposed by other countries that will be removed rather than those imposed by Britain.
There are other things that the Government can promise. The Government are doing something about training and education. I should like to hear that that is something which the Government are prepared to expedite, and will try to persuade the Commonwealth, the EC and the United Nations also to do their bit, because a change of government will require a civil service which is equipped to do the job. The civil service must be multi-racial if it is to be accepted generally. Training is therefore important. I hope that the Government will consider playing a major role in that area.
The noble Lord, Lord St. John, mentioned police training. There is also the whole issue of the South African defence force, the new force, and the way in which it will be trained. I believe that Her Majesty's Government can, again, play a major role there. I hope that we shall hear from the Minister that those are contributions which this country is prepared to make.

465
Finally, it is the South Africans themselves who will make their decisions, but they need to know that the international community wishes them well, wants them to succeed, and will do everything possible to enable them to succeed. I hope that the Minister's reply will be along those lines.
7.59 p.m.
Baroness Wharton: My Lords, I too should like to thank my noble friend Lord St. John of Bletso for initiating the debate. I share a common concern for the future of South Africa. I spent my childhood there during the war, and I did not return here until 1956.
As democracy springs to life, and African leaders start to get to grips with harsh economic reality, Africa is looking to the developed world for aid and financial support on a vast scale. That will put great pressure on the resources of the EC and its member states. One way to reduce that pressure is to help Africa to help itself. That can be done only where there is a core of good government and sound management practice upon which to build. In Southern Africa there is a chance. We have a subcontinent in which democracy and enterprise are trying to take hold as the failed dogmas of autocracy and collectivism fade from the scene. In all the countries of Southern Africa there is now a clear shift towards a greater democracy and more realistic economic policies. The transition will not be easy. It requires unaccustomed discipline and co-operation between hitherto rival groups.
The big question is whether this can be achieved. The levels of growth required to absorb huge and growing numbers of unemployed people into economic activity, the education and training required to help equip them to be effective, and the investment needed to enable all this to happen simply cannot be done without help from the developed world.
In this context the key will be South Africa, which has the infrastructure and expertise. If South Africa fails and slides into chaos and poverty, it will be doubly difficult for her neighbour states, with their fledgling economies and dependence on the republic, to succeed. The cost to us in the developed world would be incalculable.
A successful South Africa would create markets and opportunities in Southern Africa. The potential is there to transform the region into the bread basket of Africa. Like other new world societies, South Africa was colonised early by a great cross-section of people, all with differing skills. The combination of these multiple influences with the discovery of gold, diamonds and other strategic minerals, led to the growth of developed communities.
Despite the emergence of the apartheid regime after the Second World War, South Africa's trading wealth created a base for strong economic growth, which resulted in heavy investment in the infrastructure, linking the key development areas—high quality road, rail and air links, equal to anything in Europe; and sophisticated telecommunication systems.
At the same time South Africa developed her own financial and capital markets facilitated by a modern computer and information industry. The emergence of
466
a strong managerial level in South African corporations resulted in the growth of an efficient corporate sector. This was achieved despite the inequalities imposed by apartheid and the resulting distortions in the economy, which were exacerbated by international sanctions in the 1980s.
The problem in today's terms is that the cost of compensating for the failure, over the years, of the apartheid government to provide political freedoms and to invest in education, housing and job creation, coupled with a dramatic surge in the population, has created spiralling unemployment, with unskilled people living in a climate of violence, frustration and hopelessness.
The consequence is huge, social and political pressure for improved living standards, jobs, education, housing, and so on, with disadvantaged and hitherto disfranchised people looking for compensation from the state through a new government.
However, in the meantime the economy has been in recession and steady decline for nearly a decade. Gold has lost its glitter and the diamond industry is in trouble. Worldwide recession has slashed South Africa's export receipts and her industries are laying people off rather than taking them on.
Relaxation of apartheid controls has loosed a tide of people into the cities, creating huge squatter settlements and still more acute social problems of misery and random violence which brutalise all communities. The situation has deteriorated to the point where the question has now to be asked: if South Africa's economy continues to fail, can democracy there be made to work?
Without economic growth to create jobs, living standards will continue to plunge and the task of delivering successful social reforms will be insurmountable. Any multi-racial, freely elected government will be unable to meet the aspirations of its people, because the costs will simply be too high for South Africa to bear alone. The longer the economy is allowed to remain in decline the more the problem is compounded, because above all it affects morale.
South Africans today are becoming demoralised. People of all groups now fear that the situation is steadily becoming worse. This is resulting in a hardening of attitudes, which will make a negotiated settlement much harder to achieve and could seriously prolong the process, because some feel they have nothing to lose by procrastinating.
What they need is hope. They need to know that the international community genuinely wants them to succeed. Private investors will remain reluctant to put money into South Africa until there is political stability. Therefore, may I hope that the government of this country and the EC will do everything in their power to help create a climate in which such investment could be renewed?
An EC programme of support for social and infrastructural programmes would help to revitalise the economy, thus providing jobs, training and improved living standards. Above all, it would create a sense of hope and ease the tensions surrounding the constitutional talks. It would help the country to focus

467
attention on the positive aspects of the situation. In a mere three years, South Africa has abandoned and abolished apartheid and today stands on the brink of a political solution. Black freedom movements are being channelled into political parties and whites and blacks alike are seeing the importance of sound economic and monetary policies.
The fundamentals are in place. South Africa has the managerial skills, the capital-raising infrastructures, the entrepreneurial flair and creativity and the technological know-how to build a highly successful economy. Despite persistent problems of productivity, labour and management have achieved a great deal in a highly politicised environment.
Major South African groups are poised to expand into Southern Africa by upgrading infrastructures, opening up new markets and thereby improving living standards. Countries bordering on South Africa have transformed their economic inter-relationship from a defensive anti-South African alliance into the beginning of an economic community in which South Africa will in due course be a welcome partner.
The Southern African Development Community (SADC) is now actively seeking ways to build regional infrastructures, break down barriers to trade between the countries of the region and find a way to bring South Africa into the fold—one which will not result in their being swamped by their dominant neighbour.
The climate is right, but everything now depends on South Africa's ability to solve her problems quickly and initiate a period of sustained economic growth. I do not think that they can do this without our help.
8.6 p.m.
Lord Balfour of Inchrye: My Lords, I too shall begin by saying how grateful all those who have an interest in Southern Africa will be to my noble friend Lord St. John of Bletso for initiating this debate. At the same time, I join in the expressions of regret at the passing of Lord Hatch of Lusby, who, like my noble friend, was always keenly aware of the importance of the subject we are now discussing. However, I must admit that were the noble Lord here with us this evening, he might not agree with many of the things that I shall say.
