Lords Sitting of 22 January 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 Chelmsford.

Aung San Suu Kyi
Baroness Faithfullasked Her Majesty's Government:
Whether they will send a letter of congratulation to Aung San Suu Kyi on the award of the Nobel peace prize.
The Minister of State, Foreign and Commonwealth Office (The Earl of Caithness): My Lords, the Prime Minister sent a personal message of congratulations to Aung San Suu Kyi after the announcement of the award of the Nobel peace prize, but the Burmese authorities prevented its delivery.
Baroness Faithfull: My Lords, I am grateful to my noble friend for that reply. I am delighted to hear that the Prime Minister sent a telegram to Aung San Suu Kyi. What steps are being taken to seek information from the military regime about the release of that splendid lady who richly deserved the Nobel peace prize? Further, are steps being taken to see whether her colleagues, who are also in custody, could be released bearing in mind that Burma is an interesting country and many of its people are kindly?
The Earl of Caithness: My Lords, considerable representations have been made to the Burmese authorities by various means. I have spoken to the Burmese ambassador on a number of occasions. He has now left London. The EC took action on 21st September 1990 and on 4th January, 27th March, 31st March, 9th July and 31st December last year. We shall continue with our efforts.
Lord Cledwyn of Penrhos: My Lords, is the noble Earl aware that on this side of the House we warmly support the condemnation by the Foreign Secretary of the repressive and illegal regime in Burma? Can the noble Earl be rather more specific as regards the action that he believes Her Majesty's Government are taking to secure the removal of that illegal regime and the release of the lady whom the noble Baroness, Lady Faithfull, described as splendid? Aung San Suu Kyi has been elected democratically to be Prime Minister of that country. Can any action be taken through the United Nations, the European Community or ASEAN to get rid of that wicked government?
The Earl of Caithness: My Lords, we believe that the best way to take action against the Government of Burma, which as the noble Lord, Lord Cledwyn, reminded us is not the elected government, is to work through the European Community. That is why we
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continue to make the démarches which we do. Also, we shall continue to work within the United Nations to see what can be done.
Lord Avebury: My Lords, will the noble Earl make fresh representations to the People's Republic of China to ask it not to continue selling weapons to Burma? The republic is the principal arms supplier to Burma. Will he consider the suggestion I made to his right honourable friend the Foreign Secretary that a challenge should be made in the United Nations to the credentials of the illegal regime so that it can be unseated, as was done in the case of Cambodia?
The Earl of Caithness: My Lords, there is a distinction to be drawn between Cambodia and Burma. I assure the noble Lord that I have made representations to China about arms sales.
Baroness Ewart-Biggs: My Lords, in view of the great anxiety shown in this country on that subject, will the Minister advise the House of any information he has about the wellbeing of Aung San Suu Kyi —and, indeed, the other political prisoners who were imprisoned at the same time—and about the general situation regarding human rights in Burma?
The Earl of Caithness: My Lords, I cannot give the House an up-to-date assessment of the health of Aung San Suu Kyi because we cannot get the information from the Burmese authorities. We understand that they deny that she is unwell, but I cannot give an accurate or up-to-date report.
Baroness Park of Monmouth: My Lords, is the noble Earl aware that no communication has been received from this lady in the past year? The family write but receive no answer. Is the noble Earl further aware that it is not even known whether she suffered any reprisals on the occasion of the riots which occurred on the day her two sons received the Nobel peace prize on her behalf?
The Earl of Caithness: My Lords, I am aware of those facts mentioned by my noble friend. It is a disgrace that the Burmese Government behave in that way.
Lord Ennals: My Lords, does the Minister agree that it is outrageous behaviour for the Burmese Government, for more than a year, to totally disregard the will of the people? Is there any form of aid or relationship with Burma which would enable us to indicate, more than simply by diplomatic representation, the strength of feeling which exists in this country?
The Earl of Caithness: My Lords, the noble Lord is right to say that it is more than a year. In fact, Aung San Suu Kyi was placed under house arrest in July 1989. It is difficult to make progress with the Burmese authorities because of the lack of aid and trade with them. However, the EC démarches include the termination of defence attaché ties.
Lord Jenkins of Putney: My Lords, is the noble Earl aware that what has been done in Europe on this matter is well supported? Does he also agree that

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ultimately it is a matter for the United Nations? Can he perhaps be a little more explicit regarding the precise action being taken in the United Nations to secure the release of Aung San Suu Kyi and to bring into power the democratically elected government?
The Earl of Caithness: My Lords, on 30th November last year the UN General Assembly passed a resolution on Burma. We were co-sponsors of that resolution. It called for an improvement on the human rights situation and progress towards democratic government in Burma. We shall continue to work within the UN.
Lord Bottomley: My Lords, I too am unhappy about Burma. I have made my views known to U Ne Win, whom I know personally. I cannot support the views expressed today because they are an overwhelming indictment against many other people in Burma who are serving their country well—perhaps in the armed forces. I suggest that we should balance this a little more to make sure that future British/Burma relations are strengthened.
The Earl of Caithness: My Lords, our disagreement is certainly not with the Burmese people. It is with the illegal government of Burma that held an election which was won by Aung San Suu Kyi's party, at a time when she was already under house arrest, to which no recognition has been given.
Lord Judd: My Lords, will the noble Earl accept that the Prime Minister would have widespread support in this House and the country as a whole if he specifically raised this issue as a matter of priority during his visit to the United Nations later this month?
The Earl of Caithness: My Lords, it. was Britain which pressed hard for the resolution at the UN General Assembly. I shall pass on the noble Lord's comments.

Wave Energy
2.45 p.m.
Viscount Hanworthasked Her Majesty's Government:
Why they are making a reassessment of wave energy, in particular the Salter Duck, and why they formerly dismissed it on apparently inadequate or preliminary information.
Lord Cavendish of Furness: My Lords, wave energy research is being reviewed as part of the department's overall appraisal of energy technologies. Decisions on wave power in the early 1980s were based on the advice of the Advisory Council on Research and Development for Fuel and Power.
Viscount Hanworth: My Lords, I thank the Minister for that reply. But does he realise that in some quarters—and the matter even came up in committee—it was felt that the Salter Duck had been unfairly analysed when it was decided to opt for wind power? I have no proof, but many people suspect that
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that is so. Will the Minister make a statement that the Norwegian ideas, excellent though they may be, and our own on much the same basis are only small beer? They will be useful in isolated areas. Such a statement would be useful for the people who are keen on this project.
Lord Cavendish of Furness: My Lords, with regard to the first point made by the noble Viscount, I was aware of the suspicion that Professor Salter's Duck had been discriminated against. Then, as now, we refute that. I agree that other wave power technologies that have been tried are not equal to those being experimented on in Britain. The programme being conducted by Britain is probably the most advanced in the world.
Lord Hailsham of Saint Marylebone: My Lords, can my noble friend enlighten me and perhaps others as to who or what is the Salter Duck and what are the characteristics of this bird?
Lord Cavendish of Furness: My Lords, Professor Salter has been developing the technology, but it has not actually resulted in a device yet. It would be a device tethered to the seabed which works by a complex system of gyroscopes, and the movement of waves would be converted into energy.
Lord Donoughue:My Lords, following the comments of the noble Viscount on the doubts about the quality of research into the costing of the Duck —and without commenting on that, because it is speculative whether it has a basis—does not the Minister agree that the problem arises partly due to the location of the research into renewables at Harwell? It is dominated there by the nuclear interests which are believed to be hostile to wave technology because it offers the only potential competition with nuclear power. It is said that it is like putting King Herod in charge of Barnardo's. Would it not be prudent to move that small research unit outside of that influence?
Lord Cavendish of Furness: My Lords, I have heard of the suspicions mentioned by the noble Lord and I have also heard the witticism quoted before. The Government have always strongly rejected claims of bias against the technology support unit because of its link with the Atomic Energy Authority. However, the Renewable Energy Advisory Group, which is currently conducting a review of renewable energy, is considering whether there should be a fully independent renewables agency.
Lord Ezra: My Lords, in answer to my noble friend's question the noble Lord said that the review of wave power was part of a general review of energy research. In view of the increased environmental considerations, can we take it that the result of that research will be increased emphasis on looking into alternative forms of energy as a whole?
Lord Cavendish of Furness: My Lords, yes, it will have that emphasis. The result of the general review will be available in the first part of this year.
Lord Gray of Contin: My Lords, before I ask my supplementary question, perhaps I may declare an interest. I advise a company called Applied Research and Technology which is presently engaged in studying the design of the well-known Professor Alan Wells, who is much respected in this area of work. Will my noble friend bear in mind that there is no monopoly of wisdom in the development of wave power? Can he give me an assurance that Applied Research and Technology, which is shortly to introduce a prototype as a lead-on from its present exercise, will receive every encouragement and assistance, as it has done until now, from the Department of Energy in the furtherance of this exercise?
Lord Cavendish of Furness: My Lords, I am grateful to my noble friend for acknowledging the help that my department has given the ART team and the device. I can confirm that that encouragement and help will continue.
Lord Hatch of Lusby: My Lords, can the noble Lord tell the House why wave power was not included in the recent list of renewables given by the Minister, Mr. Moynihan, for consideration by the Government? Is he aware that I asked the Minister in the department about that but he could not give me an answer?
Lord Cavendish of Furness: My Lords, I can only add that as the review which is to be announced shortly is not ready, there is nothing I can presently say on the subject. Work is going ahead. It would be unreasonable to include something before it is known whether the technology is viable.
Lord Geddes: My Lords, can my noble friend advise the House of Her Majesty's the Government's views on an alternative source of renewable energy; namely, tidal power?
Lord Cavendish of Furness: My Lords, I believe that to be a separate question although it is linked. My noble friend will have to table a Question on the subject.
Lord Hutch of Lusby: My Lords, I was referring to the statement made by the Minister, Mr. Moynihan, which included a set of renewables but did not include wave energy. If the noble Lord cannot answer the question today, perhaps he will write to me and let me know why it was that wave energy was not included in the statement.
Lord Cavendish of Furness: My Lords, I do not pretend to know why wave power was not specifically mentioned. I cannot do other than provide the rather speculative answer that I gave to the noble Lord. Work continues on the review of wave energy, so the matter is not being ignored. As regards the detail of the noble Lord's question, I shall be pleased to write to him.

Alzheimer's Disease: St. Mary's Hospital
2.53 p.m.
Lord Dean of Beswickasked Her Majesty's Government:
Whether the Alzheimer's disease unit at St. Mary's Hospital is continuing to carry out research, and what assistance is being provided by the Department of Health.
Baroness Denton of Wakefield: My Lords, I understand that the research in question is continuing. This financial year the Medical Research Council—the main Government agency for funding medical research—has provided some £446,000 in its support. In the 1990–91 financial year (the latest figures available) the council spent well over £3 million directly on research into Alzheimer's disease generally, and a considerable sum on basic research which may be relevant to the disease.
Lord Dean of Beswick: My Lords, I am grateful to the noble Baroness for that informative reply. Bearing in mind the progress that has been made in the early diagnosis and treatment of this disease, will she undertake to keep the Secretary of State informed in order that there is the highest possible funding to allow this good work to continue?
Baroness Denton of Wakefield: My Lords, of course I shall ensure that my right honourable friend is notified of the concern of everyone in your Lordships' House on this matter. However, I doubt whether I need to emphasise that to him. I have already summarised the substantial sum which the MRC has spent on such research. Increases in the MRC's future grant-in-aid, announced before Christmas, will enable the MRC to launch its neuro-science and genetic approaches to human health, so expanding its programme of research on treatment of psychiatric and neurological disorders such as Alzheimer's disease.
Lord Glenarthur: My Lords, more generally, does my noble friend agree that, as well as those academics who sadly wish to take their talents abroad, there is also a number of academics who wish to bring their skills here from abroad? Can my noble friend say in which direction the balance lies?
Baroness Denton of Wakefield: My Lords, I can positively reassure my noble friend. The university statistical record shows that there have been net inflows of academic staff from abroad over the past seven years. Information collected by the research councils on the first destination of their studentship holders in 1989 indicates that 11 per cent. were going into employment abroad, and of those only 3 per cent. were entering permanent academic positions. That is a very different position from 1963 when it was revealed that about 35 per cent. of Ph.D. holders were emigrating.
Baroness Seear: My Lords, can the noble Baroness tell me whether those figures refer to a comparison of

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the grades of people who went away and of those who came back? Simply giving numbers does not tell us very much.
Baroness Denton of Wakefield: My Lords, I am delighted to be able to tell the noble Baroness that the proportion leaving for employment abroad is lower for the highest grades and that at the professorial level the total leaving has averaged about half of 1 per cent. each year. Since 1983 those leaving have been outnumbered by those coming here from abroad.
Lord Ennals: My Lords, further to this plethora of good news which the Minister brings to us, will she accept that research into Alzheimer's disease should have very high priority? Apart from cancer, it is the most disturbing and widespread of all conditions primarily affecting elderly people. Will the Minister ensure that this disease has the very highest priority?
Baroness Denton of Wakefield: My Lords, I am sure that everyone in your Lordships' House will agree with the noble Lord's request that the disease must have the highest priority. Perhaps I may continue with my good news: in response to the recommendations of your Lordships' Select Committee, the Department of Health last year appointed a director of research and development and set up the first ever NHS R&D strategy. Therefore, there can be no doubt about the commitment.
Baroness Blackstone: My Lords, is the Minister aware that the figures which she has given concerning academic staff relate to people returning for permanent posts? Is she also aware that a great many people who are working in medical research, as in other scientific research posts, are on temporary contracts? Can the Minister say what plans the Government have to improve the pay, conditions and length of contract of research staff in order to stop the staff—who are currently faced with so many uncertainties about their future careers—taking posts abroad?
Baroness Denton of Wakefield: My Lords, it is for the universities and the research councils as employers to decide on the balance between the number of permanent staff and those on fixed-term contracts. In the United Kingdom pay scales for clinical academic researchers in particular are by no means ungenerous. They are paid on National Health Service scales in which the consultant rate ranges from almost £36,000 to £46,000. Perhaps I may suggest that we should be celebrating that the world acknowledges the excellence of our people.
Baroness Elles: My Lords, does my noble friend agree that the greatest encouragement for academics and professors in this field to return and stay in the United Kingdom will be the return of a Conservative Government which looks after the NHS?
Baroness Denton of Wakefield: My Lords, I have no difficulty in agreeing with that.
Lord Cledwyn of Penrhos: My Lords, did the noble Baroness see the "Panorama" programme on Monday
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night? It was very critical of the treatment of Alzheimer's disease in this country. The programme has caused considerable disquiet. Can she give the current position of the team of 15 researchers at St. Mary's Hospital who are dealing with research into Alzheimer's disease? They are reported to be leaving for the United States, although I understand that that has now been delayed. Will the Minister clarify the position? Can she tell us about salaries? Also, is she aware that the main criticism of the Government is that the salaries of these researchers are much lower than they would be in the United States or in the countries of Western Europe?
Baroness Denton of Wakefield: My Lords, I did not see the "Panorama" programme and even with my inexperience I think that the noble Lord's question ranges a little wide of the Question. In a letter to The Times earlier this month the Dean of St. Mary's, who is directly concerned said:
"No army worth its salt is dismayed by the loss of a general. The atmosphere at St. Mary's remains very enthusiastic and lively".
I also draw attention to the fact that St. Mary's is not the only establishment carrying out research into Alzheimer's disease.

Type 23 Frigates
3.2 p.m.
Lord Glenarthurasked Her Majesty's Government:
When they expect to announce the outcome of the tender negotiations for a further three Type 23 frigates.
The Parliamentary Under-Secretary of State, Ministry of Defence (The Earl of Arran): My Lords, we expect to make an announcement shortly.
Lord Glenarthur: My Lords, I thank my noble friend for that Answer. When reaching a decision will he bear in mind the difficult employment conditions on Clydeside? Will he also acknowledge the excellent quality of Yarrow Shipbuilders' work on earlier vessels? Will he also acknowledge that, should that order go to Yarrow, there remains the possibility of opportunities for further work coming from abroad, thereby further enhancing the prospects of that yard?
The Earl of Arran: My Lords, first, I should like to say that of course we recognise the excellent quality of Yarrow Shipbuilders. However, I suspect that many noble Lords could rise in your Lordships' House and plead for the same reason to be given. All relevant factors are taken into account. But I must stress that the decision will be made on the basis of value for money.
Lord Mayhew: My Lords, are the Government reassessing the Soviet submarine threat and the role of our frigate fleet in the light of the break-up of the Soviet Union?
The Earl of Arran: My Lords, we are always assessing any world threat, from wherever it may come. It is vitally important that we keep the Royal Navy up to the best quality at all times.
Lord Boyd-Carpenter: My Lords, does my noble friend's answer mean that the Government have firmly decided to order three of these frigates?
The Earl of Arran: My Lords, it was said that up to three frigates would be ordered. However, we shall make an announcement on the result of the competition just as soon as we can.
Lord Dean of Beswick: My Lords, is the open tendering system being used or are the tenders negotiated? In other words, does each shipyard have an equal chance in the bid for this work?
The Earl of Arran: Yes, my Lords. Each shipyard has an equal chance.
Lord Mackay of Ardbrecknish: My Lords, when my noble friend and his colleagues are considering the order for these three frigates, will he bear in mind that the officers and men of the Royal Navy consider the long line of ships that have come from Yarrow to be of the very highest quality? Will he further consider that Yarrow is the lead yard for the Type 23 frigate and both merits and deserves the order for these three frigates to provide the Navy with ships of the highest quality?
The Earl of Arran: My Lords, I cannot go further than the answer that I gave to my noble friend Lord Glenarthur a few minutes ago when I said that of course the quality of Yarrow is not in dispute. Nor is the quality of any of our warships from whichever yard they may come.
Lord Williams of Elvel: My Lords, while accepting that Yarrow is the lead designer for the Type 23, and accepting the noble Earl's statement that all other shipyards will have a fair crack of the whip, is the noble Earl aware that Swan Hunter for instance has been asked, in submitting its tender, to incorporate a £4.4 million surcharge to cover payment by the Government to Yarrow for the design? Is that a proper calculation? How was that figure arrived at? Are all other shipyards which are being asked to tender being asked to put the same sort of figure in their own quotations?
The Earl of Arran: My Lords, it was made clear in the tender documents issued to the shipbuilders that their bids would be subject to a weighting to compensate for the cost to MoD for provision of lead yard services by Yarrow Shipbuilders to another shipbuilder.
Lord Glenamara: My Lords, need I point out that Swan Hunter on the Tyne is the best, both in design and building?
The Earl of Arran: My Lords, there seems to be an enormous competition for the best. All are extremely good.
Lord Chalfont: My Lords, while declaring an interest as the chairman of Vickers shipbuilders may I say that it also has an excellent record?
The Earl of Arran: My Lords, based on what your Lordships have said, it will be a very difficult decision to make.

Business
The Earl of Strathmore and Kinghorne: My Lords, with the leave of the House, I should like to say a word about the two debates standing in the names of my noble friends, Lady Cumberlege and Lord Laing of Dunphail. As the mover is allowed 15 minutes, and the Minister should rise to reply not less than 20 minutes before the scheduled end of the debate, in the case of the short debate in the name of my noble friend Lady Cumberlege, this means that all other speeches should be limited to a maximum of eight minutes and in that of my noble friend Lord Laing of Dunphail, six minutes. If any noble Lord were to speak at greater length, he would be doing so at the expense of subsequent speakers in that debate.

The Patient's Charter
3.7 p.m.
Baroness Cumberlegerose to call attention to the Patient's Charter for those using the National Health Service; and to move for Papers.
The noble Baroness said: My Lords, in moving this Motion may I say how much I welcome this opportunity to open the debate on the Patient's Charter and to express my delight that so many distinguished and knowledgable Lords should choose to participate, and in particular that our deliberations will be enriched by the wisdom and experience of two former Secretaries of State, both of whom I understand claim to have appointed me to the chairmanship of the Brighton Health Authority.
The NHS was born in the time when everything was rationed. But health care under the new Act was a cornucopia for all. It did not require coupons, it was the market leader. In contrast today, everything else is in abundance, but for health care we have to join the queue. The NHS requires reform, not simply to realign it with the reality of today, but to regain that moral elevation of being both abundant and free to all men and women. Like the Book of Common Prayer the 1946 Act was great. But great things give way to the ASB and the Patient's Charter.
The health service reforms are going to give choice and the charter is going to print the warranty. It states clearly our seven existing rights: to receive health care on the basis of clinical need regardless of the ability to pay (that is such an important ethic and one which we cherish and which is enshrined in the charter); to be registered with a GP; to receive emergency care; to be referred to a consultant acceptable to us; to be given an explanation of any treatment proposed. It was interesting recently to see the survey carried out by MIND and the Roehampton Institute which showed that 80 per cent. of people who have used mental health services think that their psychiatrist gave them insufficient information about the treatment proposed.

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The remaining rights are to have access to our confidential health records—a Bill was recently enacted in your Lordships' House—and finally to choose whether we wish to participate in medical research or student training. There are no ifs or buts; no exclusions or caveats in fairy writing—just plain guaranteed rights.
From 1st April this year three more rights will be added. The first is that people will be given information on local health services, including quality standards and maximum waiting times. The second, to be guaranteed admission for treatment by a specific date, no later than two years from the time the consultant places us on the waiting list. The third is the right to have complaints promptly investigated, a concern, I know, of the Consumers' Association. The most controversial of these three rights is that everyone should be treated within two years. That will be very challenging for the NHS. What is even more difficult is that it will question established priorities.
As a lay person, I have to be careful not to err into making clinical judgments—that is not my role—but I sometimes wonder about removing redundant tattoos. Should not those with redundant tattoos go to the back of the queue? If it is embarrassing to sleep with Mary when Tracy is writ large over your heart, that is tough; but for someone who cannot walk due to an arthritic hip, life is a great deal tougher. A warranty is a warranty and I do not like exceptions. Tracy should go to the back of the queue.
The charter challenges staff to change deep-rooted practices. I was interested the other day to be talking to a consultant in my region, who said to me that five years ago he would have been considered a very poor surgeon if he did not have a long waiting list. That was his virility symbol. But today he looks at his colleagues with long lists and as a clinical director he says to them "It's time you got your act together". Three years ago, long waiting lists were considered a necessary evil, but attitudes are changing. The majority of clinicians and managers know that lists are unacceptable and have to be tackled.
A year ago there were 71,000 people waiting two years for treatment. Today there are fewer than 35,000. The queue has halved. The number of people waiting for more than one year has also fallen by one-third, and that trend is continuing. In the south-west Thames region in 1989, the region had the second worst list in the country. But by validating lists every six months, by investing in day case treatment, by increasing the number of people treated, by better management and organisation and by using theatres and recovery wards more effectively and efficiently, we have reduced the numbers waiting by three-quarters and we now have the second shortest list in the country. I know it can be done. But I also know that there is a suspicion around that in order to reduce waiting lists people are being denied treatment; that they are not being put on the list for fear of producing poor figures. Although I have searched I can find no evidence in my region that this is happening. On the contrary, as opposed to fewer people being treated last year, more people were treated than ever before.
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The charter meets waiting times head on, but it is important that we should not forget that 90 per cent. of the United Kingdom's sick people are treated within six weeks. In our region by 31st March this year, three hospitals are likely to have no one waiting more than one year. That is a local standard being set and I know that others are more ambitious and are working towards six months. Those standards will trigger others to match. We are noticing now that whether or not hospitals are NHS trusts, the reforms have inspired staff to improve services. There is a sense of competition and that is proving beneficial.
It is easy to give people a warranty that is cleverly written, but which means nothing. The Patient's Charter is not like that—it goes on to set nine tough standards. Rightly the standards start by demanding absolute respect for people. When we are ill, we are often weak and vulnerable, and it is at these low moments that our dignity should be most respected. The NHS must serve us according to our wishes. It is our service. People should never be considered "just a case"; or worse still "an interesting case"; or the ultimate degradation "clinical material". The NHS must respect and cater for different religious and cultural beliefs with their requirements for special diets; it must welcome people with physical and mental disabilities; and someone, almost certainly our named nurse, must keep in contact with our family.
The fourth standard is a tricky one. An ambulance must arrive within 14 minutes in towns and 19 minutes in the country. The London Ambulance Service is part of my region's responsibilities, and we all know that London traffic is not always good news for people in a hurry. It is no secret that the London Ambulance Service finds it extremely difficult to meet existing targets, but the service is devising new ways to tackle these problems. It is using rapid response vehicles, a euphemism for motorbikes, with a paramedically trained, well-equipped ambulance person as driver, ready to give expert and immediate aid until the ambulance arrives. Their role is to stabilise the patient.
I understand from my medical colleagues that they refer to the "golden hour". After an accident occurs it is crucial to get trained staff to the injured patient quickly in order to stabilise them—more crucial than moving a patient by ambulance and taking them to hospital. Nevertheless, we want to speed up response times. In fact in the current year we have installed new computer equipment at a cost of £1.5 million. That will relay details to each ambulance. By September of this year it is our aim that 95 per cent. of ambulances should arrive within 14 minutes.
I take full responsibility for the London Ambulance Service and I undertake to ensure that it achieves charter standards. I know that it will not be easy. I have recently appointed a board of directors chaired by a former director of British Airways, in whom I have total confidence. He knows that the next charter standard states that people will be seen immediately on arrival at accident and emergency departments, but that is only useful when we arrive. For the seriously ill the ambulance must not be a weak link in the chain.