The Question specifies the long-term political and economic future of Southern Africa. However, like my noble kinsman on the Government Benches, I shall confine my remarks to South Africa, which, as your Lordships know, raises very different issues from those in other countries situated in the south of the continent. It is a country which has formed the background to a large part of my life and where I have witnessed several momentous events. Furthermore, for more than 40 years I have had the privilege of working for or being connected with one of the country's foremost industrial enterprises.
I cannot help casting my mind back to the events of September 1939. I have a vivid recollection of coming out of the cinema in Johannesburg as a young teenager, and hearing cheers ringing in the street. I can still hear them today. What did they signify? They announced the entry of South Africa into the Second
468
World War. I remember reading the speech in Parliament of the then Prime Minister Hertzog, in the course of which he stated:
"We are concerned here in a war in which the Union has not the slightest interest".
He was later followed by the leader of the Nationalist Party, who went even further by voicing his unreserved defence of Hitler. Fortunately, the deputy Prime Minister, General Jan Smuts, won the day by 80 to 67 votes in the South African Parliament, thereby bringing the country on to the side of the Allies. At this stage, I do not consider it necessary to detail the great contribution made to the war effort by South Africans of all races. Less than 10 years later, the picture began to change radically. In 1948, the Nationalists came to power—even Smuts lost his seat in that general election—and they started to put into practice the doctrine of apartheid which they had promulgated for years.
Since this is the first occasion on which I have participated in a debate on South Africa in your Lordships' House, perhaps I may make my views on apartheid perfectly clear. I consider it to be one of the most wicked doctrines ever perpetrated by a civilised society. It was also one of the most stupid because, from an economic point of view, it was doomed to failure from the outset.
For the next few years there were protests from prominent South Africans both in and outside Parliament but it was not until the mid-1950s, when the colonial powers began to withdraw from their colonies, that they gathered force. It was surely natural and hardly surprising that Africans in other parts of the continent, now aware of the plight of their brethren within South Africa, started to agitate on their behalf. The United Nations soon provided a ready and sympathetic forum for their vociferous protests. The rent-a-mobs of the world were given plenty of scope while any puny politician in need of either votes or sympathy could always be guaranteed to obtain one or other if he or she inveighed against South Africa. All in all, worldwide, a most vicious and vitriolic vendetta of vilification and vituperation began to be aimed at South Africa, or rather its entire white population.
There are three points about this campaign which I believe should be noted. First, it took no account of the fact—or more likely deliberately chose to ignore it—that there were indeed many white citizens of the country who had always been bitterly opposed to apartheid and who did not hesitate to vent their opposition to it. That opposition included not just white citizens of British descent but Afrikaners too. I remember the prominent part which that great fighter ace of the Battle of Britain, Group Captain Malan, played in the Torchlight Commandos, one of many organisations that came into being to oppose the government. I have often noted the comments of that wise and distinguished gentleman, Sir Laurens van der Post, on the subject of apartheid, and there have been many others.
Secondly, I have noticed that while many of South Africa's most virulent opponents were prepared to attack the apartheid regime quite correctly, they have

469
often been supporters of other loathsome regimes in various parts of the globe. They have also been most selective in their hatreds, aided and abetted by much of the media. For example the urban townships which are situated on the perimeters of South Africa's largest cities constitute an appalling indictment of the country's system and are quite rightly condemned. But I have read little or no criticism of hideous shanty towns in other parts of the world such as those in the East or in South America. I have seen and most unpleasantly smelt those dreadful blots on humanity but I detect little criticism of their governments in this respect. Once more the media have tended to be selective in their reporting. I have coined a word for this—"hypepocrisy".
My third point, which concerns the campaign waged against the white population of South Africa, may well prove a somewhat uncomfortable one for many but I think it must be stated. It means taking a brief look back at history. In the aftermath of the Boer War the British government of the day were anxious to make amends for what they judged to have been the harsh conduct of the army and they were conscious of the need for Afrikaner support for both the strategy and the financing of the British Empire: hence their abandonment of all principles of liberalism.
It was the British legislature that passed the Act restricting black and coloured voters in the Union elections to the Cape alone and it provided that no black citizen should be permitted to sit in the South African parliament. Then the creation of the Union of South Africa was regarded as a triumph but concern for the rights of the African population was little voiced at the time. Therefore I believe we should not be too hasty in ascribing all of South Africa's ills to its indigenous white population but try to remember the scenario that was foisted upon it by the government of our own country. Now, with the collapse of apartheid, South Africa enters a new phase, one that is beset with many problems and difficulties but one which heralds a new and hopeful dawn—I agree with my noble friend that it is an exciting dawn—for all the country's inhabitants, provided we do not lose sight of certain fundamental facts.
I consider that the past 20 years or so have seen the appearance on the international scene of a triumvirate of remarkable statesmen who, albeit with varying success, have endeavoured to break the political stalemate. They are Anwar Sadat of Egypt, Mikhail Gorbachev of the erstwhile Soviet Union and Willem de Klerk. I have no hesitation in including the South African President because it is he who has primarily been responsible for the death knell of apartheid and it is to him that the credit for its collapse ought to be given. Doubtless there are many who will assert that he has merely bowed to the inevitable and that his hand has been forced by the continued imposition of sanctions. I prefer to be more charitable by saying that he has displayed both courage and foresight in bringing about apartheid's demise. He has especially shown courage because he has gone against the hallowed beliefs of so many of his kinsmen in the National Party.
470
Only those who have spent time in South Africa will be aware of the deep resentment of many sections of Afrikanerdom towards the English-speaking whites. For many of these people the Boer War occurred only yesterday. I think that the result of the recent referendum which he secured is a testimony to Dr. de Klerk's achievements and I believe he deserved more on his visit to this country a couple of months ago than to be greeted by a posse of pathetic, puerile demonstrators wherever he set foot.
One of Dr. de Klerk's decisions, of course, was to order the release of Nelson Mandela from prison. I gladly pay tribute to this remarkable gentleman, who after 25 years or so of incarceration in prison has emerged with neither rancour nor resentment towards his captors. He has taken his place at the head of his people and acted with great responsibility. Indeed Mr. Mandela will not find his own supporters necessarily easy to handle. I remember reading of how one lady, writing to a newspaper from a black township, asked a few months after his release, "Where is my house"? Furthermore it is obvious that a power struggle is currently being waged within the ranks of the African National Congress. On the one hand there are those who wish to continue to negotiate with Dr. de Klerk and on the other hand there are the so-called "insurrectionists" who call for the overthrow of de Klerk and an intensification of mass action and strikes.
In addition to the ANC, which principally consists of the Xhosa tribe, there are the Zulu-orientated Inkatha Freedom Party led by Chief Buthelezi and the coloured and Indian peoples. But it is Dr. de Klerk, Mr. Mandela and Chief Buthelezi who are the three individuals on the scene who will determine the future course of events in South Africa. I shall choose to ignore the extremists on either side of the political divide.