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The remaining standards concentrate on hospital services waiting times in outpatient clinics, cancellation of operations and the way people are discharged.
There is one standard that I believe is supremely important: it is that everyone going to hospital will be in the care of a nurse, "a named nurse"; not yet a nurse of our choice, but a nurse with a name who can take full responsibility for our care, an initiative very much welcomed by the Royal College of Nursing.
So, my Lords, 10 rights, nine standards. But I want to see this edition of the charter as only the first of many, each one raising standards. I particularly want people to have the right to choose to see a nurse rather than their GP. In surveys that we have conducted we have found that for advice on children, sick babies, bandaging, and the care of elderly people and the terminally ill, nurses are the professionals that most people want to see. I hope that this measure will be introduced and tried locally before being included in the next edition of the charter.
In the tradition of debates in your Lordships' House I hope that this debate will look ahead and move the service forward. Certainly, we must not dismiss the great advances that have already taken place. In an article published in The Times recently, the Shadow Minister, the honourable Member for Peckham, and her colleague, the honourable Member for Strathkelvin & Bearsden, gave a strong and timely warning that the reforms of the NHS must not concentrate solely on costs (though the authors acknowledged that those are important) but that there must be an inseparable link between cost and outcomes of treatment. I think that this concept too should be incorporated into the next edition of The Patient's Charter. But one must not dismiss the advances that have been made. It is interesting to see that medical audit is now embraced by every consultant and many general practitioners. Peer review is an enormously powerful force in improving the effectiveness of treatments. I have long campaigned for those outcomes to be published and I hope that in time that will happen.
One of the existing charter rights of patients is to choose the consultant who will treat them. But how is this choice to be made? We need that information on outcomes. We need that information on length of waiting times. Once we have that information we are in a position to make a real choice.
Who will monitor the charter and the standards? We have 56 million monitors ready to start work, for what this charter does is to give people not only rights but responsibilities. I would urge them to take both very seriously. I hope that they will respond not just by highlighting failures—because I know that there will be failures—but that they will also take just a moment to praise those who deserve it for successes. I believe that more is gained by building on success than chastising failure. As we all know, staff are enormously encouraged by letters of thanks and helpful suggestions.
In conclusion, I urge the House to unite in support of the health service and the new charter and to suggest ways to improve it. With their new found freedom hospitals are eager for suggestions. The new
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determination of the National Health Service can be summed up in three words—we will deliver. I beg to move for Papers.
3.20 p.m.
Baroness Nicol: My Lords, I congratulate the noble Baroness on her choice of subject. It is a most important one. I also congratulate her on the thoughtful and comprehensive way that she introduced the debate. No one can quarrel with the aims as stated in the charter and, indeed, I cannot quarrel with a single word that she said when she outlined what the National Health Service should be. To that extent we are agreed. But, however attractive the words of the charter may be, we must look at them against the background of what is actually happening today and what is likely to happen in the future.
Over the past few years health authorities have been put into the hands largely of businessmen and accountants. Local representatives have been reduced in number and, in case there might still remain a small flicker of activity as regards local interest, of the last 24 councillors appointed to health authorities 22 have been Conservative, with one Labour and one Liberal Democrat.
It is no wonder that fears are growing that financial decisions are to take precedence over patient care and certainly over patient convenience. It is significant, despite what the noble Baroness said about her wish to see patient choice, that the words do not actually appear in the charter.
In April 1991, the Labour Party published (at its own expense) a charter for patients, setting out a list of 20 rights for patients which we intend to establish. In October 1991, the Conservative Government published at a cost to the taxpayer of £2 million—I do not think that that includes the cost of distribution—The Patient's Charter which we now have before us, spelling out, as the noble Baroness said, seven existing rights and three new ones. It would be interesting to compare the two lists in detail, but I am afraid that I cannot do so in the limited time available to me.
The first item on Labour's list is patient choice; that is, the right of a patient to go to the hospital of his or her choice. That is an extremely important right when it is set against the need for a patient—especially a long-stay patient—to be within reach of friends and relatives, as well as getting the consultant of his or her choice. There is ample evidence to show—I have several A4 sheets of paper with me covered with examples—that patient choice is disappearing as contracts take over and treatment is limited to the hospitals under contract. It is not the money following the patient; it is the patient having to follow the money, like it or not. I could give many examples of the restraints which contracts are imposing but again there is not sufficient time to do so.
The Government's charter correctly points out that the first seven rights already exist. In some areas the requirements are already being met, as I am sure the noble Baroness would agree. It is fair that all areas should be expected to equal the best. It will be interesting to see whether the publication of the charter has the desired effect. I for one hope that it

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will. I note that the Secretary of State is to discuss performance with the chief executives every year. I wonder whether the Minister who is to respond to the debate can say what form the discussion will take and what sanctions will be available to the Secretary of State where an authority fails to reach the required standard. I can find no mention of that in the charter.
I turn now to the three proposed new rights. The first is that the patient is to be given detailed information on local health services, including quality standards and maximum waiting times. How will that information be made available? For example, how will maximum admission times for each specialty be publicised? Will it be through general practitioners, through the post to patients, through the local press or by circular to every household in the same way as the charter was distributed? It is important for us to know what the Government consider to be adequate standards of publicity. I am sure that the health authorities will also want to know that. Further—and this is most important—if it is to be done by general distribution, who will pay?
The second right is the guarantee of admission for treatment by a specific date no later than two years from the date when a consultant places a patient on a waiting list. Here is the rub: that is all very well, but how long before a person sees his or her consultant in the first instance? The process can take months. Moreover, what if a person comes within the increasing number of categories where patients are no longer accepted for waiting lists? The noble Baroness, Lady Cumberlege, is fortunate if she cannot find any examples of reduced categories in her authority. They do exist. Again I could give such examples.
For example, last year North East Thames—it is not the most recent example that I have but I shall use it because I happen to have the details to hand—has removed varicose vein operations from its waiting list. Varicose veins may seem a slightly frivolous condition but to someone who has a serious problem with them, whether male or female, they are a disability. Indeed, they can prevent a person from following his or her occupation. Therefore, to take that condition off the list seems to me to be a highly unsuitable way to proceed.
Moreover, what happens if the consultant is not adding to his list temporarily in order to keep within the terms of the charter? That, too, extends the two-year waiting period that the patient is entitled to expect. The system of counting patients on waiting lists is becoming remarkably similar to the present system used for counting unemployed people; in other words, if you do not like the result, stop counting a few categories. At least you knew where you stood under the old system, even if you did not like it.
In her response the Minister will no doubt give us impressive figures for the number of extra patients treated in the past year. I shall welcome that news. But before we can truly rejoice we need to see the whole picture of what is happening across the whole range of treatments. The noble Baroness, Lady Cumberlege,
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said that the queue has halved. Yes, the waiting lists have halved, but for the reasons that I have already given that is not the queue.
I turn now to the third guaranteed right. It relates to any complaints about the National Health Service being thoroughly investigated. The charter states that health authorities and national health hospitals will have to publish details regularly of both the number of complaints received and the length of time taken to deal with them. I welcome that right. But it is only fair to point out that that is already the practice in some areas; for example, for many years Cambridge has published the number of complaints and the time taken to deal with them. The information is given in the public part of the health authority papers for meetings and is examined by the community health council, among others. I feel that we should pay tribute to those authorities which already follow that practice. We should also perhaps hear how the complaints are to be published. Will it be by the method being used at present, or has a better way been found?
The charter is a statement of desirable objectives. I shall not say any more about it except to say to your Lordships that, by chance, I had a telephone conversation this morning with a young mother who had taken her small child, who has recently been diagnosed as having an ear complaint, to her GP to be referred to a consultant. The GP said, "There is no point in sending you to a consultant. You will not be seen in less than two years. Are you telling me that you have no private insurance?". That could never have been said to an NHS patient a few years ago. What have the Government done to our NHS which suggests that that is an acceptable way to deal with a patient? I hope that the electors will rise in their wrath at the next election and throw them out.
3.31 p.m.
Lord Perry of Walton: My Lords, we, too, are grateful to the noble Baroness, Lady Cumberlege, for introducing the debate. The absence of my noble friend Lord Winstanley gives me my first opportunity of speaking from these Benches. It would no doubt be inaccurate to describe my change from Social Democrat to Liberal Democrat as, "crossing the Floor of the House", but change it undoubtedly is. Yet it is difficult to imagine any change in attitude to The Patient's Charter. Everything it says, as the noble Baroness, Lady Nicol, has just said, is unexceptionable.
But even if what The Patient's Charter says is unexceptionable, should it have been necessary to say it? The charter starts by spelling out seven rights that every citizen already has within the NHS. Those rights are embodied in legislation. If they were currently being honoured, there would be no need to spell them out again. For many patients, some of those rights are not being honoured. Usually the patients, while dissatisfied either vaguely or seriously, are unaware that they have such rights and make no complaint. There is therefore no doubt that it was necessary that their rights be spelled out again clearly and concisely.

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It is for that reason that the charter is to be welcomed. Yet, if those rights were all being honoured for all patients there would have been no need to spell them out again; so, although it was necessary, it should not have been necessary. In that sense, its necessity is not welcome.
In addition to spelling out the existing seven rights, the charter then goes on to define three new rights: the right to be given detailed information on local health services; the right to be guaranteed admission within a limited time; and the right to have any complaint investigated and answered. Surely any efficient organisation would, after decades of practice, have provided all those rights as a matter of course. Could any school, university or public company be successful without providing comparable rights? Those new rights are also unexceptionable, but it should not be necessary to spell them out.
The charter then goes on to define nine national standards of service and to indicate that there will be many more local standards of service. Many of those are, and will be, specific, laying down matters such as maximum waiting times. That is wholly to be commended. But the first three national standards are very general in nature. They should be rights rather than standards. Rights are guaranteed; standards are only to be aimed at. The three general standards are: to provide respect for privacy, dignity and religious and cultural belief—surely that is a right; to ensure that everyone, including people with special needs, can use the services—surely that too is a right; and to provide information to relatives and friends, subject to the patient's wishes.
Is it not sad that such elementary characteristics of a humanitarian service should need to be stated? Would not your Lordships have assumed, as I did, that such matters had been built into the philosophy of the NHS at the outset? Like everything else, they are wholly unexceptionable.
So, I suggest that had the NHS been the efficient and humane service that its founders intended, almost all of The Patient's Charter would have been a work of supererogation? It clearly is not: it is a very necessary document. That, in itself, is a condemnation of the way in which the NHS has been allowed to deteriorate as a service over the years.
My second question about The Patient's Charter is: if it was necessary to say those things, does it say enough? The answer is clearly, no. The charter deals almost exclusively with the hospital services—with the treatment of disease. It must surely be extended to cover the primary care services. Improved responsiveness and better information in primary care offer the potential for the greatest health gain by preventing illness and promoting health.
Finally, perhaps I may point out that the Liberal Democrats published some three years ago, in a document called Prescription for Health, their own patient's charter; so there are three of them on the books. The Patient's Charter published by the Government bears a close resemblance to that of the Liberal Democrats. It is a watered down version, but
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it covers the same topics and, not only that, it covers them in almost the same order. Can coincidence be an acceptable explanation?
We on these Benches naturally welcome the sincere flattery implicit in the publication by the Government of The Patient's Charter. We do not believe that it goes far enough. There are other rights that we would add. I shall give only two examples. We would give patients the right to exercise the maximum freedom of choice in selecting the timing of their treatment; and we believe that people should be informed not merely about local health services; they should be informed and consulted about any proposed changes to those services.
The Patient's Charter is a welcome start to the rehabilitation of the NHS. It cannot be implemented without the provision of adequate funding; but not only that, it will not be implemented without a restoration of what was at the outset the extremely high morale of the staff, a morale that today has sunk to a sadly low level. Those are the challenges that await the next Government.
3.38 p.m.
Lord Jenkin of Roding: My Lords, the House will be grateful to my noble friend Lady Cumberlege for giving us an opportunity to concentrate for two and a half hours upon The Patient's Charter and some of the circumstances surrounding it. I welcome the two speeches that have come from the other side of the House both of which applauded the publication of The Patient's Charter. So far from being a matter of criticism, it is something in which we can all take pleasure. Apparently all the parties whose representatives have spoken have thought it worthwhile to publish a list of patients' rights and standards. That must be a gain.
I shall declare an interest. I am chairman of a shadow NHS trust (the Forest Healthcare Trust). We take over responsibility in April. It operates in the area of Waltham Forest and my former constituency of Wanstead and Woodford. The borough contains substantial areas of social deprivation and a large ethnic minority population; and so I am not unfamiliar with some of the problems addressed in the charter.
Our district general hospital, as some of your Lordships may be aware, is Whipps Cross. It has teaching status associated with the Royal London Hospital. It also has a good and prestigious nursing school. It has pioneered some day surgery and it is a national demonstration model for what is called total quality management. So it has some good things going for it.
However, as the list published in the Sunday Times last Sunday showed, Whipps Cross appeared as having a poor record on waiting times for two of the eight specialties listed. I shall say a little more about that in a moment. In an interesting article in the Observer before Christmas, there was an extended profile of the hospital which included these words:
"wards half-full of patients who don't really need to be there…nurses too rushed to deal comprehensively with the patients who do need to be there".
I hope to say something about that.

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I may also say, as there seems to be a question of morale, that I have an enthusiastic board with executive and non-executive directors of mixed disciplines, with representatives of the ethnic minorities on the board. Like those taking part in this debate, half my members are women and half are men.
I wish to concentrate on three points. We take the Patient's Charter very seriously. We spent two of our initial shadow board meetings defining our aims, objectives and targets and working on our local charter standards, as we are invited to do. We now have a group working on management contracts which will certainly embody key charter standards. I hope that we will be able to devise realistic criteria to have some element of performance-related pay. That has again been very much welcomed by our executive directors.
I have no doubt whatever in saying to your Lordships that setting published standards against which to measure performance is injecting a new and welcome dynamism into the management of the National Health Service.
That brings me to my second point concerning waiting times, on which I wish to go into a little more detail. It has been well catalogued that it is the biggest single cause of dissatisfaction with the NHS. In considering the problem, however, one cannot separate the Patient's Charter from the other NHS reforms. The most far-reaching is the separation of purchasers and providers and the principle that the money follows the patient. As my noble friend said, these have had a marked influence on the way in which providers see their function. This is true, whether it is a district managed unit or a self-governing trust. A good example comes from our waiting times. I make the point that this was before the trust had got into the driving seat.
Last April in ENT, 200 people had been waiting for over two years—9 per cent. of the total in that specialty. In gynaecology it was 173, in oral surgery it was 118-20 per cent. of the total. That was the situation despite intensive pressure from the region and much effort by local management.
In fact 1991 has seen a dramatic change in that picture, and it is right that I should point it out. In ENT, whereas last April 200 people had been waiting for over two years, the number was 45 at 31st December and we confidently predict that it will be nil by 31st March. In gynaecology the number was 173; it was almost halved by the end of the year, down to 96, and it will be nil at the end of the financial year. The figures are the same for oral surgery: 118 in April, down to 44 by December and our confident prediction is nil by the end of March. There are similar marked reductions in those waiting for between one and two years.
How has this happened? As Dr. Johnson said, the prospect of being hanged in the morning concentrates the mind wonderfully. What has happened is that the risk of the loss of purchasers' contracts has concentrated the minds of everyone: managers,
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clinical directors, and consultants. They are being told that unacceptable waiting times will lead to the contracts going to other providers.
Perhaps I may quote a few words concerning the ENT department from the report which we received in December:
"This [waiting list] project has enabled the department to reduce its waiting list by 29% in the first 9 months of the financial year with the proportion of patients waiting over one year dropping from 39% to 12%. Further reductions are anticipated".
The report continues:
"The ENT department has achieved this remarkable success due to the consultants cooperating with managers in reducing the number of long wait patients. It is hoped that this success will ensure that Purchaser contracts for ENT work will remain in future years".
The key to the problem has been the consultants. How have they done it? Mainly by at last agreeing to refer many of their patients to other hospitals. Of course, the money follows the patients so that we have been able to pay for them. Also, long wait patients have been targeted and there have been additional theatre sessions over the Christmas break.
Why was the previous pressure not effective? There had been pressure, as any regional chairman would tell us. My noble friend made the point that long waiting lists suited some doctors, not least because not far from Whipps Cross there is a BUPA private hospital where some carry out their private practices. However, now that the Whipps Cross ENT department has faced the prospect that it might not exist in a year or two's time, and that contracts might be taken away and would go to other hospitals, they have performed remarkably well.
In the case of oral surgery, the answer was for one of our surgeons to take his work to the Independent Hospital in Whitechapel where he was able to carry on his NHS practice, using its theatres and wards under NHS terms. The health authority was able to pay for that and the same is happening all over the country.
The reforms are working far better than I dared to hope. The targets and standards are realistic, but I agree that they need to be tightened up. I have no time to go on to other developments but I believe that we must recognise what is happening. I have been living in two worlds: the world of the press and television and the real world of the enthusiastic people who are getting on with the job. I know which the public prefer.
3.47 p.m.
Lord Ennals: My Lords, the question of whether there should be a patient's charter is not controversial. It has been clear that we all have our patient's charters, the Government just happen to have brought out theirs later than the other two parties. However, we shall all welcome anything that improves the entitlement of patients to care of the best quality. Therefore, I very much welcome and appreciate the introduction of the debate by the noble Baroness. Both the noble Lord, Lord Jenkin, and I feel a godfatherly relationship to her. When I appointed her I did not know her politics, but such is the nature of

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the way in which I carried out my job, that that would not have influenced me against her. She is a very good chairman in her own right.
I should have liked to reply to some of the points made by the noble Lord, Lord Jenkin of Roding, but I wish to concentrate entirely on one aspect which relates to the first right in the Patient's Charter; that is, the needs of the very elderly, and the elderly mentally infirm. This was effectively dealt with by the programme "Panorama" on Monday night, "Getting Rid of Granny".
Perhaps I may first declare an interest not just through my active involvement in voluntary organisations like MIND, of which the noble Lord, Lord Jenkin, and I are joint presidents. There is the Alzheimer's Disease Society, the Council and Care for the Elderly, and Age Concern. I am also a non-executive director of Takare, the leading agency for providing high quality nursing homes. Twenty-two out of our 24 nursing homes have contractual arrangements with district health authorities and set their prices within government limits of income support, so the question of whether people can afford to pay never arises.
It was revealed this week in the programme "Panorama" that three-quarters of health authorities have recently cut back on long-term care. Thousands of people now face the prospect of being forced, when their hospital for the elderly closes, to go private in the sense that either they or their relatives have to run down their own modest savings to top up fees for their elderly relatives. The first established National Health Service right in the Patient's Charter is the right,
"to receive health care on the basis of clinical need, regardless of ability to pay".
I presume that that right applies to people of all ages, including the very elderly. I hope the Minister will confirm that because obviously an increasing proportion of our population falls into the elderly category. At this time nearly 900,000 people in this country are over the age of 85. By the turn of the century that figure will be over 1,100,000. The Patient's Charter contains fine words, but I wish to question the Government on their policy in this respect. If death rates were to decline, the number of patients over the age of 85 would increase. There is also a growing number of elderly people who suffer from mental distress or Alzheimer's disease. Such people have been the victims of the Government's policy to close beds for the mentally ill before proper support services are available in the community.
Such action causes anxiety not only for the frail elderly themselves, but also for their relatives who care for them and care about them. I personally know many people who are desperately worried about what the Government's future role will be in this area. I am sure many other noble Lords know such people. Those people do not wish their elderly relatives to be forced to stay in some of the wholly inappropriate, old, workhouse-type hospitals that exist. They do not wish to see their relatives in such hospitals, but they fear their relatives may be shipped to nursing homes in other parts of the country because their local health authorities have seemingly ended their responsibility
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for them. Such patients perhaps cannot afford high fees and nor should they have to do so. In the first of the Patient's Charter rights, the Government address that point. They refer to the right to receive health care regardless of ability to pay. In my view that principle should be sacred. That principle is more important to people at the end of their lives than at any other time.
The "Panorama" programme showed what many of us already knew. It showed that too many elderly people live in conditions which deny them human dignity. The Government should say without equivocation that they accept absolute responsibility for guaranteeing the first right in the charter to people of all ages. Yet people are being bussed to private homes from their own communities. It is sickening to hear some people comment that some patients are too frail to know where they are. That is not a good enough excuse.
I believe the conditions in some private homes are grossly unsatisfactory. That fact was revealed in the "Panorama" programme. Many of the private homes are now registered, but nevertheless some of them are inadequately staffed and the quality of care given to elderly people is such that none of us should be proud of it. But what option do patients or their relatives have in this matter? I repeat, the Government should accept responsibility for all these patients. The Government could accept that responsibility by introducing government-run nursing homes that are properly supervised. Alternatively the Government could enter into contracts with nursing homes involving proper supervision by health authorities. I do not mind how the Government tackle this matter as long as a high quality of health care is maintained and the Government accept responsibility for providing the funds to achieve that high quality.
No one should be forced to pay for private accommodation he cannot afford. No one should be forced into poverty and homelessness, as is the case now. Relatives should not be forced to accept a nursing responsibility which may be quite beyond their capabilities. Indeed there are many thousands of carers today looking after elderly people who are carrying out functions they are not qualified to carry out. In those cases there should either be medical services provided in the carers' homes or those in need of care should be in properly supervised nursing homes.
I wish to refer to the Salisbury health authority. Apparently that health authority has closed 49 continuing care beds in the past two years when the need for such beds was growing. This is a huge problem and it affects an enormous number of people. Every year it affects more people. Over the next 20 years there will be a steady increase in the number of elderly people requiring more and more help from the health service. Thank God The Patient's Charter has made a clear statement on this issue although I believe the words "regardless of age" should be added to the first right in the charter.
The Prime Minister has said recently:
"No one should have to rely on private health care".
I am certain that is correct. The Prime Minister must ensure that his Government carry out his wishes. The

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Government must ensure that no one has to rely on private health care. The Prime Minister must now ensure that every health authority in the country respects that first right in the Patient's Charter. I believe, however, that that right should take account of social as well as clinical need.
3.55 p.m.
Lord McColl of Dulwich: My Lords, I, too, wish to thank my noble friend Lady Cumberlege for introducing this debate. The Patient's Charter is a logical extension of the Government's reforms in the National Health Service. It clearly delineates the targets at which the reforms are aiming. However, it is no use pointing out the targets if there are no incentives to stimulate the 1 million NHS employees to reach them.
Some months ago the noble Lord, Lord Glenamara, told us of his visit to an outpatients clinic in the North of England. He was kept waiting for four hours. As he is a patient, charming and modest man he did not protest. However, when he visited the clinic again two months later he was again kept waiting for four hours. On that occasion his curiosity got the better of him and he carried out a little survey to find out what time the other patients had been instructed to attend the clinic. To his horror he discovered they had all been asked to attend at 9 a.m. All the patients were eventually seen by the end of the morning. That indicates that the cause of the shambles had nothing to do with a lack of resources. It was due to a lack of consideration and courtesy. That is the fundamental problem.
The majority of patients in the National Health Service throughout the land receive courtesy and consideration when they are treated. But the crucial question is how we ensure that all NHS patients always receive the kind of courtesy and consideration which is their due. The answer is quite simply that there must be incentives for good behaviour and disincentives for inappropriate behaviour.
A brilliant idea formulated by Professor Einthoven was to split the two functions of district health authorities. He formulated the idea of making district health authorities the purchasing authorities which approach hospitals and buy the care required to service their populations from the providers. That split is absolutely crucial to these reforms. Professor Einthoven said that having purchaser and provider wrapped up in one entity—that used to be the case with the former district health authorities—would be rather like having a university where students set their own examination papers, answered them and then corrected them themselves. Clearly there are dangers in that kind of system. It is essential to make the split I have referred to.
The noble Lord, Lord Carter, has repeatedly said he does not like patients being called customers. He thinks that is a new phenomenon, but of course there is nothing new under the sun. We have been calling patients customers for 30 or 40 years. We did so because there was a widespread view—was the case with many other nationalised industries—that
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everything was free and that patients did not have to pay for their care. However, they pay for it in a rather roundabout way through the tax system. To emphasise the fact that patients paid for their care they were referred to as customers. Therefore I do not think the noble Lord should be so opposed to the term.
There is a further shift in emphasis towards giving the patient power by enabling him to change his GP more easily. The reforms are shifting power to where it should be, to the customer—or perhaps I should say to the patient.
Perhaps I may take up the point made by the noble Baroness, Lady Nicol, that the method of counting waiting lists is constantly being changed. She is quite right. However, she ought to have mentioned that the greatest change was made by the last Labour Government, which quite reasonably said that all patients who had been given dates for their operations were to be removed from the waiting lists. That is not the situation today. Were we to do that now and give all patients on the waiting list dates for their operations we could reduce the waiting list to zero. Therefore, while the methods have been changed they are not comparable. That needs to be said loud and clear.
The noble Baroness also said that patients' choice has been limited by the reforms. That is a point which must be dealt with because the Labour Party agrees that money should follow patients. It wants all doctors to be able to refer patients wherever they like. That is the eventual aim of the Government's reforms. However, if we had done that from 1st April 1991 there would have been the chaos which the noble Lord, Lord Ennals, predicted so often. That is why the Government did not do that. Instead, they said that we should proceed slowly and keep everything this year as it was last year.
Would the noble Lord, Lord Carter, like to intervene? I thought that he wanted to say something.
The idea of keeping the situation steady for a year was to enable all systems to be put in place so that there would not be chaos. If the noble Lord, Lord Carter, thinks that it would have been better to have chaos, so be it. There would have been chaos if all GPs could have referred all their patients anywhere they liked. It was perfectly reasonable to keep the referral patterns this year as they were last year. It is quite wrong for the Opposition to make such a song and dance over the issue.
It is also wrong continually to imply that to become a self-governing hospital is to opt out of the National Health Service. It is no such thing. Self-governing hospitals are answerable to the Secretary of State in the same way as the boards of governors of the teaching hospitals were in the old days. They have to provide an annual report and financial report. They cannot borrow money without permission from the Secretary of State. Therefore the Labour Party cannot continue to describe the system as opting out of the National Health Service. It is nothing of the kind. We have no wish so to do.

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In conclusion, I should like to thank my noble friend Lady Cumberlege for introducing the document and to say what an excellent document it is. It will work because the incentives are in place.
4.3 p.m.
Baroness Carnegy of Lour: My Lords, speaking on 13th January during the final stages in this House of the Local Government Bill the noble Lord, Lord McIntosh of Haringey, reminded us that the phrase "the Citizen's Charter" was not invented by the present Prime Minister or indeed by any present politician but by Herbert Morrison in 1920. The longevity of the idea is interesting. My noble friend Lord McColl has left us in no doubt that the need is even greater now than it was in 1920 to find ways to ensure that public services are as user friendly as they can possibly be.
Many of your Lordships may remember the gist of what Ivan Illich wrote on the subject in the early 1970s. Among other things he pointed out that, increasingly, big institutions such as hospitals, schools and I have to say to the noble Lord, Lord Perry, universities, and the professional people and others who control and run them, although they sincerely believe that they are doing their best for patients etc., in effect tend, because of the way things are organised, to make arrangements which are more and more for the benefit of the providers and less and less for the people the providers exist to serve. One could call it the "what is good for the institution is good for the consumer" syndrome. Illich saw the need in the modern world for deliberate measures to redress that imbalance in order to tip the balance in favour of the ordinary citizen. The Patient's Charter is an attempt to do just that in the National Health Service.
Of course, as speeches in this debate have made plain, printing the charter is the easy part. Behind each right which a patient has and behind each guarantee, mechanisms and good practice must be developed right across the health service to make sure that they are delivered. A good example is the small field of the National Health Service in which I am involved, the right of a patient to choose whether to take part in medical research. That is one of the rights which is contained in The Patient's Charter. Perhaps I may point out to the noble Baroness, Lady Nicol, that the right to choose is mentioned on page 9.
It seems obvious that the patient should have the right to choose. However, to be asked by one's doctor whether one will take part in, say, the trial of a new drug can be quite a threatening question. What does one say? One knows that the research is important; new treatments must be discovered and tried out. One would like to help if one can. If one says "no", will it upset the hospital or the doctor so that they take less good care of one from now on? Life is pretty tough already if one is ill and coping with the present treatment; can one bear to risk extra uncertainty, new hazards or the possibility of it all going wrong?
It must also be said that there are strong incentives for hospitals, university departments and GPs to undertake research and to find patients to take part. There is the incentive of finding better treatments.
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Kudos attaches to research. There is also money to be earned for the department or practice, especially if the research is sponsored by a large commercial drug company.
All of that means that a patient's freedom to choose freely and without anxiety or pressure whether to take part in a drug trial is very important. How is that right to be safeguarded in the National Health Service? Part of the mechanism in that part of the charter is the network of local research ethics committees, a number of which already exist and which the new government guidelines suggest should soon be in place within every district health authority and every regional authority in Scotland. Many have been operating for some time. I am the chairman of one such committee. It is interesting to see from both sides of the fence just how important that part of the Patient's Charter is.
When our committee began its work we were interested to discover how difficult it often was for patients asked to involve themselves in research to know what they were letting themselves in for. It was interesting how relaxed researchers were about describing precisely what they planned to do. They were very polite when issuing the invitation, but they were not precise in describing what was involved. They were fairly relaxed about explaining to the committee and very relaxed indeed about explaining to potential participants what the possible hazards might be and what was involved. I know that other ethics committees have had the same experience.
If a person is to be properly free to choose whether to take part in a drugs trial he or she must be supplied with full, clear, easily understood information. It should be written down so that it can be read at leisure. The patient can then have the chance to discuss the matter with the doctor and ask questions. There are all kinds of details that he or she may wish to know. For instance, "What is the purpose of this drugs trial? Why am I one of those asked to take part? How does the drug work? What exactly will happen during the trial? How long will it last? Shall I have any side effects? What will happen if I react badly? Will I be able to ask to withdraw? Will anyone suggest that I might withdraw? If I say 'no' now or withdraw later will it upset the doctors and affect my present treatment?"
The ethics committee of which I am a member will not agree to a piece of research proceeding until it has seen a copy of the written information to be given to all participants and the separate consent form. In that way the committee can check that people understand what is proposed, what will happen and that they can say "no" or withdraw if they wish to do so.
Likewise the committee asks searching questions of the researchers. For instance, "What is the precise objective of the research? Could it be done any other way? Is the research capable of achieving that aim? What categories of people will be involved?" The committee checks carefully the safeguards for patients and so on. And news travels; in the second year of the committee's work there is no question but that circumstances have improved since the first year.
The Patient's Charter may look like a slim volume, but one thing leads to another. In Scotland there is a

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plan for action which has been developed by 500 people working in the health service. There is every sign that people are realising that in the National Health Service the most health-giving ingredient will be ever-increasing user friendliness.
4.12 p.m.
Lord Holderness: My Lords, I am grateful to my noble friend Lady Cumberlege not only for making possible the debate but also for the excellent speech with which she introduced it. As I expected, there has been a general welcome for the charter. It will not at a stroke reduce all delays and remove all disappointments. Indeed, there is a danger that it might even decrease the urgency with which improvements throughout the National Health Service are eagerly awaited. However, it does one thing of immense importance; it endorses the supremacy of the user. The position and importance of all who work and plan in the National Health Service is clearly recognised, but those of the user are paramount.
I should have preferred a little more boldness. Two years is still a long time to wait for treatment, but I take the point that many people, perhaps most, will not have to wait that long. However, while that waiting time is rightly a matter for concern, the much shorter waiting time of weeks or even days for the result of an important medical examination can cause a misery of anxiety. Such an improvement need not depend on a revision of the charter. I should like to see steps taken immediately not to reduce the thoroughness of any examination but to cut out all dilatory delays for which no satisfactory explanation can be offered.
Nor need a formal change be made to the ninth of the national charter standards. When an attempt is being made to improve collaboration between hospitals and GPs at the time of the patient's discharge, it is a matter of great concern that a hard-pressed general practitioner is unaware of his or her patient's return home. It is too often the case that when the patient eventually returns to the surgery the GP is ignorant of the treatment that was offered and the future treatment that is required, except in so far as the patient can provide sketchy information.
In general there is abundant scope for the introduction of further standards, and the sooner the better, in areas where performance, the supply of goods and the time that is taken can be easily measured. From 1987 until last year a special authority, the Disablement Services Authority, worked towards integration within the National Health Service of the provision of wheelchairs and artificial limbs. After studying the matter closely for almost four years it appears to me to be relatively simple to promise a potential user of a wheelchair or a similar appliance that it will be available within a certain number of days or weeks. Similarly, the man or woman needing an artificial leg should be guaranteed to receive the limb that fits satisfactorily within a specified time after the amputation or the prescription of the limb.
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The final and most important issue was the fruit of a recent discussion among the Department of Health Advisory Group on Rehabilitation, of which I am chairman. Several of the group's more expert members pointed out that rehabilitation after long neglect was prominently mentioned in the department's Green Paper, The Health of the Nation. It is hoped that the issue will maintain its place in the forthcoming White Paper. However, the Patient's Charter makes no mention of that. There are hints, but only hints, of rehabilitation among the rights and the standards, but nowhere can I find unambiguous and unmistakable promises that every man, woman and child, whether in hospital or after discharge, has a clear right to continuing rehabilitative care aimed at the fullest possible restoration of his or her capacity. If my noble friend can give an undertaking along those lines I and her advisory group will be greatly relieved.
4.17 p.m.
Baroness Seccombe: My Lords, I am delighted that my noble friend Lady Cumberlege has initiated this important debate on the NHS with particular reference to the Patient's Charter. Health is naturally one of the most high profile areas of government. After all, we all become deeply concerned when our family or friends become sick.
There is plenty of research to show that most people who use the NHS are well satisfied with the treatment that it provides. Their views are quite at odds with the constant criticisms of the NHS which we hear from the Labour Party. The tragedy is that such criticism can cause only alarm and concern to people when often they are vulnerable and most in need of reassurance and comforting support. To hear the Opposition talk one would believe that the NHS is a crumbling service suffering savage cuts. The truth is very different. Funding for the NHS has increased in real terms every year since 1979. The figures speak for themselves. In 1979 £8 billion was spent on the NHS. In 1991–92 the figure is £33 billion. After allowing for inflation that is an increase of 50 per cent. That is a truly impressive record on which the Government can be congratulated.
To be effective money must be spent wisely. There is ample evidence to show that that is happening and is reflected in widely reported public satisfaction. Several recent surveys have shown that the vast majority of people who use the NHS come away with favourable impressions. In November 1991 the National Association of Health Authorities and Trusts published a survey of patient's satisfaction. It showed that 87 per cent. of people with recent experience of using the NHS were satisfied with hospital in-patient care and visits to their doctors.
I welcome The Patient's Charter. It is an important document which not only draws attention to the seven existing rights and standards of the NHS but also states firmly and clearly the Government's commitment to building on success and creating an even better NHS. In particular I welcome the attention given to appointment times. I know that my noble friend Lord McColl has already referred to it. I too have had experience, as I am sure most Members in

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this Chamber have, of turning up at hospital for a 9 a.m. out-patient appointment only to find that 20 other people have been given the same appointment time, all sitting in a dingy waiting room, sometimes for several hours, with no explanation or apology given. not even from the doctor when one eventually saw him.
That scenario might be more convenient for the doctors, but surely the prime concern of the NHS should be for the welfare and convenience of the patient. That is where the charter puts its emphasis. It is the patient, the customer—yes, I am happy to regard the patient as the customer—who pays an average £44 a week for a family of four for the service. That system of out-patient appointments is unacceptable. I am pleased that one of the national charter standards is that everyone will be given a specific appointment and will be seen within 30 minutes of that time.
The health reforms have made it possible for the charter to promise that no patient will have to wait more than two years from the day that the consultant places that patient on the waiting list. Dramatic advances have been made. The Merseyside region has already achieved that target. In the first six months of the reforms there was an overall fall of 16 per cent. —a most encouraging success.
The new NHS hospital trusts play an important part in the challenge. In those hospitals attention is being paid to the needs of patients and many more are being treated. It must be a great joy for all the staff of trust hospitals to have the flexibility to adapt their services to the needs of local people. They must appreciate too the fact that their own management is more able to respond quickly and effectively to staffing standards, capital programmes and pay and conditions.
It is interesting to observe that some BMA spokesmen have admitted that GP fund-holding has improved patient care. There is real enthusiasm by many doctors to join that voluntary scheme. By April some 7 million people will be covered in that way. Over two-thirds of fund holders believe that their quality control over hospitals has improved as a result of fund-holding.
The Labour Party will lose a great deal of support by its recent re-statement of its intention to turn the clock back by abolishing GP fund-holding. I am delighted that the NHS is so prominent in the political argument today. The Government have a good and proud story to tell. The agenda for the future is strong and positive. It is this Government which is most capable of shaping and modernising the NHS to meet not only today's challenges but those of the 21st century.
4.23 p.m.
Lord Mancroft: My Lords, it was fitting that the debate today should have been opened by my noble friend Lady Cumberlege. She demonstrated her enormous knowledge and experience of the health service and her grasp of its problems and solutions to
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the problems. We are grateful to her for the opportunity today to talk about this important subject.
The debate is about existing policy. It is not, as we have previously discussed in the House, a debate on possible options, on ways to go forward, or even on criticisms of the past. That is important. Not only are we discussing existing policy; it is policy spearheaded by brave reforms. Perhaps we are a little premature today in speaking about the Patient's Charter and the reforms. In terms of the National Health Service's history, the reforms have only just begun. It will be years before we achieve the results that we seek. However, there is no escaping the fact that the early signs are very good indeed.
I believe that the Patient's Charter is a tremendous demonstration of the Government's commitment to the National Health Service. Not only that, I hope that it will finally put to bed the Opposition's claim that the Government wish to privatise the health service. I hope, too, as my noble friend Lady Seccombe demonstrated, that it will finally put to bed the claims of the Opposition that the Government have instigated cuts in the health service. Even a party that is led, as the noble Lord, Lord Desai, said earlier this week, by leaders who do not understand economics, cannot fail to grasp the fact that an increase in expenditure from £8 billion to £33 billion is not a cut.
One of the reasons that the Labour Party talks so much about cuts is that throwing money at the health service is the only policy that it has produced. It is not just throwing money; it is throwing money which it does not have and which it could not produce. Its economic policies would not produce the growth that would be required to fund its plans. Indeed, it would be more likely to produce the same result as occurred during the last Labour Government: a Labour Chancellor going cap in hand to the IMF. I doubt that the IMF would produce the sums that the Labour Party wishes to spend on the NHS.
Of course the NHS could always use more money. There is no limit to its requirements. Any government of any description will clearly spend as much as they possibly can. This Government are no exception. They have spent proportionally more than any government previously because their economic policies have allowed them to do so. They have produced the cash. However, in spending that money it has become clear that it was not lack of funds, or anything to do with money, that caused the main problems in the National Health Service during the 1980s. What clearly have been needed—and they have been implemented—are reforms to make the service more cost effective.
As with so many issues, the only real debate about reforms within the National Health Service has been within the Conservative Party. All the different bodies within the health service, and outside it, have been involved in those discussions as is right and proper. There has been acrimony at times; harsh words have been spoken. Indeed, I am sad at the level and angles of the attack that the British Medical Association has entered into. It is pleasing for all of us to see that it is slowly changing its mind. It realises that those reforms

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are right. I believe that slowly the BMA will begin to convince its members—or its members will begin to convince it.
Only the Labour Party consistently rejects the reforms. It is sad that the Labour Party prefers to continue the system as it was. It is extraordinary that, although it consistently derided the Patient's Charter, it has one of its own—as indeed have the other parties. Everyone apparently now has a patient's charter. The Labour Party's patient's charter is bigger—it would be, would it not? However, it seems strange to me that mention of waiting lists is missing from the Labour Party's charter. That rather belies the claim that the Labour Party puts patients first. It is quite clear to anyone who has any connection with the health service that on a practical basis it is waiting lists which worry patients more than anything else.
Reference to waiting lists is one of the most important components in the charter. It is important in practice because in many ways it is the simplest problem although not the easiest to solve. It is easy to identify the problem. The goal is to reduce those waiting lists. The results therefore are easier to gauge. At present the results are pleasing. My noble friend Lady Cumberlege and my noble friend Lord McColl have referred to cuts in waiting lists within a region, within a trust. It is particularly satisfying to the Government to see how fast the trusts are coming to grips with that problem and are managing to lower those waiting lists. Of course there is a long way to go and it is early days yet, but we are undoubtedly heading in the right direction.
The second and third key components of the charter to my way of thinking—and it is clear that every speaker in this debate has a favourite part of the charter—are costs and standards. Of course the two are interlinked, and that in itself within the health service is a revolution. Previously, cost was called price, and standards were not really talked about too much, but you cannot evaluate the cost until you have the standard and you know what you are aiming at. It is not simply price; it is the end result that is important.
If I may, I shall give your Lordships an example. Some of your Lordships may know that I am particularly interested in one area of health care, which is the treatment of drug addicts and alcoholics. This is a difficult area for the health service. They are not popular patients, and they never will be. They do not easily come forward for treatment and they are extremely hard to treat. I am involved in the voluntary sector through various charities and I have also a commercial interest in it too.
In viewing these two different areas of treatment, two different philosophies of treatment, I have learned some interesting facts. I am a director of a housing association, which is a large organisation which deals with drug addicts. We treat them for £255 a week, which is a very low price. I am also engaged with a commercial operation which treats patients for £250 a day. There is, however, a difference far beyond that when one compares those two figures. Within the housing association the programme is 18 months.
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Only 4 per cent. of patients complete the programme and only 2 per cent. ultimately remain off drugs. Within the private sector establishment something like 80 to 90 per cent. complete the treatment, which lasts for a maximum of six weeks. Of those who complete, anything between 40 and 60 per cent. retain their health and remain abstinent from drugs.
It is difficult to be as accurate as one would like to be, but what one can basically say is that at the cheaper end of the market, which has different problems, it costs about £20,000 to get one patient off drugs, whereas at the more expensive end of the market it costs about £15,000 to get someone off drugs. That is the difference between cost and price.
One of the reasons for the differential is that the private sector exists within the disciplines of competition and cost effectiveness. It is constantly evaluating its performance, its results and patient satisfaction, and even more than that GP satisfaction. It is really the GP who is buying the treatment, buying the health care, on behalf of the patient. These evaluations, these performance examinations, have not up until now been used within the health service, but encompassed within the reforms and within the Patient's Charter would be the requirement to do that. I hope, therefore, that we shall see slowly, carefully, and gradually a raising of standards.
I mentioned earlier to your Lordships the price of treatment, but it is worth bearing in mind the tops and bottoms of the scale.
Several noble Lords: Order! Order!
Lord Mancroft: My Lords, I see that I have run out of time.
4.34 p.m.
Baroness Faithfull: My Lords, I join other noble Lords in thanking my noble friend Lady Cumberlege for initiating the debate. As she has said, the Patient's Charter sets out what the National Health Service has to offer. She emphasised that the service is available to all citizens in this land on the basis of clinical need, regardless of ability to pay. I take the point that the noble Lord, Lord Ennals, made that we are still looking at the position with regard to patients suffering from an Alzheimer's disease condition and the elderly.
The long held view "Put the patients first" still pertains. Furthermore, it is the role of the staff of the health service to listen, and not only to listen but to hear the views the patients put forward. I understand that the charter is to be translated into nine different languages. That would enable the health service to be understood by the ethnic groups who are citizens of this land, and it is a wise movement.
I should like to ask my noble friend three questions. First, would she not agree that the charter, to be better understood and more helpful, should surely include the medical running of the community services and the social services and explain the role and link between the hospital and community services? This point was well made by the noble Lord, Lord Holderness. The charter concentrates only on the hospital service, and here I agree with the noble Lord, Lord Perry. The

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hospitals should work in partnership with the general practitioners, the health visitors and the midwives, and unless there is a partnership between them the health service cannot well be understood by the public.
I remember visiting a health centre in a small town some years ago. It offered a wonderful community service to patients and in some instances performed minor operations. Indeed there were two beds for overnight stays. The work of this community health centre relieved the hospital staff, who were then able to concentrate on serious surgical cases and others needing hospital treatment. In this way the waiting lists of the hospitals were reduced.
As president of the National Children's Bureau my second point concerns health services for children. Should we not be promoting an integrated child care health service? To build up a nation of healthy children is surely the role of our health service, and furthermore is likely to produce a healthier nation who, in turn, will not need the health service to the extent it does at the moment.
The Faculty of Community Medicine wrote:
"For many years the general consensus of opinion has favoured an integrated health service for children in which the promotion of child health, the prevention of disease, the early detection of remedial abnormality, the treatment of illness and the care of children with disabilities and support for their families is accommodated within the basic structure of our system of medical practice".
Under the chairmanship of a well-known doctor, Professor Philip Graham, a report was published in 1987 called, Child Health 10 Years After The Court Report, Investing in the Future.Would my noble friend not agree that the charter might be even more helpful to parents and children if there were an integrated health service for children?
My third point concerns the management system. The charter will not be fully implemented without good management. I would submit that the present management structure needs reappraisal. In industry, commerce and the services policies are issued from headquarters, but the detailed methods and ways of carrying out those policies are left to the local managers. Would the Minister not agree that much bureaucratic time and money spent on issuing detailed instructions and expecting a reply is wasteful? I understand that the trust hospitals have cut out this tier of management and as a result show shorter waiting lists and a better service to patients.
We should rightly be proud of the National Health Service of this country. I pay tribute to the nurses, doctors and ancillary staff for the service which they give. Under the Patient's Charter I believe that they will be able to give an even better service.
4.40 p.m.
Baroness Eccles of Moulton: My Lords, I begin by thanking my noble friend Lady Cumberlege for giving us the opportunity to discuss this most important document and all that lies behind it. In the health authority where I work we waited in some trepidation for The Patient's Charter. However, we were relieved to find that the rights and standards it sets out, although varying in the demands they make, are all
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attainable. My health district warmly welcomes the charter and is able to make good use of it. It is already becoming a familiar document to staff and patients alike.
The charter flows naturally out of the mainstream standards required through the reforms. Therefore there is no temptation to sideline its demands. Each contract that, as a purchasing authority, we agree with our providers has quality requirements and continuous monitoring of performance is an integral part of a purchaser's job.
Some of the rights and standards are an echo of what is already happening and I should like to give some examples in a moment. Others cannot be achieved immediately but are being worked towards, and yet others have to depend on the contributions and co-operation of other agencies. The whole provides a focus, stimulus and aid to management. However, we do not see it as a document making demands which we must meet, tick off and put on the shelf. We see the charter's standards as minimum, again with the proviso that some are harder to achieve than others. In some instances we have anticipated and even exceeded them, in others we aim to improve by some considerable degree on the minimum.
Setting aside the external agencies, it must be said that two kinds of co-operation are essential for success. Within the hospital or community unit management cannot deliver to the highest standards without the wholehearted and enthusiastic participation of clinicians, as was stressed by my noble friend Lord Jenkin. My health authority has already witnessed this participation. Also, it is essential that purchaser and provider co-operate in accepting and recognising the problems and work together to solve them. The internal market does produce creative tensions—that cannot be denied—but it can have very positive results. In spite of this, we must never lose sight of the fact that we are no more than part of a system spending public money on a single aim.
An example of our response to one of the three new rights which could not have been achieved by management in isolation is the dramatic reduction in waiting times in Ealing. Clinicians and managers working together have eliminated all on the two-year waiting lists. However, in pursuing the principle that the minimum is not good enough, it is our intention that by the end of March we will have reduced all waiting times to less than one year.
However, waiting times are influenced by other factors. For example, if the ninth national standard—and that standard has been mentioned previously—cannot be fulfilled, that is, if continuing health or social care outside hospital is not available, then the bed that continues to be filled keeps the next patient on the waiting list.
It is also very important that we do not concentrate entirely on the time taken for people to move through hospitals. For somebody waiting for domiciliary treatment, assessment or support, several months can seem a very long time and can reduce significantly the quality of life.
Not only is it essential for hospital doctors and managers to work closely together, but it is equally

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important that the hospital and GP interact. Where standards embrace both parts of the service—for example, in referrals, explanations of treatment or discharge home—it is necessary that hospitals and GPs play by the same rules. One way in which hospitals can help GPs to provide a better service is by frequently circulating up-to-date waiting time information so that patients can be referred where lists are shorter.
In Ealing we are already paying regard to the first of the new rights; that is, the requirement for detailed information. Local health services are detailed on an at-a-glance A4 card with easily read information, such as a list of the 40 hospitals with which we have contracts and the improved services available. GPs can refer to that at a glance without having to wade through a tome. At the same time we published similar information in the local press.
As regards the monitoring process, the wide-ranging rights and standards cover the tangible and the intangible. Some are easily described in a contract and easily measured in the monitoring process; for example, clear and concise information for patients, such as why they are in hospital, what treatment they can expect and an understanding of their illness. My noble friend Lady Cumberlege mentioned that there will be the provision of a named nurse for each patient on the ward or within the community—wherever the need exists—for the necessary length of time, which can easily be measured. The monitoring of the less tangible rights and standards has to depend on such methods as patient satisfaction surveys. The outcomes of the initial surveys should form the baseline "level of satisfaction" for the hospital. In order to promote higher standards the purchaser will then set a higher target for the hospital to achieve in future years.
I was going to give your Lordships an example of the way in which we are raising standards across hospital and community care but, in view of the time, I shall omit that. I have tried to give your Lordships an idea of one health district's support and enthusiasm for the Patient's Charter on behalf of the patients and the population for which we are responsible. I have given one or two examples of how it is already taking effect.
However, I end by stressing once more that we do not accept those standards as the best that can be achieved. They provide useful benchmarks but we must continue to try to do even better.
4.48 p.m.
Baroness Brigstocke: My Lords, I too am most grateful to my noble friend Lady Cumberlege for instigating this debate on the Patient's Charter. As a member of a health education authority and the mother of a nursing sister who works in a very busy accident and emergency department, I applaud both the Government's efforts to improve and modernise the nation's health service and their commitment, as expressed in the Patient's Charter, to ensure that those efforts are successful. I was also greatly reassured to learn from the noble Baroness's clear and informative speech how the regional health authorities are
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implementing the charter's rights and standards. I only hope that all health authorities are sufficiently and professionally managed as is the case with the South West Thames Health Authority.
Today I speak not for the health education authority but for a far wider constituency which makes up 50 per cent. of the population—that is, the female population. In passing I note that over 50 per cent. of the speakers in today's debate are women.
One of the seven rights in the charter is the right which each one of us has to be referred to a consultant who is acceptable to us. Moreover, the first of the nine national standards assures respect for privacy, dignity and religious and cultural beliefs. Many women patients prefer to have a woman GP; I certainly do. Many women would find a woman consultant more acceptable than a man. The details of breast or cervical cancer, the after effects of chemotherapy, the psychological stress associated with certain operations—many women, though not all, want the choice of discussing such intimate details with a woman consultant. They want "privacy" and "dignity", in the words of the charter's first standard.
Moreover, women from ethnic minorities often need a woman consultant because of their religious and cultural beliefs. It is good to know that the National Health Service wants to respect the dignity, privacy and religious and cultural beliefs of us all—women and men. However, at the moment there is a great difficulty for the National Health Service in fulfilling its promises in that respect. There are nothing like enough women at consultancy level in this country. Women hold only 15.5 per cent. of all consultancy posts; only 3.2 per cent. of consultants in surgical specialties are women and the percentage of women in general surgery is shamefully low—less than 1 per cent.
I shall not waste your Lordships' time by offering anecdotes about crude prejudice and bias among some members of the medical profession—only some—who in the past have claimed that women are not up to it, get too emotionally involved or even that they are, too caring to be surgeons. Imagine! There has been discrimination against women reaching high posts as consultants. Let us hope that that is now a thing of the past. I know that the National Health Service Management Executive is taking up the Project 2000 challenge to increase the quality and quantity of women's participation in the workforce.
The figures tell an interesting story. I know that medical schools accept only students of the highest calibre and quality: 51 per cent. of those students are female. I am told that the women do better (perhaps I should not say that) in medical school than men. They continue well in the early years and are fairly equally and proportionately represented until registrar level. From then on women are proportionately unrepresented. Even at senior house level only 37 per cent. of senior house officers, taking all specialties, are women, and of senior house officers in surgical specialties only 17 per cent. are female. I have already given the dismal figures at consultancy level, yet

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women are naturally fitted for surgery. Not only are they dextrous but they have smaller hands which can reach more easily into certain body cavities.
Fortunately the Department of Health, in collaboration with the Royal College of Surgeons, has devised a scheme to help women come through this glass ceiling of promotion. The Women in Surgical Training scheme identifies women who wish to train as surgeons. Those women are then invited to join the scheme. The Royal College of Surgeons has set up surgical advisers in every region to be mentors to those women. The Department of Health is funding mutual support groups. I must emphasise that there is absolutely no question of positive discrimination in favour of women, but appointment committees will know when a woman candidate for a consultant's post is part of the scheme and that her performance and progress are being monitored. Bringing in the new shift and partial shift system in hospitals will also help women with children as it will allow for part-timers. This year £1.3 million is being spent to fund a vast increase in part-time training posts at registrar and senior registrar level. That could help men too.
Let me conclude with a short anecdote. The Department of Health recently published an excellent document entitled Women Doctors and their Careers. On the front cover are four women clearly working in an operating theatre. One of the Department of Health's secretarial staff—a woman I am afraid—when she saw the cover said, "What a nice picture of four nurses". The picture was of four extremely senior surgeons. There are a few first-class women surgeons and consultants; more are needed in order to fulfil the assurance of the Patient's Charter.
4.55 p.m.
Lord Harmsworth: My Lords, almost exactly three years ago I bought for a small publishing operation a computer. It cost not much over £3,000. It was intended to run a complex and comprehensive sales ledger. It was also intended to handle some intricate and difficult typesetting. At the time the computer, in its power, was a quantum leap ahead of its counterpart of the year before. Even so the applications to which it was to be put would stretch the then state of the art. Now it is used for typesetting, business ledgers, payroll—complex and time consuming otherwise for the layman—letter writing and record keeping of mathematical and literary kinds. Despite its then vast memory—I thought it would last me 10 years—it ran out of space. I therefore bought another. The new one cost not much over £2,000. It stores three times as much and performs even more complex functions in a fraction of the time.
To me one of the most impressive statistics in Duncan Nichols' extremely encouraging half-year report on the first six months of the newly structured NHS is the figure shown for computerised GP practices. In 1989–90—around the time I bought my own computer—47 per cent. of practices were computerised. In 1991-92, when I bought my second computer, 75 per cent. were computerised. Imagine: fairly small country practices, not to mention large busy London practices, can quickly, cheaply and
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comprehensively log all their patients, recall specific groups for smear tests or immunisation and know that their records are accurate and all embracing.
They can dispense more knowledgeably both on price and indications. They have a long-stop, a failsafe, on side effects and contra-indications, for the computer can be programmed to bleep if a drug is contra-indicated for any specific patient. They can run appointments systems and generate relatively effortlessly information of a more demanding nature than in previous years and pass that information on to the FHSA. And more. And there will be more to come. All that ensures that time with patients is not eroded; that the quality of service is on the upgrade.
The Patient's Charter is a solid guarantee. My hope is that the need for it as a safeguard will turn out in practice to be ephemeral. My hope is that it will not be long before all its provisions—basic, desirable and eminently worth while though they are—will become a total commonplace. To the great credit of all who run the NHS, they are largely so already. The seven existing rights are deeply grafted on to long-standing NHS lore. The three new rights may soon represent no more than history to those charged with delivering first class health care. The first nine national standards are largely met. The local standards are much to be welcomed.
The National Health Service is truly blessed. It has reached a juncture in its distinguished and important history of service, a juncture at which it is now in desperate need of a change of direction, only to find that that essential element or tool which will free a massive organisation from becoming hidebound, is at hand. The technology so necessary to benefit the patient is cheap, powerful and far easier to use. It is getting massively better by the month. It will surely not be long before the benefits to the patient, already evident, and so skilfully structured and guaranteed through the 1990 health Act, will become even greater marvels to the public. Already patient satisfaction is widespread. That friendly screen on the doctor's receptionist's desk, in the hospital or on the GP's desk can spell reduced waiting times for operations, efficient appointments registers, less hanging about in surgery waiting rooms, accurate and comprehensive testing and immunisation programmes and a knowledge of safety in prescribing.
For those who deliver the service the advantages are again manifest and complementary in prescribing, appointments registers, screening programmes, patient records, immunisation programmes, financial accounting and in the handling of queues.
My sincere hope is that the work of the past few years—namely, the charter, the 1990 Act and the new GP contract, to mention but three—will be built upon. A new technology-based NHS has been born. There is one all-important beneficiary: the patient.
5.1 p.m.
Lord Carter: My Lords, like other noble Lords I wish to thank the noble Baroness, Lady Cumberlege, for enabling us to have a very useful debate. We have all agreed that the whole concept of a patient's rights is now firmly on the political agenda. That is a very