I should now like to remind your Lordships of three facts which I believe must be taken into account in reaching decisions about the future of the country. The first, and by far the most important, is to recognise the need for power sharing between the major political parties and races in any government of the future. I was heartened to read recently that that has been endorsed by the national executive committee of the ANC and I warmly congratulate it on that. All who are conversant with South Africa will know that the ANC would never yield power to an administration dominated by the Inkatha Freedom Party and its allies, and vice versa. Partnership not power must be the key to the future, otherwise the worst fears harboured by some that one day the country might descend into tribalism would be realised. In that event a conflict between the ANC and the Inkatha movement would be so horrific as to make every previous war within Africa seem like a minor skirmish. I am content to leave it to the legal and constitutional experts to work out a solution. On this vital issue I therefore hope that Her Majesty's Government may have a part to play, if asked, in providing their advice and assistance.
Secondly, I come to the future role of the white South Africans. I believe it is essential to realise that

471
they are an integral part of the country's population. It may be thought simplistic to make this point: nevertheless I do so, partly on account of the ignorance and prejudice shown to them in the past and partly because recent attacks by an extremist organisation are clearly designed to drive them out of the country. The whites are not settlers: they have been resident in South Africa for more than 300 years and they have no other home. If they are viewed merely as settlers, then many citizens of Canada, Australia and the USA ought to be similarly viewed.
Moreover, as a result of the efforts of the white business community, which has so often stepped in where the government should have acted, many black citizens will have experienced a higher standard of living than that of the inhabitants of many other countries in the world. In passing, I add that I have been heartened to read of an increasingly thriving black business community containing a number of millionaires. Why should they not prosper on an equal basis with their white compatriots? Only the second-rate sneer at success.
Finally, once the deliberations concerning the country's political future have been concluded, I look forward to sustained investment in South Africa. Indeed that is absolutely essential. The ravages of apartheid and the effect of sanctions have combined to weaken the economy drastically. With increasing poverty and unemployment the scale of the problem has risen alarmingly within the past four years. Fortunately South Africa is rich in minerals and is already a highly industrialised country providing more than 40 per cent. of the continent's industrial production and generating more than half its electrical power. As so much of the rest of Southern Africa depends upon South Africa I believe that were this beautiful land to descend into chaos and darkness then the lights of many countries south of the Sahara would also go out.
8.18 p.m.
Lord Monson: My Lords, I first join in the general chorus of regret for the passing of the noble Lord, Lord Hatch of Lusby. Although we did not agree very often on political matters he always spoke up strongly for the things he believed in and stuck to his guns even in the face of widespread disapproval. Those were characteristics I admired very much.
I, too, am grateful to my noble friend Lord St. John for giving us the chance to debate this important topic. For reasons of time I, too, will confine my remarks to South Africa. My noble friend knows Southern Africa a hundred times better than I by virtue of having spent most of his life there. However, I have been to South Africa, and to a lesser extent Namibia, on several occasions over the past 27½ years, as well as having been to Zimbabwe, Botswana, Lesotho and Swaziland. I have many friends in the region, from very different backgrounds, and have a great affection for the place and care deeply about what happens there.
Perhaps more relevantly, I have studied the pattern of other countries throughout the world where ethnic,
472
cultural and religious tensions exist. None is precisely comparable with South Africa. Nevertheless, from studying the precedents many predictions can be made with a reasonable chance of being proved right in the long term, although whether one wants to be proved right is another matter.
It is ironic that only five days ago we discussed Hong Kong at length. The consensus seemed to be that for hard-nosed considerations of realpolitik one man one vote democracy is no solution for Hong Kong and indeed is a positively bad idea. Today, paradoxically, we are discussing southern Africa, with particular reference to South Africa, and the general feeling seems to be that one man one vote democracy is a good idea and is the ideal solution. It would be splendid if that were so and established liberal democracy became a reality. However, a number of things can be predicted, sadly if safely.
First, whatever form of government exists in South Africa in 15 or 20 years' time it is most unlikely to be a western-style liberal democracy. The second prediction is that that outcome is unlikely to worry public opinion or the media in the West. They will not object very much to authoritarianism so long as the power is exercised by a different group of authoritarians from those who have now been in power for four decades or longer. Demonstrations outside South Africa House, if that remains its name, will be ill-attended if they take place at all.
The third prediction is that the press, now known to be the freest press in Africa, indeed among the freest in the world, will cease to be so. Certainly, the savage criticism and lampooning of government ministers and others in positions of authority which has been taking place since I first visited South Africa in 1965 will no longer be allowed.
The fourth prediction is that the police, although under the command of a completely new set of officers from those currently in command, will behave no more like Dixon of Dock Green than they do at present.
That sounds rather cynical. Actually, sadness rather than cynicism is the prevailing emotion, but there is no point in being self-deluding and unrealistic. None of the above means that South Africa need end up like Uganda, Algeria, Yugoslavia or the Lebanon, and still less, thank goodness, like Sri Lanka.
What can Britain and her partners do to try to help matters evolve as satisfactorily as possible in these difficult circumstances? First, one should try to evaluate realistically what South Africa has in its favour and what is working against it. In favour are its mineral wealth, including strategic non-ferrous metals other than gold; good soil, on balance; an extremely varied, mainly temperate climate and a varied topography which enables a wide variety of foodstuffs to be grown to the extent that the country can be virtually self sufficient; a good transport infrastructure, especially as regards roads; as my noble friend Lady Wharton mentioned, good telecommunications; and, contrary to popular misconception, a well-educated workforce by African standards with unusually developed entrepreneurial instincts.

473
Against that there are the following disadvantages: a population explosion; an AIDS epidemic; a chronic drought in much of the west and centre of the country, accompanied by excessive rainfall on the eastern coast causing leaching and soil erosion, the latter accentuated by the over-grazing associated with a traditional pastoral way of life. In addition, at present there is a worldwide surplus of most agricultural products which is causing a decline in prices in real terms. The same applies to wine. That is good news for those of us who enjoy the stuff but not such good news for the producers.
There is excessive optimism about the part which gold can play in the future prosperity of South Africa. A country with Libya's population density can exist on mineral resources; a country with South Africa's population density cannot, particularly when the mineral resources in question are as difficult and costly to extract as are South Africa's. There is fierce competition in manufactured goods from other emerging countries throughout the world, not only those in South-East Asia—the old favourites of South Korea, Taiwan, Singapore and Malaysia, but also Indonesia, the Philippines and Thailand—but also the Indian sub-continent, where they are now branching out into more sophisticated products, Latin American—notably Mexico, Brazil and Chile—and, last but by no means least, the emerging democracies in eastern Europe, where wage rates are considerably lower than in South Africa at present. Productivity is also lower at the moment but that will not last forever.