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welcome development. I congratulate the Government for pointing out at the beginning of The Patient's Charter that seven of the 10 rights are existing rights and that they have been in existence for some time. It is certainly important to underline and emphasise them. My noble friend Baroness Nicol pointed out that the Labour Party produced our Charter for Patients in April 1991 in which there are 20 patient's rights. I am glad to see that some of them are repeated in The Patient's Charter which the Government published in October last year. I am sure that we can all agree that there is much more joy in Gallup over one sinner who repenteth.
However, there are a number of areas in which we believe that the Government's document can definitely be improved. I believe that we can all agree that there should be a guarantee of admission if the first operation is cancelled. The patient should not have the double anguish of two cancellations before being given a guaranteed admission date. In passing, one can point out that the time set in The Patient's Charter for ambulance response is less tough than in the existing ORCON standards which require that half of all calls are met within eight minutes.
The limit of two years' waiting time from outpatient appointment to operation is of limited value unless there is a limit on the waiting time for the first outpatient appointment. I do not apologise for repeating a point which I made in the debate on Monday. I quote from The Sunday Times of last week:
"Statistics do not always reveal a true picture. There is evidence that some hospitals and health authorities are manipulating them. Just because there is a short waiting list for an operation does not mean there will be a short wait for an out-patient appointment. In some areas, hospitals are reducing recorded waiting times by delaying appointments with the consultants or opening waiting lists for the waiting list. The clock starts the day the consultant decides treatment is needed.
"For example, Southmead hospital"—
which is in the constituency of the Secretary of State—
"sent a letter to an orthopaedic patient that says, 'The consultant presently has a waiting list of 60 weeks to see him and therefore rather than booking an appointment too far into the future we have added your name to our pending list'".
The article continues:
"Similar tactics were reported last week at other hospitals".
An article appeared in the Guardian on 3rd December which states:
"Evidence is emerging that patients who have been waiting two years or more with relatively minor conditions are being given priority over more pressing cases.
"A memorandum to senior doctors from a general manager of a hospital in North London says, 'This will mean that, in some instances, patients will need to be treated in preference to some patients who clinically are a little more urgent'".
Perhaps I may repeat a specific question that I put to the Minister on Monday which could not be answered at the time: namely, does the department have any information on the length of pending lists and on the length of the waiting lists for the waiting list?
The biggest omission from The Patient's Charter is the right which is the very first of the Labour commitments:
"The right to choose in which hospital you are treated".
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There is no point in knowing which are the best hospitals for particular treatments if health managers or GP fund holders will not pay for the patient to go there. GPs, including my own, are now producing examples of health managers overriding doctors' medical judgments and refusing extra contract referrals.
Right No. 4 refers to the right,
"to be referred to a consultant, acceptable to you",
and should be re-worded. It should read, the right:
"to be referred to a consultant, acceptable to you, if the internal market allows it".
If the Government were to give patients the absolute right to go to the hospital of their choice, that would drive a coach and horses through the internal market.
I now turn to the detailed rights in The Patient's Charter. There has been a deal of confusion over the meaning of the word "rights". It is a point that I raised at Question Time on 5th November when I asked:
"My Lords, is the Minister aware that there is confusion over the use of the word 'rights' in the Patient's Charter? Are those rights enforceable at law? Will the patient receive compensation if the rights are not met?"
The reply from the noble Baroness was:
"My Lords, there are seven existing rights which are enforceable at law and through the additional channels that are being provided. From April of next year there will be three important new rights". [Official Report, 5/11/91; cols. 144–5.]
The implication is that all 10 rights are enforceable at law. I was puzzled about that and I raised the subject again when I wound up from this Bench on the third day on the debate on the Loyal Address. I received an extremely helpful letter from the noble Baroness on 26th November. I am extremely grateful for that letter. It deals with the point of the actual enforceability of the rights in The Patient's Charter.
As regards the first and the third rights, referring to receiving health care on the basis of clinical need and receiving emergency medical care at any time, the noble Baroness said that they,
"are not generally enforceable through the courts at the suit of a particular patient".
Therefore those rights are not enforceable at law. As regards Rights Nos. 2, 3 and 4; namely, the right to be registered with a GP; to receive emergency medical care and to be referred to a consultant, she said:
"They are enforceable by patients through the Family Health Services Authority complaints procedures, which can result in the withholding of amounts from the GPs remuneration".
However, it is not spelt out what the patient's redress is in those circumstances.
I have already mentioned Right No. 4 referring to a consultant acceptable to the patient. I am not sure how that squares with the freedom which is supposed to come in the internal market. Above all, it is worth repeating that Right No. 1,
"to receive health care on the basis of clinical need, regardless of ability to pay"
is not, according to the Minister, enforceable at law. That is why the whole of the country is concerned about the creeping privatisation of the health service. As regards Rights Nos. 5 and 7—that is,
"to be given a clear explanation of any treatment proposed"
and,
"to choose whether or not you wish to take part in medical research"—

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the patient will have to seek redress through common law. The patient might have an action for damages in the courts.
Right No. 6, which is the right to access to health records, is the only one which is legally enforceable through a particular statute. The letter from the noble Baroness goes on to say,
"(Access to health records) derives from the specific statutory duty imposed by the Access to Health Record Act 1990. It is legally enforceable by the patient through the courts".
The letter continues:
"The three new rights arc in the nature of duties to be imposed on health authorities. Anyone who feels they are being denied one of the Rights may write to the Chief Executive, Duncan Nichol, who will be responsible for investigating the matter and, if a right has been denied, for taking action to ensure that this is corrected".
So, of the 10 rights which we were told were enforceable at law, only one—that is to say, access to health records—is clearly and directly enforceable through a specific statute. Four of the rights are not directly enforceable at all by the patient; two rely on litigation at common law and three involve access to the complaints' procedure, with final recourse to the health service ombudsman. However, the Consumers' Association has pointed out that it regrets that, on the one hand, no specific targets have been set for dealing with complaints, despite the promise in the Citizen's Charter White Paper, while on the other, deadlines exist for the time in which a consumer must make a complaint.
I can assure the Minister and the House that this analysis is not meant to be carping or unconstructive. I was concerned at the Minister's reply in the House last November regarding the enforceability of rights. I hope that the House will agree that it is important, if we are to understand the implications of the Patient's Charter, that the patients are fully aware of the exact meaning of the word "rights" and their enforceability.
I shall deal briefly with the point made by the noble Lord, Lord McColl, when he referred to the pattern of referral. In the debate on Monday I gave three specific examples relating to GP fundholders and the pattern of referrals and to the provision of hospitals in London, where the Government have stopped the reforms working. In my view that is because they are extremely anxious about the electoral consequences.
This has been a useful debate. I should like to repeat my thanks to the noble Baroness for giving us the chance to debate this important subject. We on these Benches look forward to the time, which will not now be long delayed, when a Labour government will be putting into operation the 20 patient's rights which are set out in our charter for patients.
5.10 p.m.
The Parliamentary Under-Secretary of State, Department of Health (Baroness Hooper): My Lords, the symphony of support for the Patient's Charter has been most agreeable. Perhaps the one or two discordant notes struck by Opposition speakers only served to emphasise how few of them there were. After the strictures thrown at this side of the House last
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week and widely reported in the press, I find it extraordinary that only three out of the 17 speakers in this debate came from the Labour Party.
I, too, take the opportunity to thank my noble friend Lady Cumberlege for bringing to our attention the publication of the Patient's Charter in October last year. That was a significant step forward in the Government's drive towards the better quality public services envisaged in the Citizen's Charter. The charter has been very well received by health service staff. The summary of the Patient's Charter, has, as has been said, gone to every household in the land. In England alone almost one million members of the public have asked for copies of the full charter. That is a measure of the importance of the charter and of the health service to the ordinary citizen.
Why was it necessary to publish a charter? I was asked that question by a number of noble Lords opposite. They went on to refer on the one hand to the Labour Party's charter of rights and on the other hand the noble Lord, Lord Perry of Walton, reminded us of his party's prescription for health, so clearly they thought it was necessary to issue some sort of charter.
What makes this patient's charter so relevant now is the fact that it is seen and must be seen as an important and specific part of the Citizen's Charter. I regret to say that it has also been proved necessary for the National Health Service to clarify an area where innocent and concerned members of the public have been made unnecessarily anxious and fearful as a result of the campaign of confusion and misinformation carried out by the party of the noble Lords opposite, who chose to target this hugely important area of public service for electioneering purposes. In case of any doubt that may have been sown by the contribution of the noble Lord, Lord Ennals, I can confirm that the first of the seven existing rights—which is to receive health care on the basis of clinical need, regardless of ability to pay—means exactly what it says.
I do not need to reiterate in detail the 10 rights and nine standards which have been referred to by most or all speakers this afternoon. However, perhaps I may dwell a little on the three new rights to be introduced in April of this year.
The first of these, the right to more information, is in the true spirit of the Citizen's Charter. Health authorities and individual hospitals will have to publish detailed information about services. This will include information on maximum waiting times for outpatient appointments and on admission for treatment. District health authorities will also have contact points—with named people—so that patients can consult them about the availability of services. That will be publicised locally. To help with the spread of information a national network of telephone helplines is being set up. Patients and staff will be able to dial a single, well-advertised number and be connected to their local information point for easy access to information on waiting times and self-help groups.
The second new right deals with admissions. It does not deal with all admissions because over half of the admissions to hospital—some 7 million in the past

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year—are immediate because they are accident, emergency or urgent admissions. When I say this to friends and colleagues from other countries, such as Denmark, they recognise that that means that half the admissions to our National Health Service hospitals are in fact a larger quantity of people than the entire population of their country. With regard to those other admissions—where planning takes place before the patient is admitted—again, the great majority of patients are admitted for treatment speedily—half within five weeks of being placed on a waiting list and 90 per cent. within a year. This afternoon we have heard some good news on waiting times from people involved in and responsible for the provision of services in the National Health Service. I congratulate them and thank them for all that they are doing in this important task. This is not a new problem. Waiting lists have existed in the National Health Service since its inception, but now for the first time all patients are to be given a guaranteed waiting time for admission. I reassure my noble friend Lord Holderness that two years is very much a maximum. This is just a starting point which we intend to improve as quickly as possible.
The third new right is to have any complaint about NHS services thoroughly investigated. This again is not new. But for the first time health authorities will have to publish details of the number of complaints received and how long they took to resolve. Much more publicity will be given to complaints procedures. Complainants will receive a prompt written reply signed by the general manager. If they are dissatisfied by the answer from the general manager about the administration of a National Health Service hospital they can take the complaint to the National Health Service Commissioner.
On the subject of redress, about which I was asked —particularly by the noble Lord, Lord Carter—patients who think that they are being denied a charter right can as I have said, write to the Chief Executive of the National Health Service who will investigate the matter and, if appropriate, ensure that corrective action is taken. Some of the basic charter rights are founded in statute or common law and can be individually enforced by the patient through the courts; for example, access to records, consent to treatment or research. Once the Chief Executive or any senior member of the National Health Service is alerted to a breach of a right, the matter will be dealt with immediately. Health authorities are expected to ensure that national and local charter standards are achieved as speedily as possible.
I have dealt to some extent—time does not permit greater detail—with the rights aspect of the Patient's Charter. With regard to standards, let me emphasise that the standards listed have all been generated from within the profession. They will be set at both national and local level. They are being set in areas which we know to be of particular concern to patients because we know that failure to provide information, and waiting around causes anxiety and frustration. However, they are and do represent merely a starting point. For instance, the first standard is, as has been
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quoted, respect for privacy, dignity, and religious and cultural beliefs. Having a room in which staff can speak privately to relatives; not being addressed by one's first name by people who do not know you, without agreement; providing interpretation services; proper choice of meals which do not contravene religious taboos, are all things which greatly add to the quality of a patient's life. We have very recently issued new guidance to ensure that hospitals and health services are conscious of the fact that all faiths should be considered in the context of spiritual support to patients.
The second standard is to ensure that everyone, including people with special needs, can use services. We want to make sure that all buildings are accessible for people who have to use wheelchairs, or who have sight problems, and that services heavily used by disabled people are not tucked away up two flights of stairs. My noble friend Lord Holderness asked for the specific inclusion of rehabilitation services in the charter. I can say to him that I believe that this is implicitly covered by the first right, which is to receive care on the basis of clinical need. But, as I have already said, this charter represents a starting point.
The fourth standard deals with emergency ambulances. My noble friend Lady Cumberlege gave a welcome pledge regarding the London Ambulance Service. I too know of its efforts to improve standards. Perhaps I may answer the specific question raised by the noble Lord, Lord Carter. The standards in the charter are identical to the current ORCON standards. The additional standard to which the noble Lord referred—50 per cent. within eight minutes—is included in the supplementary guidance on the Patient's Charter which we issued to the service authorities earlier this week.
The sixth standard is also important because it addresses one of the major causes of frustration for patients. I refer to waiting time in outpatient clinics. We are calling an end to the old system of block booking under which the patients arrived together and spent hours waiting because the overriding priority was ensuring that the consultant was fully occupied. The patient is paramount. The charter standard is that patients should have a specified appointment and receive a full explanation and apology if they are kept waiting for longer than 30 minutes. That is an important start in the right direction. Health authorities will be strongly encouraged to set additional local standards which reflect the views of patients on local priorities.
It is true that the charter is largely hospital related and deals with aspects where we have had evidence of concern from patients about matters that affect them when they are at their most vulnerable. That is why we took the hospital as a starting point. However, primary health care, including dentistry, is definitely on the agenda for future and further action. In this respect the points on information technology referred to by my noble friend Lord Harmsworth are also extremely important. New technology is also vital in measuring progress and performance and in ensuring

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that the efficiency indicator is as accurate as possible. That is essential if the vital task of monitoring is to be effective.
I am surprised that no noble Lord drew attention to page 22 of the charter document. It is headed "How you can help". Sometimes when underlining people's rights we forget that they also have responsibilities. A number of important issues are listed on that page. People are asked to remember that where appointments are made they should not be missed without some kind of warning. With around 40 million patient appointments each year this is a problem even if only a small proportion of patients do not let the hospital know if for some reason or other—or no reason at all —they cannot attend. People are also encouraged to remember that organs such as kidneys are urgently needed and to remember to carry their donor card. They are also reminded of the need for more blood donors and of the need for voluntary helpers, the example given being to help in hospital shops.
My noble friend Lady Brigstocke reminded us of the important role of women in medicine. As the National Health Service is the largest employer of women in this country and in fact in the whole of Europe we are and have been extremely concerned to ensure that the needs of women in employment are properly catered for. So far as concerns opportunities for women in the medical profession, we have been active in terms both of the working party on part-time training, which will review and develop the present arrangements for part-time appointments for senior registrars, and of the working group for women in surgical training to which my noble friend referred. It aims to encourage women actively pursuing a career in surgery by establishing regional advisers and providing information on the career progress of women trainees.
Monitoring will be vital to this exercise. The National Health Service Management Executive is fully committed to the successful implementation of the Patient's Charter. A team of senior health service managers has been appointed to help take forward work on the charter to ensure smooth implementation and to help hospitals and health authorities to work on their own initiatives designed to deliver high quality services to patients. This is a popular idea. Not only are the national standards and the local standards envisaged in the charter document for 1992 coming about, but many hospital units have voluntarily responded to the idea by issuing their own charters. This must prove that the Patient's Charter is an integral part of the Government's plans for an even better health service, a health service which puts the patient first, provides high quality services and offers first rate value for money, a health service that we can continue to be proud of well into the 21st century.
Lord Ennals: My Lords, before the noble Baroness sits down, she said in regard to the first right that elderly patients had that right, regardless of their ability to pay. How will health authorities ensure that right if they have cut down drastically on the number of beds available for continuing care?
Baroness Hooper: My Lords, I am grateful to the noble Lord for raising that because it is a point to which I meant to refer in my response. The noble Lord, Lord Ennals, and other noble Lords referred when giving an example of need to the BBC "Panorama" programme. That programme was a travesty. It used spurious research to reach distorted conclusions. In the words of the Guardian yesterday:
"Ministers have genuine grounds for complaint about the programme".
Indeed, only about a quarter of health authorities provided information for the survey and only long stay beds were included. Methods of treatment and care are always being revised and are always changing. However, what is important to remember is that the National Health Service now treats 84 per cent. more elderly patients than it did in 1979 when the noble Lord, Lord Ennals, ended his term as Secretary of State. We are continuing to improve services for elderly patients.
5.28 p.m.
Baroness Cumberlege: My Lords, I thank all noble Lords who have taken part in the debate for the valuable contributions they have made in testing the boundaries and in developing new thinking on the charter. I understand that it is not the convention of the House for me to sum up fully—that is perhaps a mercy—and neither do I have the time. However, I should like to make one or two brief points.
Although I have some sympathy with what the noble Baroness, Lady Nicol, said—I should like to go through some of the points with her—I cannot agree with her about the leadership of the National Health Service. She expressed concern that all the new people being appointed to the boards of the authorities and trusts were coming from industry and commerce. That is not strictly true. My noble friends Lord Jenkin of Roding and Lady Eccles of Moulton, both chairmen of hospitals or of potential trusts, have illustrated in the debate the kind of dynamic leadership which we need in the health service and which is already bringing results.
I should also like to share in the sympathies expressed by many speakers, including the noble Lords, Lord Ennals and Lord Perry of Walton, and my noble friends Lord Mancroft, Lady Seccombe, Lady Faithfull and Lady Carnegy of Lour. They all stressed that the charter is only the first step. I absolutely agree with that. As the noble Lord, Lord Ennals, said, it is essential that we get into the community care side and also into primary care. I was disappointed that time did not allow my noble friend Lady Eccles to explore some of the primary care charter standards which are being introduced in Ealing, and I know that in the Trent region there is much development work being undertaken on this.
Finally, I should like to thank my noble friend the Minister for her very thoughtful, courteous and full reply. I shall read Hansard with great interest. I have absolutely no doubt that in her position of authority she will ensure that the charter is monitored and delivered. However, I should like to stress that it is for the people of this country to deliver the charter. As the

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noble Lord, Lord Carter, and other noble Lords have said, we must ensure that the standards are widely published so that we can all make sure that the charter is monitored and delivered. I beg leave to withdraw the Motion.
Motion for Papers, by leave, withdrawn.

Asylum Bill
Brought from the Commons; read a first time, and to be printed.

Industry and Capital Management
5.31 p.m.
Lord Laing of Dunphail: rose to call attention to the importance of an equitable balance in industry between the interests of capital and all other stakeholders and to the need for capital management to evolve so that it will continue to benefit the national community in the 21st century; and to move for Papers.
The noble Lord said: My Lords, I am delighted and honoured that time has been made available to debate this Motion. I am especially pleased that so many noble Lords have decided to participate.
The material phrase in the Motion is "equitable balance". Finance and industry have a symbiotic relationship—we need each other—but distortion of the balance between those complementary but sometimes conflicting forces is a threat to success. During my lifetime the balance has changed from a creative partnership to a situation in which those who work in wealth-creating industry see institutional shareholders as totally detached from the realities of production and services; they seem to buy and sell blips on an electronic screen, to know the price of everything and the value of nothing, and are highly esteemed by our society for so doing. That perception may be exaggerated, but the purpose of this debate is to determine whether the balance needs adjusting and, if so, how that might be done.
I believe in the capitalist system. It is the most efficient means of generating real wealth for a community, but no economic system is without problems. Where problems are promptly identified, they can be promptly brought under more effective control but, in this country, signs of potential trouble are all too often ignored or misread so that corrective steps, when eventually taken, are taken too late and after much damage has been inflicted on the economy.
I am indebted to Professor Charles Handy for bringing to my notice a pertinent quote from Lord Eustace Percy in 1944:
"The human association which in fact produces and distributes wealth, the association of workmen, managers, technicians and directors, is not recognised by the law. The association which the law does recognise—of shareholders, creditors and directors—is incapable of production or distribution and is not expected by the law to perform these functions. We have to give law to the real association and to withdraw meaningless privilege from the imaginary one. Here is the most urgent challenge to political invention ever offered to the jurist and the statesman".
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That challenge is no less valid today. Lord Eustace mentioned some of the stakeholders in a business, but there are others—and they include the nation itself. I wholeheartedly agree with Adolphus Green, the founder of Nabisco, who said that,
"the officer of every corporation should feel in his heart —in his very soul—that he is responsible, not merely to make dividends for the stockholders of his company, but to enhance the general prosperity and the moral sentiment of the United States".
Sadly, the national interest seems to have slipped well down the list of priorities because managements feel they cannot afford to take it into consideration. There is a widespread belief in industry and commerce that institutional investors look for short term results and give little credit for a company's commitments to investment in technology, in training, in research and development or in building world market share, all of which would further the nation's economic interests. That is the fundamental reason for disquiet about the present relationship between providers and users of capital. The imminence of the single market gives urgency to this question—there could be no more opportune time to examine our structures to ensure that we are not marginalised because of our failure to invest enough. The president of the CBI said recently that we need to double our spending on investment and keep it at that level for the rest of this decade. I agree. But to do so could lead to a company's dividends being affected.
Given the attitude of the City to bottom line, the shares are likely to be marked down with an increased threat of takeover and predators claiming that "shareholders' assets were not being utilised efficiently". It is no coincidence that dividends from UK companies started to outpace profitability in the mid-1980s—in effect paying shareholders an advance loyalty bonus with their own money. If we continue to pay out to shareholders the funds which should be going to re-investment, we will never catch up with our competitors, the pound will remain weak within the ERM and our interest rates will have to remain high because they cannot be lower than those of Germany. Of course, long-term investment has also been inhibited by inflation leading to high interest rates. But I believe that a disincentive at least as strong is management insecurity arising from the apparent willingness of the City to sell any company to anyone so long as the price is right.
A small number of institutions dominate the UK equity market —the top 50 have over half the equity and a few dozen individuals make decisions in respect of many millions of shares. Those who exercise great power have a great responsibility to use their power wisely. Surely they cannot totally disclaim consideration for the national interest? Other countries seem to take a less exclusively profit-driven view. The French, for example, make no secret of their chauvinism. Unwanted takeovers are blocked either by government veto or by constraints in a company's articles of association, which are possible because their shareholders appear to recognise the importance of protecting the nationality of their major companies.

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The mission statements of many German and Japanese companies place commitment to shareholders after commitments to quality, customers and employees. While I do not suggest that we could or should emulate everything they do, the co-operative relationship between their owners and managers would seem to have contributed to their international competitive success. Article 14 of the German constitution declares that ownership involves obligations and that its use should at the same time serve the common good. How different from the culture of Anglo-Saxon fund managers for whom ownership responsibility appears almost non-existent.
I understand the difficulties for financial institutions—they have their own shareholders to consider —and the publication of quarterly league tables encourages them to operate short term. What I do question is the wisdom of our society endorsing, encouraging and applauding it.
If we do not recognise that our totally free market in corporate control is seriously damaging to the nation, it could soon be too late. I have no wish to see a protective ring-fence around British industry, but I understand the French chauvinism, or what I would call loyalty, better than I understand our "take the money and run" approach. If too many of our major companies are sold to non-British owners, and free market forces make that more rather than less likely, then the UK would become increasingly a satellite economy. The geopolitical centre of Europe is likely to move eastward and when non-British boards come to consider the best territory in which to have their productive facilities, the UK will be at a considerable disadvantage. We could be drained of our brightest and best business leaders who will want to be based at their companies' power centres—which will not be in the UK—a lesson Scotland has learnt to its cost. Quite apart from self-interest, have we no pride?
So I very much hope that we can acknowledge that there is a problem in the balance and that the role and the responsibilities of capital need to be more clearly defined. There are a number of constructive steps which could be taken. For example, as recommended by the Select Committee chaired by my noble friend Lord Caldecote, voting rights could be restricted to shares which had been held for at least 12 months, a proposal which is being considered in some states in the USA. That would give a greater degree of security against damaging speculative dealing.
I am delighted that the Trade and Industry Select Committee in another place has put forward recommendations for changes in takeover policy and practice which include greater emphasis on public interest considerations when assessing whether or not a takeover should be blocked. That committee also recognises that the balance between bidding and target companies is weighted in favour of the bidder who can at present acquire nearly 30 per cent. of a company without having to disclose his intentions. The recommendation is that that level should be reduced to under 15 per cent.
The Government could also make constructive adjustments on the tax front. As far as I can ascertain, about half the institutional money presently invested
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in the UK market is tax exempt—an encouragement to trade rather than to invest. There can be no justification for the exemption of pension funds from capital gains tax—indeed I should like to see a punitive tax on all short-term capital gains, and no tax on longer term gains.
This is a complex subject, but we should never lose sight of the fact that, apart from being aggregations of property, companies are social organisms in which men and women realise, or fail to realise, purposeful and productive lives. Their effectiveness and productivity are arguably the most important barometers of the effectiveness and productivity of a nation. There is surely something seriously wrong when, in the eyes of those men and women, the providers of capital appear to be playing a computer game with real money and real people's lives.
The problem is the divorce between ownership and control. Those who control the overwhelming majority of shares are essentially only agents, charged with managing the savings of millions of insurance and pension fund members—the real owners; and it is a sobering thought that employees' savings could be used to support a takeover bid which they oppose—for the company which employs them. They cannot be consulted on share buying or selling any more than were trade union members before their leaders cast block votes. The latter was deemed to be undemocratic and legislation was introduced to correct it. Can the one be wholly right and the other wholly wrong?
I believe in free enterprise, but freedom demands responsibility. Power has to be constrained by consideration of the greater good—we already have monopolies and restrictive trade practices constraints. In a society which seems to want instant gratification, may it not be time to restrain the virtually unfettered freedom of capital to dispose—if the price is right—of this country's asset base?
There is unlikely to be a simple remedy, but let us at least explore possibilities. Other countries manage things differently and achieve better results for their people. Let us not deny the value of some of their structures just because they were "not invented here"; and, to quote from the report of the Select Committee chaired by my noble friend Lord Caldecote:
"The most urgent need is for a change in our culture"
I beg to move for Papers.
5.46 p.m.
Lord Shackleton: My Lords, before I turn to the admirable speech that we have just heard, perhaps I may draw attention to the fact that we have, rather unusually, a maiden speech from a Peer who took the Oath only yesterday. He is a brave man and a wise man. He is the noble Lord, Lord Ashburton, known to many of us as John Baring. He is a distinguished banker who will undoubtedly bring a great deal of influence and interest to your Lordships' House.
The noble Lord, Lord Laing of Dunphail, made a speech which seems to me to be acceptable to everyone in the House who believes that mankind, in whatever cause he is operating, should do his duty. What he had to say on the subject of takeover bids relates closely to our experiences. I was a director of RTZ, a company

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which was forced into a takeover bid to protect a company which did not want to be taken over. We had to go through the whole dreadful rigmarole of dawn raids, and in the end the employees did not like what we had done, although we did it in the interests of a company which was being taken over.
The principle involved is a sound and important one. We should study the experiences of our colleagues in other countries. In that respect, the matter is a source of sorrow, I know, to your Lordships. We have had discussions on ICI and other companies which were threatened by takeover bids regardless of the merit of the takeover. The noble Lord's speech represents his philosophy. I know his work. I have read it. As a director of personnel in a big company I have even had him talk to the staff. I wish he could talk to the staff of every company and, in particular, the boards of every company.
What the noble Lord said was valid and necessary in the interests of the development of the capitalist system so that it can be approved by everyone, which it cannot at the moment. I accept what he has to say about the capitalist system. It would always have been true had it been properly operated, but it never has been properly operated. That emerged from his speech.
The doctrine that the noble Lord has put forward is well contained in the books that he has written and which I have studied. I had members of my staff read them. Of course, the system he described is not the only system. I should like to refer to another system which is less generally applicable than the one described by the noble Lord. I mean the John Lewis Partnership. The week after I lost my seat in Parliament, I found myself standing behind a counter in John Barnes. I remember that I received a bonus of half a crown that day for opening a new account. I spent 10 extremely happy years with that remarkable institution. I do not know how many noble Lords are aware of the academic studies recently made. One or two show that the John Lewis Partnership, in competition with great companies like Marks & Spencer—and I do not wish to make any points on this—has an equal achievement, despite the constraints of the complications of its constitution and the partnership bonus, as it is called, the sharing of profits. In my judgment that is less important than the democratic rules that go with it. Less important than the fact that the profits are shared out is that it is done in a way that is constructive and contrary to short-termism. It is an effective system and those who believe in an idealistic approach to their job find that the partnership is a place in which they can be happy.
I must confess that during my latter years there I was in charge of a whole section of what was called the critical side—as opposed to the executive side—which was responsible for administering the partnership system and the rights and privileges of all the partners, as the employees were called. The company has a strange language which is sometimes the source of humour, including the partnership itself. It represents the principles that underlie John Spedan Lewis's dream. I believe that the company has a workable
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system which could well be adopted by others who wish to go down that path. However, if no one does, all ought to study the principles of the noble Lord, Lord Laing, which he set out clearly in his speech. It is an example to us all in industry, management and everywhere. We all need to bear in mind these factors and I congratulate him on his speech.
5.52 p.m.
Lord Ezra: My Lords, the debate which has been so effectively introduced by the noble Lord, Lord Laing of Dunphail, raises fundamental issues affecting industry and the economy. What he said has just been admirably supported and extended by the words of the noble Lord, Lord Shackleton.
In the limited time we have, each of us must choose one aspect of the wide-ranging subject. I choose that of the progressive change in the ownership of quoted companies from individual shareholders to institutional investors, to which the noble Lord, Lord Laing, referred and to the powers which this has put in the hands of the institutions.
It is fair to say that the institutions themselves have increasingly realised the importance of their new role in British industry. Last March the Association of British Insurers drew attention to the problem in a discussion paper entitled The Responsibilities of Institutional Shareholders. It contained nine principles of good practice. One was to encourage regular and systematic contact at senior executive level with the companies in which investments were held. Care would, of course, have to be taken to avoid imparting any price-sensitive or insider information. This is a highly desirable suggestion. From my own experience, I believe that it is already fairly widely practised. When I was at the coal board I had the great pleasure on one occasion, together with the director of the pensions fund, of visiting the noble Lord, Lord Laing, at his headquarters. We heard about the prospects of his company in which we were investors and we came away much encouraged.
Another principle proposed is that institutional investors should support boards by a positive use of voting rights, unless they have good and stated reasons for doing otherwise. This also is highly desirable. The voting rights of institutional shareholders are now so strong that they can amount to a shareholders' block vote, as the noble Lord said. It is essential that this power be used in a responsible manner.
It is further proposed that institutional investors should take a positive interest in the composition of boards of directors, with emphasis on the need for a core of non-executive directors with appropriate experience of independence.
There is support for the appointment of remuneration and audit committees, membership of which should largely be of non-executive directors. Both these proposals have wide support among many bodies and the issue of corporate governance is the subject of an inquiry currently being undertaken by a team headed by Sir Adrian Cadbury. The matter was recently discussed in the House in a debate introduced by the noble Lord, Lord Williams of Elvel.