Not only are manufacturers in the countries I have mentioned likely to undercut those of South Africa but investors worldwide may well prefer to direct their new investment to other countries on the grounds that South Africa is too risky when there are so many other opportunities throughout the world. Finally, there is the revolution of rising expectations among young blacks—expectations which cannot possibly be met.
That, in turn, leads one to South Africa's most notable and distinct feature in the eyes of the world, although it is by no means unique to that country—the clash of races, tribes and cultures. I am told that old colonial hands used to say that the whites in Kenya were the officers. With officers there is no problem; there are not many of them and those who stay on can continue to manage hotels, become airline pilots, doctors, white hunters and so on. The role of NCOs in Kenya was fulfilled by the Asians, and, as we know, half of those have had to leave. In Rhodesia the whites were generally thought of as NCOs. Some 65 per cent. of those departed, many of them for South Africa. Finally, in South Africa, one has not only the officers, of whom my noble friend is a magnificent representative, but many NCOs and—this is where South Africa differs from most of the other parts of English-speaking Africa—a considerable number (possibly one million) who could be described as private soldiers.
These private soldiers have actual experience of weapons handling and the handling of explosives. They have little or no chance of promotion, and nowhere else to go. They are also in direct competition with those of other races who are trying to move up
474
the ladder. That is an explosive mixture, particularly as the privates are in alliance with those NCOs who moved south from Rhodesia, Zambia, Angola, and Mozambique and who consider South Africa their last bastion —their Alamo, so to speak.
It is extraordinary how people here who should know better try to pretend that that problem does not exist. They concentrate their scrutiny on the northern suburbs of Johannesburg, where people have large houses and swimming pools, and simply never visit the poor white suburbs. They probably do not know that they exist. Only Hugo Young, writing in the Guardian approximately two-and-a-half months ago, has even touched upon it.
Where does one even begin to find a solution? That is before taking into consideration the tensions between the Zulus, Xhosas, Tswanas and other tribes and the concealed but undoubted latent tensions between Asians and black Africans. The adoption of a federal or cantonal system would almost certainly lessen some of the tensions.
That brings me to Bophuthatswana. There is much I should like to say yet again about that country, or state, for example, about its excellent and humane prison system. There is no slopping out there, but clean flushing lavatories for every small dormitory. It puts much of our own prison system in Britain to shame. Indeed, that was confirmed by an honourable Member in another place who also happened to be a distinguished criminal lawyer with much experience of prisons. I persuaded him to visit prisons in Bophuthatswana on a fact-finding trip to that country.
Were there time, many other achievements could be mentioned. One of the most notable achievements of Bophuthatswana, partly as a result of accident and partly design, is that it has brought together the most unlikely people. In March 1985 when I first visited Sun City—a name which most people laugh at for no logical reason—I was astonished to see some sharply-dressed, exuberant people who had driven up from Soweto in cars and coaches happily rubbing shoulders and mingling with burly, moustachio-ed, blue collar and lower middle-class whites from Johannesburg, Pretoria and industrial and mining towns like Rustenburg and Krugersdorp. Such mingling was almost unheard of anywhere else in South Africa at that particular time: it does not happen very often now. They did not mix socially; that would have been too much to expect. But there was complete mutual tolerance and acceptance. I learnt from the Austrian director of the complex, who had no particular political axe to grind, that there had not been a single racial incident of any magnitude during the entire time that the place had been open. That is more than can be said for Britain, many European countries or the United States.
One can only guess at the reasons for that happy state of affairs. One suspects it is due partly to the fact that when one visits a place like that one is in a holiday mood and out to enjoy oneself, but it is partly due to the fact that no group feels threatened or menaced by any other. Surely, the challenge is how to extend that sense of not feeling threatened right across South

475
Africa as a whole. Once a minority group, be it racial, religious, economic or tribal, feels that its jobs, livelihoods, homes, and possibly the lives and future of its children are all secure, the prime source of fear, tension and conflict will disappear. True, the economic problems will persist but, against that, investment may well start to flow in to a greater extent than might otherwise occur because people will feel that it is once again a safe place in which to invest.
This is a tremendous challenge both for those who are presently running South Africa and for this country, our partners and all those throughout the world who are trying to help. It will necessitate a massive injection of funds. I honestly do not know where those funds will come from in a time of worldwide slump and financial stringency, but it seems to me to be the only hope. Where one has racial, religious or cultural tension of the magnitude seen in South Africa and elsewhere, no durable political solution will be remotely possible without economic prosperity and something approaching full employment.
8.33 p.m.
Lord Bonham-Carter: My Lords, I too should like to thank the noble Lord, Lord St. John, for giving us an opportunity to discuss this very important and difficult subject. I also pay tribute to the late Lord Hatch of Lusby whose presence this evening would certainly have added a certain amount of controversy to the debate and who would have spoken with great knowledge, sincerity and a lifelong conviction about Africa, to which he was wholly devoted.
I have listened with great interest to the speeches made by noble Lords this evening. However, it seems to me that one issue has received too little emphasis; namely, that South africa is facing an immediate short-run crisis. The real problem is whether it will overcome the crisis so that the various plans and prospects as to what could, should and perhaps might be done—which have been quite rightly sketched—will ever have the opportunity of being done.
The issue in the short-run is whether South Africa can survive the crisis epitomised in the negotiations going on between the Government and the ANC, the violence that is racking the country and the economic crisis which reflects the world depression but is worse in South Africa partly for demographic reasons and partly for political reasons. When one combines violence and the economic and political crisis one has a very dangerous and difficult situation. It seems to me that the prospects of that being survived are a priori unlikely. However, having recently been there with other noble Lords, I must admit that several things struck me as surprising. It is not the first time that I have been there. I was amazed by the huge changes that had taken place over the past decade or 12 years and by the complexity of the problems that confronted that society.
I was also amazed by the optimism with which the politicians confronted those problems. They appeared to assume without much doubt that an agreement would be reached, elections would be held and an
476
interim government would be formed. It must be said that if the surveys of public opinion undertaken by the South African Institute of Foreign Affairs are to be trusted, that optimism was not shared by the white population as a whole. But that was certainly the overwhelming view of those to whom I spoke. They represented a fairly wide cross-section of political opinion from Right to Left. One asked oneself on what it was based. Was it based on the idea that the alternative was too dreadful to be contemplated, or was it based on something more substantial that escaped the eye of the visitor?
Despite the huge changes that have taken place which are obvious, unmistakable and remarkable, the heritage of apartheid is everywhere to be seen. It is one thing to repeal the Group Areas Act, the Land Act and the Population Registration Act, but one cannot repeal their consequences. Those consequences manifest themselves in the yawning gap that separates whites from blacks in economic standing, job opportunities, the amount spent on education, housing, and so on. For example, if one looks at the Durban Functional Region (as it is called), one sees the heritage of apartheid manifested in other ways. It has a population of 3.5 million or slightly more, a very high proportion of whom are under 20. There is 40 per cent. to 50 per cent. unemployment. Eighty per cent. of the jobs are located in Durban or to the south of Durban. There are 500,000 people living in townships to the north of Durban. There is no public transport to get those people from the townships to their jobs. They have to get up at three or four in the morning in order to get to their jobs by seven. There is no public transport. What transport there is is very expensive and costs about one fifth of the monthly wage. That has not happened by chance; it has been planned. It has to be overcome and will require huge sums of money, great determination and a united endeavour. One has a society that is fragmented racially and institutionally—and fragmented deliberately. That is a huge and enormously difficult task to overcome. We are asking that fragmented society to unite and deal with the problem.
The other heritage is violence, in a country which is always violent. In 1990 there were 40 murders per 100,000 which represents 15,000 in a year. In the United Kingdom there are 1.1 murders per 100,000. According to the Institute of Race Relations in South Africa, in 1990 3,700 political deaths were recorded, which is a minimum figure. By the end of July 1992 there were approximately 1,800, and there have been many more since.
I shall not enter into the controversy of who is responsible for that situation, but the impact of the violence on the political negotiations and on the prospect of investment is very serious indeed. Unless that violence can be reduced, the prospects of investment coming into South Africa are very small and that situation mitigates seriously against the prospect of a likely outcome to the political negotiations.
The third legacy is the state of the economy, which is partly a legacy of apartheid and partly a consequence of world conditions and population

477
growth, which means that living standards are dropping steadily year by year. If one combines those factors, one realises that this is not the best moment to introduce a major political revolution and a new government which would have to tackle the social and economic consequences of apartheid as well as the consequences of violence.
The problems facing that government would be huge. If those matters are combined with the expectations of the black population, one has a challenge which would be forbidding to anyone. It is against that background that the negotiations are taking place and it is scarcely surprising that they are difficult. What is surprising is that they have done as well as they have done.
The attitude to the negotiations appears at first sight to be odd, but perhaps it is not so odd. The government would like to delegate as much responsibility as they can to others. On the other hand, the ANC wants as little responsibility as possible and at the same time it wishes to get its hands on the levers of power. The government, looking at their own constituency, are frightened that they will be seen to negotiate capitulation. The ANC, looking at its constituency, is frightened that it may be seen to be negotiating to be co-opted. Therefore, they are both looking at their own circumstances, fearing that agreement may offend their own constituencies.
That process is preventing political development. One may say to either side, "why is this not done?". They will produce some argument about the impact it will have on their negotiating partners. I took part in a conversation when great play was made about the absence of equality and opportunity, and the discrimination on grounds of colour and race. I asked the ANC people why they did not do something about it. I asked why they did not ask the government to introduce legislation to make such a thing unlawful. They said that they could not do that because to do so would be to accept the legitimacy of the government. Therefore, no development or progress could be made while the negotiations were going on. That situation makes it all the more necessary to have elections and an interim government as quickly as possible so that something can be done.
That situation cannot occur until the other question has been solved; therefore it is a catch 22 situation. The need for an interim government is urgent and the need for elections is urgent. However the difficulty of holding elections is huge and does not appear to have been properly addressed. How can there be elections which have any credibility? How can 500,000 people in townships be registered when their ages and names are not known, or whether they are immigrants or nationals? They are almost certainly dominated by warlords and will be intimidated. The elections will not be free and full elections, and when they are over, whoever loses will say that they were illegitimate.
I may be guilty of painting a gloomy picture, but if we are thinking of how we can help South Africa we must face up to the short-term problem of overcoming the current crisis. We can do that only indirectly by supporting the sensible people, by supporting those
478
who are trying to reach agreement, by offering training facilities to potential civil servants, the police and the army, and by providing any kind of backup that we can. However, there will not be investment until the conditions for investment are in place. The only people who can provide the conditions for investment are the South Africans, and that can be achieved only when a political settlement has been reached, which will be a very difficult task.
8.46 p.m.
Lord Clinton-Davis: My Lords, it is a long time since I participated from the Front Bench in a foreign affairs debate; indeed I go back to 1981–1983 when I was one of the opposition spokespersons. My remit was South Africa and various other places that my noble friend Lord Healey decided to divide between us.
It is very pleasant for me to face the noble Baroness with whom I had the pleasure of co-operating to a very considerable degree during the period of the last British presidency when she looked after European affairs and did so admirably, if I may say so. It was a pleasure to work with her at that time.
I echo the views expressed by noble Lords, without exception, about the timeliness and importance of the debate. We thank the noble Lord, Lord St. John of Bletso, for having initiated it. The debate has been interesting and has ranged very widely. Above all, I appreciated the comments made about my late friend Lord Hatch of Lusby, or John, as we knew him. Back in 1981 to 1983, he was fighting in his indomitable style for human rights. I thank my noble friend, Lord Pitt, for having made the suggestion that the report in Hansard should be sent to John's widow. I think that that would be wholly appropriate.
I shall confine my remarks in the main to South Africa, but this is a debate about Southern Africa. I wish to raise some questions about Angola, Mozambique and Namibia as well as South Africa. Like my noble friend, Lord Pitt, I realise that one has to work towards democracy in Southern Africa. That point was echoed by the noble Lord, Lord Bonham-Carter, in a very remarkable analysis of the situation in a short period of time.
My noble friend spoke about the centrality of South Africa in the situation that is affecting Southern Africa. That is something that goes without saying. He spoke of the need for a plan to create a trained multinational civil service. I am sure that he is right. Everything that we can do in that respect is important.
A few words about Angola. The United Nations observers found that the recent elections were free and fair. We welcome that, and we would welcome the formation of a government of national unity and the holding of presidential elections as soon as possible. It is unhappy that the initial reaction of Unita in refusing to recognise the result of the elections could have had the most tragic consequences. One hopes now that that will not be so. But unless it plays by the rules the whole situation could be placed in jeopardy. It is essential that it does play by the rules if reconstruction of the war-torn economy and infrastructure and reconciliation between peoples are to be promoted.

479
This is no time for further equivocation on the part of Mr. Savimbi. The question arises: how can we help to sustain Angola's fragile democracy and ensure that no further efforts from outside, and in particular from South Africa, to destabilise the lawfully-elected government will take place? May I ask the noble Baroness the attitude of the Government about Unita? Do they contemplate recognising that organisation? What aid programme is currently being undertaken by the European Community and the United Kingdom in relation to Angola?