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Where the proposals about the role of institutional shareholders seem to me to fall short is in regard to the takeover situation. It is proposed in the document to which I refer that institutional investors should not commit themselves to a particular course of action until they have reviewed the best and most up-to-date information available. It is also emphasised that they have a fiduciary responsibility to those on whose behalf they are investing.
Both these points are entirely valid, but it can be asked whether they go far enough. In takeover situations, should not institutional investors have regard to the long-term strategy of the company which is the subject of a contested takeover, to the impact which such a takeover could have on those employed and to the wider national interest which might suffer as a result of some activities of the company concerned being discontinued or sold off?
In their document on the responsibilities of institutional investors, the Association of British Insurers indicates that:
"some considerations, such as the impact of a takeover on competition or on some other national interests, must be the direct concern of Government. In the absence of Government action, institutional shareholders cannot be expected to allow such issues to dictate their ultimate decision".
This makes it very clear that institutional shareholders, in a bid situation or in any other situation affecting the future of a company in which they have invested, feel that their decisions must ultimately relate to where they consider the best interests of their members lie. If other wider interests are to be taken into account, then they must be indicated and the ways in which they can be observed laid down by government.
It seems to me that this is fundamental and it leads me strongly to support the noble Lord, Lord Laing, in the various proposals he made for changes in takeover policy and practice and in the other modifications which he would like to see introduced.
5.57 p.m.
Lord Ashburton: My Lords, the trepidation anyone is bound to feel at speaking in your Lordships' House for the first time is compounded in my case by the fact to which the noble Lord, Lord Shackleton, drew attention—that I took the oath only yesterday afternoon. I am most grateful to him for the over-kind terms in which he referred to me. I am also most grateful to your Lordships' House for the opportunity of speaking today and would ask your Lordships' indulgence for the perhaps unseemly speed with which I have moved to the point of making my maiden speech.
I had no intention yesterday morning of making any such speech until I realised that the noble Lord, Lord Laing, was initiating the debate and that the fact that I have been a merchant banker for 40 years gave me relevant experience of a number of the subjects which will undoubtedly be covered. I have also had the pleasure of talking on numerous occasions to the noble Lord, Lord Laing, and other noble Lords about the subject and the concerns which he has so strongly put before the House.
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I must say at once that I sympathise most strongly with much of what he said and certainly support continued debate on how changes of control of British companies should take place and on what extra measures may be appropriate to make the process more acceptable to all the stakeholders, the employees, the owners and the national interest. I cannot cover much of the fascinating field opened up to us by this debate but must concentrate more narrowly in the time available.
In the course of my time I have acted as adviser to companies that were aiming to acquire and companies that were being acquired, both willingly and unwillingly. I have also been on the boards of companies which were acquired, both willingly and unwillingly, and on the boards of other companies which were undertaking the acquisition. I know what a huge diversion of management time these processes involve, not to mention the personal career disruptions that follow takeovers and acquisitions at every level of the company.
There have been times when I have been tempted by the narrow balance of advantage being gained or by arguments that are particularly hard fought and narrowly balanced to feel that the whole business of merger and acquisition was too chancy and indeed on occasions too offensive to be justified. I know most corporate financial advisers have on occasion felt the same. Certainly many of us are concerned at the results of our efforts. But in the end it seems to me that we should continue to make it possible to change by this means the managements of companies who fall short of the standards they should be achieving. I believe that is what we are discussing; changing the management of companies. That is unfortunately not always done by boards of directors, who are naturally and inevitably themselves close to the business. An outside eye must be able to see things from a different point of view, and not every board of management accepts criticism readily. It may sound odd to noble Lords, but it is not always possible for institutional or private shareholders to work up a sufficient conviction to involve themselves in changing a management.
It is tempting indeed to look overseas to see how these things are ordered there. France, Germany and Japan have been mentioned by the noble Lord, Lord Laing. They certainly have different ways of ordering things, but I must say, if anything, they have been changing, however slightly, towards a more Anglo-American pattern. Tax considerations can have something to do with the practices of other countries, certainly in Italy for example. But what the noble Lord, Lord Laing, refers to as French chauvinism is a much wider phenomenon of French life than just the protection of French companies. I have doubts about how effectively we could transfer bits of that chauvinism to this country without much wider prior changes taking place across our society. That might be like expecting an avocado tree to flourish in northern Scotland.
Japan certainly is another case in point. While one can only admire what Japanese companies and Japanese-owned businesses in this country are achieving in fields where in the past we have manifestly

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floundered, again I suggest from my experience that adopting parts of the Japanese system of ordering government/business relations would be difficult in our culture.
I now wish to make one further point. I feel that mergers between British companies, however achieved, are too often disappointing in their results. All the forward planning, be it operational, financial or economic, is not enough if the huge human problems which putting two businesses together entails are not properly addressed as the highest priority. Employees at every level, from the bottom to the top, deserve proper explanation, reassurance and involvement, always within the limits imposed by the fact that management must be allowed to manage and to judge what, if disclosed, might be commercially disadvantageous. I believe British management could do better in that respect. I have little experience overseas so I make no comparisons there.
The noble Lord, Lord Laing, has made suggestions which may help the position. As I have said, I would be against making it impossible for one company to acquire another, but I would certainly not be averse to the lowering of the shareholding limit above which a company would have to disclose its intentions. I would not be much concerned if there were a short-term rate of CGT although I wonder whether it makes sense to levy it at a level above that of income tax.
I would certainly not be concerned in principle if it was not possible to vote shares until they had been owned for 12 months. I also believe that individual managers should behave consistently. The phrase "Do as you would be done by" is a succinct way of putting it. Some managements who believe passionately that their company should be immune from takeovers change their tune when they are on the acquiring tack, or when they are wearing the hat of a trustee of their own pension fund considering what action should be taken in a takeover situation. We are all too aware of the widespread human frailty involved. Above all, however, I believe we should avoid calling in aid government fiat. May we in particular be spared Ministers taking unilateral decisions in this field.
6.5 p.m.
Lord Nelson of Stafford: My Lords, it is a pleasure that falls to me on behalf of the whole House to congratulate the noble Lord, Lord Ashburton, on his excellent maiden speech. Your Lordships have heard him speak with great authority in this field. I am sure I express the wish of everyone when I say that I hope we shall hear him in this House on many occasions in the future.
I agree wholeheartedly with the Motion proposed by my noble friend Lord Laing. However, I shall not spend a great deal of the short time that is available to me in emphasising the importance of what he has said. I have just two points to make. Manufacturing industry will not survive in world markets unless it invests on an adequate scale—that means a scale commensurate with what is invested by our competitors—in research and development, test
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equipment and new manufacturing plant. Additionally unless that is done on a stable and consistent basis, manufacturing industry will not retain or attract the able staff necessary to make such investment successful. Therefore the issue with which this debate is concerned is an extremely important one for us all. This is not a new problem. The dangers inherent in "short-termism" have been discussed now for quite a while. What is disappointing is that not much has been done about it as yet. I hope that other speakers, too, will use the short time available to them to consider what might be done to strengthen the position of manufacturing industry.
The situation in Germany, France and Japan has been referred to. I find that interesting, but I believe it is a wasted effort to believe we can adopt their systems. Our traditions are different to theirs and we must concentrate our minds on adapting our system to meet the needs of the problem. What action can we take? I do not believe we can expect the institutions to abdicate from their responsibility to do the best they can for their stake-holders, whether they be pensioners or investors. The noble Lord, Lord Ezra, touched on a number of points which can be addressed to ensure that institutions adapt their policies to ensure that as far as possible there is an adequate flow of funds back into industry.
I should perhaps add a further point to what has been said. Can we not adapt the tax laws a little to make it possible for the managers of institutions to realise it is in their interests to support long-term investment in industry and against their interests to adopt a short-term approach? Two methods have been suggested relating to the taxation of short-term and long-term investment profits. The matter of removing or adding the imposition of capital gains tax is another method of tackling the problem of steering investment in the direction in which it is needed.
We must encourage institutions to take a closer interest in the management and the business of the companies in which they have invested. Something has been done in that respect and that has been commented on. But my impression is that it is not nearly enough. One or two big institutions are talking to one or two big companies but across the board much more has still to be done. Perhaps we should consider how we can stimulate a closer working relationship between institutions and industry.
That leads me to industry itself. Industrial management must play its part in this matter. It must cultivate the institutions and make them more aware of what they are doing and why they are doing it. There is a constraint, which was touched upon by the noble Lord, Lord Ezra, namely the question of insider trading. However, it must be in the interests of all shareholders that companies are properly valued, and that particular issue may have been over-stressed. Company managements have to do a great deal more to cultivate their institutional shareholders. We should remind ourselves that, according to the CBI they control 68 per cent. of the shares of British quoted companies.
Management also has to do more to make its plans better known, possibly through company accounts

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and the dissemination of more information. Here again one comes up against the issue of the commercial wisdom of disclosing to one's competitors exactly what one is doing. So there are constraints there as well, but a balance must be achieved between the two.
I should like to stress that we need action by a number of different parties. I hope that this debate will stimulate such action. In conclusion let me say that I should like to see a Department of Trade and Industry which is more proactive in furthering those points. The department should not necessarily take action itself but it should draw attention to weaknesses where they exist and stimulate change where such change is necessary.
6.11 p.m.
Lord Bruce of Donington: My Lords, I, too, should like to congratulate the noble Lord, Lord Ashburton, on his maiden speech. I regret that the exigencies of time prevent me from enlarging upon that aspect of our affairs as I should wish. I should also like to support and congratulate the noble Lord, Lord Laing, who made a most thoughtful speech which will give all of us much on which to reflect during the coming weeks, months and even years. The debate he has initiated raises the most profound issues which would normally take much longer to discuss than the short time allowed within the context of this debate.
It cannot he denied that the interests of capital and capital generally have dominated industry since well before the beginning of this century. They dominated it in the Soviet Union, where there was the most extreme form of capitalism in which the state owned all the capital and, without any democratic control from below, succeeded in the course of years in ruining the Soviet economy. There were no democratic constraints. State capitalism as practised in the Soviet Union undoubtedly not only brought much destruction to the environment generally but ruined industry and caused great hardship to individuals.
The other form of capitalism, to which we in the West are accustomed, has, as the noble Lord, Lord Laing, said, brought considerable benefits in the intensification of the division of labour within industry and in its pursuit of profit. Undoubtedly it has brought about a state of affairs in which the standard of living in the western states has advanced at a much faster rate than elsewhere.
However, we should not forget that there are still defects within the capitalist system, to which the noble Lord so correctly referred. Those defects are expressed in current parlance by talk of a recession in which millions of people are unemployed in the free world, vast sections of the means of production are unused and human needs are clamant. Yet recession appears to be regarded as a disease like flu, a God-given or devil-given thing which suddenly afflicts people. The cause lies within the system itself.
We should not forget that although one form of capitalism has failed, our own form of capitalism has many more advantages, particularly in the role of consumer choice and the production of consumer goods. However, there is much which needs to be
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corrected before it can even begin to serve the national interest to which the noble Lord referred in the Motion and when he asked for a better deal for stakeholders, among whom I assume he included the employees of the companies concerned who do the physical work of production.
The operation of market forces has not been able to produce that so far. It is up to us to make the changes —some of them philosophical changes in attitude—which have to be made. One of the first changes we have to make is to realise that we are all part of the same human family and that a factory or workshop is not merely a place from which labour can be shed, to use the current term, but is a place which is a social organism on its own in which people have to take into account the work which each of them does. Therefore we have to employ a degree of co-operation on all sides of industry—employees, stockholders and managers—very much on the lines of the German mitbestimmung and similar to that followed by Japanese enterprise. We have to turn our industries into organisms in which there is a oneness of purpose, where there is no sense of injustice between one and another and where the rewards are not outrageously disproportionate to the hours spent in work. That means a change of mind.
All of us have to realise that the national interest means more than the two words within which it is expressed. It means the re-establishment of a national ethos; it means the establishment of a social oneness within the factory or workshop; and a sense of community within the community as a whole. In short, instead of pursuing our activities merely for profit we should begin to do so in the pursuit of living.
6.17 p.m.
Lord Grimond: My Lords, I should like to join in the congratulations which have been offered to the noble Lord, Lord Ashburton, and also to the mover of the Motion. If we have more such speeches as his I shall be converted to the view that the House of Lords ought to continue.
There is no doubt that the balance between labour and capital has tilted in favour of capital. It is essential not only to spread ownership but to involve workers in the running of and responsibility for their companies. They should feel that they employ management just as much as shareholders do.
One of the best ways of achieving that is through employee stock ownership plans, legislation for which exists both in America and in this country. In America 10,000 businesses operate such plans. Ten per cent. of American workers outside agriculture are members of such plans. That is a remarkable statistic when one bears in mind that only 15 per cent. of such workers belong to trade unions. The numbers in such plans are growing steadily.
Why is it that such plans have been almost a total failure here? The answer is twofold. First, there is the intolerable complication and expense with which any innovation in this country is almost inevitably surrounded. Secondly, we attempt apparently to block

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every loophole in taxation which might be exploited by some rogue. The end result is that the rogues escape and the honest men are driven to exasperation.
There are two serious objections to the form of ESOP which the present Government rightly introduced. The first is that in this country a majority of the trustees of an ESOP must be elected by the workers themselves. Now, that may be desirable and I am in favour of it in general, but it should not be a sine qua non. Furthermore, it is neither favoured nor wanted by the trade unions. The second is the tax objection. If a shareholder sells his shares on the formation of an ESOP he will receive certain tax advantages. However, he may forfeit those advantages in punitive terms if the company does not "get out", as it is called, the shares within seven years. People have proved to be extremely unwilling to undergo such a risk when they cannot be certain what the next seven years may hold for a company.
The result is that there are very few ESOPs in this country while the scheme is forging ahead in America. It appears to be one of the best ways of achieving what the noble Lord, Lord Laing, wishes to achieve. There are many other ways but during the short time available I wish to concentrate on this issue. Nor have I time to explain an ESOP in detail. The scheme has been on the statute book for some time; it is essentially a plan for ownership by the employees themselves.
I was chairman of an organisation called Job Ownership which exists to promote ownership by the workers in industry. The organisation raised the points I have made with the Chancellor of the Exchequer and I am grateful that we have an opportunity this evening to raise them again at a most strategic time in the financial year. Although I understand that the Minister cannot what is in this House's Prayers called "pre-vent" the Chancellor of the Exchequer and tell your Lordships what the Budget contains, I hope that he will represent to the Chancellor that there are serious drawbacks to a scheme that has worked extremely well in America and which the Government have supported in this country. I understand that the Minister will not be able to tell the House that he will do something about that, but I hope he will at least make favourable signs that my comments will be taken into account.
6.22 p.m.
Lord Benson: My Lords, I believe that there are five categories of stakeholder in the industrial organisations of this country. All are of equal importance. They are the management, the workforce, the creditors and in particular the banks, the customers and the shareholders. Therefore, the task before us is to consider whether each of those stakeholders is making its best contribution to the country's industry. I do not believe that they are and perhaps I may give some examples.
In the past five years two of those stakeholders have not, in my view, discharged their responsibilities satisfactorily. They are management and the banks. Management has failed because it raised enormous loans at high rates of interest which were out of
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proportion to the capital bases of their companies. The result is that debt equity ratios are now completely out of hand. The situation has been exacerbated by the failure to spend sufficient on research and development and the failure to retain sufficient profits to finance the installation of the modern technologies that are being developed in every field of business activity.
The banks have failed to live up to their responsibilities because they have lent imprudently without considering or monitoring the viability of their customers' businesses or the soundness of the management. I do not have to justify these views. The financial columns of every newspaper record collapses, fraud, bankruptcies, liquidations, massive redundancies, the loss of markets and the massive provisions required by the banks and finance houses for bad and doubtful debts.
Perhaps I may give a second example. I do not believe that the institutional shareholders and the fund managers have discharged their responsibilities adequately. They are caught in a conflict of interest. One of their objectives is to maximise the dividends paid on their investments and the capital value of their holdings. They welcome takeover bids because takeover bids automatically have that result. The consequence is that shares are now regarded as counters to be traded in the bazaar rather than as the bedrock of our industrial prosperity. That attitude of mind has done and can do irreparable damage to the long-term interests of the companies in which the institutions invest.
Therefore, the task that faces us is to persuade individual stakeholders to subordinate their own interests in favour of the national interests and of the other stakeholders. I believe that can be done only by lifting commerce and industry out of the maelstrom of day to day political controversy and formulating a national industrial policy. That would identify the responsibility of the stakeholders and their collective responsibility to the nation and to each other. It would give us the leadership that we have lacked for so long. It would give us a firm foundation on which to build for the future and to stem the decline in our industrial output that has continued for so long.
During the 66 years that I have been in the City there has never to my knowledge been a national industrial policy except during the five years from 1940 to 1945. During that time our achievements in the industrial field were little short of miraculous. I realise that a chorus of strident voices will be ready to denigrate the proposal that I have put forward. However, I wish to remind the House that 45 short years ago we vanquished our then enemies, Germany and Japan, having inflicting untold damage. During the past 40 years those two nations have restored their economies on the basis of sound industrial policies, with the result that both now dominate the industrial markets of the world. By comparison our achievements are second rate and they will remain second rate unless we take some action to stop that. What we need above all is the discipline and the leadership of a national industrial policy instead of the absence of such a policy that we have endured for so long.
6.27 p.m.
Lord Boardman: My Lords, I too congratulate the noble Lord, Lord Ashburton, on his maiden speech. I have had the privilege of being associated with the noble Lord on various occasions in the City. I know of his distinction there and of the great work that he has done for charitable causes. We are fortunate to have him in this House and I hope that we shall hear from him often.
I also thank my noble friend Lord Laing for introducing the debate. It is a most important subject. Although we cannot cover it properly in the short time that we have available perhaps we may see how we can best do so. I am not sure that the position is as one sided as my noble friend suggested. There have been more British takeovers of American companies than has been the reverse. That has been true too of other parts of the world, although I accept that in Europe the position is less happy. The restrictions of government and companies in countries such as France and Germany make a hostile takeover virtually impossible.
Nor am I sure that I can accept entirely my noble friend's criticism of institutional shareholders. I believe that his criticism is too severe. My experience has been that institutional shareholders, if given the facts and if there is competent management, will show great loyalty to the companies in which they have invested. There has been a change of attitude in recent years. Perhaps Pilkingtons marked the turning point a year or two ago. That situation showed how institutional shareholders will rally round a company which has invested heavily in research and has good management. I accept, though, that a company which has spent heavily on R&D and depleted its distributable profits may be pounced upon unless it is able to convince its institutional shareholders that what it has done is right, explain why it has done it, and make clear that shareholders can expect benefits to come from it.
I believe that we can improve the procedures to give an element of greater protection from short-term speculation. Various suggestions have been made by the Select Committee chaired by my noble friend Lord Caldecote, the Select Committee in another place, the Takeover Panel and others. I am sure that those should be considered carefully. However, at the end of the day—I agree with my noble friend Lord Nelson —the main responsibility must be upon the directors and management to justify a continuation of their stewardship. It is their responsibility. They must have the record to show and must ensure that that responsibility is recognised.
I wish briefly to comment on an aspect of corporate governance which has not so far been raised but is within the Motion. It is a matter that disturbs me. Indeed, I could add it to the five factors listed by the noble Lord, Lord Benson, since it refers to the role of accountants who act as auditors. The noble Lord was a distinguished leading member of that profession. I recognise that the role of auditors is clearly defined by statute. I define that role as that of watchdog for the shareholders, and indirectly for the creditors, over the
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correct factual presentation of the financial state of the company. An auditor is in a semi-adversarial position against the directors and management.
The shareholders appoint the auditors. The shareholders have the power to fix their fees though in fact they normally delegate that power to the directors. The auditors should be responsible to the shareholders. However, in many, if not most, cases the same firm which is employed as auditor is also employed by the company for a range of accountancy, consultancy and tax advice quite outside its role as auditor. The fees agreed by the directors are often greater than the audit fees. The same firm discharges two roles; first, it questions and sometimes challenges management; and, secondly, it is employed by management to advise and help.
I have no doubt that the vast majority of accountants carry out that dual role with complete integrity and do not allow the one role to interfere with the other. However, that may not always be so. We should consider the point carefully. It may be that accountants who act as auditors for a company should not be allowed to carry out any other paid task for that company. One should perhaps consider a power for auditors to have more snap inspections of the firm that they audit instead of waiting for the end of year results when they audit only annually. A lot can go wrong, as we know from recent cases, during the course of a year. The auditors should be responsible direct to an audit committee of the board. I refer of course to quoted companies.
These matters deserve and require deeper examination than I am permitted to carry out in the short time available today, but I hope that I have indicated the line of monitoring that I believe we should consider for better corporate management.
6.34 p.m.
Lord Pennock, My Lords, perhaps I too may pay tribute to the noble Lord, Lord Ashburton, on the occasion of his maiden speech. One could not help but admire his courage and clarity. He put forward views which will not be in accord with those of many colleagues in the House today but he has presented his views with fairness and complete comprehensibility.
I recall meeting the noble Lord, Lord Laing, for the first time 15 years ago on an occasion, which he may well have forgotten; it was to discuss an issue seemingly far removed from today's discussion. The subject on the table was the Bullock Committee's proposal to appoint worker directors with the specific responsibility of representing the interests of the shop floor. We were a band of industrialists. I assure noble Lords that we were not dyed-in-the-wool reactionaries. We were all enthusiastic practitioners of what was then called joint consultation. We were all seeking to increase the involvement of shop floor employees in understanding our businesses and influencing the decisions that affected them. We were non-political. I recall that the noble Lord, Lord Shackleton, was also a member of the group.
Our conclusion at the end of our discussion bore an uncanny similarity to the issue that we discuss today. We maintained that there must be a balance between

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the interests and aspirations of all the stakeholders in a company. I agree with the noble Lord, Lord Boardman. That balance is a director's responsibility. We defined the stakeholders as the investors and creditors, the customers, the employees (management and shop floor), the community (local, where the business is situated), and the community at large (which is the nation). If the demands of a group of shareholders upset that balance then the health and future of that company will be in danger and the company will find itself non-existent.
In the 1970s there was the great danger of dominance of shop floor interest, industrial unrest, stoppages and strikes, and inflated wage demands without corresponding increases in productivity and competitiveness. Those were issues which kept company chairmen awake at nights. Today, on the one hand, it is the fear of a share price which can be the result of financial manipulation and, on the other hand, the demand of a favourable short-term bottom line at the expense of the longer term health of the company, or even the effect of political happenings in countries far removed from the place of business. Those have become the burning questions of the late 1980s and early 1990s.
I cite a few hard facts on the perils of short-termism. The first relates to a cut back in capital investment to shore up the bottom line. It is already happening. In the 1980s our capital investment improved significantly. I have many figures available. We increased to an average figure per person in manufacturing industry of about £2,000 per annum. That was a considerable increase on the 1970s. The figure was still behind those of the French and the Germans. As noble Lords can imagine, it was well behind the Japanese who increased their capital investment at a rate of 9.5 per cent. per annum and achieved a figure per person in manufacturing industry of about £5,500 per annum. In 1991 the forecast by the Chancellor in his Autumn Statement is that there is a decline in investment of 9 per cent. That spells danger.
I refer to the effect on research and training of short-termism. The CBI informs me that training is standing up remarkably well. On research, some noble Lords may remember that I described in a previous debate how the pharmaceutical and agrochemical businesses in ICI—now its major profit earners by some hundreds of millions of pounds per annum—were researched at a very high expense for 10 years without earning a penny profit and demanded huge research in the long term at the expense of short-term profits. There is the danger of paying high dividends to keep up the share price. Although we did better than the 1970s, the CBI calculates that in the 1980s our productivity went up 5 per cent. per annum, and our profitability also went up 5 per cent. per annum. Our dividends went up 15 per cent. per annum. An increased dividend at the expense of investment cannot continue to be the case.
The solutions? We have heard many today. I believe that maybe we should look into the question of more long-term finance, more long-term loans, with
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less dependence upon the stock market for our equity and capital. There are 500 companies on the German stock exchange; we have 2,000. Maybe we should encourage our banks to invest in companies and not just to lend them money and to look all the time at interest rates; perhaps we should encourage them to become involved in those companies. Again, I am reliably informed that in Germany 10 per cent. of all what we would call non-executive directors—that is, members of supervisory boards—are bankers. The bankers that I have met recently on the German scene are businessmen who know what they are talking about.
Finally, as a number of us have said, how unfortunate it is and how frightening that we have 70 per cent. of the equity market, of our share investment, controlled by insurance companies and pension funds. About 100 people make these fateful decisions. It is also a fact that something like 70 per cent. of our manufacturing production is completed by not more than 300 companies. These are small numbers for a national problem.
I am not sure that I could rise yet to the notion of the noble Lord, Lord Benson, of a national policy, but I should have thought that within these numbers there could be a change of attitude. We changed attitudes in the 1980s, moving away from those of the 1970s, in a remarkable way. I believe that we shall need to change attitudes in the 1990s and move away from the weaknesses of the 1980s, with its insistence not on profit but on short-term profit and not long-term profit as well, which is equally important.
6.42 p.m.
Baroness O'Cathain: My Lords, it is good to have a debate on industry, and wonderful to have the contribution of my noble friend Lord Ashburton in his splendid maiden speech. I wonder whether I am alone among noble Lords who of late have felt submerged by local government Bills and by further and higher education? Too little time is spent considering the position of the wealth creators. That is why I welcome this debate today, particularly as it is a debate instigated by the noble Lord, Lord Laing.
I have been one of the noble Lord's admirers for over 20 years. I have always regarded him as a humaniser of industry, who has led the way on developments which have resulted in industry being a better place in which to work and a much more attractive proposition for our young people in their career choice. As he has always been in advance of his time, it was no surprise to see that he had put down a Motion that has its eyes firmly set on the 21st century.
The recent and current world recession has caused us to be pessimistic—too pessimistic—about our industrial sector, but I believe that we can be optimistic about the future. Industry used not to be attractive to the best brains, but that has changed. Industry has been recruiting many more graduates, but it has also become more attractive to school leavers. Twenty years or so ago school leavers would never have had any chance of ever considering that senior management or indeed board membership was within their sights. Now it is. Why?—because of the