I turn to Mozambique. A peace accord was signed between the government and Renamo as recently as the 4th October. On 7th December the Secretary General of the United Nations proposed a United Nations peacekeeping force of some 7,000 troops, police, and civilians in order to monitor the agreement. It will again be a huge undertaking to rebuild Mozambique following the debilitating war. There is a massive refugee problem; there is famine; and there is drought. Much of the burden is falling on the shoulders of two of the poorest African countries, Malawi and Zimbabwe. I would ask the noble Baroness: what is the size of the Community's and the United Kingdom's aid programmes to Mozambique? What is the current situation regarding the ceasefire so far as the United Kingdom perceives it? Is the noble Baroness able to provide any report on the peace process missions and the United Kingdom's likely role?
So far as Namibia is concerned, after considerable prevarication and an illegal occupation by South Africa over many years, Namibia achieved independence—and it is remarkable to think in these terms—only on 21st March 1990, when SWAPO won fiercely-contested elections, with the neighbouring government of South Africa doing its utmost to thwart that victory.
In office SWAPO has cast aside quite remarkably its justifiable resentment at its treatment and that of the Namibian people by a hostile South African government and its allies over the years. The SWAPO led government is to be commended for the way in which they have tried to work with the white population in pursuing Namibia's economic and political development, despite the unhappiness of some of its supporters, who feel that compromises have gone too far. Can the Minister tell us the extent of the aid programme from the United Kingdom and from the EC so far as Namibia is concerned?
I turn now to South Africa, which has preoccupied most of us in the debate. Although quite remarkable changes have been effected since the release of Nelson Mandela over the last two or so years, there obviously can be no room for complacency. Indeed, I adopt the quite remarkable analysis in so short a time—as I have already described it—of the noble Lord, Lord Bonham-Carter. Clearly, a great deal needs to be accomplished in a situation which remains immensely difficult and fragile.
We have to appreciate the impatience of a people who have for so long been demeaned as a deliberate act of policy by the national government. Suspicions
480
undoubtedly abound, and with reason. The younger supporters of the ANC in particular demand swifter moves to overthrow the remaining traces of apartheid, injustice and discrimination. The role of the ANC is far from easy in its efforts to influence a national peace accord, drawing up a new constitution, setting up an interim parliament and all that these tasks involve. Problems will continue to abound: irresponsible and provocative actions by Inkatha, continuing violence, threats of secession, echoed by the public leaders of Ciskei and Bophuthatswana. One cannot ignore the white extremists' claims with talk of a Boer homeland. This is a terribly difficult situation to overcome.
There is a peace process that has come under enormous pressure too as a result of a murderous cycle of violence, culminating in hundreds, if not thousands, of deaths and injuries; the collusion of the security forces with those responsible for the political violence as the violation of human rights continues; and as the revelation of undercover operations on the part of the security forces increases, including the provocation of violence by black against black. Forty-two people were killed in the Boipatong township, with the fearless Goldstone commission holding the government responsible for their failure to prevent the massacre and indeed other iniquitous behaviour.
Further massacres have occurred in the Ciskei. Dr. Jonathan Gluckman, the leading South African pathologist, at the centre of a furious row over police killings of some 200 detainees this year alone, finds that his offices have been bugged with sophisticated surveillance equipment.
Despite the catalogue of death, cruelty, and disaster, it is utterly surprising that all is not lost. On 4th December, just a few days ago, a joint statement was issued by the government and the ANC underlining,
"there is a shared responsibility to ensure that a multi-party negotiated transformation from the present situation to a democracy must take place rapidly."
A shared responsibility. The statement outlined a series of further steps that both agreed were required to promote that end.
There is to be a further meeting next month designed to facilitate the negotiating process and to relaunch the Convention for a Democratic South Africa. I understand that a plan has been agreed involving a transitional governing council, a power share between black and white politicians, to run the country by May as a precursor to the first ever democratic non-racist elections which are set to be held in November. I am not sure that that timescale can be adhered to. One only hopes that it can. But any attempt by anyone to block or delay will certainly escalate the violence. Inkatha, the military wing of the Pan Africanist Congress, stands condemned by the South African government and the ANC alike for the part it has played in recent outrages in attempts to subvert the powerful moves for change.
Co-operation between the government and the ANC is proceeding apace, although the situation remains unstable. But fundamental questions remain on both sides. Can President de Klerk and the National Party deliver? Are they strong enough to implement an agreement that may be reached, due to

481
the complicity of the government, or at least parts of the administration, in subversion and in political violence in South Africa? Can Nelson Mandela hold back his supporters, who are desperate for urgent change?
As the noble Lord, Lord Bonham-Carter, said, difficult though the situation may be, free and fair elections must be held at the earliest reasonable time. Perhaps his pessimism in that regard is not well-founded when one looks at the equally remarkable events that have occurred in Namibia and Angola where similar problems prevail. One can hope only that my limited optimism will turn out to be the case. I wish that I could be wholly optimistic.
Let us remember that in the process leading up to the elections there must be media balance. It must be a prerequisite that the South African Broadcasting Corporation allows political parties equal access. In the run-up to the elections a more positive role must be given to United Nations monitors.
Perhaps I may conclude by asking the Minister the following questions. I shall well understand if she does not have time to reply tonight. Perhaps during the Christmas Recess she will think of nothing other than sending to me replies to my questions. Has Mr. Tom Vraalsen made any preliminary recommendations, his report having been expected on 12th December? What progress has been made by the South African Government in releasing prisoners? How many are still held? Will the Minister comment on allegations of violations of Angolan and Zimbabwean airspace by South Africa? If the Minister confirms that that has happened, will she say what the Government have done about it? What pressure is being placed by the United Kingdom and the European Community on South Africa to negotiate the elections, as promised, as soon as possible?
Once again I thank the noble Lord, Lord St. John of Bletso, for having initiated this interesting debate.
9.2 p.m.
The Minister of State, Foreign and Commonwealth Office (Baroness Chalker of Wallasey): My Lords, I thank the noble Lord, Lord St. John of Bletso, for introducing this interesting and wide-ranging debate. It has arisen at a most opportune time. Like other noble Lords, I too will miss our friend the late Lord Hatch of Lusby. I am delighted that the noble Lord, Lord Pitt, will be sending a copy of Hansard to Lady Hatch because otherwise I should have done just that. Lord Hatch sharpened our minds. He and I rarely agreed, but we had a great respect for each other. That is how debating in this Chamber should be.
I thank the noble Lord, Lord Clinton-Davis, for his kind remarks about me which related to a time six years ago when we were busily engaged on EC matters. I am still so engaged. When we took over the EC presidency in July I was determined to ensure that the problems and aspirations of Southern Africa should not be forgotten amid the inevitable pre-occupation with events elsewhere. How right was the noble Lord, Lord St. John, in saying that we need a new focus on the whole Southern African issue.