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universal commitment to youth training, management training and, importantly, continuous training throughout one's career. This commitment has been the result of major government initiatives, the most recent of them being those of the Department of Employment creating the TECs.
Industry now is a more democratic place in which to work. I have spent a little time making these points because it is important to realise the distance we have travelled in terms of making industry a more attractive place for the young, and the greatest need of industry in the 21st century will be a highly-skilled, flexible, enthusiastic labour force. This is one way of attracting and keeping the commitment of the providers of capital.
Of course there should be an equitable balance in industry between the interests of capital and of all other stakeholders, and of course the term "other stakeholders" encompasses employees. We have been told that "the City" has too much power over industry and that its outlook is too short term. Already in a debate in your Lordships' House I have stated that I believe that short-termism is not the problem that others perceive. I repeat, the banks have sustained the United Kingdom industry over long and difficult periods, including the 1960s and 1970s when the economy was beset by stop-go policies. Despite what my noble friend Lord Benson says, many banks are in the forefront of trying to save companies. All have departments with descriptive but unfortunate titles, such as intensive care units, which have been set up to take under their wings companies in financial difficulties with a view to nursing them back to health.
There are many senior bankers beavering away giving advice to these companies that have over-extended themselves, set over-ambitious targets, paid less attention to management controls and marketing than they should have done, and whose managements did not have enough expertise to see that a slowdown was likely. This is remedial action, but positive action also rates high in the banks' strategy. For instance, the Midland Bank set up some 350 enterprise centres in March 1990 with the aim of counselling businesses. To date some 300 of the managers of those enterprise centres have been sent on courses in the Manchester Business School where they have studied how best to assist business. That really does not match up to the conventional image of a non-caring banking system.
However, that is not to say that things are not tough. Of course they are. But I believe that there is truth in the saying that from adversity comes strength. Industry is much leaner, fitter and alert; it is more aware of the competition than ever before. Most employees in industry now identify with the strategy of their company, with the products of their company, as barriers to communication have been steadily eroded. The whole industrial atmosphere is more open.
Employees in industry—I resist calling them workers; everybody should be a worker from the chairman to the postboy—have a much greater stake in their company than is apparent. Government
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measures have encouraged this through the development of schemes such as the savings-related share options and PEPs linked with company shares, encouraging staff to take up a long-term shareholding in their own company. The creation of a much greater shareholder base throughout the country as a whole, partly as a result of privatisation, has made more individuals aware of the opportunities to invest in industry. I read recently that over 25 per cent. of the adult population now owns shares.
The institutional investors cannot disregard, and do not disregard, the needs of their suppliers of finance; namely, the pension funds of business. But perhaps there is a requirement for greater vigilance by trustees on behalf of their members. The noble Lord, Lord Laing, makes a persuasive case. The "interests of capital" mentioned in the Motion are also the interests of employees. Corporate pension schemes have a big stake in industry, and more and more employees realise that their real interests lie in a strong industrial base.
The government are frequently accused of not doing enough for industry, but an examination of basic statistics suggests that if this is so, industry is still managing to score some notable successes. Manufacturing productivity growth in the 1980s has been faster than in any other major industrialised nation. In the decade 1970 to 1980 Britain was sixth in the league table for business investment growth in the G7 countries, and in the following decade second. Much has been said today about the lack of investment, but the figures do not bear it out. Above all, the Government have created a climate of low inflation, which makes industry's planning task so much easier.
The suggestions put forward in the debate today are worthy of further consideration. I am sure that they will receive it. It would be nice if the message that went forth from here to industry was, "We appreciate your problems, we appreciate your worth, and we hope that at worst we do nothing to hamper your progress and at best we can encourage you to increase your competitiveness". The future of this country relies to a large extent on having a successful, thriving industrial base. Once more may I say how grateful I am to the noble Lord, Lord Laing, for instigating yet another successful initiative in calling for this debate.
6.49 p.m.
Viscount Caldecote: My Lords, I fully agree with all that my noble friend Lord Laing said in his opening speech and I congratulate him on it. As he said, there is no doubt that a capitalist economy as we understand it provides the best basis for wealth creation and meeting the needs of the community as a whole but it is not perfect. Therefore, we are most grateful to my noble friend for giving us the opportunity to take a constructively critical look at modern capitalism, which originated with the establishment of the limited company concept in 1855. That enabled the owners of a company to invest any sums they liked knowing that that was the limit of their risk. Therefore, enterprise and risk-taking were

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encouraged, creating added value and new resources for the community and wealth for the owners if the company flourished.
In that context, the principle later enunciated by a chairman of General Motors in the United States was that "What is good for General Motors is good for America" seemed to make sound sense. It clearly implied that if the shareholders—the owners of a company—prospered, there was no need to look further for any other objective because that ipso facto benefited the community at large.
In today's circumstances I believe that we need to cast a critical eye over those principles to see whether they are as relevant and serve us as well today as they did in the past. However, we must beware of generalising, for the situation of a small, newly formed limited company struggling for survival, owned by a few shareholders closely connected with the founder, is very different from that of a great multinational plc, mainly owned by financial institutions, making profits of hundreds of millions of pounds.
In the small company, maximising shareholders' value is vital to survival, and in virtually every case the survival of that kind of company is in the interests of the community. Jobs are created, a new service or product is provided and there are the prospects that it may grow to be one of the great companies of the future. Therefore, the interests of the shareholders are the same as the interests of the community.
However, the situation of the larger, established company trading well is rather different. It has greater freedom of manoeuvre to look, as I believe it should look, beyond the bottom line and shareholders' value to the wider interests of all the stakeholders referred to by my noble friend. As he made clear, they include the community within which the company operates.
In my view the primary objective of such companies should be to give the best value for money to their customers and, most of all, to expand their business to make the maximum contribution to the prosperity and the interests of the community. Of course those objectives can be obtained only if the company earns profits on a scale adequate to generate and attract the funds needed for continuing investment, thereby ensuring the survival and growth of the company. In my view those should be regarded as a means to an end and not the end objective itself.
Some companies—and clearly United Biscuits is one of them —already work along those lines but too many do not. Therefore, they fail to meet their full responsibilities to the community. That kind of approach to business is in danger of bringing capitalism into disrepute and creating a climate in which the imposition of excessive controls and disincentives will be demanded in our democracy. That will be to the long-term detriment of the community for, as the late Lord Bramwell said in the 1850s in the discussions on the formation of limited companies:
"If ever there was a rule established by reason, authority and experience, it is that the interest of a community is best consulted by leaving to its members, as far as possible, the unrestricted and unfettered exercise of their own talent and industry".
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That is as true today as it was then. However, I endorse what my noble friend said; namely, that the greater the freedom given, the greater the need for responsibility in exercising it. If capitalism is to survive, with its unrivalled potential for adding value for the benefit of the community, I believe most strongly that its objectives must be redefined along the lines which I have suggested.
6.54 p.m.
Lord Sharp of Grimsdyke: My Lords, the Motion of my noble friend Lord Laing is couched in elegant terms with its reference to the need for equitable balance in the management of capital. However, the issue can be simply stated. Is the shareholder supremacy and corporate governance currently enshrined under UK company law, both politically and economically sustainable? That is a difficult question but it is important and timely that it is aired and debated. It is in that seminal sense that I make my now truncated contribution to the debate.
My noble friend Lord Laing argued persuasively that directors of boards of joint stock companies have a duty to constituencies other than exclusively to their shareholders. That is a very seductive argument. Like motherhood, it is difficult to resist the emotional appeal. However, the reality is that any successful company cannot really survive or prosper without well-trained and motivated employees, without satisfying customers on value and price and without due regard to the economic well being and health and safety of the community in which it operates. Inevitably the shareholder comes at the end of the queue of the various interests, but it becomes dangerous legally to elevate those other interests over the interests of shareholders if the full benefits of the joint stock company structure are to be maintained.
The introduction and development of the joint stock company has conferred massive benefits to society, as the noble Lord, Lord Bruce, commented and its contribution to economic growth and a higher standard of living for all who live in a free enterprise economy no longer needs to be justified against the now discredited alternative of a centrally managed economy with the state making all economic and production decisions. However, that does not mean that we should not be sensitive to the need to effect improvements.
Under current company law, the supremacy of the shareholders is paramount and I would not wish to see that legally weakened because in my view it is essential not to diffuse the accountability of the board of directors. However, we need to examine whether the shareholders' rights need to be strengthened, particularly in the context of the dominant position of institutions which control so much of the equity of the joint stock companies.
In 1963 private shareholders held 59 per cent. of the quoted equity of British industry and commerce. Today that figure has declined to 12 per cent. That means that a handful of fund management groups, by virtue of the size of their shareholding, now control the destiny of a large segment of our quoted companies. Even greater concentration of ownership

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is inevitable if only because of pre-emption rights firmly exercised by the institutions. I hope that the authorities will review that practice in the context of seeking wider share ownership. It is a matter of some general importance, particularly to those companies wishing to raise capital from overseas investors as well as seeking to widen ownership of their shares in this country.
I agree entirely with the view expressed by my noble friend Lord Laing that fund managers, for all their protestations, are inevitably influenced by short-term considerations. To some extent, trustees of company pension funds have only themselves to blame when they hand over to institutions the management of their pension fund and then proceed to measure their performance by quarterly evaluations. It is open to the trustees to offer contracts to institutions based on yearly rather than quarterly evaluations and they could also reserve the right to be consulted on disposal of shares in any company faced with a hostile bid.
There has been much discussion on the need to establish a level playing field in takeovers. My noble friend Lord Laing commented on the chauvinist attitude of the French. A level playing field is not essential when we play games because any inequalities or adverse conditions tend to be evened out through the equitable arrangement of changing sides at half time. It is difficult to envisage using that expedient in competition takeover policy. However, reliance on the competition criterion alone is not enough in an imperfect world with built-in restraints and obstacles. In that context I have every sympathy with the Secretary of State for Trade and Industry who wished to prevent nationalisation by the back door by resisting the opportunism of French state-owned firms which wished to acquire companies in the United Kingdom by hostile bids.
State-owned companies have a built-in advantage in that they can achieve their target without being over-concerned with the discipline of cost and financial implications, as long as they are underwritten by the French Treasury, even if they incur losses. To discriminate against such French concerns merely because they were state-owned or controlled has been ruled ultra vires, yet I think the Secretary of State was fundamentally correct.
I believe that some further harmonisation in competition and takeover procedure and policy is called for, and I look to the Secretary of State for Trade and Industry to initiate discussions on those issues with his counterparts in the Community and with Sir Leon Brittan in his pivotal role as Competition Commissioner. Central to those discussions will be the consideration of the public interest, including implications of a takeover on employment, research and development, regional policy and not least competitiveness.
I submit also that, notwithstanding the overall jurisdiction of the Treaty of Rome and the endeavours of the Commission to seek even-handed treatment of companies across frontiers, our own Secretary of State for Trade and Industry should persist in demanding full reciprocal rights when considering applications by companies of foreign countries, including Community
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countries, if they are making hostile bids for UK companies. The Secretary of State for Trade and Industry has already introduced that reciprocity principle in considering applications by foreign companies who wish to take advantage of the liberalisation of telecommunications services in this country. I welcome that initiative and ask that the same principle be applied to foreign, hostile takeovers.
Nothing that I have said should diminish the importance of reinforcing the accountability of directors to their shareholders, to improve the flow of information and to improve the efficiency of capital by restructuring of companies and industries. As a final comment, perhaps I may quote from Jonathan Charkham, the adviser to the Bank of England. He said,
"Is there just the slightest possibility that our market system, so excellent when viewed in isolation, may be put at a disadvantage in international competition by those who have superior linkages and lines of accountability within it, and a greater sense of patience".
7.2 p.m.
Lord Skidelsky: My Lords, perhaps I may add my congratulations to those already offered on the most interesting maiden speech of the noble Lord, Lord Ashburton. It is a good time to hold this debate because the battle between capitalism and a certain kind of socialism is over. Hardly anyone believes in state ownership of the economy or central planning of an economy anywhere in the world. It is natural to say that if capitalism is in charge it should be socially responsible.
There are many ways of talking about that. We in the SDP used to talk, and still talk, about the social market economy; but stakeholding is another expression when talking of social responsibility. The basic idea is that a company should feel responsible not only to its shareholders but to a variety of other interests and generally to the wider community. Noble Lords spoke of consumers, employees and the Government; they spoke of the national interest, though I fail to see how the national interest can possibly be a stakeholder in any ordinary meaning of the term.
As the noble Lord, Lord Sharp of Grimsdyke, said, it is a seductive thought. But it is not an entirely convincing one. One is in danger of a confusion of language leading to a confusion of ideas. What does "stakeholder" mean? In the simplest way and the way I understand it it means "owner". Customers are not owners of companies except where they may be part of consumer co-operatives. Similarly, employees are not stakeholders unless they own the company or shares in it. What about governments? Governments can be stakeholders in companies if they own part of the equity in them. But is that the road down which noble Lords want to go? It certainly has not been a proposition put forward this evening. Unless we are clear about the position, there is a danger that we shall go back down the road to corporatism where responsibilities are not clear and the division between the public and the private becomes blurred.
Tonight we have heard the voice of big business. It is a humane voice. It is a plausible voice. We did not

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hear the voice of small businesses. There has not been one mention of markets, as though the whole revolution of the 1980s had not happened. We must also remind ourselves that the voice of big business is the voice of managerial autonomy. If one sets oneself the task of balancing between the different stakeholders, that is an argument which amounts to a demand for no accountability whatever to anyone.
Having said that, I do not dispute for a moment that businesses should be socially responsible and have strong commitments to their employees. After all, that is a matter of self-interest. The evidence is overwhelming that the better employees are treated or looked after, the better they perform and the better the results of the companies. One point which was hardly mentioned this evening but which is important concerns investment. Noble Lords mentioned investments, but investment in people is the most urgent matter facing our industry at the moment. Investment in training is good business. There is no guarantee that a worker trained at the employer's expense will stay in that company, but a company which invests in its workforce is more likely to retain their loyalty than a company which treats labour as a commodity.
Further, employees can be made into stakeholders in the technical sense of the word; they can be made shareholders. I support that. There should be a great deal more employee share ownership. There are strong arguments for it both in terms of attitudes to the company and something which has not been mentioned—that the wider employee share ownership is, the more it tends to stabilise employment by countering inflationary wage demands.
Finally, there is a version of stakeholding of which I wholeheartedly approve. It is summed up in the slogans of a property or share-owning democracy. It is the concept that the whole population has a stake in the wealth of the country and that the wealth-creating process is extremely important. A great deal more can be done to deepen share ownership from the point it reached in the 1980s by developing a secondary market in shares. We need to increase the quality and supply of advice to potential shareholders. We need to simplify communication between companies and potential shareholders. Trying to read a company's annual report is even more painful than trying to read the Local Government Bill passing through the House at the moment.
I believe we need also to break the registrar's oligopoly over share registration. Why cannot banks and building societies establish personal shareholding accounts, where individual shareholdings come with the regular statements? Those are all forms of stakeholding of which I wholeheartedly approve. Stakeholding in that sense and the other senses I have described is set to become one of the big ideas of the 1990s. I am grateful to the noble Lord, Lord Laing, for introducing the debate.
7.9 p.m.
Viscount Brentford: My Lords, I too should like to thank my noble friend Lord Laing of Dunphail for introducing the debate. It is timely and I endorse most
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of what he said. I believe those points are worth considering. I also congratulate the noble Lord, Lord Ashburton, on his admirable maiden speech and look forward to hearing him on these and no doubt other topics in the long-term future.
I wish to comment on two points which have often been mentioned in this debate. I also wish to touch on attitudes and communication which are tremendously important today. Management must manage. I repeat the point which has already been made. Management needs checks on it. One of the very important checks is in the form of external directors on the board. They can play a very significant role in good management. They can look at matters objectively in ways which those who are employed full-time in management of a company may be unable to do. It is also good to see annual general meetings of shareholders being used, albeit in a way that can often be crushed. But useful things are coming out from questions which are put at annual meetings. I hope to see that procedure being used all the more.
The first attitude of management is that it bears responsibility to manage. It also has an attitude that is relevant to all the stakeholders who have been mentioned, including the local community, where that is relevant. I believe that it was my noble friend Lord Boardman who commented on Pilkington, which is a company which has a great history of looking after the local community. The more that that can happen, the more beneficial it will be. There is also the attitude towards the nation and the role of particularly substantial companies, of which there may be only one or two in the country. They have a responsibility to the nation.
A great deal of what we are talking about shows the significance of relationships in the management of companies. It is obviously crucially important for management to have good relationships with other employees and also with all the stakeholders. That human aspect will be all the more crucially important in future. There is the attitude towards the priorities that should govern the future policies of a company. I look forward to seeing an attitude which moves away from short-term gains towards a 10-year investment policy in such aspects as technology, research and development.
I now turn to communication. That is a jargon word for which I apologise. It covers in one word what several of your Lordships have said. Perhaps I may illustrate one point of good communication which is now compulsory in the directors' report—that is to say, the amount that is given by the company to charities during the year. Since I put down my name to take part in this debate I have looked at quite a number of annual reports which have passed through my hands in the past week. I have seen the great range of the percentage of profit before tax which is given to charities. Sometimes the sum is minute and sometimes it is as much as 1 per cent. of the profit. That is a very healthy sign of good communication today. I would like that to be extended. I would also like companies which do not give much to charity, to do so because that would be good for their image. There is a great need for that today.

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I also wish to follow the noble Lord, Lord Skidelsky, concerning training. I do not support the trade union recommendations which I have seen to make it legally binding for every employee to have five days' training per annum. However, it is often appropriate for companies to give five days' training per annum to those employees who will benefit from it. I should like a statement to be added to the directors' report about how much training is being given, although sometimes that is included. The more information that is disseminated on the subject, the better it will be for the nation.
There is another point I wish to make concerning communication, which is improving today. I refer to publicity for a company's philosophy, strategy and motives in what it is aiming to do. There is plenty of scope for that, which is good. I hope that, by and large, companies will keep improving communication with their shareholders and the general public as to what they are doing.
7.15 p.m.
Lord Mottistone: My Lords, I congratulate the noble Lord, Lord Ashburton, on a first-class maiden speech, particularly on having the courage to speak on a subject of this kind so quickly, and also on making an important contribution to the balance of the debate as a whole.
I also wish to congratulate my noble friend Lord Laing on introducing a subject about which he feels very strongly and at the very earliest time that he reasonably could. Being a Scotsman, he is likely to be persistent and in successive Parliaments achieve his aim. One of my Scottish uncles, the third Viscount Elibank, took many years of persuasion in this House and behind the scenes to cause the Government to introduce pictorial postage stamps which are now so popular but which were initially strongly resisted both by the government and the Post Office. Perhaps my noble friend will be equally successful in due course in his efforts to have a more even balance of power in the control of public companies than exists today.
My noble friend has explained clearly how the balance of power has shifted from being excessively in the hands of management in the 1930s and excessively in the hands of trade unions in the 1960s and 1970s to being now excessively in the hands of a few institutional shareholders. I agree strongly with my noble friend Lord Laing that the proper control of any activity, including businesses, can be efficiently exercised only if as far as possible it is evenly balanced between the major forces providing that control. For the long-term success of a company, if there is to be greater power in any one of the three major sources of power—management, labour or capital—it must surely be in the hands of the source which has the interests of that success as its only concern. I refer to the management and its workforce.
Studying the problems of the 1970s and being a manager at that time led me to the conclusion that the particular weakness of the great power of the trade union leaders was that they had a general interest in exercising that power, as they saw it, for the general good and not enough interest in the success of any of
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the particular enterprises in which they had representation. I believe that my noble friend Lord Laing is telling us that the institutional shareholders who now exercise excessive power also believe that they are acting for the general good but they too do not have enough interest in the long-term success of any of the particular enterprises in which they have shares.
The problem is how best to limit the power of providing capital so that the success of enterprises is maximised while, as other noble Lords have said, not unduly restricting the proper protection of the shareholders. My noble friend directs our attention to the practices of the French, the Germans and the Japanese. I am sure that he is right to do so. He also made useful suggestions as to what can be done by companies to protect themselves and by government.
I hope that my noble friend the Minister and his colleagues will give serious consideration to how these proposals might be implemented. In addition, the Government might well start by reading an article in the Economist of 18th January, page 94, entitled "GATT's next mountain". We must listen to what my noble friend Lord Laing has had to say.
7.19 p.m.
Lord Wade of Chorlton: My Lords, I am well aware of the views of my noble friend Lord Laing, which come from being ex-chairman and managing director of one of our greatest companies. I speak as one who has been involved only in very small companies where the manager has invariably been the owner. It is in that context that I should like to give my views on the impact of capital in that particular area.
I think that we would all agree very strongly with the noble Lord, Lord Laing, the directors and all the stakeholders that there is a paramount need to have a genuine and common interest on all fronts. However, in small businesses—and I see no reason why it should not be so in large businesses—it is the manager who brings about that point of view. The noble Lord, Lord Ashburton, who gave such a splendid maiden speech, referred specifically to the quality of management in this respect, as did the noble Lord, Lord Benson. Although we are aware of the financial difficulties of large companies—and we are all very much aware of that in smaller businesses—I think that it must also be accepted that many managements of large companies have regarded their shareholders as a source of money to be plundered.
My noble friend Lord Laing referred to the founder of Nabisco. I do not know whether any noble Lords have read Barbarians at the Gate in which it is shown what the successors to that company tried to do to their shareholders, without having any interest at all in the welfare of the shareholders. Some of the shareholders might have been—and most likely were —institutions. In fact, vast numbers of them were small independent shareholders. It is my view that in many large companies recently management has forgotten the owners of the business. In small businesses we do not forget them. In small businesses we can explain to our bankers and to our shareholders the aims and objectives of the business and how it is

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now time to review the future; how it is now time for a change of policy and to be more innovative. Similarly, there is an important role for the managers of large companies to do exactly the same.
I do not believe that there is an important role for government in this area. It is for the managers of businesses to make quite clear the views that are commonly expressed by managers of large companies, their importance to our community and the role that they have to play.
Small businesses went through a very difficult period in the 1980s, with a constantly changing financial climate on a micro and macro scale. It is very difficult for the small businessman to come to terms with that situation and to make the necessary adjustments. In my own case I remember how two or three years ago, in very buoyant economic times, money was thrust at us from every possible source. Now, at the very time when we want it most, there is none available.
Last night I was in Glasgow on business and I went to view the Burrell Collection. I should advise any noble Lord who has not done so to do the same. It was explained to me that Mr. Burrell, who accumulated that vast collection of very valuable items, made most of his money by investing in ships at the very time of the recession, when nobody else was investing in ships. It is my opinion that there is a need for our financial supporters to see that the very time we want money is when they do not want to give it to us.
When a private company owner looks at his company's situation sometimes his priorities might not always be the same as those of the owner of a large company. It may well be that a private owner and manager has different aspirations as to what he wants to achieve in the short term. Perhaps he wants to get a product into the marketplace; perhaps he wants to innovate something new about which he feels strongly. Very often the raising of capital is not necessarily one of his prime concerns, or even skills. There is a major re-educational task ahead for financial advisers, whether in banks, in clearing banks, in venture capital or accountancy, to assist businesses in general to be more financially aware and sophisticated in all the relevant aspects of capital management and capital-raising. That is an area in which many of them do not really become involved in the way that they should.
We also need to be aware that potential investors are seldom pursued with enthusiasm by larger companies. Often businesses with exceedingly good potential do not realise that potential and the owners are reluctant to give up equity. There are many companies that start off small and which could grow if they would only appreciate that it is far better to have a small piece of a large cake than to have nearly all of a cake that nobody wants to eat.
Reference has been made to a national industrial policy. I am totally opposed to the involvement of governments in industrial and business matters. Invariably, whenever they become involved they make a mess of it and it needs more and more legislation to try to put it right. In my opinion the role of government in industrial and business matters is, first,
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to make it clear that they put success in industry as the prime and most important task of any government, because without the creation of wealth nothing else is possible. They should then keep inflation as low as possible; they should keep the costs of government as low as possible and should keep interest rates as low as possible. If they can clear those, the skills and abilities of the British Isles can make us all rich. For God's sake let us keep government as far away from that as possible.
7.25 p.m.
Lord Holme of Cheltenham: My Lords, in rising to speak in this debate I would normally be irresistibly reminded of the remark of Senator Mo Udall, who found himself at a Democratic convention explaining to a rather puzzled delegate, after two days of speeches with two days still to go, what could be left to be done in the remaining time. Senator Udall explained it this way: he said:
"Everything that can be said, has been said, but not everybody has yet said it".
Fortunately that has not been our problem tonight because, thanks to the scope of the resolution put down by the noble Lord, Lord Laing, we have had a very rich debate with many excellent contributions, notably a memorable maiden speech from the noble Lord, Lord Ashburton. Yet there is still lots left to say. It is a shame that we have had a debate in which the contributions have been limited to six minutes each.
I want to use the brief time at my disposal to pursue the theme of the responsible company. It must be right that capitalism and free markets have won, and that state socialism and command economies have lost, as the noble Viscount, Lord Caldecote, the noble Lord, Lord Skidelsky, and others have said. But this is no time for complacency. Those of us who live in a system with a free market and a developed capitalism know how very far short from perfect are these institutions and their operations.
I should like to explain briefly the respects in which I think the concept of pervasive responsibility, operating through companies, can contribute to an improvement in performance. I do not accept, as people sometimes do, that there is a conflict between responsibility and success. Long-term success is ultimately based on responsibility.
When asked why he comes to work, any manager worth his salt will say "My objective is to improve, optimise, maximise the return to the shareholders". Yet sometimes that is used as though it was the be all and end all. We all know that it is a necessary condition of corporate life but it is not a sufficient objective. It is not in itself sufficient. Perhaps I may explain briefly the ways in which a better rounded and more responsible company might succeed.
The first responsibility of a company—and it may sound obvious—is to itself, to the nature of its work and to the quality of its product. The noble Lord, Lord Nelson, said let us not try and ape foreign systems. But I think he would acknowledge and others would acknowledge that we can, in this respect, learn from the Japanese the concept of total quality

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management. If we do not want to learn from the Japanese let us think of the words of that old Wesleyan hymn:
"Who sweeps a room as for the Lord Makes that and the action fine".
We all know that the quality of goods and services in this country and the United States are too often second rate, too often shoddy and too often not of the high quality which makes us internationally competitive and fulfils the first obligation of anybody at work, which is to do as well as possible that which has to be done.
The second responsibility of a company is to suppliers and customers. By extension, the quality carries through to the customers in terms of value for money. In the modern world the complexity of distribution chains means that companies are linked to their lateral suppliers and customers in a chain of great complexity, often driven by computer information, which demands a partnership between all elements in the distribution chain. The old adversarial relationship that often existed between buyer and customer has to give way to one of partnership. There is an upside to that. If less goods are held in inventory, more of the capital employed can be invested in capital equipment and technology and in revenue investment of one kind or another.
A company also has a responsibility to its employees. The best companies in Britain already exercise this responsibility to the full, but not all are the best. In the best companies, managers communicate—a point made by an earlier speaker. In the best companies, workers are never hands; they are brains. In the best companies, there is a partnership—a point to which my noble friend Lord Grimond referred. It is a partnership based on sharing profit and decisions. In the best companies, there is single status. There is not a hierarchy of canteens, restaurants and car parks. There is equality at work which involves everyone in the workplace. In the best companies, profits and decisions are shared so that the commitment to the task is improved.
Finally, there is responsibility to the community, both national and local. More and more companies are recognising their environmental obligations. They are realising that to use less energy and the right materials can improve their success. Earlier in the debate my noble friend Lord Ezra referred to the relationship with investors. Outside directors have a crucial role to play. They should meet regularly with institutional investors. As regards investors, the responsibility to which I have referred has to be a mutual responsibility. It must cut both ways. It must be a responsibility for mutual achievement. Rather than the casino capitalism, which in the guise of helping industry has too often stunted and distorted it, we need between government and industry, between industry and the City, between managers and their employees and between all stakeholders a greater sense of partnership for shared success.
7.32 p.m.
Lord Williams of Elvel: My Lords, the House will be grateful to the noble Lord, Lord Laing, for introducing this Motion. It will be grateful, too, for the maiden speech of the noble Lord, Lord Ashburton. I very much hope that we shall hear more from him in the future on this and other subjects.
It is almost impossible in the short time I have available to set out an Opposition line on the noble Lord's Motion. In fact I do not intend to do so because I agree with very much of what he said in his introduction. The noble Lord has a long and distinguished history as chairman and chief executive of a company that has tried to put into effect the kind of ideas that he has put forward to the House today. He speaks with great authority and we respect him for that.
The first point that occurs to me is that five years ago a debate of this kind could not possibly have taken place in the atmosphere we have experienced today. Attitudes are now starting to change. I have no doubt that five years ago we would have had a barrage from the Benches opposite of how important it was that the market and competition should rule. Those were the only criteria. I have initiated many debates in which we have had that barrage from the Benches opposite. However, we have not had it today. That marks a major advance in the thinking of the industrial community. For that we are grateful.
In his introduction the noble Lord, Lord Laing, cited the German constitution. He was right to do so. I remind him—this is about the only party political note that I shall sound—that the Federal German constitution was constructed by the Labour Party when in office. Built into it was a system of co-operation between workforce and employers which was viable then and is still viable today. It is a pretty good model.
The Motion refers to "an equitable balance". There has been some discussion between noble Lords about who constitute the stakeholders in any company. I was impressed, if I may so without disrespect, by what the noble Lord, Lord Benson, had to say on this matter. Stakeholders go much wider than shareholders; they go wider than employees or management; they go wider even than creditors. Indeed, and, as the noble Lord, Lord Holme of Cheltenham, has just said, in certain circumstances they go as far as customers. I would not go so far as the noble Lord, Lord Benson, and say that that is always the case. However, with some chains—I hate to cite the example of Marks and Spencer in the presence of the noble Baroness, Lady O'Cathain, but I must—
Lord Skidelsky: My Lords, may I ask the noble Lord a question?
Lord Williams of Elvel: My Lords, I am sorry but I have very little time. As I speak from the Opposition Dispatch Box I feel that I should be allowed my full time. As I was saying, with some chains, customers are intimately linked to the supplier.
There has been a historical conflict. My noble friend Lord Bruce of Donington was right to say that

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on the whole—I accept that it is on the whole—the capitalists have won the argument rather than the trade unionists or the banks. However, I am sure that noble Lords on all sides of the House will agree that it must be a major objective of this country to ensure the efficiency of our industry, particularly our manufacturing industry. I have argued that point and many noble Lords opposite have argued that point. We are at one in that regard. The prime objective must be to see how we can create an equitable balance which ensures that fundamental aim.
There are obvious difficulties in balancing the interests of the different stakeholders. There are obvious differences between noble Lords as to who should be responsible for such a balance. On the one hand, the noble Lords, Lord Boardman and Lord Sharp, argue that the managing director of a company or the board of directors should be responsible. Under Section 309 of the Companies Act 1985 directors of a company are to have regard in the performance of their functions to,
"the interests of the company's employees in general, as well as the interests of its members".
That is the only guidance to directors on the performance of their functions. In the Companies Act there is a great gap in what the duties and functions of directors should be. I welcome what the noble Lord, Lord Grimond, said about ESOPS. I believe that that is the right way forward for us. The example of the United States, where these schemes can build up over the years to identify the interests of employees with management and shareholders, provides the right way forward. That is not to say that my noble friend Lord Shackleton is not right to point to another possibility—the John Lewis Partnership and the Co-operative movement—but I believe that it is right that the employees have in the end to be identified with shareholder interests. That is the right way forward.
The Motion refers to the need for capital management to evolve. In this context I refer to a debate that has taken place between a number of noble Lords along slightly different lines. I believe that the financial services industry taken in general—I do not like to refer to the City as such—is still regarded by the great British public as having something of a mystique. It is felt that there is something rather removed about what people do in running pension funds and so on. We must get away from that idea. As wealth grows—and we hope that it will—people's savings will no longer be invested only in their own homes, as has been encouraged by governments of both parties over many years; they will start to be diversified. There must be an industry which comes down to the level of the general public to ensure that they understand what is available and what it is all about in simple terms.
I also believe that it is not right, as noble Lords on all sides of the House have said, that takeovers should be determined by a few fund managers telephoning one another to say, "Are you going to accept such and such a bid at three o'clock this afternoon?"; answer, "Yes", "Right, we'll all go"—and that is the end of a great company without any regard to any other
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considerations. As your Lordships will know, I have argued from this Dispatch Box on many occasions that we should shift the onus of proof in takeovers onto the company that wishes to make a bid and take over a company so as to determine whether it is in the national interest.
I turn now to the point made by the noble Lord, Lord Wade, with whom I disagree on almost every occasion; indeed, this is one of the occasions on which I again disagree with him. I believe that the Government have an important role to play. They must encourage the kind of partnership about which I think the noble Lord, Lord Laing, has been advising us this afternoon. The Government must ensure the accountability of financial institutions. They must do everything they can to ensure that manufacturing industry is given primary importance. Without that we are lost. That is why I welcome the Motion.
7.41 p.m.
The Parliamentary Under-Secretary of State, Department of Trade and Industry (Lord Reay): My Lords, I should first like to thank my noble friend Lord Laing of Dunphail for giving us the opportunity to discuss the profoundly important issues which he has raised this afternoon. Surely no one has more right to raise issues of this nature than he has. He spent 45 years as a director of United Biscuits, 25 of them as either managing director or chairman. I gather that during that time the value of the company rose from £4 million to £1.6 billion and its sales from £4 million to £2.7 billion. The steady growth of the company—led, as I am sure it was, with far-sighted strategic vision—was reflected in its share price. I understand that a stake of £100 invested in United Biscuit shares in January 1945, with reinvestment of gross dividends, would have been worth £5,400 by the end of 1989, giving an average annual growth of 17.5 per cent., which is more than twice the retail prices index, and that between 1980 and 1990 the share value increased at an average annual rate of 23 per cent. So there was no divergence in that case between long-term managerial success and the long-term interest of the shareholder.
The debate provides us with an opportunity to examine whether we have the appropriate corporate and financial structures to best advance the long-term interests of British industry. Like the noble Lord, Lord Ashburton, to whom I shall return, I very much welcome the debate. It is surely right for us to take a look at other countries whose business and manufacturing record since the war has been better than ours to see what lessons we might be able to learn from them. I find it a remarkable and promising development that at last we as a nation are willing to look for lessons to learn from other countries' experience. It was never so when I was young: Britain, in our own eyes, always did things differently and best; and some may feel that we paid a heavy price for our former complacency. But I should like to add a word of caution at this point. Even if we were to find that other countries had organised things better, we should be foolish if we were to imagine that we could transplant their system wholesale—or, indeed, parts

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of their system—into ours. As the noble Lord, Lord Ashburton, felicitously put it, it is pointless to try to plant avocados in Scotland.
All countries have their own particular structures and relationships which have developed over many years. They cannot with the wave of a government wand be introduced over here. No country can hope overnight to transform its pattern of corporate ownership and control even if it wanted to. We may seek to try to influence shareholders' perception of their responsibilities, even of their long-term interests. But we must live with the basic pattern, and what we seek to change has to be viewed in the context of our industrial life and not someone else's.
I have a further point to make. There is no logical reason why there should be an inherent conflict between the interest of the shareholder and the long-term interest of the company. Here I agree with what the noble Lord, Lord Holme, said. If a company is perceived to be investing wisely today, its share price should, even in the short term, reflect in anticipation the profits that that investment will generate. If shareholders desert a company that undertakes heavy investment, that may reflect a lack of confidence in the management's judgment, but it is not self-evident that the shareholders are wrong.
It may be the case that there is an insufficient degree of trust in British management by the City. It is possible, perhaps as a result of earlier disappointments, that shareholders have a tendency to under-value the capacity of British management to invest wisely for the future. Alternatively, it may be the case that British management is failing to project its full worth to the City. If so, there is perhaps a communications problem. But when the City is convinced of the quality of management and where the City has confidence, for example, in the future commercial value of research and development undertaken by companies' management (as is the case with a number of major British companies) then institutional shareholders do not necessarily desert those companies because of their commitment to the long term, to which institutional shareholders are allegedly allergic. For example, companies in the pharmaceutical sector combine very high levels of research and development with very high market ratings—proof that the argument of my noble friend Lord Laing that heavy investment in R&D depresses share prices is not necessarily true.
I am entirely at one with those who assert that we need more innovation in this country and more commitment by industry to research and development. It is precisely in order to stimulate greater spending on R&D by firms that the Innovation Advisory Board of the Department of Trade and Industry arranged to compile and publish the first British R&D scoreboard. The department has also recently set up an innovation unit which is designed to raise the status of innovation and improve communications between companies and investors.
My noble friends Lord Laing and Lord Pennock both took British companies to task over their dividend policies. However, I do not think that it is correct to view dividend payments as simply
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investment forgone. Dividends are a means to attract new investors and new capital to the market. It is also the case that amounts paid out in dividends are relatively small in comparison to the total capital spending of companies. As a result, the rapid rise of dividends which my noble friend Lord Laing pointed out as having taken place in the second half of the 1980s—which I may say took place partly because of rising profits—occurred at the same time as a period of the fastest business investment growth seen in this country since the war. Nevertheless, I agree with recent statements made by the Governor of the Bank of England that in appropriate circumstances the deliberate reduction of dividends can be the mark of a responsible and resolute management.
I should like to say something about the specific proposals put forward by my noble friend Lord Laing and other speakers, although I must make the point which was recognised by the noble Lord, Lord Grimond; namely, that at this time of the year I cannot be expected to comment on specific proposals for changes in taxation. Nevertheless, as regards the tax privileges of pension funds, I should like to point out that governments of all political colours have wished to encourage people to make financial provision for their retirement. Moreover, that policy has been highly successful. Half of the working population is now covered by an occupational pension scheme and a further 4.5 million people have personal pension plans.
So far as concerns the desire of my noble friend Lord Laing that companies should restrict voting rights to shares which have been held for at least 12 months, it is in fact open to companies to do that by altering their articles of association. Of course that can cut both ways. It may help to protect an efficient management from an unwanted takeover, but it may also be the device of an inefficient management to save its own skin. However that would undermine the basic principle that the owners carry the risk, in return for the right to appoint the directors and have a say on major issues affecting the company. I must add that the view until now has been that share issues with unequal voting rights are confusing and contrary to modern principles of transparency and the equal treatment of shareholders, and the Stock Exchange has long been encouraging their disappearance.
My noble friend Lord Laing referred to the recommendation of the Trade and Industry Select Committee in another place regarding the criteria according to which the authorities should decide whether or not to block a proposed takeover. We shall be replying to the Select Committee's recommendations in due course. I would only point to the fact that the Select Committee endorsed our view that policy on mergers should continue to be based mainly on competition grounds and that it did not think that the bidding company should be put in the position of having to prove that a takeover was positively in the public interest before it should be allowed. Our present system is designed not to favour one side or the other. The Government take the view that the interests of the shareholders will in general diverge from the public interest only where competition issues

921
are at stake. We do not exclude that in particular cases other issues might lead to an MMC reference, but those will remain very much the exception. Provided that markets are working properly, there is no reason why investors should not share a well-run company's estimate of what will serve its long-term interest, and why expectations of long-term performance should not be properly reflected in the share price.
Our view is that the threat of takeover provides a useful discipline on management. I therefore agree with the conclusion of the noble Lord, Lord Ashburton. Other countries have other means for keeping management efficient; we have takeovers. If takeovers were disallowed, or made substantially more difficult, there would be little or nothing to disturb the life of the incompetent manager. The Select Committee observed that the relative protection from the threat of hostile takeovers enjoyed by companies overseas can make managements less responsive both to the needs of shareholders and to the long-term interests of the company and its employees.
My noble friend Lord Sharp raised the issue of reciprocity. It is often suggested that bids for foreign companies which are themselves bid-proof should be disallowed. We have given careful thought to that matter. We understand the concern that there should be a level playing field, but on the whole our view is that, in takeovers as in other trade policy matters, it is in our broader interest to follow an open trading approach. We want to see barriers brought down rather than new ones erected. It follows that we should not pursue a policy of reciprocity; that is to say, of disallowing bids which originate from companies which are allegedly bid-proof themselves. For one thing, whether such companies are in fact bid-proof is not necessarily possible to establish; it is certainly in the circumstances a hypothetical question. More importantly, a bid refused on grounds of reciprocity might have undesirable repercussions. It might for instance lead to acquisitions of foreign companies by British companies being prevented, or to some unrelated act of commercial retaliation. In other words, it risks widening the area of potential international trade conflict. A more positive avenue which we have been following within the EC is to seek to outlaw company law restrictions which place obstacles in the way of takeovers, thus placing Britain and other member states on a more equal footing. We have however to recognise that national structures and cultures probably play a larger role than legal restrictions in that area; so on the whole we do not think it right to have a policy of reciprocity. We want access for our companies overseas, wherever they wish to go in search of new markets and new opportunities. British companies are substantial overseas investors and we wish to do nothing to reduce their scope, including their scope to expand by overseas takeover. By the same token, we see this country as having been a great beneficiary from inward investment, and we wish to do nothing that might deprive this country of the benefits of foreign capital and expertise—
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including management expertise, in which area it appears that the Japanese, in particular, have much to teach us.
Shareholders can play an important role in sound conduct of company affairs. My noble friend Lord Nelson asked for a more pro-active Department of Trade and Industry. Indeed we should like to see managers and trustees of investment funds taking a more active interest in the companies in which they invest. We welcome the guidance given recently by the Institutional Shareholders' Committee, which listed many ways in which institutional investors might involve themselves more closely in the companies in which they hold stakes. They were referred to in some detail by the noble Lord, Lord Ezra, and I shall not go into them any further now.
My noble friend Lord Boardman drew attention to the role of auditors. He expressed anxiety about conflicts of interests between a firm's auditing role and its other business, such as consultancy. Those suggestions merit careful consideration. I expect that they will be considered in detail by the Cadbury Committee on the financial aspects of corporate governance. That committee is well equipped to study all sides of the issue, and we look forward to receiving its report later this year.
My noble friend Lord Laing introduced into the debate, into the terms of the Motion and into his speech the word "stakeholders". He implied that companies have obligations to interests beyond those of their shareholders. The noble Lord, Lord Skidelsky, questioned the value of that concept, but we agree that other stakeholders, apart from the shareholders—
customers, employees, creditors, suppliers and the general public—have legitimate and important interests which are now recognised by law. Any well run company now knows that it has to recognise those wider obligations as a condition of its success.
I welcome what the noble Lord, Lord Shackleton, said about the value of employee involvement in the John Lewis Partnership. We agree that employee involvement contributes to the prosperity of the company, as well as to the quality of working life of the employees. So we encourage and promote effective employee involvement. For example, the Department of Employment has recently launched, jointly with the Confederation of British Industry, an initiative to demonstrate the importance of employee involvement in key aspects of business performance. But we believe that companies themselves should work out the ways that best suit them for involving employees in their business. Given that their circumstances can differ so much, what we do not want is a mandatory procedure which would require all companies to do it in the same way.
The noble Baroness, Lady O'Cathain, rightly drew attention to the wider share ownership achievements over the past decade. The Government have encouraged financial participation by employees through the privatisation programme which has given employees unprecedented opportunities to acquire a stake in the businesses in which they work (90 per cent. of those eligible have done so)—and through a range

923
of tax reliefs for schemes such as employee share ownership and profit-related pay. No fewer than 2.25 million employees benefit today from approved all-employee share schemes.
The noble Lord, Lord Grimond, expressed some anxieties about ESOPs. He would like an assurance that I shall draw the attention of my right honourable friend the Chancellor of the Exchequer to his remarks. Indeed, I shall do that.
I enjoyed the maiden speech of the noble Lord, Lord Ashburton. I regretted, perhaps more than he, that it had to be confined within the six-minute limit. It contained the distilled wisdom of a lifetime's experience in the City, and was delivered with an assurance that would have deceived anyone who had not been told that the noble Lord had taken the Oath only yesterday. I greatly look forward to hearing further contributions from him.
The noble Lord, Lord Benson, called for a national industrial policy. As noble Lords may have gathered, I am sceptical about the necessity for such a policy. We believe that prescription from above on matters which are best left to companies and their managers would not be a helpful move.
My noble friend Lord Brentford mentioned gifts to charity. I agree with him that companies would benefit from increasing their gifts to charity. The noble Baroness, Lady O'Cathain, referred to the humanisation of industry which has taken place in recent years. I am happy to acknowledge that industry has been attracting better brains and has become more democratic and a more attractive place in which to work.
My noble friend Lord Caldecote emphasised that companies should play a constructive role in the community. I agree. On communications with investors in industry, my noble friend Lord Wade made the interesting point that small companies can be better at communicating with their investors than some large ones. We must take that into account.
I welcome the endorsement by my noble friend Lord Sharp of our policy on takeovers by state-owned companies, of whatever nationality. Sometimes such takeovers can raise competition concerns. The proposed takeover of ICI's business was a case in point. It was blocked by my right honourable friend the Secretary of State for Trade and Industry after an adverse finding by the Monopolies and Mergers Commission.
Over the long term, the welfare of all the stakeholders in companies will depend on the competitiveness of British industry. We, the Government, have set the scene. The United Kingdom experienced faster business investment growth in the 1980s than any other of our G7 partners, with the exception of Japan. In that period our manufacturing productivity grew faster than that of any other major competitor. R&D spending by industry—surely the most valuable—has grown by nearly 50 per cent. in the last six years for which figures are available. Inflation—perhaps of all phenomena the most damaging as concerns long-term planning because it destroys confidence in the future—has been reduced to the German levels for the first time in a generation.
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Industry has been given the environment in which it can flourish. It has the backing of a government which knows the importance of giving business its head. We have provided free markets, the lowest corporation tax rate of any major industrialised country and a vastly reduced burden of regulation. Our policy of bringing down direct taxation has restored personal incentives.
Unlike the party opposite, we do not intend to overload industry and its employees with high taxation, excessive regulation and a host of restrictions and instructions. When we have weathered the recession, as we will, it will be up to industry to make the most of all the opportunities beckoning to it from the whole wide world.
Let us hope that the management of industry, with the active support of its shareholders, will address itself to the problems and chances which only it can grasp and solve.
8.2 p.m.
Lord Laing of Dunphail: My Lords, I wish to thank your Lordships for attending this debate and contributing to such a stimulating and, I hope, worthwhile discussion. I wish to add my congratulations to those of everyone else to my noble friend Lord Ashburton. I thank the Minister for making his points so clearly. In due course I shall enjoy returning to the subject, when I shall try to be more persuasive. My Lords, I beg leave to withdraw my Motion for Papers.
Motion for Papers, by leave, withdrawn.

South Pacific Island States
8.3 p.m.
Lord Glenarthurrose to ask Her Majesty's Government what is their policy towards the island states of the South Pacific.
The noble Lord said: My Lords, I beg leave to ask the Question standing in my name on the Order Paper. My reason for doing so is not, I hasten to say, because I doubt that Her Majesty's Government have a policy towards the island states of the South Pacific. I most certainly know that they have. I had the privilege for two years to be in the shoes of my noble friend Lord Caithness as the Minister in the Foreign and Commonwealth Office responsible for our relationship with that region. During that period, I visited many of the Pacific Islands and I have visited the Pacific twice subsequently. So to a limited extent I have had a hand in that policy.
However, being aware that the region is enormous and the peoples, their cultures and aspirations diverse, I believe that it would be useful to all of us who follow events there and also to those in the region who follow our interest in them to have a condensed overall perspective of how the Government view the region.
I do not think, however, that a position on the South Pacific island states in general can be isolated from the relevance of other key influences in and close to the region. Our own association with Australia and New Zealand has, for example, provided over the years the opportunity for a largely shared attitude

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from these members of the Commonwealth, to what are, after all, their neighbouring islands, many of which have Her Majesty the Queen as head of state. The other countries of the Pacific rim—notably Japan, Canada and the United States—have their own interests and even territorial responsibilities to look after. France, who, like ourselves, still has colonial interests to administer, is obviously also a key player.
I mentioned the Commonwealth. While generally its South Pacific constituents are strong participants, recent years have seen one sad departure—Fiji. I shall not rehearse the history of Fiji's internal politics which led to the coups of 1987. Suffice it to say that, despite those events, for many years previously and since 1987 there has been no more loyal friend of Britain than Fiji and no more staunch supporter of the role of the Commonwealth in the South Pacific and in international affairs. Fiji wants to be able to rejoin the fold and to reinforce the ties between us and among her neighbours, which even now are strong. I very much hope that my noble friend can give some indication of Her Majesty's Government's attitude to Fiji's desire to re-enter the Commonwealth.
It is not surprising that some focal point for mutual discussion on the region has been needed. In a part of the world emerging from the influences of the Second World War where old colonial influences were beginning to decline, and as steps were taken towards independence, there emerged a need to focus on aid, trade and cultural and social matters.
The South Pacific Commission, born in 1947, with the United Kingdom as one of its midwives, became a focal point for that discussion. With its headquarters in Noumea in the French territory of New Caledonia, and annual conferences alternating between Noumea and different island venues, the South Pacific Commission has developed into an important convention. Our own participation is much welcomed and exists by virtue not only of our historical association with the region, but through our current territorial interest in Pitcairn Island.
I have been fortunate enough to attend three South Pacific Commission conferences, two, in New Caledonia and the Cook Islands, as a Minister, and one last year on Tonga as the special delegate of my right honourable friend the Foreign Secretary. On each occasion it gave me great pride to have two flags in front of me at the conference table: the Union flag and the flag of Pitcairn Island. I shall say more about Pitcairn in due course.
The major political point of focus for the region has been the South Pacific Forum. Meeting annually, again at different venues in the Pacific, the leaders of the South Pacific island states—including Australia and New Zealand—have developed an effective process of political discussion best designed to achieve their mutual prosperity and security. Over recent years, the value of the forum has been enhanced by its encouragement to Pacific rim countries and those with other Pacific interests to join a dialogue after the main forum meeting. Again, I have been privileged to take
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part in two of these forum dialogues—the first of its kind in 1989 in Kiribati and the second in 1990 in Vanuatu.
Both the forum and the commission greatly welcome our presence. Representation at ministerial level is something they value particularly highly. I hope that my noble friend will be able to give an assurance that he will endeavour wherever possible to arrange for Ministers to attend both these meetings regularly in the future.
Two of the issues which have dominated discussions at past fora and in the subsequent dialogues have been drift net fishing and French nuclear testing. Drift net fishing by the Japanese, with the huge mono-filament nets literally hoovering up the contents of the ocean and taking far more by way of different types of sea creatures and birds than their main quarry, the albacore tuna, has been a matter of enormous concern. I was able on Her Majesty's Government's behalf to join in the chorus of protests at the forum of 1989 about the immense damage that Japan was doing with this fishing. Many of the islands' economies depend on fishing. Their concern was understandable. But the message went home and a moratorium was introduced. If the staunch views of the forum and the partners in the dialogue had not been so clearly expressed by nearly everyone concerned, such a decision might well not have been reached.
As to French nuclear testing, I have to say that our position has not been one which generally finds favour among the islanders. We have long expressed our view that we accept that testing is necessary, even if not desirable. Nevertheless, the international climate has altered somewhat since that view was last promulgated and it is a personal hope of mine that, notwithstanding the relevance of the French independent nuclear deterrent, even in the highly uncertain contemporary international scene, France might one day at least be able to agree to a moratorium.
As to the UK's position on the Treaty of Rarotonga declaring the South Pacific nuclear free zone and our decision in 1987 not to sign the protocols of that treaty, I am sure our position is correct. The posture of the South Pacific is understandable, but in reality I think impracticable for the greater good. It has always been my impression that the island states go along, albeit reluctantly, with our policy and accept the reasons for it.
These issues are sensitive in regional terms, but the South Pacific Forum has been a continuing platform for sensible and rational discussion. Whatever our difference of views may be, our participation has always been encouraged. The closeness of our relationship could never be maintained without the invaluable role played by our high commissioners and embassy within the region. We have representatives in six island states and non-resident accreditation to a further five. The size of our missions varies from what has in the past been literally a one-man band in Kiribati to a more substantial presence in Fiji. The latter is enhanced by the presence there of the British

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Development Department of the Pacific which is the focal point for the United Kingdom's aid to the region.
Having visited all our resident posts, I must pay tribute to the work they do to achieve such sound relationships between their host countries and ourselves. A posting to the South Pacific may sound like everyone's dream but the distances involved are enormous, travelling is not at all easy and the quality of life is very different from other posts in more accessible parts of the world. I think a very special kind of person is required to fulfil the tasks which our representatives undertake. That said, it is hardly surprising that all those who have been there nearly always seem to fall in love with the way of life in the South Pacific. I hope my noble friend can give me an assurance that even in these times of financial stringency no post will be closed. To try to retain influence and interest with fewer posts would be misunderstood. It probably would not work and it would be most unlikely to save worthwhile sums of money.
As regards the British Development Department of the Pacific, I know that certain changes are taking effect to make our aid effort more closely attuned to the needs of specific countries. BDDP will close and the staff associated will be attached to our posts throughout the region. I was encouraged to be told on my most recent visit in October that this was well understood and accepted by the islanders, but I think it would be helpful if my noble friend could spell out precisely what the new arrangements will be and how our aid effort will be enhanced by the changes.
Broadly speaking, I believe our aid effort in the region is effective. It is certainly valued by those who receive it. One country which is of growing significance is Papua New Guinea. This country is particularly renowned for its mineral reserves and has, accordingly, a large and growing economic base. Although the Commonwealth Development Corporation has some programmes taking place there, as indeed it does elsewhere in the region, it strikes me that Her Majesty's Government could perhaps review the position on a bilateral aid programme to Papua New Guinea. Such a move would enhance the opportunities for PNG to develop her full potential. Although relations between us are very close, I am certain that anything we can do further to support PNG would be to our mutual benefit.
If I left one burning ambition unfulfilled in my period as a Minister responsible for that part of the world it was my inability to visit Pitcairn Island. It is almost impossible to believe that so far as I am aware no ministerial visit has ever been arranged to Pitcairn Island. This remote territory some 3,200 miles north east of New Zealand and about the same distance west of Chile, with around 50 inhabitants, is the platform for much of our historical and contemporary involvement in the region.
The Governor of Pitcairn, who is also our High Commissioner for New Zealand and resides in Wellington, is able to make visits from time to time. Indeed the islands are administered by part of his
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office and for their size they have a thriving economy based on the sale of stamps. Of course I understand the practicalities against making regular visits. We might not see my noble friend for many weeks should he venture upon such a trek. However, I do not think we should continue to use Pitcairn Island as a lever for part of our enthusiasm and interest for the South Pacific without at least paying direct personal acknowledgement to its importance and our influential position through it as a wholly dependent territory. Its people's affection for the Queen and closeness to the UK are legendary. I hope, therefore, that my noble friend might indicate whether he foresees the possibility of such a visit. If he does not, I should perhaps tell him that my enthusiasm remains undiminished and my imagination for ways of getting there almost boundless.
In summary and in conclusion, I must say I have been immensely struck by the enthusiasm which the South Pacific island states show for our continued interest. On our part, continuity, a close understanding of the region's views and perceptions, the appearance of familiar faces and a genuine love of the diverse cultural differences which exist between the different island groups are all important factors. The scope for diminished interest leading to less stability and even to undesirable influences emerging seems to me to be real enough. But it is in the spirit of what has become for the UK a renewed interest in the South Pacific that I look forward to what my noble friend can tell us about the Government's policy towards this important and particularly friendly part of the world.
8.18 p.m.
Lord Shackleton: My Lords, the noble Lord has achieved his purpose already in that he has given some publicity to the South Pacific islands and has raised our awareness of them. I am sure the noble Lord, Lord Auckland, will be able to add to what has already been said. Two of the South Pacific islands are, of course, Australia and New Zealand. Even though we have practically reached the annual anniversary of Australia Day, which falls this weekend, it is not possible to initiate a debate on those two islands.
I was very interested in the noble Lord's remarks about Pitcairn Island. A tribute needs to be paid to at least one High Commissioner from New Zealand who travelled all the way to Pitcairn Island in a small yacht. The noble Lord was right to wish to encourage travel to Pitcairn Island. Some of the women who are skilled at yacht racing might be able to undertake such a venture.
I wish to speak briefly about Papua New Guinea. The company I am involved with, RTZ, has a principal subsidiary, CRA, which has developed a magnificent mine there. It appeared that the mine was well suited to the needs of the people of Papua New Guinea and to the needs of the government there and the shareholders in the mine. It is a tragedy that for the time being all that has been lost. I do not know of a solution but I should like to put on record the achievement of CRA in doing such an excellent job in Papua New Guinea, and in Bougainville in the North Solomons in particular. It is a wonderful country. It is