482
I want to see the Community and its member states provide real support for political and economic reform in the region. I want to see us use our influence and resources to help them to resolve the conflicts left behind by the end of the Cold War and the collapse of apartheid. The noble Lord, Lord Balfour, was right in saying that apartheid was doomed to failure from the outset. The difficulty was making enough people in South Africa see that in addition to those on the outside who could see it so clearly.
The noble Lord, Lord Bonham-Carter, was right in saying that we have yet to overcome the divisive inheritance of apartheid. While it may have disappeared I see as I walk round townships and visit projects in South Africa how long it will take before those devout and committed people will have the chances that we all believe they should have.
It has been an eventful year with some high points and some lows. In South Africa the optimism of the first half of the year gave way to anxiety following the suspension of CODESA in June. But there is now real hope that all-party talks may resume early in the New Year. My discussions with various people in South Africa lead me to believe that that can be so.
We have seen the Rome peace agreement for Mozambique ending 16 years of civil war. But we have also seen the peace agreement in Angola stumble at the final hurdle of the general elections. The principles of good government and economic reform begin to make themselves felt in a number of countries. But we have also seen the worst drought in living memory threatening progress throughout the region and denying some people even a future.
It is easy to dismiss Southern Africa along with the rest of the continent but in my opinion it is wrong to do so. Behind the headlines of conflict, famine, drought and AIDS there lies a new hope for the future; a hope based on reconciliation, on lessons learnt from the past and on what is required for the future. As the noble Lord, Lord Balfour of Inchyre, said it is partnership not power that matters. I can assure the noble Lord, Lord Monson, and others that the Government are already playing a major part.
What is the part that we and our EC partners can play to underpin the political and economic future of the region? I visited Zambia, Zimbabwe and Mozambique in September to see for myself how we have been helping to tackle the most immediate problem; the drought. We have already committed more than £60 million bilaterally and through the EC to help the worst drought-affected areas. We are also taking a lead in urging other donors to contribute generously too. We have funded irrigation and research schemes and are also helping to ensure that farmers will be able to take advantage of the rains when they do come. That is the case all over.
As the noble Lord, Lord St. John said, I was again in South Africa in September and I thank him for the kind remarks he made about me. A peaceful transition to democracy in South Africa is central to the future of all in the region and not just South Africans. The visit of the EC troika of Foreign Ministers led by our Foreign Secretary showed our support for the reform process and resulted in some tangible steps to combat

483
violence, which I shall describe in a moment. We are contributing to both EC and Commonwealth observer teams and to task forces attached to Judge Goldstone's commission of inquiry. I believe that those teams are already helping to defuse the tensions on the ground. We are ready also to offer police training when all the parties in South Africa agree that the time is right for it.
The noble Lord, Lord Pitt, asked about military training in the area. We shall have to consider it at the time if all parties request it but I cannot make any promises because it is right to move slowly in that area but to move more quickly on the issues where we are already receiving many requests for help.
I should like to consider the political outlook. I am indeed heartened by the progress made at the meeting between the government and the ANC 10 days ago. The noble Lord, Lord Balfour of Inchrye, referred to the efforts made by President de Klerk and Nelson Mandela. I echo that. In his last private visit here the president told me of how determined he was to achieve progress for the sake of all the people of South Africa.
I felt that the noble Lord, Lord Bonham-Carter, was rather depressing in his analysis although I agree with much of what he said. However, as the noble Lord, Lord Clinton-Davis, said, there is a shared responsibility in South Africa to get matters right. The priority now is to involve all parties, including the Inkatha Freedom Party, in multilateral constitutional talks. I plead with all those in South Africa to involve themselves in such talks for the sake of their own people.
When I was in Zululand, in Kuazulu, in September, I found then a wish among ordinary simple people without great education that their leaders should agree to talks because only through talking can the problems be resolved which those people face.
Of course, all that is against a background of continuing violence which deeply concerns us all. The escalation of tension in Natal and the recent incidents in the eastern Cape were quite dreadful. The primary responsibility for the maintenance of law and order rests with the government; but we have said to all political leaders that everything possible should be done to support the national peace accord. That is why we were to the fore in making sure that we contributed towards the EC and Commonwealth observer teams. I believe that that is the right way to proceed.
I echo what the noble Lord, Lord Clinton-Davis, said about the recent terrible APLA threats to target particular communities in South Africa. Such actions do nothing to hasten the day of democratic government in South Africa and do nothing to help the people there.
In our efforts to help through the 50 UN observers in South Africa and through the two 15-strong EC and Commonwealth observer teams, we are also seeking to give ideas as to how the people of South Africa should resolve their own disputes. People on the ground must be involved in local dispute resolution committees set up by the national peace accord. I am pleased to see that a little progress is
484
gradually being made there. Britain supplied one of the six EC experts to help Judge Goldstone in his investigations and we give his commission of inquiry every support, as the noble Lord, Lord St. John, knows. However, I believe that making sure that all parties within South Africa lend their full support to the peace process is the key to achieving greater peace and more progress.
The noble Baroness, Lady Wharton, referred to the importance of moving towards democracy and the importance of the economy, as did a number of noble Lords. Attention is rightly focusing on future trade relations between the new South Africa and the European Community. Although thinking is still at an early stage, our aim is to build a relationship which by stimulating trade flows in both directions will bring increased wealth to both sides and to the region.
The noble Lords, Lord St. John and Lord Bonham-Carter, the noble Baroness, Lady Wharton, and my noble friend Lord Elibank all referred to the very important financial situation in South Africa. Investment is needed in South Africa above all else because without that vitally important private investment, South Africa will not have the opportunity to deploy its mineral wealth and all its other benefits. That is why I welcome the preparatory work already being carried out and we shall support early access for South Africa to the international financial institutions' lending. Ultimately, it must be for the South Africans to create the right conditions to attract investment both from those at home who currently invest abroad and from those abroad who can see a real future—as I am sure your Lordships' House does—in South Africa. We want and need South Africa to succeed for the region. As my noble friend Lord Elibank said, it is the motor of Southern Africa and it could be an even greater motor for people in the region.
We must continue to find practical ways to help black South Africans prepare for their rightful role in the political and economic life of their country. Our bilateral aid programme for black South Africans will exceed £10 million this year. We are already contributing a similar amount to the EC positive measures programme in South Africa. That is now the Community's largest single aid programme. As our own aid programme grows, responding to the new opportunities as they emerge, the assistance is being concentrated in rural development, small business development and primary health care. I can reassure the noble Lord, Lord Pitt, that we are retaining education as the main focus of our aid. We are currently putting 1,100 black South Africans through tertiary education both here and in South Africa.