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fascinating. In my youth it was an area for exploration among cannibals. Now it has grown to a large extent into a modern state. Unfortunately, like other modern states it is prone to disagreements and, alas, in Papua New Guinea the Bougainville copper mine is no longer functioning. I hope that it will come back into operation soon.
I congratulate the noble Lord. I am not sure that he does not do a better job as an individual peer than as a Minister. To send peers to islands is a good use of Members of this House. I was sent to the Falkland Islands, which are rather different from the South Pacific islands. I hope that there may be a team of Members of the House of Lords who will make visits and represent Her Majesty and Parliament in those islands.
8.20 p.m.
Lord Auckland: My Lords, some people may wonder why at eight o'clock on a Wednesday evening your Lordships' House should be debating the South Pacific when there are so many problems in the European Community, the Middle East, Ireland and Eastern Europe. My noble friend Lord Glenarthur has given ample reasons to those who may study his excellent speech. He has demonstrated the importance of those islands. They have rather glamorous sounding names since their independence—Vanuatu, Tuvalu, Kiribati. The Gilbert Islands and the New Hebrides sounded very much more formal.
I declare a non-financial interest as chairman of the Anglo-South Pacific Group of the Commonwealth Parliamentary Association. The only country which I have visited is Fiji, which, alas, is temporarily out of the Commonwealth, as your Lordships know. I went there with my wife in 1971 on holiday en route to a very hard working official visit to Auckland in New Zealand. What a wonderful country it is and how essential it is for Fiji to return to the Commonwealth. I hope that after the elections which are to take place next month that may be achieved.
Last year I went to New Zealand on a Commonwealth Parliamentary Association visit to the Waitangi celebrations. I had hoped to go via Tonga and visit our Commonwealth Parliamentary Association office there. However, as some of your Lordships may know, getting from Tonga to Australia or New Zealand is not easy. There are two or three flights a week but, unfortunately, despite the marvellous efforts of the High Commissioner for Tonga here in planning a route, it was not possible for me to obtain a flight in time to link up with my parliamentary colleagues in New Zealand. If I had arrived two days late having been, in their view, disporting myself in Tonga, I should not have been popular.
However, I have two memories of Tongans. The first is of 1953, when I was in the Territorial Army and at the coronation of our present Queen helped to line the route in Pall Mall. Your Lordships may recall that it was a very wet and windy day and very cold. I remember the wonderful sight of the much beloved Queen Salote in her open carriage, with the rain
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pouring down, being cheered by the crowd. Her marvellous achievements alone have put Tonga—the Friendly Islands—on the map. That has made me particularly anxious to visit those lovely islands.
My other memory of Tonga is of a "Songs of Praise" broadcast of Christmas carols on Christmas Day two years ago. There was two-way traffic between St. Martin in the Fields and Tonga. Those who know how well the Fijians and Tongans can sing will know what a marvellous programme that was.
If we do not pay more attention to those islands others may well do so. I am not as knowledgeable about the islands as my noble friend so I speak with some diffidence, but, although they may be a long way away, the islanders are extremely friendly towards this country. On behalf of the Commonwealth Parliamentary Association and the Foreign and Commonwealth Office I sometimes have the opportunity of meeting Ministers from Tuvalu, Vanuatu and Kiribati when they come here. My noble friend Lord Glenarthur and my noble friend the Minister, who have visited those countries, will know better than I the enormous affection of the people of the islands for this country. I hope that we can do something to reciprocate.
One difficulty is the problem of travel. I know that Her Majesty's Government cannot do a great deal about that, but the fact that one cannot get easily from the islands to Australia or New Zealand is a real problem. I am told that there are moves afoot to do something positive—perhaps in the form of additional Air New Zealand or Qantas flights. There is an opportunity for tourism. The islands are beautiful and there are a great many opportunities for swimming. If it was possible to have flights to the islands and to provide hotels at a reasonable price and of good quality enormous opportunities could be opened up in the islands. I daresay that a number of Australians and New Zealanders already go to the islands but even they have great problems with travel.
I recently attended a reception at the Foreign Office at which I met a gentleman from Cable & Wireless. The company is doing a great deal of work in the islands, in particular in Tonga, where I believe it has a franchise up to 2000 AD. I have not given my noble friend notice of this question, but can he comment on the opportunities available for other companies to work in the islands and possibly to set up companies? We do a great deal of business with Fiji, despite the enormous problems in that island at present. I believe that there are opportunities to help in the Solomon Islands too. I wonder whether anything is being done to help with agriculture there and whether any teams have gone out to provide advice. However, perhaps the islands are limited as to what they can grow.
I end by thanking my noble friend for having initiated the debate. We rightly spend a great deal of time discussing Europe but, as I said last year, I believe that the Commonwealth is of major importance. In the international sphere the islands are of growing importance and the debate is timely.
8.30 p.m.
Baroness Ewart-Biggs: My Lords, I join the noble Lord, Lord Auckland, and my noble friend Lord Shackleton, in expressing gratitude to the noble Lord, Lord Glenarthur, for tabling for debate a region in the world which I do not recollect having discussed previously in this House. I congratulate him, as the Minister then responsible, on his contribution towards the policy in that region. The debate will give the Minister an opportunity to outline government policy on various aspects, including the political developments in Fiji, Papua New Guinea and other island states. It will also give him an opportunity to set out the Government's overseas aid commitments and objectives in relation to the South Pacific.
I was interested in what the noble Lord, Lord Glenarthur, said about Fiji. It has always been a loyal member of the Commonwealth. Nevertheless, one of the main developments that caused concern in the South Pacific was the coup in Fiji in May 1987. Troops commanded by Lieutenant-Colonel Rabuka overthrew a multi-racial coalition government headed by the Fijian Labour Party's Mr. Bavadra. That government, comprising the multi-racial Fijian Labour Party and the Indo-Fijian National Federation Party, was of historical importance. It was the first time since Fiji's independence in 1970 that the Fijian and Indo-Fijian communities shared political powers as equal partners.
Following the coup, Colonel Rabuka declared Fiji a republic and withdrew the country from the Commonwealth. In 1990 he imposed a new constitution which enshrined Fijian dominance of government and gave sweeping powers to the Fijian president and to the great council chiefs. It is most sad and worrying that the new constitution shows evidence of racism and discrimination. For instance, it prohibits Indo-Fijians from becoming president or prime minister and bans them from holding a wide range of other high public offices. It also imposes racially-based employment policies which guarantee ethnic Fijians preferential treatment in appointments to all levels of the Civil Service. Consequently, the ethnic Fijians, who comprise about 47 per cent. of the population, currently receive about 75 per cent. of all new Civil Service appointments. Such discrimination has extended to all areas of civil and economic life within Fiji.
Opposition groups have attempted to publicise and campaign against the gross inequity of the system. Since the coup many have been subjected to harassment and imprisonment. The case of Dr. Singh, a former lecturer at the University of the South Pacific and a civil rights campaigner, has been brought to my attention. He was the subject of abduction and torture.
Will the Minister outline the Government's latest assessment of the situation in Fiji with respect to both human and civil rights? In the light of the Harare Accord linking overseas aid provision to a country's human rights record, will the Government review their aid policy to Fiji and their provision of training for members of that country's armed forces?
As was said by the noble Lord, Lord Auckland,
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elections in Fiji are expected to take place in May this year. However, in view of the unacceptable constitution, the Fijian Labour Party has decided to boycott the polls. Will the Minister say whether the Government's proposal put forward in May 1990 and confirmed by the noble Lord, Lord Glenarthur, still stands? It was proposed to help Fiji to work out a constitution for its communities to consider. Will the British Government respond if there is a request from any of the Opposition parties in Fiji to monitor the elections?
I am not saying that there is any question of Britain interfering in Fiji's internal affairs. I merely wish to know what information the Minister can give to the House on those two issues. Can he also say how the rest of the Commonwealth countries regard Fiji's possible wish to return to the Commonwealth and whether there have been any discussions among Commonwealth countries on that subject?
There have been political upheavals in other island states in the South Pacific. I wish to comment briefly on one further issue and to ask the Minister about Papua New Guinea and its conflict with the secessionist movement of Bougainville Island. I believe that the situation there as a result of the blockade is most serious. Does the Minister have any information about the peace process that was being carried out and the relationship between Papua New Guinea and Bougainville Island?
I wish to speak briefly of Belau. It may appear strange that a small group of islands consisting of some 500 square miles of land and a population of only 15,000 has been the victim of political destabilisation. In 1947 Belau was placed in trust by the UN to the US administered trust territory of the Pacific Islands. Under the terms of that trusteeship the United States was obliged to assist the islands to make the transition to eventual self government. However, the United States neglected the development aspect of its trusteeship while at the same time turning the Pacific into a nuclear test site, which has left many of the islands uninhabitable.
Fearing the threat of such tests to the environment, 92 per cent. of Belau's inhabitants approved the world's first nuclear-free constitution. However, pressure remained on Belau to overturn that constitution and to approve a compact of free association. I understand that women tribal elders refused to accept the compact and successfully challenged its legality. They won the reinstatement of the nuclear-free constitution.
I understand that the people of Belau want some form of association with the United States. However, they would prefer to keep nuclear warships out of their waters, as was said by the noble Lord, Lord Glenarthur. It is possible that the United States may revise its strategy in the South Pacific in the light of the disintegration of the USSR. That will have definite implications for the people of Belau. Therefore, I hope that the Minister will comment on the current situation between the United States and Belau.
Lastly, there is little doubt that the South Pacific island states depend on the provision of overseas aid. There is visible evidence of that which comes from the

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UNICEF country programme recommendations to the Pacific Island region, which show some worrying statistics. They show that child mortality is a grave problem. The figure for infant mortality, although it involves a wide range throughout the region, at the highest may be 120 deaths per 1,000 live births. That is a high level.
A recent World Bank report highlights that, despite high levels of aid, economic growth has been poor over the past decade and seems to have made little impact on sustainable development in the region. Against that background the UK aid programme is in a state of transition. I should be grateful if the noble Earl would say something about whether our aid programmes to the South Pacific in terms of strategy, objectives and funding, are under review and in what way he believes that they will change. Perhaps he will also inform us whether our aid policy includes any projects designed to address health and environmental problems caused by nuclear testing in the South Pacific to protect the region from further ecological degradation.
The US and the UK conducted extensive nuclear tests in this region prior to their signing the partial test ban treaty in 1969. It would make a great impact if the French ceased their tests too.
I am grateful to the noble Lord, Lord Glenarthur, for bringing up this subject of great interest. I look forward to the response of the Minister. I am extremely sorry that I did not give the noble Earl warning of the points that I wished raised. However, since they are of a general nature I hope that he will be able to respond.
8.42 p.m.
The Earl of Caithness: My Lords, I, too, thank my noble friend Lord Glenarthur for giving the House this opportunity to discuss British policy towards a region which is not often in the news but with which Britain still has a valued relationship. It is useful from time to time for the House to reflect upon areas of our foreign policy which usually receive little publicity, yet nevertheless have their significance.
It might be helpful if I clarify what I mean by the island states of the South Pacific. I mean the countries and territories in the region stretching from the Mariana Islands in the north to Tonga in the south, and from Palau in the west, to Pitcairn in the east. Like my noble friend Lord Glenarthur, I include Papua New Guinea.
The Government's policy towards these island states is to continue to take an active interest in them and to maintain a commitment towards them. As recently as 15 years ago Britain administered a substantial part of the region. Since then all but a very few territories have become independent. But we still have a presence and remain engaged in the region.
Britain's contacts with the South Pacific go back to the early 18th century and have continued uninterruptedly for over 200 years. Pitcairn, our only remaining dependent territory in the region, celebrated its bicentenary in 1990.
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Our involvement began with the voyages of the explorer/navigators, Wallis, Cook and Bligh. It developed through trading and missionary activity, until we gradually assumed responsibility for the administration of much of the region.
Political evolution during the 1960s drew on British political traditions and institutions, as well as the representative nature of many of the island societies. It led to the achievement of full sovereignty and independence in the 1970s and early 1980s without conflict for the great majority.
As a result of our long-standing involvement, a substantial common heritage has built up. It has left us with many historical, institutional and cultural links, and a certain residual emotional attachment to the region. My noble friend Lord Glenarthur obviously has that attachment, and so have I.
As I have said, most of the South Pacific island states were formerly UK dependencies or protectorates. English is their most universal language. Their parliamentary systems owe much to Westminster. Eight of the island states are members of the Commonwealth. Three of them are realms. A fourth, Fiji, would like to re-establish its close links with the Crown, but I shall say more about Fiji later. At times our respective armed services have served alongside each other and developed ties of friendship. It has proved impossible to be interested and involved in the South Pacific without making many firm friends among the island peoples themselves.
So, although the British role in the South Pacific has shrunk since the islands became independent, we have nevertheless maintained an interest and a corresponding presence in the region. More specifically we run a significant bilateral aid programme for the South Pacific island states as well as contributing to multilateral programmes. We maintain six resident diplomatic missions there—more than any other former metropolitan power. Those missions are in Papua New Guinea, Fiji, Vanuatu, the Solomons, Tonga and Kiribati. We have non-resident relations with five others, including two new South Pacific states which we recognised last year, the Federated States of Micronesia and the Republic of the Marshall Islands. Like my noble friend Lord Glenarthur 1, too, with to pay tribute of the highest quality to our high commissioners, ambassadors and their staff.
We are active members of the South Pacific Commission, which we helped to found 45 years ago, contributing a significant part of its core budget. We participate at ministerial level in the South Pacific forum's annual dialogue with out-of-area countries. We are a major regular participant in disaster relief operations, most recently following the damage caused by Cyclone Val in Western Samoa where a troop of the Queen's Ghurka Engineers from Hong Kong is doing a very useful job.
There is considerable British private sector investment in the region, most notably in Papua New Guinea, about which the noble Lord, Lord Shackleton, knows so much. United Kingdom investment is currently running at £500 million and, if

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all goes well, is set to rise to £2 billion in the next few years. Like the noble Lord, we hope for an early resolution of the country's problems.
But while it is natural, in view of our many long-standing ties, that Britain should remain involved, those ties in themselves are not the reason for doing so. We remain involved because it is in our interest to do so. It is in our interest that the South Pacific, adjoining as it does the economically dynamic Asia-Pacific region, should remain secure and stable, as it has been generally since independence.
It is in our interest, as a country which wishes to see democratic systems adopted worldwide, that the South Pacific states should continue to make a success of democracy, as most of them have done since independence. It helps that the region happens to share our political values and orientation. That obviously suits us and we want to ensure that it continues.
United Kingdom investment in the region, which I mentioned earlier, is another interest. We want to support and protect United Kingdom investment, and a good way to do that is to help to encourage stable conditions.
The South Pacific also forms part of our regular exchanges with Australia and New Zealand. They welcome our involvement, which helps to spread responsibility for providing advice and technical co-operation and to balance the interest being shown by other out-of-area countries.
There has been some increase in outside interest in the region, both political and commercial, in the last five years. The Japanese are keen to build up a positive image. They have increased aid flows and are also investing commercially. The Chinese and Taiwanese are also active. Since 1987 Fiji has sought to cultivate relations with Malaysia. From the other side of the Pacific, the United States is showing increased interest since President Bush met South Pacific leaders in Hawaii in 1990.
Turning from the reasons for, to the objectives of, our policy, those are to help to consolidate democracy in the region and to strengthen like-minded attitudes there. To that end we seek to promote the well-being and development of the island states. The main instrument for the pursuit of those objectives is our bilateral aid programme and the careful attention we give to its planning and management. We have, and will continue to have, an active aid programme in the Pacific, focused at the country level on Vanuatu, the Solomon Islands, Kiribati, Fiji, Tuvalu and Tonga. We also support a number of projects with regional organisations, the biggest being a programme of staffing assistance and training at the University of the South Pacific.
Our government to government aid programme is presently running at about £12 million a year. With our contributions to multilateral programmes, the annual flow of UK funds to the region is about £35 million. Although this may not seem a large sum it is very big per head of local population. In addition, the Commonwealth Development Corporation is an important ingredient of Britain's overall assistance to the region. In the five years to 1990, the CDC invested
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over £60 million in the Pacific, with Papua New Guinea receiving the largest contribution. The CDC has investments in natural resources, economic infrastructure and development finance.
The aim of our bilateral aid programme is sustainable development. Our planning and management of the programme lays stress on the following points among others: attention to the effectiveness of our aid; the need for policy dialogue with recipients; institutional development with a sectoral approach; making development compatible with concern for the environment; strengthening the private sector; co-ordination with other donors.
At this point perhaps I may respond to my noble friend Lord Auckland. I can tell him that the United Kingdom continues to support commercial agricultural development in the Pacific through the Commonwealth Development Corporation, which is funded by the ODA. The CDC has supported development of coffee and cocoa estates in Vanuatu and forestry in the Solomons.
The majority of our aid is spent on providing skilled British staff in a variety of fields, from meteorology to animal health, and from the judiciary to geological survey. Training for local people, also in a wide variety of skills, is another key element of the programme. To make this technical co-operation more effective we are aiming to concentrate on a smaller number of sectors and institutions in each country, selected so that our effort and that of host governments contributes towards clearly identified objectives aimed at long-term sustainability.
A meeting of aid recipients and donors organised by the South Pacific Forum at the beginning of last year concluded that, although most Pacific countries receive substantial volumes of aid, standards of living have declined in the past 10 years. We have therefore been looking hard at the planning and management of our aid programme in the region to ensure that we learn the lessons of the past and build on success. We are, for example, paying more attention to the effectiveness of aid. We are also giving greater priority to policy dialogue with recipients. "Policy dialogue" means being sure, before we commit aid funds, that there are policies in place within which aid is likely to be effective and that we have, together with host governments, identified the key development objectives and the constraints to their achievement.
The search for more effective ways of helping to achieve sustainable institutional development is leading to a gradual shift away from the simple provision of British manpower and the supply of scholarships. Instead we are seeking to adopt a more integrated approach, based on a rigorous joint review of the factors preventing the institutions from recruiting and retaining their own staff and of the long-term sustainability of current structures and service levels. Unless these issues are tackled, providing British staff can be counter-productive, masking the need for adjustment and sapping the will of local people to tackle their problems.
These new arrangements will cut out duplication in existing structures and will be more responsive to the needs of the region because they will include a

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substantial presence on the ground in the main recipient countries. This will allow increased discussion and dialogue at the project design stage and a more intensive management input during their implementation. This should increase the quality of our aid, and I am glad to say to my noble friend Lord Glenarthur that I think that the change that we have instituted in BDDP has been to the benefit of the area and has been received as such.
Other shifts in emphasis are that we now prefer to help with the maintenance and rehabilitation of existing buildings rather than to build new ones. We hope to emphasise in-country and on-the-job training for junior and middle level staff. We will use more regional experts, and institutions, in our aid programmes rather than bringing in so many people from Britain. We will seek to strengthen the private sector and to enhance the capacity of nongovernmental organisations.
One of our current projects is helping the South Pacific Forum Secretariat to undertake a study of the factors which may be undermining the effectiveness of current programmes of technical co-operation, and to identify guidelines which may help the island states and their donor partners to plan for more effective programmes in the future.
We attach the highest priority to this process because it is increasingly clear that traditional patterns of aid in the region are failing, and failing conspicuously, to underpin sustainable growth. If donors provide aid which underpins high levels of consumption and welfare provision without helping the island states to become more self-sufficient in the longer-term, then we are simply reinforcing the tendency to aid-dependency.
We also attach a high priority to co-ordination among aid donors, welcoming and encouraging the opportunities for co-ordination offered by UNDP sponsored discussions and by regional bodies like the South Pacific Forum secretariat. Some recipient governments have organised single country meetings with their aid donors. These have proved most effective. We hope the practice will spread and become a regular habit.
I have dwelt on our aid programme because it is the core of our policy. Aside from the bilateral aid programme there are no other major instruments of policy available to us for the South Pacific. The island states are far too far away for us to have day-to-day business with them.
However, my noble friend Lord Auckland mentioned one area that is important to us, and that is trade links. Trade links, though not negligible, are modest. At 5.5 million people, the market is a small one. Nevertheless our diplomatic missions do engage in trade promotion and commercial work. The bulk of UK exports are in fact re-exports from Australia and New Zealand and get subsumed into our trade statistics for those countries. Direct UK exports total about £45 million a year. I was glad that my noble friend had the opportunity to discuss some of the trade and industry that we are doing in the South
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Pacific. I would say to him that there are opportunities, and I hope that British business will take them.
The Commonwealth link is significant and provides opportunities for us to lend support to the region. South Pacific island states account for one-sixth of Commonwealth membership. The Commonwealth has done useful work on the security problems of small states, recognising that micro states are particularly vulnerable to subversion and exploitation by unscrupulous outsiders. Recently the Commonwealth Secretariat has offered its services in the search for a solution to the Bougainville secession problem in Papua New Guinea. Against this background there are various miscellaneous ways in which we give the South Pacific as much attention as we can, within our priorities and available resources.
I have already mentioned our active participation in the South Pacific Commission and in the annual dialogues with the South Pacific Forum. We like to support these leading regional organisations, to encourage regional co-operation. We try to be represented at ministerial level at major meetings in the region, and I agree with my noble friend Lord Glenarthur on their importance. I have been to the region three times since assuming my present responsibilities visiting Fiji, Tonga, New Caledonia, Vanuatu, Guam and the Federated States of Micronesia. My immediate predecessors also paid regular visits, and I am grateful to my noble friend Lord Glenarthur for acting on behalf of the Government at the South Pacific Commission in Tonga last year.
We aim to make the most of our scholarship and sponsored visitor schemes, to expose South Pacific islanders to the British experience and British institutions. The Foreign and Commonwealth Office runs a Commonwealth Fund for small states using residual British Phosphates Commission money which, among other things, is used to pay for an office in New York for the Solomon Islands and Western Samoan missions to the United Nations and also to pay for young officials from the island states to attend training courses in the United Kingdom. We have Heads of Missions Gift Schemes to enable our High Commissioners to make presentations of useful equipment.
But after our aid programme, our other major continuing commitment is our six resident diplomatic missions in the region. To give aid intelligently to the island states we have to have an understanding of them. Through our missions we aim to establish good working relations with those involved in the governmental, private and voluntary sectors in those countries. I should mention here that the Fiji Embassy and Papua New Guinea and Tongan High Commissions in London provide us with additional immediate points of contact.
Resource costs of our diplomatic operation are very modest. In return we secure the continuation of a favourable situation in which we are generally well regarded in the area, make an effective contribution, and enjoy some influence. The island states are friendly and generally supportive. A number of them

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supported us during the Falklands conflict and over the Gulf war. They have been helpful to us at the United Nations where seven of them are members.
All that makes for an excellent relationship, which throws up few problems for us. There are no real bones of contention and only very few points of difference.
The main such difference concerns the South Pacific nuclear free zone. The island states would like us to sign the protocols to their nuclear-free treaty—the Treaty of Raratonga—and join in condemnation of nuclear testing in the region. We recognise and understand South Pacific anxieties in this matter. However, as a nuclear power which believes in nuclear deterence we accept the need to test nuclear weapons in order to maintain the effectiveness of the deterrent. That prevents us from acceding to the South Pacific's wishes and subscribing to the protocols.
In practice, as publicly stated, we remain ready as a matter of policy to respect several of the intentions of the island states in the Raratonga treaty. For example, we have no intention of testing, manufacturing or basing nuclear weapons on our only dependency in the region, Pitcairn, nor of conducting nuclear tests in the South Pacific. The island states accept that.
We understand and sympathise with other specific anxieties of the region, also environmental in nature. The South Pacific Regional Environmental Programme (SPREP) and its associated convention has an invaluable role to play in protecting the region's environment. We fully support the programme. We have signed the SPREP Convention on behalf of Pitcairn and are now working actively towards ratification. Meanwhile, we are contributing financially to several SPREP projects and will continue to do so. We endorse the recent decision to extend the programme's scope; for example, to look at the regional implications of biodiversity and climate change. The latter, and its effect on sea-levels, bears on the very survival of many South Pacific islands.
We are also conscious of the strong South Pacific worry about drift-net fishing. We attended, on Pitcairn's behalf, the 1989 Wellington meeting which led to the conclusion by states in the region of the Wellington Convention prohibiting fishing with long drift-nets in the area. We supported the aims of the convention. For a time our position on accession was complicated by international discussions on an acceptable definition of long drift-nets. However, we are now ready to sign the Wellington Convention on behalf of Pitcairn, subject to Pitcairn's approval. We and our European Community partners have fully supported the United Nations General Assembly resolutions of the past three years on the subject, including that passed only recently on 20th December. The Community had already decided to end large-scale drift-net fishing in northern seas, as recommended by the UNGA Resolution. I am glad to say that in the past 18 months long drift-net fishing in the South Pacific has virtually stopped.
I referred earlier to Pitcairn, our only remaining dependency in the area. We assume full responsibility for the territory's administration. It has first call on
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our aid funds for infrastructure projects, repairs and improvements. We recently provided £20,000 for satellite communications. Other projects in the pipeline are replacement electricity generators and work on the jetty. Any further decline in the island's present population of around 60 would be worrying, raising questions about long-term viability. We are very conscious about the desirability of a Ministerial visit.
Like my noble friend Lord Glenarthur, I should be keen to visit Pitcairn. However, the logistical problems are formidable. I am in correspondence with my noble friend Lord Arran at the Ministry of Defence at the moment on this very matter.
As my noble friend Lord Glenarthur and the noble Baroness, Lady Ewart-Biggs, reminded us, one of the more sensitive elements in our policy towards the region is our relations with Fiji since the 1987 coups. We were saddened by the coups, which caused a break in Fiji's parliamentary tradition and led to the lapsing of its Commonwealth membership.
That led us to examine our policy. We concluded that censure and ostracism would serve no useful purpose. We decided to maintain more or less normal relations with Fiji while making it clear that we would like to see an early return to parliamentary government there under a constitution acceptable to a majority of all the peoples of the country. We took the view that Fiji's political crisis was primarily an internal matter for its own citizens to resolve. We continue to apply that policy, giving advice when asked for and urging reconciliation between the communities and encouraging movement towards democratic government. I felt that the noble Baroness, Lady Ewart-Biggs, would wish the U.K. Government to be more interfering. I believe that to be totally wrong. At the same time we stand ready to take up human rights violations with the Fiji Government as necessary, and I have done so myself.
It is well known that Fiji much regrets the severing of its direct links with the Crown—a consequence of its declaring itself a republic—and would like to see them restored. But a necessary first step is for Fiji to rejoin the Commonwealth.
I make the Government's position clear. They would welcome Fiji's return to the Commonwealth. At the moment Fiji is not formally seeking re-admission. When it does it will be for the Commonwealth as a whole to decide.
Elections in Fiji are planned for the first half of this year under a controversial and contested new constitution introduced in 1990, but no specific date has yet been fixed and target dates have been postponed more than once. If those elections take place in a constructive and orderly way the restoration of elected parliamentary government should prove a positive step. We shall have to see what happens. Meanwhile we enjoy good relations with Fiji, as indeed we do with all the island states.
We intend to continue to maintain our interest and involvement in the region. We will go on doing our bit to promote sustainable economic and social development. We will continue to seek to encourage regional co-operation among the island states as a source of

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strength and as the best means to pursue their common interests. And we will keep up our contribution to the promotion of good government in the region so that the stability which it has enjoyed since independence may continue and whatever social tensions it may face in the future can be resolved within its democratic structures.

British Railways (No. 3) Bill [H.L.]
Returned from the Commons with amendments; the amendments considered and agreed to.
House adjourned at six minutes past nine o'clock.