To respond to shorter term needs we provided £500,000 last year to bring the political exiles home through the UNHCR programme. We are also supporting several projects to help reintegrate them into South African society. We have 19 black students at the new School of Public Administration in Wits University and this year the United Kingdom has run for the first time specially-designed public administration courses in the UK for future black public servants. It has been a real joy to me to see the quality

485
of those coming on those courses and to hear from Mr. Mandela, as I did on the telephone on Sunday, how much it had meant to some of the people who had been on a recent course. This is one of the ways in which we shall continue to contribute. We are also planning to give further help before the elections and of that there will be more detail in time to come.
I was asked by the noble Lord, Lord St. John, about the possibility of South Africa's joining the Lomé Convention. That will take some time and require the agreement of 69 other countries. What is much more likely is that South Africa will quite quickly join the new Southern African Development Community, which was established by the Windhoek Treaty last August. That was a bold and far-sighted step to bring the countries of Southern Africa together. I know that there is a great deal of interest in when the time will be right for South Africa to join.
So many interesting questions and comments have been made in the debate that I fear that, in answering in regard to the kind of aid that we are giving, the political help and encouragement and the political reality on the ground, I shall omit much. However, we should note the amount of help which South Africa has given her neighbours during the period of drought. It is something for which the South African Government and the South African Railways have not been well thanked, yet they made all the difference in transporting food to the famine-struck countries of Southern Africa. Indeed, I believe it helped to bring about a much greater exchange of views between ministers in some of the Southern African countries and in South Africa. In that sense South Africa has been healing wounds as well as performing a life-saving task for people in Mozambique and other countries around.
I was asked a number of questions in regard to neighbouring countries. The signature of the Mozambique peace agreement in October was a significant event. We welcomed it with our EC partners. We have been encouraged by the progress made in its implementation. The humanitarian aid is now reaching previously inaccessible regions and Britain has played her full part in the recent report to the United Nations Secretary General on the United Nations' role in the peace process. We shall be represented at this week's donor-pledging conference in Rome and will be giving additional resources to Mozambique. Your Lordships may care to know that we have disbursed this financial year bilateral aid worth over £30 million, including £15 million in emergency and drought aid to Mozambique.
I was asked also about Angola. It is important that we have a clear view of what is happening there. We learned some hard lessons from Angola which we are determined to put to good use in Mozambique. Perhaps I may add to my earlier comment on Mozambique that we have offered to train instructors for the new joint army in Mozambique with the Zimbabweans at Nyanga in Zimbabwe. We hope very much that we shall get a positive response from both the Mozambique government and from Renamo. We have certainly given a great deal of assistance in recent years but we are fully prepared to go on assisting
486
Mozambique through its transition to elections and beyond. It is a very poor country, but with very deserving people. I hope that we shall be able to play our full part.
The reason why I referred back to Mozambique before going on to Angola is that we can see how important it is to put in the help now to Mozambique before we reach the elections. We hope, from our previous experience, to do more and better there so that in the event of an election result in Mozambique which is not expected by one of the parties, we will not have the same very tragic situation which we have faced in recent weeks in Angola.
We have been very active in supporting the United Nations in Angola. The special representative of the United Nations Secretary General, Margaret Anstee, has been quite outstanding in helping to put the peace process back on track. Throughout we have made it clear to both sides in Angola that the violence must be renounced; that the cease-fire brokered by the UN Secretary General must be respected; and that the Bicesse Peace Agreements must be implemented, particularly regarding demobilisation and the integration of the armed forces. We shall continue to use our influence to encourage a resumption of the peace process.
The resolution of such conflicts is vitally important because one of the most encouraging features of the past year has been the willingness to move through the process of democratisation, as so many of your Lordships have mentioned, and on to economic reform. In that respect the countries of Southern Africa are very worthy of help and particularly perhaps from our own Westminster Foundation for Democracy, which may be able to help to take forward the whole process in Angola and other Southern African countries.
Your Lordships asked a number of questions about other countries in the region. Zambia has been courageous in tackling the legacy of years of economic mismanagement. It has now ended subsidies; it is reforming the public sector and re-establishing an IMF/World Bank-backed structural adjustment programme. Throughout the region, economic reform needed to underpin democratic government was menaced by the terrible drought. That is why we gave significant extra balance of payments support to Zambia as well as to Zimbabwe to help to ensure that as well as feeding their people the economic reform programmes would stay on track.
Your Lordships asked a number of questions about Malawi during the debate. In spending nearly a quarter of our total bilateral aid on Southern Africa, our support is not indiscriminate. We have always made sure that it was carefully targeted. We and our EC partners have pressed the Malawian Government to improve their human rights record. We sent a clear indication of our concern last May by suspending the balance of payments support. Since then the Malawian Government have announced some welcome steps. They have allowed ICRC access to Malawian prisoners and we hope that that will continue. Many detainees have been released. I cannot give the numbers but I shall let your Lordships know.

487
The Government have also announced a referendum, under UN auspices, on the multi-party system. Much more remains to be done in Malawi, but at least we are beginning to see progress. I hope that the conduct of the referendum, which will be particularly a test of the government's commitment to fundamental change, will be able to be observed internationally and will be seen to be free and fair because that will set another country in Southern Africa on the path to democracy. The UN will be supervising that referendum, and I can tell your Lordships that we are perfectly prepared to send observers if asked to do so.
There are hopeful signs elsewhere in Southern Africa. In Swaziland, King Mswati, in a major departure with the past, has introduced promising democratic reforms to bring the government in closer touch with the people. Elections will be held next year. In Lesotho, the first democratic elections for nearly 30 years are now only weeks away. We are following progress there closely and have funded the services of the election commissioner provided by the Commonwealth Secretariat.
In Namibia we have probably seen the greatest success, with a country emerging from a desperate situation into one which is now firmly democratic in both regional and local elections. Namibia is trying extremely hard to do all the things that are being asked of it and that is why it is right that our programme,
488
which is set to rise to over £3 million this year, should be helping that country in the crucial education sector, and especially with teacher training. We are helping also with police training, public sector reform, natural resource development and with the Ministry of Health. We are responding to Namibia's intention to get on with the job itself. I believe that is the best possible way of assisting a country.
I need hardly add that Botswana's democratic traditions and record of sound economic management are widely admired. We hope that Botswana will continue to go from strength to strength.
Finally, none of us underestimates the difficulties which the Southern African region still faces. I have real hopes that 1993 will be a turning point for South Africa and for all of its neighbours. If this can be so for South Africa, it will be a catalyst for that regional co-operation and progress that is so badly needed. The people of Southern Africa have shown in their embrace of democracy and economic reform a faith in themselves and in their shared future. I believe that if we can continue to give them the support and the friendship that they deserve, their faith will be well justified. This has been a useful debate. I shall write individually to your Lordships on any questions that I have been unable to answer tonight.
House adjourned at twenty-eight minutes past nine o'clock.